Quar­terly profit rises 12% for Al Ra­jhi Bank

The National - News - - BUSINESS - MICHAEL FAHY

Saudi Ara­bia’s big­gest re­tail bank, Al Ra­jhi Bank, re­ported a 12 per cent in­crease in third-quar­ter net profit as op­er­at­ing in­come grew and im­pair­ments fell.

The bank re­ported a net profit of 2.83 bil­lion Saudi riyals (Dh2.77bn) for the three months to Septem­ber 30, which was ahead of an­a­lysts’ ex­pec­ta­tions, as rev­enue also in­creased 12 per cent and op­er­at­ing profit rose al­most 14 per cent.

Although op­er­at­ing ex­penses also edged up 1.5 per cent, “there was a de­crease in im­pair­ment charges for fi­nanc­ing from 417.3 mil­lion riyals to 332.2, by 20.4 per cent”, the lender said in a state­ment to Saudi Ara­bia’s stock ex­change, Tadawul, where its shares trade.

“There was also a de­crease in salaries and employee-re­lated ben­e­fits ex­penses,” the state­ment added.

Net profit for the first nine months of the year grew 10 per cent to 8bn riyals, as op­er­at­ing profit grew 13 per cent to 14.48bn riyals. The bank also re­ported a 5 per cent growth in its loan book to 244.59bn riyals, while cus­tomer de­posits rose 3 per cent to 298.81bn. Over­all, the bank’s as­sets grew al­most 4 per cent to 368.28bn.

The bank’s shares were trad­ing 1.7 per cent lower at 59.2 riyals at 12.48pm UAE time yes­ter­day. A re­port on Saudi Ara­bia’s bank­ing sec­tor by EFG Her­mes an­a­lyst Shab­bir Ma­lik last week pointed out that val­u­a­tions across the sec­tor have dropped in re­cent months, and were trad­ing an av­er­age of 2 per cent higher so far this year, hav­ing been 33 per cent higher at the be­gin­ning of May.

EFG Her­mes had a neu­tral rat­ing on Al Ra­jhi Bank af­ter cut­ting its longer term earn­ings fore­casts following re­cent in­ter­est rate cuts by the US Fed­eral Re­serve, which are mir­rored by Saudi Ara­bia’s cen­tral bank given the riyal’s peg to the US dol­lar.

How­ever, the note also pointed out that Al Ra­jhi Bank re­mains “the dom­i­nant player in Saudi Ara­bia, par­tic­u­larly in the re­tail seg­ment”, with about 9 mil­lion cus­tomers and the big­gest net­work of branches (550) and point-of-sale ter­mi­nals.

“The bank of­fers a strong fund­ing pro­file with best-in­class cost of funds,” EFG’s re­port said.

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