We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Mon 12 Jul 2010 07:42 PM

Font Size

- Aa +

Saudi Arabia's Samba's Q2 profit declines 1.6%

Net lending income fell after the loans portfolio shrank by 5.7% by end June.

Saudi Arabia's Samba's Q2 profit declines 1.6%
PROFIT DROP: Saudi Arabias second largest bank by market value, Samba Financial Group, posted a 1.9% drop in Q2 net profit. (Getty Images)

Samba Financial Group, the second largest bank in Saudi Arabia by market value, said second quarter profit declined 1.6 percent on lower commission income.

Net income for the quarter ended June 30 dropped to 1.22 billion riyals ($325 million), from $330.69 million in the year earlier period, the Riyadh based bank said in a statement on the Saudi bourse website today.

The average estimate of five analysts was for a profit of 1.17 billion riyals, according to Bloomberg data.

Increased provisions for bad loans and tightened lending hurt earnings at Saudi banks since the global credit crisis and an economic slowdown. Saudi British Bank, 40 percent owned by HSBC Holdings, reported a 34 percent decline in second quarter profit today.

Riyad Bank, the third largest in the kingdom by market value, and Arab National Bank also posted declines in second quarter profit.

In a phone interview, John Sfakianakis, chief economist, Banque Saudi Fransi, said: “Going forward, the situation for banks looks much better if you compare it to 2009. Most of the provisions have been taken out by the banks. There is nothing unknown that is going to suddenly make the banks take more provisions.”

Saudi bank lending to businesses rose in May at the fastest pace for nine months, indicating a gradual return to credit availability. Lending to the private sector increased an annual 3.9 percent in May, up from 2.4 percent in April, the Saudi Arabian Monetary Agency, the country’s central bank, said on its website on June 27.

Samba reduced first quarter provisions for bad loans by 30 percent to $42.69 million for the three months ended March 31, from the previous quarter, according to data posted on the Saudi bourse website on April 28.

Samba’s loans fell 5.7 percent to $22.1 billion as of June 30, while customer deposits declined 1.5 percent to $36,2 billion, the bank said. Net income from special commissions declined 7.8 percent to $319.9 million in the second quarter, compared with the year earlier period, the bank said.

Arabian Business: why we're going behind a paywall

For all the latest Saudi Arabia news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Real news, real analysis and real insight have real value – especially at a time like this. Unlimited access ArabianBusiness.com can be unlocked for as little as $4.75 per month. Click here for more details.