SNB to hold 0.5% stake in UBS Group after merger with Credit Suisse

Saudi National Bank (SNB) said 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.

Credit Suisse was acquired by UBS in March for $3.2bn (CHF3bn) in a deal that was brokered by the Swiss government to stem the global banking crisis that was unleashed by the failure of two American banks earlier that month.

SNB said its investment of $1.5bn (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, SNB said in a bourse.

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.”

In March, Fitch Ratings said 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.

SNB’s Q1 2023 performance

Meanwhile, SNB said its net profit in the three months to March 31 increased by 12 per cent to SAR5bn compared to SAR4.5bn the same period a year earlier, driven by higher fees and gains from investments.

The bank said that its operating income rose almost 8 per cent in Q1 2023 to SAR8.7bn, thanks to an increase in income from special commissions and financing and investments, which were up almost 11% year on year.

SNB’s overall balance sheet expanded by 3 per cent compared to 31 December 2022, driven mainly by a 4 per cent growth in financing, 3 per cent growth in retail principally from 4 per cent mortgages growth and 4 per cent wholesale financing growth. Similarly, customer deposits rose by 8 per cent in the first quarter, although were only about 0.7 per cent higher year on year.

The said net impairment charge for expected credit losses in the first quarter reached SAR493m, up 28 per cent against SAR386m in the same period in 2022. SNB, which was founded in 2021 through the merger between Samba Financial Group and the National Commercial Bank, now commands about 30 per cent of the overall banking market in Saudi Arabia.

Read: Saudi National Bank to raise capital in Credit Suisse by $4.1bn