Saudi Arabia's Al Rajhi Bank posts 39% rise in 2021 profit as operating income grows

Total operating income up 24% as the kingdom's economy continues to recover

Net profit for year ended December reached $3.9bn. Ahmed Yosri / The National

Al Rajhi Bank, Saudi Arabia’s second-largest lender by assets, reported a 39 per cent rise surge in its 2021 net profit as operating income rose steeply on the back of the kingdom's economic recovery.

Net profit for year ended December reached 14.74 billion Saudi riyals ($3.9bn), the lender said in a statement on Sunday to the Tadawul Stock Exchange, where its shares are traded.

Total operating income was up 24.1 per cent a year in 2021 to 25.7bn riyals, thanks to an increase in net financing and investment income, which grew 21 per cent, fees from banking services, which rose 48 per cent, and other operating and exchange income.

Operating expenses during the period rose 4.1 per cent due to an rise in salaries and employee benefits, depreciation expenses and other administrative expenses. There was also an 8.3 per cent increase in impairment charges for financing.

"The bank, through its prudent risk management, has increased the provisions against the financing portfolio by more than 23 per cent compared to the previous year, which reflected positively on the strength of the bank's financial position, as the non-performing loans coverage ratio reached more than 306 per cent," said chairman Abdullah Al Rajhi.

He said the bank continued to "develop its investment and banking resources".

The lender's strong performance comes as Saudi Arabia's economy, the largest in the Arab region, continues to recover from the coronavirus-induced slowdown, driven by higher oil prices.

The International Monetary Fund expects the kingdom’s economy to grow 4.8 per cent in 2022, after expanding by about 2.9 per cent last year.

Other reports are more optimistic, with Japan' MUFG forecasting that Saudi's real gross domestic product will expand 7.6 per cent and Emirates NBD projecting growth of 6 per cent this year.

In November, Moody's Investors Service also changed the long-term ratings of nine banks in Saudi Arabia, including Al Rajhi Bank, to stable from negative, primarily driven by the lenders’ resilient performance and the expectation that the government’s capacity to support them will remain unchanged.

Al Rajhi Bank said its financing portfolio for 2021 increased 43 per cent to 453 million riyals while customer deposits rose 34 per cent to 512bn riyals.

Shareholders’ equity rose to 67bn riyals in 2021, an increase of 16 per cent, with earnings per share amounting to 5.9 riyals.

Total assets during the period increased 33 per cent to 624bn riyals.