RIYADH (Reuters) – Riyad Bank, Saudi Arabia’s sixth largest bank by market value, said it made a third-quarter net profit of 716 million riyals ($190.9 million), up 10 percent from the year-earlier period.
Analyst forecasts of the bank’s third quarter earnings ranged from 731.37 million riyals to 839 million riyals, according to a Reuters survey last month.
A statement posted on the bourse Web site said operating income was 3.83 billion riyals in the nine months to September, up 6 percent year-on-year. Earnings per share grew to 3.55 riyals in the same period, up from 3.53 riyals a year ago.
The bank posted the 10 percent growth partly through aggressive lending but profit growth slowed compared to the second quarter due mainly to a continuing decline in stock activity.
Riyad Bank had outperformed listed Saudi banks in earnings growth in the second quarter, when its net profit rose 24.3 percent to 848 million riyals.
Net interest income reached 839 million riyals in the third quarter, up 17 percent from the year-earlier period and up 1.7 percent from the second quarter of 2007.
“The bank continued to focus on core banking activities,” Chairman Rashed Abdul-Aziz al-Rashed said in the statement.
Loans in the nine month period stood at 64.8 billion riyals, up 28 percent from their level a year earlier, more than double the growth in deposits which totalled 76.4 billion riyals at the end of last month, the bank said.
Non-interest income, made up mainly of brokerage commissions, reached 408 million riyals in the third quarter, down 2.2 percent from a year ago and down 25.6 percent from the second-quarter of 2007, according to Reuters calculations.
“The volume of trade in the stock market slid by some 17 percent in the third quarter compared to its level in the second quarter … This does not help the recovery process of banks,” said Ibrahim al-Alwan, deputy chief executive of KSB Capital, which had forecast a third-quarter net profit of 804 million riyals for Riyad Bank.
“This said, Riyad is faring well in the recovery process. It has continued to be aggressive on lending,” Alwan said.
In September, the bank said it planned to raise 13.13 billion riyals through a rights issue which would increase its capital by 140 percent and beef up reserves.
“The planned capital increase shows that they are getting really aggressive on lending. It’s a huge capital increase. A great chunk of it will be directed to fund major projects which might not yield high income but represents lower risk compared to retail lending,” Alwan added.