Investors sold shares of Arab National Bank (ANB) after the Saudi lender announced a 7.4 per cent decline in profits for the first quarter because of the increased operating expenses.
Net income fell to 587 million riyals, from 634m riyals in the same period last year. Earnings per share for the quarter was 0.69 riyals, down 9 per cent from last year.
Relatively low interbank borrowing rates in Saudi Arabia, known as Sibor, has hurt the profitability of banks across the kingdom as net interest income has declined, said Faisal al Azmeh, an analyst at NCB Capital in Riyadh. Three-month Sibor is at 0.75 per cent.
Net interest income at ANB was down 1 per cent year on year and 5 per cent quarter on quarter.
The lender, listed on the Saudi Tadawul, declined 2.2 per cent to 34.10 riyals after the news was released yesterday. Mr al Azmeh has a "neutral" rating on the stock, with a fair value of 34.60 riyals.
The bank is likely to play to its strengths and focus on the retail and commercial loan segments where loan growth is improving, he said.
Retail growth should be driven by a restructured and sales-focused branch network. ANB has the country's fourth-largest network.
Loan growth for the quarter was up 3 per cent on the same period last year, while deposits were up 14 per cent and 5 per cent compared with the previous quarter.
Total operating expenses, including provisioning charges, were up 32 per cent in the first quarter compared with that period last year. Analysts are awaiting further details on loan-loss charges as the bank has not yet filed the full financials.
ANB's coverage ratio is more than 100 per cent, complying with the country's central bank regulations, Mr al Azmeh said.
The bank's credit quality declined in 2009 because of its exposure to major defaults in Saudi Arabia. But ANB booked provisions to improve its coverage ratio from 75.9 per cent for 2009 to 108.1 per cent for last year.
Specs
'Gold'
Director:Anthony Hayes
Stars:Zaf Efron, Anthony Hayes
Rating:3/5
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A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
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Infobox
Western Region Asia Cup Qualifier, Al Amerat, Oman
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Monday fixtures
UAE v Kuwait, Iran v Saudi Arabia, Oman v Qatar, Maldives v Bahrain
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All or Nothing
Amazon Prime
Four stars
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The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
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RESULT
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