Saudi British Bank posts Q2 loss as merger-related costs increase
Lender's tie-up with Alawwal bank has created the third-biggest bank by assets in the kingdom
Saudi British Bank (Sabb) reported a net loss of 254 million Saudi riyals (Dh248.7m) in the second quarter of the year, compared to a net profit of 833m riyals during the same period last year.
The quarterly loss was mainly attributed to an increase in provision for credit losses and an increase in operating expenses, which included 75m riyals for integration planning and transaction costs relating to its 18.6-billion riyal merger with Alawwal bank.
Total operating profit for the reporting period surged 5 per cent to 1.98bn riyals, the lender said in a statement to the Tadawul stock exchange, where its shares trade.
Revenues from special commissions and investments rose to 1.95bn riyals in the second quarter of this year, from 1.63bn riyals during the same period last year.
The lender also said its net profit for the first six months of 2019 dropped 52.9 per cent year-on-year to 851m Saudi riyals due to higher total operating expenses driven by an increase in provisions for credit losses.
“The first half of 2019 witnessed the historic merger of Sabb and Alawwal bank, uniting the legacies and resources of two of the oldest banks in the kingdom, with legal effect on June 16 2019,” said Lubna Olayan, chairman of Saab.
"For the six-month period ending June 30, 2019, the merged bank generated a profitable return even after taking into account extraordinary costs and one-off credit losses related to the merger, all of which were in line with our expectations," she said.
Ms Olayan said the integration of the two banks was progressing well, and the board and management team were focused on delivering it successfully.
“Our balance sheet and capital base remain strong and will continue to underpin our lending growth capacity as we seek to support our customers," she said.
Following its merger with Alawwal bank, Sabb’s customer deposits, loans and total assets grew to 196bn riyals, 158bn riyals and 270bn riyals, respectively, creating the kingdom’s third-largest bank, second-largest corporate lender and fourth-largest retail lender, Saab said.
Updated: August 6, 2019 05:12 PM