Saudi National Bank 2022 net profit up 47% on higher income and lower impairments

The kingdom’s largest lender reported that total operating income rose by about 17% during the year

SNB posted full-year net profit of about $5 billion. Michael Bou-Nacklie / The National

Saudi National Bank, the largest lender in Saudi Arabia by assets, reported a 47 per cent increase in its full-year net profit, driven by an operating income increase and lower net impairment charges as the kingdom's economic recovery continues.

Net profit for the year ended December rose to about 18.6 billion Saudi riyals ($5 billion), from the previous year, the lender said in a filing on Wednesday to the Tadawul Stock Exchange, where its shares are traded.

The results beat the average analyst estimate of 18.2 billion riyals, according to Refinitiv data.

SNB, which bought a stake of about 9.9 per cent in troubled Swiss investment bank Credit Suisse last year, said total operating income increased by about 17 per cent to 9.35 billion riyals during the year.

This was driven by an 18.4 per cent jump in net special commission income, a 21 per cent increase in fee income from banking services and other operating expenses that fell 12.4 per cent.

Net impairments, or total provisions for expected credit and other losses, dropped more than 57 per cent to 1.69 billion riyals.

The aggregate net profit of Saudi Arabia's 10 largest banks increased by 9.3 per cent on quarterly basis in the third quarter of 2022, driven by higher interest rates and lower impairment charges, according to professional services consultancy Alvarez & Marsal.

SNB's total assets for the year increased 3 per cent at 945 billion riyals while loans and advances jumped 9.6 per cent to 545 billion riyals.

Customer deposits declined by an annual 3.5 per cent to 568 billion riyals.

Last month, SNB raised its paid-up capital by 15.22 billion Saudi riyals after it issued a bonus share for every three owned by shareholders.

SNB's board recommended to shareholders to approve the increase in capital by about 34 per cent to 60 billion riyals, from 44.78 billion riyals, through the issuance of bonus shares.

The recommendation is intended to strengthen the bank's financial position, “which contributes to achieving its strategic objectives”, the bank said in the bourse filing at that time.

The capital increase came from the bank’s retained earnings — the portion of net income retained after paying dividends.

The bank, which is 37 per cent owned by the kingdom’s sovereign wealth fund, the Public Investment Fund, also announced last month that it would pay a cash dividend of 2.67 billion riyals, or 0.60 a share, to shareholders for the second half of 2022.

SNB, was created through the merger of National Commercial Bank and smaller rival Samba Financial Group in 2021.