Al Rajhi's profit rises on healthy growth in lending

Riyadh: Saudi Arabia's Al Rajhi Bank's first-quarter profit rose 2.1 per cent, as the Gulf's largest Islamic lender boosted profit from core business operations.

Net income in the three months to March 31 climbed to 1.6 billion riyals ($427.2 million), or 1.07 riyals per share, compared with 1.57 billion riyals, or 1.05 riyals per share, in the year-earlier period, the bank said.

The bank raised its paid-up capital by 11.1 per cent earlier this year through a bonus share issue.

It was the strongest rise in quarterly net profit since December 2006, after which the bank had a run of negative results due to a stock market crash in 2006.

Net income from investment - the equivalent of income from lending in traditional banking - rose 11.5 per cent to 2.03 billion riyals, it said.

Income from banking services increased 18 per cent to 454 million riyals, it said, without giving details about other sources of revenue such as from trading and foreign exchange operations. "The bank continues to achieve growth by diversifying its sources of revenue, and developing the investment and corporate banking sectors along with retail banking," chief executive Abdullah Sulaiman Al Rajhi said.

Local investment bank KSB Capital forecast Al Rajhi would post a profit of 1.6 billion riyals.

The bank's earnings in the first quarter would keep it on the path of recovery from the 2006 crash, said Ebrahim Al Alwan, KSB's deputy chief executive.

"Rajhi could have posted a stronger rise in first-quarter net profit had it not been engaged in expansion in Kuwait and Malaysia," he added.