SNB posts 12% jump in Q1 net profit on operating income boost

Saudi National Bank, the largest lender in Saudi Arabia by assets, reported a 12 per cent increase in its net profit for the first quarter of 2023, driven by higher operating income, as the kingdom’s economy continues to post strong growth.

Net profit for the three months to the end of March reached 5 billion Saudi riyals ($1.33 billion), from 4.5 billion riyals in the same period last year, the lender said in a filing to the Tadawul Stock Exchange, where its shares are traded.

Total operating income improved by 8 per cent to 8.7 billion riyals, driven by an increase in net income from special commissions and financing, and investments driven by margin and balance sheet expansion, SNB said.

Reflecting on the impact on its first-quarter earnings from SNB’s investment in Credit Suisse from the merger with UBS, the Saudi lender said its shareholding in Credit Suisse of 9.88 per cent will “convert into a shareholding in UBS of approximately 0.5 per cent upon completion of the merger”.

SNB had acquired a 9.88 per cent stake in Credit Suisse in October last year for 5.5 billion riyals as a financial investment allocation within the Saudi bank’s investments portfolio.

As of December 31, SNB’s investment in the Swiss lender had declined by about 20 per cent, with a further drop recorded in the January to March period.

“The financial impact on SNB’s balance sheet was a decline in the Credit Suisse investment carrying value by approximately 70 per cent during the first quarter [the carrying value of the Credit Suisse investment as at March 31, 2023 was 1.3 billion riyals],” it said.

However, in March, SNB said its growth plans and profitability were unaffected by the lower valuation of its investment in Credit Suisse.

The disclosure followed UBS’s announcement to buy Credit Suisse in an all-share deal for $3.2 billion as part of a state-backed rescue deal.

SNB appointed Saeed Al Ghamdi as its new chairman in March, following the resignation of Ammar Al Khudairy due to “personal reasons”.

Total operating expenses before provisions for credit and other losses were stable at 2.4 billion riyals in the first three months of this year. Hence, cost-to-income ratio improved annually, SNB said.

The lender’s overall balance sheet expanded by 3 per cent in the first quarter, compared with December 31. The bank has also “maintained healthy capitalisation levels and a strong liquidity position”, it said.

However, SNB’s net impairment charge for expected credit losses increased by 28 per cent annually to 493 million riyals for the JanuaryMarch period.