RIYADH: Saudi Hollandi Bank had the best second quarter among three local lenders that announced quarterly earnings yesterday after it cut costs by more than half to offset a decline in lending income.
The bank, part owned by a Royal Bank of Scotland-led consortium that may sell its stake through a public offering, has more than doubled its net profit in the three months to June end to 250.5 million Saudi riyals ($66.8m), beating analysts' forecasts. Profits were 90.6m riyals during the same period last year.
While both its lending and non-lending net incomes fell by 15.6 and 8.2 per cent respectively during the quarter, Hollandi's operating costs shrank to 228.3m riyals from 461.9m riyals in the second quarter last year.
Operating profit - the sum of lending and non-lending net incomes - fell 13.3pc to 478.8m riyals. By the end of June, the annual decline in Hollandi's loan portfolio accelerated to 11.1pc from 7.4pc in the 12 months to March end this year.
The much bigger Riyad Bank posted a 16.5pc fall in second-quarter net profit mainly after lending income fell for the second straight quarter while its costs soared.
Unspecified provisions weighed in to cut second-quarter net profit at the smaller Bank AlJazira, the kingdom's number one stock market broker, to less than a fifth of its level a year earlier, the bank said.
The Saudi stock exchange erased during the second quarter much of the 11.1pc gains it made during the first quarter.
AlJazira's net lending income inched up 1pc to 188m riyals but net income from non-lending operations fell by almost a third to 109m riyals.
The bank did not explain the drop in non-lending income. It has, however, allowed itself to be more aggressive on lending activities: by the end of June, its loans portfolio grew by 10pc against 7pc by the end of March.