Saudi Arabian lender Al Rajhi reports 20% rise in fourth quarter net income

Net profit beats analysts' estimates as fees and financing investments income climbs

Al Rajhi Bank on Tuesday said its second quarter net income rose 3.4 per cent. Bloomberg

Al Rajhi Bank recorded a 19.8 per cent rise in its fourth-quarter net profit, beating analysts' estimates, as fees and financing investments income climbed at Saudi Arabia's biggest lender by market capitalisation.

Net profit in the three-month period to the end of December reached 2.45 billion riyals ($653.4 million), up from 2.05bn riyals in the year-earlier period, it said in a regulatory filing to the Saudi Stock Exchange (Tadawul), where its shares are traded. The quarterly profit beat the highest estimate of 2.38bn riyals in a Bloomberg analyst survey.

The bank attributed the growth in profitability to a 10 per cent increase in total operating income boosted by an 8.1 per cent and 18 per cent advance in financing and investments and fee income, respectively. Al Rajhi, which has now reported profit increases  in nine consecutive quarters, said a 1.1 per cent decline in total operating expenses also helped lift profitability .

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Most banks in the six-member economic bloc of the GCC have struggled to maintain profitability in the past two years amid lower oil prices and slowing economic growth, which dented demand for credit. Al Rajhi, which largely focuses on consumer banking, has fared relatively better than others.

Bank profits are expected to improve in the kingdom along with credit demand this year as the government continues to buoy the economy through an expansionary budget and implements a 72bn riyal stimulus programme to spur private sector growth.

The bank's full-year 2017 profit also rose 12.2 per cent to 9.12bn riyals, up from 8.13bn royals  in 2016, according to the statement.

Loans and advances at the end of December 2017 reached 233.54 billion riyals, a 3.8 per cent rise from 224.99bn riyals reported at the end of 2016. The bank's assets  increased 1 per cent to 334.11bn riyals last year while customers deposits reached 273.05bn riyals, up by 1 per cent from 2016.