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Saudi’s Samba bank reports drop in profits as economy slows

Saudi’s Samba bank reports drop in profits as economy slows

RIYADH: Samba Financial Group , Saudi Arabia’s third-largest bank by assets, joined other major banks to have suffered falling profits this quarter as the kingdom struggles with tepid economic growth and subdued levels of spending.

Samba reported a 2.3 percent drop in first-quarter net profit on Thursday, broadly in line with analysts’ forecasts, as operating expenses rose. It is the seventh major bank in the kingdom to report earnings this quarter, with four of them reporting declining profits, reflecting subdued levels of spending by the government and consumers and slower economic growth. Samba made a profit of 1.23 billion riyals ($328 million) in the three months to March 31, down from 1.26 billion riyals in the same period a year earlier, it said in a bourse statement. Three analysts polled by Reuters had on average forecast the bank would make a quarterly net profit of 1.18 billion riyals. Operating expenses for the bank rose by 9.8 percent from the year earlier period, mainly due to an increase in credit costs.

Saudi companies issue brief earnings statements early in the reporting period before publishing more detailed results later. Operating income for the quarter rose by 2.0 percent on the corresponding period of 2016 to 1.98 billion riyals, while profits from special commissions increased 8.5 percent over the same timeframe to 1.36 billion riyals. Loans and advances at the end of March stood at 124.3 billion riyals, falling 6.1 percent on the same point of 2016, while deposits dipped 4.4 percent to 170.4 billion riyals over the same period. Deposit levels at some banks have fallen after the government withdrew cash from banks to help bridge the budget deficit. The deposits were parked with banks when oil prices were high.