Saudi Arabia’s National Commercial Bank (NCB), the kingdom’s largest lender, posted a 2.6% fall in second-quarter net profit yesterday, missing analysts’ forecasts as fee income weakened and operating expenses rose.
NCB is the fifth Saudi bank to report earnings for the second-quarter. The sector’s performance is more mixed than in the first quarter when all of the top seven lenders but one - Al Rajhi Bank - reported higher profits.
NCB, which listed in November after the largest ever initial public offer of shares in the Arab world, reported a net profit in the three months to June 30 of 2.36bn riyals ($629mn).
This was below the 2.43bn riyals made in the same period of 2014, and off the 2.47bn riyals forecast by four analysts surveyed by Reuters.
“NCB reported weak results driven by lower non-interest income, which may be perceived negatively by the market,” Chiradeep Ghosh, banking analyst at SICO Bahrain, said in a research note. NCB’s non-interest income fell 15.7% year-on-year, according to SICO
Banks in the kingdom have generally enjoyed strong profits in recent years as surging oil revenues have helped propel lending.
NCB, Banque Saudi Fransi and SABB all reported higher operating expenses during the quarter, which was partly attributed to the lenders likely spreading bonuses to staff over four quarters, said Ghosh.
NCB’s loans and advances climbed by 13% year-on-year to 233bn riyals by the end of June, echoing generally-healthy double-digit loan growth across the other four banks that have reported so far.
This is despite flat sector-wide loan growth in May after the previous month’s 9.5% increase, which was a near-four-year low according to central bank data.