Saudi Arabia’s Samba’s earnings rise 6%

Samba Financial Group posted a 6 per cent increase in first quarter net profit, boosted by a gain in special commissions and investments in addition to a decrease in credit costs and salary expenses.

The Saudi Arabian banking group’s net profit rose to 1.31 billion Saudi riyals (Dh1.3bn) in the first three months of the year from the same period in 2017, the bank said in a regulatory filing to Tadawul exchange, where its shares are traded.

Special commission income and investments increased 5.5 per cent to 1.43bn riyals in the quarter from the corresponding period last year.

The earnings came in above the average analyst estimate of 1.28bn riyals, according to Bloomberg data. The three estimates ranged from 1.25bn riyals to 1.31bn riyals.

The gains came despite a 2 per cent drop in total operating profit due to a decrease in banking fees and other operating income.

Loans and advances fell 6.6 per cent to 116bn riyals in the first quarter while customer deposits increased 1.2 per cent to 172.3bn riyals, the bank said.

The fortunes of Saudi Arabian banks in general are improving on the back of a return to economic growth in the Arab world’s largest economy after it slowed down in the wake of a three-year oil slump that started in 2014.

The kingdom’s listed banks on aggregate reported a 9 per cent year-on-year increase in net profits in 2017, an improvement on a 5 per cent decline the previous year, due to lower interest expenses, prompting expectations of a credit-positive recovery in 2018, according to a Moody’s report published in March.

Saudi banks’ interest expenses declined 12 per cent last year, reflecting an improvement in domestic funding conditions after a significant tightening in 2016 because of falling oil prices.

The average cost of funds fell to 0.9 per cent in 2017, after doubling to 1 per cent in 2016.