* Q3 profit 1.34 bln riyals vs 1.37 bln riyals yr ago - statement
* Earnings weighed by higher impairments
* Saudi banks have suffered poor Q3 earnings season (Adds detail, context)
By David French
DUBAI, Oct 18 (Reuters) - Samba Financial Group became the latest Saudi bank to report a drop in third quarter earnings, as the kingdom’s third-largest lender by assets said an increase in provisions against bad loans led to a 2.2 percent drop in profit.
Saudi Arabia’s banks are having to adapt to weaker growth as cheap oil slashes state revenues and pushes the government into spending cuts, which are weighing on the private sector and consumer spending.
Other Saudi banks, including the kingdom’s largest, National Commercial Bank, have reported falling profits for the quarter due to a rise in bad loans.
Samba made a profit of 1.34 billion riyals ($357.4 million) for the three months to Sept. 30, down from 1.37 billion riyals in the same period a year earlier, it said in a statement.
The result was in line with the average estimate of five analysts polled by Reuters.
Samba’s earnings were dragged down by a 9.4 percent increase in operating expenses as it was forced to set aside more cash to cover bad loans.
Like a number of other banks, Samba also reported a decline in deposit levels, although the 0.6 percent year-on-year drop to 173.96 billion riyals as of Sept. 30 was not as steep as other lenders have experienced.
Deposit levels have been falling as the government, which had placed substantial amounts of oil revenue with banks when prices were high, withdraws cash to help bridge the budget shortfall.
$1 = 3.7495 riyals Editing by Mark Potter, editing by Louise Heavens