Saudi National Bank reports 20% jump in first quarter profit as economy rebounds

Net impairments for expected credit losses dropped 29% to $74.6m

SNB, created through the merger of NCB and Samba Financial Group, on Monday reported a 20% rise in its first quarter net profit. Michael Bou-Nacklie / The National

Saudi National Bank, the country’s biggest lender, said first quarter net profit jumped 20 per cent, boosted by higher fee income and lower impairment charges as the kingdom's economy rebounds from the Covid-19 pandemic.

Net income for the three months to the end of March climbed to 3.4 billion Saudi riyals ($907 million), SNB said in a statement on Monday to the Tadawul stock exchange, where its shares trade. However, it missed EFG Hermes’ forecast of 3.9bn riyals net profit for the period.

Quarterly operating profit climbed 8.8 per cent to 5.77bn riyals, helped by a 0.5 per cent rise in net income from special commissions and financing and investment activities to 4.18bn riyals.

Higher quarterly net profit was "derived from higher total operating income and lower total operating expense including impairments", which was partially offset by a rise in other "non-operating expense", SNB said.

Net impairments for expected credit losses dropped to 280m riyals at the end of March, from 396m riyals recorded for the same period a year earlier, a sign that businesses in the kingdom are stabilising as the economy continues to recover from the impact of the Covid-19 pandemic.

The IHS Markit Saudi Arabia Purchasing Managers’ Index stood at 53.3 in March, down from 53.9 in February, a slightly softer, but relatively solid upturn in the performance of the non-oil private sector economy. A reading above a neutral 50 level indicates economic expansion and below points to a contraction.

Non-oil businesses in the kingdom, the Arab world's largest economy, continued to see expansions in output and purchasing, and a stabilisation in job numbers that aided efforts to reduce outstanding work.

SNB was created through the merger of National Commercial Bank and its smaller rival Samba Financial Group. SNB, which began operating on April 1, has more than 896bn riyals in assets.

"The merger has likely created a national champion with an enhanced franchise value. Therefore, alongside modest cost savings and synergies, we expect restructuring costs to be contained," S&P Global Ratings said in an April 12 note.

On Monday, SNB said total investments at the end of the first quarter climbed to 149.66bn riyals from 133bn riyals a year earlier. The bank’s loans and advances portfolio jumped 17 per cent year-on-year to 356.72bn riyals, while its clients’ deposits grew almost 12 per cent to 419.43bn riyals.

The Public Investment Fund, the kingdom’s sovereign investment arm, is the biggest shareholder in SNB with a 37.2 per cent stake. The Public Pension Agency controls 7.4 per cent and the General Organisation for Social Insurance owns 5.8 per cent.