Saudi Arabia's National Commercial Bank reported a 20 per cent year-on-year increase in third quarter net profit as it benefitted from higher operating income and investment-related income, as well as lower costs.
The company reported a net profit for the quarter of 2.55 billion Saudi riyals (Dh2.5bn), beating analysts' expectations, as total revenue from special commissions, financing and investments rose 4.9 per cent to 4.93 billion riyals.
"Total operating income increased by 5.9 per cent mainly due to the increase in net special commission income, investment related income and lower other operating (expense), which partially [is] offset by a decrease in fee income from banking services and exchange income," the company said in a statement to Tadawul, where its shares trade.
NCB, Saudi Arabia's largest bank by assets, has been in merger negotiations with Riyad Bank since December last year. If the deal were to complete, it would create a bank with assets of about 744 billion riyals (Dh734.5bn). By the end of September, NCB's assets were 8 per cent higher year-on-year at 498 billion riyals.
For the nine-month period, the bank reported a 16 per cent increase in net profit to 8 billion riyals on a 9 per cent increase in revenue of 14.58 billion riyals.
Both customer deposits and loans and advances increased at a similar pace, at just under 5 per cent, to 340.38bn riyals and 280.53bn riyals, respectively, despite the fact that interest rates in the kingdom fell in line with cuts made to the US Federal Reserve's rates in the quarter, given the riyal's peg to the US dollar.
"The results show that NCB has been able to keep rates pressure at bay, and credit quality is relatively stable. Earnings surprised, mainly because of lower-than-expected provisioning," said Shabbir Malik, banking analyst at EFG Hermes.
