Saudi banks’ profits shake off fall in oil

Saudi Hollandi, Bank Al Bilad and Riyad Bank reported strong growth in earnings for the three months ended December.

Some of Saudi Arabia’s biggest banks kicked off earnings season in the kingdom yesterday with bumper fourth quarter profits.

Saudi Hollandi, Bank Al Bilad and Riyad Bank yesterday reported strong growth in earnings for the three months ended December.

Saudi Hollandi said its fourth quarter net income increased 33 per cent to 461.9 million riyals (Dh452.4m), while Bank Al Bilad’s quarterly income rose 16.5 per cent to 249m ryals.

Meanwhile, Riyad Bank said its fourth quarter income rose by about 3 per cent, or 1.06 billion riyals.

Crude oil, the main driver of the country’s economy, suffered a price collapse in the second half of 2014, losing about half of its value. That might reduce the amount of cash flowing into bank coffers and consequently the amount of money that banks are willing to lend, reducing revenues and profit. So far however, lenders in the kingdom are still benefiting from increased consumer spending and appetite to take on debt.

Elsewhere, Bloomberg News reported that Banque Fransi, one of the top 10 lenders in Saudi Arabia by market capitalisation, plans to open its first office outside of the kingdom ahead of a possible opening up of the country’s stock market to foreigners.

The bank expects approval to start operating in the Dubai International Financial Centre this month, Yasir Al Rumayyan, the chief executive of the unit, said yesterday. Saudi Fransi Capital International, as the Dubai office is to be named, will focus on asset management and brokerage activities.

The largest economy in the oil-producing GCC may open the stock market to overseas investors from April, three sources said last month. The move could attract as much as US$40bn of foreign cash into the $478bn exchange, the British asset management company Schroders said last July.

“We want to be well positioned ahead of the Saudi market opening up to foreign investors,” Mr Al Rumayyan said. “The Dubai office will focus on attracting foreign flows into our Saudi investment funds and asset management business.”

Muskan Thacker, the head of asset management and chief investment officer at Saudi Fransi Capital, will become chief executive of Saudi Fransi Capital International, said Mr Al Rumayyan. Shahjahan Mirza, currently deputy chief information officer at Saudi Fransi Capital, will become chief investment officer.

Banque Saudi Fransi was the sixth-largest broker in the kingdom last year, according to data from the stock exchange.

* with Bloomberg News

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