Riyad Bank has more bad news on earnings

Bank posts fall of 16.5 per cent in second-quarter net profit

It was the second consecutive disappointing quarter for Riyad Bank, Saudi Arabia's third-largest lender. The bank posted a fall of 16.5 per cent for its second-quarter net profit, mainly as its lending income declined for the second straight quarter. Riyad Bank made 766 million riyals in the quarter to the end of last month, down from 918m riyals in the same period last year, according to a statement posted on the Saudi bourse website last weekend. In April, Riyad Bank said its profits rose 55 per cent, but it still missed analysts' estimates. Yesterday the stock rose 1 per cent to 28.20 riyals. Banking and financial institutions in the kingdom are still struggling to clear their retail and corporate lending books of bad debt racked up since the financial crisis hit the region in 2008. For the second quarter, net lending income, known in Saudi Arabia as special fees net income, fell 10.5 per cent to 1.03 billion riyals, after a 9 per cent decline in the first quarter.

Riyad's loans remained almost unchanged at 104.7bn riyals by the end of last month while they were up 6.1 per cent at the end of the previous quarter at 106.3bn riyals. Income from banking services - brokerage, investment and foreign exchange operations - rose by almost 33 per cent to 499m riyals during the second quarter, based on calculations by Reuters. Operating income remained almost unchanged at about 1.53bn riyals. This means operating costs rose 25.6 per cent to 761m riyals, from 606m riyals in the second quarter of last year, but less than the 785m riyals in the first quarter.

In addition to salaries, operating costs include provisions for non-performing loans and investments. The bank made no mention of the size of provisions for non-performing loans it had to make during the second quarter. Those provisions totalled 194m riyals in the first quarter of this year. For the first half of this year, earnings per share rose 6.6 per cent to 0.97 riyal and the bank's board decided to distribute 0.60 riyal of it as a dividend.

* with Reuters