RIYADH, 20 July 2006 — Saudi Hollandi Bank (SHB) recorded a SR681 million operating profit for the first half of 2006, an increase of 33 percent compared with the corresponding period of 2005.
SHB’s net profit of SR365 million for the period ended June 30, 2006, however, showed a decline of 20 percent compared to the first half results last year of SR456 million. The 2006 first half net result was impacted by SR295 million provisioning in the second quarter, mainly due to a one-off credit provision amounting to SR274 million. Excluding the one-off credit provision, the bank’s first half-year net result for 2006 would have been 40 percent higher than the same period last year.
Giel-Jan van der Tol, managing director, commented: “At the end of the second quarter, SHB conducted a thorough review of its credit portfolio which resulted in a one-off credit provision related to a very small number of credits. Although the one-off credit provision had a material impact on the bank’s profitability in the second quarter, it has limited effect on the bank’s excellent financial position. In addition, our operating performance is solid and shows continuing positive developments across all business lines.”
Total assets as of June 30 amounted to SR44.5 billion, an increase of 27 percent over the previous year, mainly attributable to loans and advances to customers that grew by 38 percent from SR18.8 billion to SR26.0 billion. Customer deposits grew by 32 percent reaching SR32.4 billion by June 30 compared to SR24.5 billion as at June 30, 2005, while the bank’s investment portfolio, which is comprised of financial instruments denominated in Saudi riyals and US dollars, increased by 8 percent to SR10.5 billion. As a result of the one-off credit provision in June 2006, net earnings per share for the first half of 2006 declined from SR2.07 to SR1.66, while return on equity was 19.3 percent (2005: 27.4 percent) and return on assets recorded 1.6 percent (2005: 2.6 percent).
SHB affirmed its robust position in the corporate banking and structured finance segment. In May, SHB and ABN Amro closed the landmark $3.5 billion multi-sourced project finance transaction for the construction of Saudi Basic Industries Corp.’s (SABIC’s) Yanbu National Petrochemical Company (YANSAB) petrochemical plant. SHB was financial adviser, mandated lead arranger and sole book runner in conjunction with ABN Amro. This was the largest Greenfield project finance mandate awarded in the history of Saudi Arabia. The bank’s corporate finance team is engaged in more than 10 initial public offerings (IPO’s), of which the Red Sea Housing Services Co. IPO will be the first to be launched on Aug. 12, 2006.
With the appointment in April of Philip King as general manager for consumer banking, SHB will further expand its consumer banking business. SHB’s consumer lending book continued to show healthy growth in the first half of 2006, supported by record sales of credit cards.
In recognition of the sound operating results for the first half of 2006 and the bank’s strong financial condition, the board of directors decided in its meeting held on July 11 to distribute SR195 million as semi-annual profit dividends, allocating a net dividend of SR0.85 per share, equal to the interim dividend of the first half 2005. This is subject to final approval from the regulatory authorities.
This year SHB is celebrating its 80 years presence in Saudi Arabia making it the oldest bank in the country.
In April the bank launched its new corporate logo and inaugurated its new landmark regional office building in Jeddah. Established in 1926, SHB operates 41 branches and 162 ATMs distributed over the Kingdom. SHB is listed on the Saudi Stock Exchange and has 1,427 employees of which 84 percent are Saudi nationals.
The Dutch bank ABN Amro Bank NV, who founded SHB, owns 40 percent of its stock with the remainder being owned by Saudi investors.
