DUBAI: Al Rajhi Bank posted a fourth successive quarterly profit decline as its second-quarter earnings fell 8.2 percent year-on-year, with Saudi Arabia’s largest listed lender hit again by higher provisioning.
The bank said it made SR1.95bn ($520m) in the three months ending June 30, compared with SR2.12bn in the same period a year earlier, citing an increase in total operating expenses for the drop without elaborating.
Saudi companies issue brief earnings statements early in the reporting period before publishing more detailed results later.
The last three quarters saw earnings dragged down by higher provisioning and higher operating expenses in this quarter has been interpreted to mean rising impairments. “It seems there is a one off charge but overall Al Rajhi will always have a higher cost of risk due to its retail focus,” said Ali Adou, fund manager at Abu Dhabi-based The National Investor.
“For corporate clients, the only risky exposure is to the contracting industry where banks have high lending. The impact from labour shortage on the contracting sector will continue for the coming quarters,” he added.
Some firms in the kingdom, especially construction companies, have reported their earnings have been adversely affected since a crackdown in late 2013 on illegal foreign workers and new laws aimed at employing more Saudis — who usually command higher salaries than expatriates.
Al Rajhi’s quarterly profit decline stands against the positive earnings performance reported by most other Saudi lenders — yesterday, Samba Financial Group became the latest bank to beat forecasts with a 7 percent year-on-year gain in net profit.
Reuters
