Samba Financial Group, Saudi Arabia’s second-biggest lender by market value, posted its fourth consecutive decline in profit in the third quarter as brokerage activity diminished.
Net income in the three months to September 30 dropped 7.1% 1.3 billion riyals ($346.7 million), below analysts forecasts, which ranged from 1.35 billion riyals to 1.42 billion riyals, according to a Reuters survey last month.
Earnings per share were 6.46 riyals in the third quarter, against 7.12 riyals in the year-earlier period, the bank said in a statement on the Saudi bourse website. Nine-month profit fell 9.5% to 3.87 billion riyals, the bank said.
“This resulted from the decline in banking fees, knowing that the group has achieved a strong rise in its core banking activities,” Chief Executive Eisa Al-Eisa said in the statement.
Net interest income rose 15.6% to 3.67 billion riyals, it said without giving details on banking fees, which are mainly made up of brokerage commissions.
In the first half, banking fees fell more than 41% to 830 million riyals, accounting for nearly 22.2% of income from operations.
Hisham Abu Jamea, head of research at Riyadh-based Bakheet Investment Group, estimated banking fees accounted 28% of net income in the third quarter.
“The bank is very aggressive on lending and it wins almost all the big mandates for the major IPOs in the kingdom,” Abu Jamea said. Samba loans were up 16.4% at the end of September, the bank said.
“There is improvement but it’s slow compared with other banks,” Abu Jamea said.
Alrajhi Bank, the kingdom’s largest publicly traded lender, brought this year’s decline in profit to a halt in the third quarter on higher lending and investment income.
Samba’s fall in third-quarter profit was normal for a lender that is the third-largest broker in the kingdom, said Abu Jamea, whose third-quarter profit forecast was the closest.
“The value of stock market transactions was 15% below its level in the second quarter,” he said. Samba held an 11% share of the brokerage market at the end of June, he said.
Bakheet expects Samba to post a profit of 5.3 billion riyals this year, implying fourth-quarter net income will climb 52.4% to 1.43 billion riyals.
At the end of September, assets rose 22.1% to 141.3 billion riyals and shareholders equity grew 17.1% to 16.9 billion riyals, the bank said. – Reuters
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