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Sun 6 Jul 2008 02:53 PM

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Riyad Bank earnings up on increased lending

Saudi's fourth-largest bank posts 6.8% rise in Q2 income, tops most analysts' forecasts.

Riyad Bank posted a 6.8 percent rise in the second-quarter profit after Saudi Arabia's fourth-biggest lender by market value boosted its lending business to compensate for lower brokerage income.

Riyad Bank topped most analysts' forecasts with profit of 906 million riyals ($241.6 million), or 1.06 riyals per share, in the three months ended June 30, compared with 848 million riyals, or an adjusted 1 riyal per share, in the year-earlier period.

The average forecast of four analysts polled by newswire Reuters last month was for quarterly profit of 841.15 million riyals.

"These earnings confirm the bank's continuing drive towards focusing and expanding core banking activities and developing assets," the bank said in the statement posted on the bourse website.

Loans grew 44 percent at the end of June while deposits climbed 23 percent, it said. Net lending income rose 23 percent - the largest component of operating income - while net banking services fees climbed 21 percent, Riyad Bank said.

The pace of net lending income growth slowed from the first quarter, when it rose 27 percent year on year. Net banking income growth picked up from 15 percent in the first quarter, according to Reuters data.

The Saudi central bank has tightened bank lending restrictions this year as it fights decades-high inflation.

Riyad Bank did not say how much it earned from non-trading investments, net exchange income or net trading income.

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.

Shares of Riyad Bank are down 30.3 percent so far this year, compared with a 15.6 percent decline for the main index and 27.9 percent decline for the banking and financial services index.

Shares of Riyad Bank were down 0.72 percent at 0845 GMT. (Reuters)