RIYADH, 11 October 2007 — Samba Financial Group, Saudi Arabia’s second biggest lender by market value, posted its fourth consecutive decline in profit in the third quarter as brokerage activity diminished.
Net income in the three months to Sept. 30 dropped 7.1 percent SR1.3 billion ($346.7 million), below analysts forecasts, which ranged from SR1.35 billion to SR1.42 billion, according to a Reuters survey last month.
Earnings per share were SR6.46 in the third quarter, against SR7.12 in the year-earlier period, the bank said in a statement on the Saudi bourse website. Nine-month profit fell 9.5 percent to SR3.87 billion, the bank said. “This resulted from the decline in banking fees, knowing that the group has achieved a strong rise in its core banking activities,” Chief Executive Officer Eisa Al-Eisa said in the statement.
Net interest income rose 15.6 percent to SR3.67 billion, it said without giving details on banking fees, which are mainly made up of brokerage commissions. In the first half, banking fees fell more than 41 percent to SR830 million, accounting for nearly 22.2 percent of income from operations.
Hisham Abu Jamea, head of research at Riyadh-based Bakheet Investment Group, estimated banking fees accounted 28 percent of net income in the third quarter.
“The bank is very aggressive on lending and it wins almost all the big mandates for the major IPOs in the Kingdom,” Abu Jamea said. Samba loans were up 16.4 percent at the end of September, the bank said. “There is improvement but it’s slow compared with other banks,” Abu Jamea said.
Samba’s fall in third quarter profit was normal for a lender that is the third-largest broker in the Kingdom, said Abu Jamea, whose third quarter profit forecast was the closest. “The value of stock market transactions was 15 percent below its level in the second quarter,” he said. Samba held an 11 percent share of the brokerage market at the end of June, he said.
Bakheet expects Samba to post a profit of SR5.3 billion this year, implying fourth quarter net income will climb 52.4 percent to SR1.43 billion. At the end of September, assets rose 22.1 percent to SR141.3 billion and shareholders equity grew 17.1 percent to SR16.9 billion.
