Al Rajhi Bank, Saudi Arabia’s second-largest lender by assets, reported a 24 per cent jump in its first-quarter net profit as total operating income rose on the back of the kingdom's economic recovery.
Net profit for the three months to the end of March climbed to 4.1 billion Saudi riyals ($1.1bn), the bank said in a statement to the Tadawul stock exchange, where its shares are traded. Total operating income for the period rose 17 per cent to 7bn riyals. Total income from special commissions and investments also surged 20 per cent to 6bn riyals.
“Net income increased due to an increase in total operating income … caused by an increase in net financing and investment income, fees from banking services, other operating income and exchange income,” the bank said.
Total operating expenses rose 5.3 per cent due to an increase in salaries and employees’ related benefits, depreciation expenses and other general and administrative expenses, the bank added.
Total assets jumped 28 per cent to 658bn riyals, while customer deposits rose 21 per cent to 508bn riyals.
Saudi Arabia, the Arab world’s largest economy and Opec’s biggest oil producer, recovered strongly from the coronavirus 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.
The International Monetary Fund also revised its growth forecast for the kingdom in its latest World Economic Outlook on the back of higher oil prices.
Saudi Arabia's economy is now predicted to grow 7.6 per cent this year, up 2.8 percentage points from the IMF's January estimates, and 3.6 per cent in 2023, up by 0.8 percentage points from the previous estimates, the Washington-based fund said last week.
Banks' domestic credit growth is expected to “stay strong” in 2022-2023 after the sharp 15 per cent surge last year as the government focuses on meeting its targets as part of the vision 2030 strategy and Saudi nationals seek loans for housing, S&P Global Ratings has said.
Lenders will also benefit from expected interest rate rises this year, as they experience an increase in profit and register a potential shift from demand deposits to savings accounts, the ratings agency said.
Al Rajhi Bank announced a $4bn capital increase plan to grow its business earlier this year.
