Al Rajhi Bank, Saudi Arabia’s second-largest lender by assets, reported an 18 per cent jump in its second-quarter net profit as total operating income rose on the back of the kingdom's economic recovery.
Net profit for the three months to the end of June climbed to 4.25 billion Saudi riyals ($1.13bn), compared with 3.6bn riyals during the same period last year, the bank said in a statement on Sunday to the Tadawul stock exchange, where its shares are traded.
Total operating profit for the period rose nearly 13 per cent to 7.1bn riyals, while net income from special commissions and investments increased by more than 10 per cent to 5.5bn riyals.
The “net income increased due to an increase in total operating income … caused by an increase in net financing and investment income, fees from banking services, and exchange income, while there was a decrease in other operating income”, the lender said.
Total operating expenses rose 3.7 per cent as a result of “an increase in depreciation expense, salaries and employees’ related benefits, and other general and administrative expenses”, the bank said.
Profit was also boosted by a 0.6 per cent decline in impairment charges for financing to 580 million riyals.
Banks in the kingdom, like their GCC peers, are recording improved operating conditions and increased profitability as Gulf economies continue to bounce back from the coronavirus pandemic slowdown.
Saudi Arabia's economy, the Arab world's largest, grew 9.9 per cent in the first quarter of 2022, the highest rate in a decade, the latest government data showed.
After strong expansion in 2020 and 2021, driven by mortgages, consumer loans and lending to small and medium enterprises, Saudi banks' credit growth is expected to stay strong at about 12 per cent in 2022, according to S&P Global Ratings.
Last month, the ratings agency said that the Saudi Central Bank’s 50bn-riyal support package for the kingdom’s lenders is expected to ease their near-term liquidity needs and help boost lending.
Al Rajhi's net profit for the six-month period to the end of June climbed about 21 per cent annually to 8.39bn riyals while operating income rose about 15 per cent to 14.1bn riyals during the period.
The bank's assets grew 30 per cent year-on-year to 709.7bn riyals in the first half of the year, while investments also rose nearly 30 per cent to 96.6bn riyals.
Customer deposits increased almost 24 per cent annually to almost 553bn riyals during the January-June period, the statement said.
