Saudi British Bank’s Q3 figures match Riyad Capital’s estimates

Saudi British Bank (SABB) reported net income of SAR 1.25 billion in the third quarter (Q3) of 2018, in-line with Riyad Capital’s SAR 1.20 billion forecast and market consensus of SAR 1.22 billion, the brokerage said in an earnings review.

The lender’s net income rose 15 percent year-on-year (YoY), driven by higher total operating income on the back of lower opex and improved net special commission income (NSCI), despite the drop in non-core income.

“We maintain our neutral stance and SAR 36.00 target price,” Riyad Cap said.

SABB’s special commission expense climbed 27 percent YoY and 23 percent quarter-no-quarter (QoQ) to SAR 296 million.

However, this was overshadowed by special commission income rising 15 percent YoY and 5 percent QoQ to SAR 1.7 billion, in spite of the fall in loans, signifying higher yields.

Consequently, NSCI came in at SAR 1.4 billion (+12 percent YoY and +2 percent QoQ), almost matching the forecast.

“It appears that these results have been heavily influenced by the rise of interest rates in the market,” Riyad Capital said.

Meanwhile, net loans decreased by SAR 1.2 billion quarter-on-quarter (QoQ) to SAR 112 billion, while deposits depleted by SAR 3.6 billion to SAR 129 billion, matching estimates. Most of the drop came from time deposits, which fell by SAR 2.9 billion.

Operating expenses declined by eight percent YoY but rose significantly by 42 percent QoQ to SAR 643 million. Provisions were mostly behind the annual and quarterly change in opex, recorded at SAR 87 million versus SAR 169 million in Q3 2017 and SAR 91 million last quarter.