Banque Saudi Fransi first-quarter net profit up 12% on higher operating income

Impairment charges for credit losses fell 5.2 per cent on the year during the first three months of 2022

Banque Saudi Fransi's total operating income increased 7.3 per cent. Photo: Banque Saudi Fransi

Banque Saudi Fransi posted a 12 per cent increase in first-quarter net profit as operating income rose and expenses fell.

Net profit for the three months ending March 31 increased to 875 million Saudi riyals ($233m), Saudi Fransi said in a statement to the Tadawul stock exchange on Sunday.

The impairment charge for credit losses for the first three month of 2022 fell by 5.2 per cent year-on-year to 275m riyals that helped to cut operating expenses and improve operating income, the bank said.

“Net income increased mainly because of an increase in total operating income by 3.06 per cent,” the lender said.

Domestic credit growth is expected to “stay strong” in 2022-2023 after the 15 per cent surge last year as the government focuses on meeting its Vision 2030 strategy targets and Saudis seek loans for housing, S&P Global Ratings said in a separate report last week.

Banque Saudi Fransi's total operating income increased 7.3 per cent, mainly as a result of higher net special commission income, exchange income and other operating income. This was partially offset by a reduction in net fee and commission income and trading income, it said.

Total operating expenses also decreased largely because of a lower impairment charge for credit losses and other financial assets as well as salaries and employee-related expenses, it said.

This was partially offset by an increase in other operating costs and general and administrative expenses.

Lenders in Saudi Arabia will benefit from expected interest rate rises this year, as they record an increase in profit and register a potential shift from demand deposits to savings accounts, S&P Global Ratings said in another report this month.

For every increase in the benchmark interest rate of 100 basis points, banks in the kingdom are expected to record a rise in net profit of 13 per cent and return on equity of 1.5 percentage points, it said.

Saudi Arabia, Opec’s biggest oil producer, is recovering strongly from the effects of the pandemic. The kingdom’s economy is forecast to grow 7.7 per cent this year from 3.2 per cent last year, helped by higher oil prices and a “robust” non-oil sector, Jadwa Investment said in a report this month.