DUBAI, Oct 13 (Reuters) - Saudi British Bank (SABB), the kingdom’s sixth-largest bank by assets, posted a 12.7 percent drop in its third-quarter net profit on Thursday, missing analysts’ forecasts as it set aside more cash for bad loans.
The bank, an affiliate of HSBC Holdings, said it made 995 million riyals ($265.4 million) in the three months to Sept. 30, compared with 1.14 billion riyals in the same period a year earlier.
Four analysts surveyed by Reuters had expected the bank to post an average net profit of 1.14 billion riyals.
The bank attributed the drop in profit to a 23.3 percent jump in operating expenses, which it blamed on higher impairments for credit losses as well as other costs.
Saudi banks face sluggish economic conditions as a result of lower oil prices and reduced government spending, which has fed through to lower net interest income and, in some cases, a rise in provisioning for bad loans.
The tricky economic backdrop was reflected in a 2.9 percent year-on-year decline in Saudi British Bank’s total loans and advances to 125.9 billion riyals on Sept. 30, while deposits slumped 7.6 percent to 144.1 billion riyals.
Operating income for the quarter was flat on the corresponding period of 2015 at 1.69 billion riyals, while profits from special commissions increased 13.3 percent to 1.22 billion riyals. (Reporting by David French; Editing by Andrew Torchia)