May 17, 2020 / 6:04 AM / 12 days ago

Saudi NCB's net profit up 2.1%, impairment charges sharply up

DUBAI, May 17 (Reuters) - National Commercial Bank , Saudi Arabia’s biggest lender, on Sunday posted a 2.1% rise in quarterly profit, as a rise in net special commission and fee income offset a sharp rise in impairment charges.

NCB’s net profit was 2.83 billion riyals ($745.5 million) for the period that ended March 31, up from 2.78 billion riyals in the same period a year earlier.

EFG Hermes had a forecast of 2.4 billion riyals for net profit, while FAB Securities had projected 3.28 billion riyals.

The bank said total operating income increased by 7.2% mainly due to the increase in net special commission income - which for Islamic lenders is comparable to net interest income.

Investment related income, fees from banking and services and foreign exchange income also rose.

Net impairment charge for expected credit losses hit 396 million riyals in the first quarter, up from 145 million riyals in the similar period of the previous year, a jump of 173%.

Gulf banks have been reporting higher impairment charges, hurt by a slowdown in economic activity and an oil price slump.

Rating agency Moody’s said earlier this month that the Saudi government’s spending cuts on the back of lower oil prices will weigh on the non-oil sector of the economy, where the banks do most of their business.

$1 = 3.7560 riyals Reporting by Saeed Azhar; Editing by Simon Cameron-Moore

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