Saudi's largest lender National Commercial Bank says profit rises on higher lending

Saudi Arabia’s National Commercial Bank (NCB), the kingdom’s listed largest lender, reported a 3.2 per cent rise in second-quarter net profit on Sunday, at the low end of analysts’ forecasts.

The bank made a net profit of 2.44 billion Saudi riyals (US$665 million) in the three months to June 30, up from 2.36bn riyals in the same period of 2015, it said in a bourse statement.

Four analysts had forecast on average that NCB would make a quarterly profit of 2.54bn riyals.

Saudi companies issue brief earnings statements early in the reporting period before publishing more detailed results later.

Deposits at the bank, which has close links to the government, shrank 12.8 per cent year-on-year to 314.71bn riyals at the end of June, continuing a decline seen in the first three months of 2016.

Lower oil prices are forcing Saudi lenders to adjust to tighter liquidity as the government uses revenues previously placed as deposits with banks to help plug its budget deficit.

The trend contrasts with previous years when Saudi banks were able to build up hefty deposits from revenues earned by the government from high oil prices.

Loans and advances at the end of June stood at 264.77bn riyals, up 13.0 per cent on a year earlier.

Quarterly operating income rose 6.8 per cent to 9.32bn riyals, while profits from special commissions increased 9.1 per cent to 6.72bn riyals.

The bank plans to expand overseas, growing its Turkey franchise while exploring new markets including Malaysia, Indonesia and Egypt, its chairman Mansour Al Maiman told Reuters in May.

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