Samba Financial Group and Saudi British Bank (SABB) posted small profits on Monday, while Saudi Arabia’s second-largest lender Al Rajhi Bank posted a seventh consecutive drop in quarterly profit.
The results signal a mixed performance for three of the kingdom’s six largest banks. Samba and SABB both posted strong fee income growth, driven by demand for products to hedge against volatility in currencies and interest rates, said Murad Ansari, director of equity research at EFG-Hermes.
With Saudi Arabia’s riyal pegged to the U.S. dollar, some of the kingdom’s companies with overseas operations have had to grapple with the greenback’s recent strength.
Both banks beat analysts’ forecasts. Samba, the third-largest bank by assets, posted a 3.1 percent rise in its first-quarter net profit to 1.28 billion riyals, with SABB, the sixth-largest lender by assets, reporting a 3.2 percent rise to 1.12 billion riyals.
But Al Rajhi’s earnings fell 11 percent year on year to 1.52 billion riyals, which it attributed to a decrease in total operating income, down 2.2 percent to 3.42 billion riyals, and a rise in total operating expenses.
With one of the highest exposures in the financial sector to the retail segment, the bank remains weighed down by a cap on retail fees, introduced last year.
Appetite for retail credit has also been curbed by recent mortgage rules limiting the maximum loan-to-value ratio at 70 percent.
The batch of results follow profit increases posted by Riyad Bank and Banque Saudi Fransi.
Analysts say the kingdom’s banks remain vulnerable if lower oil prices are sustained, putting pressure on government revenues. But the price drop has yet to lead to a significant drying up of liquidity.
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