SNB’s Q2 net profit up 9% to $1.33bn

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Saudi National Bank (SNB) said its second-quarter profit rose by 9 per cent from a year earlier, driven by higher operating income along with lower operating expenses, including a plunge in expected credit losses (provisions for bad loans).

The bank’s net profit surged by 9 per cent to reach $1.33bn (SAR5bn) in the three months to June 30. Net profit in the first six months of 2023 soared by 10.4 per cent to reach SAR10bn, compared to the same period a year ago while operating income rose by 4.8 per cent YoY to SAR17.2bn.

Provisions for credit losses fell 87 per cent year-on-year (YoY) in the quarter to SAR76m from SAR592m from the same period a year ago, supporting a 14 per cent decrease in total operating expenses to SAR2.7bn, SNB said in a bourse filing, while total operating income grew 2 per cent.

ارتفاع أرباح #البنك_الأهلي_السعودي بنسبة 10.4% ليصل إلى 10,037 مليون ريال سعودي بنهاية النصف الأول من 2023م

— البنك الأهلي السعودي (@snbalahli) July 25, 2023

The Saudi lender said its Q2 2023 operating income jumped by 2 per cent YoY to SAR8.5bn from SAR8.3bn for the same period in 2022, thanks to an increase in fees from banking services, foreign exchange income and investment income.

SNB said loans and advances grew 7.7 per cent in the first half while deposits grew 1.6 per cent. However, customer deposits are up 6 per cent year to date from the end of December.

The overall balance sheet expanded by 5 per cent during the period compared to the year ended December 31 2022, driven by a 6 per cent growth in financing.

SNB’s exposure to Credit Suisse

Meanwhile, SNB said in May that its 9.88 per cent shareholding in Credit Suisse Group will convert to approximately 0.5 per cent of UBS Group following the completion of the merger between the two Swiss banks.

The bank’s investment of SAR5.5bn in Credit Suisse plunged by approximately 20 per cent by the end of 2022 and further declined by 70 per cent during the first three months of 2023. The carrying value of the investment at the end of March was SAR1.3bn.

However, despite the financial impact on SNB’s equity, the lender said, “There was no income statement impact as SNB had made an irrevocable election, as permitted by the accounting standards, to present subsequent changes in the fair value of the Credit Suisse investment through other comprehensive income.”

Fitch Ratings said in March that UBS’s takeover of Credit Suisse would have a neutral impact on SNB’s A- rating, due mainly to the limited contribution of the Credit Suisse investment to the Saudi lender’s group asset portfolio of less than 0.5 per cent of total assets.

Earlier in July, Swiss daily newspaper, Blick reported that SNB wanted to raise its stake in Credit Suisse to 40 per cent ahead of the Swiss bank’s collapse in March.

Read: How Saudi Arabia’s banking system is building a solid future