Saudi British Bank Reports Q2 Profits Up 15.19 Per Cent

H1 profits for SABB were up 14.61 per cent at SAR 2,237.76 million while earnings per share rose from SAR 1.95 to SAR 2.24. Total assets were up 8.36 per cent at SAR 175,468 million while investments rose 34.47 per cent to SAR 41.475 million. Loans and advances were up 6.33 per cent at SAR 112,710 million and customer deposits gained 9.86 per cent to SAR 138,295 million.

NBK Capital MENA comments…

Good set of results that carry no surprise; lower balance sheet liquidity supports NIM

• The Saudi British Bank’s (SABB’s) 2Q2014 net profit increased by 15% YoY driven by a double-digit increase in operating income. Net profitreached SAR 1.16 billion in 2Q2014, up 7% QoQ.
• Operating income up 11% YoY and came in line with our forecast (1.9% higher). Operating income reached SAR 1.66 billion, increasing 3% QoQ on higher net interest income.
• NIM increased QoQ on lower balance sheet liquidity. Balance sheet liquidity decreased in 2Q2014 as loans and investments increased (by around SAR 6 billion) while total assets were broadly flat; this indicates that there was a decrease in other low-interest-earning assets, most probably balances with SAMA. Net interest income increased 7% YoY, 5% QoQ, and came broadly in line with our forecast.
• Non-interest income advanced by 16% YoY and came slightly higher than our expectation. The breakdown of non-interest income is not disclosed in Saudi banks’ preliminary earning releases.
• Loan growth at 3% QoQ, broadly in line with our view for FY2014. Deposits were up a marginal 1% QoQ, which increased slightly the simple loans-to-deposits ratio to 81% by the end of June 2014.
• Good set of results with NIM trends, operating income, and loan growth coming in line with our view. However, net profit growth for 1H2014 (+14.5%) has been slightly stronger than our forecast for FY2014 (+10%). We maintain our fair value and our “Hold” recommendation on SABB; however, we will issue an update report on the bank after we speak with the bank’s management.
• Originally published on http://www.cpifinancial.net