DUBAI: Saudi British Bank (SABB), the kingdom’s sixth-largest bank by assets, posted a 12.7 per cent drop in its third-quarter net profit on Thursday, missing analysts’ forecasts as it set aside more cash for bad loans.
The bank, an affiliate of HSBC Holdings, said it made 995 million riyals (Dh974.26 million, $265.4 million) in the three months to September 30, compared with 1.14 billion riyals in the same period a year earlier.
Four analysts surveyed by Reuters had expected the bank to post an average net profit of 1.14 billion riyals.
The bank attributed the drop in profit to a 23.3 per cent jump in operating expenses, which it blamed on higher impairments for credit losses as well as other costs.
Saudi banks face sluggish economic conditions as a result of lower oil prices and reduced government spending, which has fed through to lower net interest income and, in some cases, a rise in provisioning for bad loans.
The tricky economic backdrop was reflected in a 2.9 per cent year-on-year decline in Saudi British Bank’s total loans and advances to 125.9 billion riyals on September 30, while deposits slumped 7.6 per cent to 144.1 billion riyals.
Operating income for the quarter was flat on the corresponding period of 2015 at 1.69 billion riyals, while profits from special commissions increased 13.3 per cent to 1.22 billion riyals.