Major Saudi banks continue to post strong results

16 April 2015

Profits up for most lenders in the kingdom

  • Saudi banks post strong growth in first quarter
  • Only bank to report loss is Al-Rajhi Bank
  • Lending activity slows

More major Saudi banks have posted strong profit growth for the first quarter of the year, compared with the same period last year, despite slowing loan growth.

National Commercial Bank (NCB), Samba Financial Group, Saudi Hollandi Bank, and Sabb have all reported increased profits for the first quarter of the year. The only bank to post a major decline in profit was Al-Rajhi Bank, which posted an 11 per cent fall in profits compared with the first quarter of 2014.

The banks are still increasing their loanbooks, but the rate of growth is beginning to slow in the kingdom. The past two quarters have seen far lower growth rates compared with the rates recorded in the first half of 2014.

A lack of confidence in the market surrounding the impact of low oil prices is one factor analysts blame for the slowing lending activity.

The retail banking sector is the most hard-hit in the kingdom, as demonstrated by Al-Rajhi’s results.

The bank’s first-quarter loanbook grew by 6 per cent compared with the first quarter last year, but lending is slowing on a quarterly basis.

There are limited opportunities for lending in the retail market this year, say analysts.  

This is due to reduced mortgage lending as a result of new regulations. 

Opportunities for personal loans are also weakening due in part to two-month bonus salaries paid in February, says a research note from Dubai-based Shuaa Capital dated 7 April.

Saudi Hollandi Bank is the latest institution to post a hike in profits. The bank’s first-quarter profits stood at SR538m ($143m), marking a growth of close to 30 per cent on the same quarter the previous year. It is also up by 17 per cent on the previous quarter, according to a note on the Saudi Stock Exchange (Tadawul) issued on 15 April.

Saudi Hollandi Bank’s results follow NCB’s results. It is the first time the bank has announced first-quarter results following its initial public offering (IPO) last year.

Saudi Hollandi Bank reported profits of SR2.6bn, a 2.8 per cent increase on the first quarter of 2013.

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