Saudi Arabia's NCB reports 6% rise in Q1 income on operating profit

Net income for the three-month period ending March 31 rose to 3.16 billion Saudi riyals

Saudi Arabia’s National Commercial Bank, reported a 22 per cent drop in its second-quarter profit.  Michael Bou-Nacklie for The National

National Commercial Bank, Saudi Arabia’s biggest lender by assets, posted a 6 per cent year-on-year jump in its first quarter net profit as operating income rose despite an increase in provisions for bad loans.

Net income for the three-month period ending March 31 climbed to 3.16 billion Saudi riyals (Dh3.1bn), the lender said in a regulatory statement to the Tadawul Stock Exchange, where its shares are listed. Revenues from special commissions and investments rose to 4.9bn riyals, a 15 per cent rise from a year earlier, it added.

“Total operating income increased by 3.6 per cent mainly due to the increase in net special commission income, investment related income and lower other operating expenses," NCB said.

Total operating expenses at the end of the first three months of the year, however, rose by 0.7 per cent due to a jump in net impairment charges for financing and advances. Impairment allowance for bad loans climbed to 144m riyals at the end of the reporting period from 2m riyals in the same quarter of 2018, it added.

NCB’s loans and advances grew by 268.7m, a 6.3 per cent year-on-year rise, while customers’ deposits remained flat at 309.7m.

NCB, which counts Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, among its shareholders is looking to merge with rival Riyad Bank. If the proposed union goes ahead, it would create a financial institution worth $182bn (Dh668bn) in assets.

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

The tie-up would also be among a string of banking sector consolidations taking place across the GCC. Dubai Islamic Bank, the largest Sharia-compliant lender in the UAE on Tuesday said it is considering acquisition of its Dubai-headquartered competitor Noor Bank. The announcement follows the three-way merger between Abu Dhabi Commercial Bank, Union National Bank and Islamic lender Al Hilal Bank.