Dubai: Starting the year-end financial reporting season on a positive note, Saudi Arabia’s leading commercial banks yesterday reported strong earnings in the fourth quarter of 2014.

Three of the biggest banks from the Kingdom — Saudi Hollandi Bank (SHB), Riyadh Bank and Banque Saudi Fransi (BSF) — yesterday reported strong year-on-year growth in earnings, supported by strong growth in non-interest incomes.

SHB reported 462 million riyals (Dh452) net income — up 33 per cent year on year with the operating income surging 20 per cent to 803 million riyals compared to the same period in 2013. Loan growth decelerated to 3 per cent in the fourth quarter on quarter on quarter basis. But for the full year loan growth was a stellar 21 per cent for 2014 compared to 19 per cent in 2013. Analysts expect a strong year ahead for SHB in long growth.

“Based on our recent management meetings with nine KSA banks, we expect SHB to continue to outperform on loan growth compared to peers,” Suha Urgan and Taher Safieddine, analysts with Shuaa Capital wrote in a note.

The bank reported a net interest income of 529 million riyals, up 24 per cent year on year supported by decent loan growth. However the non-interest incomes were on decline although it looks strong on a year on year basis with 13 per cent gain.

“We continue to see SHB better positioned for 2015 vs its competitors given its strong corporate banking franchise and non-funded income generation capability coupled with healthy underlying asset quality,” Shuaa analysts said.

Banque Saudi Fransi, part-owned by Credit Agricole, reported 851 million riyals in net income in the fourth quarter of 2014, up from 274 million riyals in the same period a year earlier.

BSF’s forth quarter net income more than tripled on cost of risk normalisation. The bank reported double-digit net interest income growth of 12 per cent year on year with deposits growing more than 10 per cent quarter on quarter. But the loan growth remained moderate at 5 per cent year on year compared to the estimated sector average of 13 per cent.

Riyad Bank posted a fourth quarter net income of 1.06 billion riyals, up 3 per cent compared to the same quarter in 2013. While non-interest income growth remained stable, interest incomes were on the decline as the loan book shrank 5 per cent quarter on quarter. The overall loan growth for the full year was down to a mere 2 per cent compared an estimated 13 per cent for the sector as a whole.

The bank’s provision charge for the fourth quarter was up 18 per cent to 257 million riyals. Elevated provisions are largely attributed to efforts to ramp up collective provision coverage.

All three banks reported strong non-interest incomes 12 months of 2014 but reported a declining trend on a quarter on quarter basis in the fourth quarter of this year.

“While we believe this is partially attributable to the restrictions on retail fees and potential drop in investment gains, we await full financials to see if there are other areas of major weakness,” said Urgan and Safieddine.