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Abu Dhabi, UAESaturday 23 February 2019

Saudi lender NCB grows profits by 8% in 2018 on lower expenses

Full-year net profit rises to 10.67bn riyals in line with analysts’ estimates

NCB, Saudi's largest bank by assets, reported an 8% rise in net profit for the full-year 2018. Michael Bou-Nacklie for The National
NCB, Saudi's largest bank by assets, reported an 8% rise in net profit for the full-year 2018. Michael Bou-Nacklie for The National

National Commercial Bank, Saudi Arabia’s biggest lender by assets, reported an 8.8 per cent year-on-year increase in 2018 annual profit thanks to rising income and lower operating expenses.

Full-year net profit rose to 10.67 billion riyals, in line with the average estimate of 10.58bn riyals of three analysts polled by Bloomberg.

Full-year operating income rose 3 per cent year-on-year to 18.93bn riyals, NCB said on Tuesday in a filing to the Tadawul stock exchange, where its shares are listed.

NCB, which said in December it is in preliminary talks to merge with rival Riyad Bank, cited higher operating income and lower expenses as the key reasons for the profit rise.

Total operating income increased mainly due to an uptick in commission income, fees from banking services, foreign exchange income and other income, it said in the bourse filing.

Total operating expenses were 3.7 per cent lower in 2018 than the previous year, mainly due to a decrease in net impairment charges for financing and advances. Equipment and software expenses, rent, salaries and general administrative expenses also fell.

Total assets rose 1.9 per cent to reach 453.3bn riyals, NCB added.

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If the proposed merger with Riyad Bank goes ahead, it would create a financial institution worth $182bn (Dh668bn) in assets.

The potential deal, which is under consultation, would be the second merger of banks in the kingdom, following that of Saudi British Bank and Alawwal Bank, subsidiaries of the HSBC and Royal Bank of Scotland respecitvely, which was agreed last year.

It would also be the latest in a string of banking sector consolidations taking place across the GCC.

After a challenging few years of low oil prices, tighter liquidity and squeezed profit margins, regional banks are set to see stronger performance in the year ahead as macroeconomic conditions improve and demand for credit grows, according to reports by rating agencies Moody’s Investors Service and S&P Global Ratings towards the end of 2018.

Updated: January 22, 2019 04:07 PM

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