National Commercial Bank (NCB), a leading financial institution in Saudi Arabia, posted a 24 percent increase in third-quarter net profit as net commission income increased and operating expenses including impairments for bad loans declined.
According to a statement given to the Tadawul stock exchange, NCB’s net profit for three months which ended on September 30 rose to $843 million which was much higher than the analysts’ expectations.
The net income from special commissions and financing and investments marked a 6 percent increment which reached $1.09 billion, while net impairment charges for expected credit losses declined to 43 percent compared to the same period last year and reached $101 million.
NCB stated that due to a decrease in rent and other related expenses the total operating expenses also dropped by 9.8 percent.
Earlier this month, the lenders came to an agreement to merge with Samba Financial Group, one of its smaller competitors. Once the deal is completed, NCB is set to become the Arab world’s third-biggest banking entity with assets worth $223 billion.
“This merger process marks the start of a new era for Saudi banking. We are focused on making sure that the combined and larger bank comes together seamlessly to serve our customers, partners, investors and talent across both teams,” Mr. Alkhudairy, Samba Financial Group’s current chairman, stated.
The past nine-month earnings of NCB have climbed by 1 percent to $2.15 billion and the total operating income rose by 4.7 percent mainly due to the increase in the net special commission income, fees from banking services, foreign exchange income and higher investment-related income.
The lender’s assets have increased by $153 billion at the end of the nine-month period which is a 16 percent jump when compared to last year’s same period. Whereas the investments rose by 9 percent to $38.3 billion and customer deposits reached $108.8 billion which is a 20 percent hype.
The lower provisioning was an unexpected event, with the cost of risk more than halving compared to 45 basis points in the second quarter.
“The earnings beat was largely driven by core drivers, as loan growth was strong, spreads widened and provisioning was lower than expected, while it could be driven by provision reversal, the trend highlights management’s growing optimism on credit quality prospects” analysts from investment bank EFG Hermes said.