News Column

Banque Saudi Fransi reports Q2 profits of SAR 884 million, up 15.86 per cent

July 8, 2014

Banque Saudi Fransi's profits for Q2 were up 3.27 per cent quarter on quarter. H1 net profit of SAR 1.74 billion was up 20.33 per cent while earnings per share rose from SAR 1.2 to SAR 1.44.

Earnings per share for the six months ended 30 June 2013 were recalculated to reflect the increase in the bank's share capital from 904.02 million shares to 1,205.36 million shares, which was approved during the Extraordinary General Assembly Meeting on 16 April 2014.

Total assets rose 11.18 per cent to SAR 184,313 million. Investments were up 31.43 per cent at SAR 45,128 million. Banque Saudi Fransi saw loans and advances rise 6.49 per cent to SAR 117,390 million while customer depsits were up 7.89 per cent at SAR 134,408 million.

NBK Capital MENA comments…

Good set of results; lower balance sheet liquidity supports NIM

Banque Saudi Fransi (BSF) reported 16% YoY net profit growth in 2Q2014, driven by higher operating income growth. Net profit reached SAR 884 million in 2Q2014, up 3% QoQ.

Lower balance sheet liquidity supports NIM. Net interest income soared 17% YoY, 8% QoQ in 2Q2014, and came higher than our forecast. Balance sheet liquidity decreased in 2Q2014 as deposits decreased around 3%, while investments increased 16%, which we think came at the expense of balances with SAMA. We note that YTD, BSF's investment portfolio jumped 32%. The NIM in 2Q2014 reached a level unseen since the end of 2012.

Non-interest income grew 12% YoY, 1% QoQ, and came in line with our forecast. The breakdown of non-interest income is not disclosed in Saudi banks' preliminary earning releases. Total operating income increased 15% YoY, 5% QoQ, and came 7.3% higher than our forecast driven by the higher-than-expected net interest income.

Loan growth at 2.2% QoQ, resulting in 5.5% YTD growth, in line with our view for FY2014. Provisioning (not disclosed in Saudi banks' preliminary earning releases) appears to have increased YoY. Given robust operating income growth, BSF might have grossed up provisioning during the quarter.

Good set of results with the operating income beat driven by higher-than-expected net interest income. Non-interest income, loan provisioning trends, and loan growth came in line with our view for FY2014. We maintain our "Hold" recommendation on the stock; however, we will issue an update report on BSF after we speak with the bank's management. 

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Source: CPI Financial

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