Samba reports 30% rise in 2019 profit on operating income boost

The lender also reported strong growth in loans and advances and its customers' deposits last year

Samba Financial Group reports more than 30% rise in its full year 2019 net profit. AP Photo

Samba Financial Group, Saudi Arabia’s third-largest bank by assets, reported a 30 per cent rise in its full-year net profit as total operating income climbed.

Net income for the 12 months ending December 31 rose to almost 4 billion Saudi riyals (Dh3.92bn), the lender said in a statement to the Saudi Tadawul stock exchange, where its shares trade. Total operating profit rose 5.4 per cent at the end of last year to 8.6bn riyals.

The lender attributed the rise in its operating income mainly to “higher net special commission income, exchange income and trading income". A drop in zakat expense also helped bank’s net profit to grow. Expenses related to zakat –an Islamic tax - at the end of 2018 included settlement amounts relating to earlier years, which were not repeated in 2019, the lender explained.

The bank’s total revenue from special commissions, financing and investment activity climbed 11.8 per cent to 8.43bn riyals. Its assets at the end of last year also rose 11.2 per cent year-on-year to 255.6bn riyals, Samba said in the bourse filing.

Loans and advances surged 24.5 per cent to 141.6bn riyals at the end of 2019, while customer deposits rose almost 5.9 per cent to 180.2bn riyals.

“[The fourth quarter] is the second consecutive quarter of strong loan growth for the bank. Samba’s loan growth in third-quarter [of] 2019 was driven by USD-denominated deal flows,” Shabbir Malik, analyst at EFG Hermes, said.

“Samba was one of the leading banks on the Aramco IPO, from which the bank should have received sizeable fees and deposits,” he noted.

Saudi Arabia, the biggest Arab economy, is implementing wide-ranging economic and social reforms as it looks to cut dependence on hydrocarbons, grow domestic industries and diversify revenue streams.

Banks in the kingdom are benefiting from continued government investments in infrastructure, housing and industrial sectors, boosting mortgage and project finance markets in the country.

Analysts expect the operating conditions in Saudi and the wider Gulf to improve and credit growth to return as governments in the region shift focus from austerity to spending.