SABB Bank, Saudi Arabia’s third-largest lender by market value, said second-quarter profit rose 25.2 percent on higher income from lending and asset management despite a surge in costs.
SABB made a net profit of 795 million riyals ($212 million) in the three months to June 30, 2007, against 635 million riyals, it said in a statement on the bourse website.
The earning came in mid-range of forecasts by analysts who were betting on between 766 million and 872.8 million riyals according to a newswire Reuters survey last month.
Operating income rose 29.1 percent to 1.33 billion riyals, according to Reuters calculations based on previous data.
SABB said its operating income for the six months to June 30 of 2008 stood at 2.52 billion riyals, up 22.7 percent from last year.
“Our balance sheet has allowed us to respond to the increasing demand for funding within the kingdom as reflected by the 59.5 percent growth in our loans… over the last 12 months,” Managing Director John Coverdale said in a statement.
“This asset growth has more than offset the impact of falling rates,” he added in reference to central bank steps to tighten lending restrictions to fight decades-high inflation.
SABB also benefited of a “strong performance” from trade, mutual fund, treasury and IPO related businesses as well as “a modest increase” in brokerage income. SABB is 40-percent owned by HSB.
Banks in the world’s largest oil exporter have moved away from relying on income related to stock market activities since a regional stock market crash in 2006. The Saudi index is the Gulf region’s worst performer this year.
“[This] has delivered well balanced income streams from our funds and non-funds activities,” Coverdale said.
Costs rose 23.4 percent in the first half of 2008 due to an “increase in headcount and performance related compensation”, SABB said.
The surge in inflation forced many firms to offer substantial wage increases.
Shares in SABB are up 3.1 percent since the start of the year, while all other banking shares are in the red.
The benchmark banking and financial services index lost 27.1 percent since the start of the year. (Reuters)
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