SNB Profits Climb by 20%

Saudi National Bank (SNB) net profit, after zakat and tax deductions, increased by 20% to SR3.78 billion in the Q3, compared to SR3.15 billion, in the same quarter the previous year.

This came after the consolidated preliminary financial results for the period ending September 30, 2021, were released for (9 months).

Total operating profit for Q3 was SR7.8 billion, up from SR5.63 billion in the same quarter the previous year, a 38% rise.

The current period’s net profit after zakat and tax was SR9.3 billion, up from SR8 billion in the previous year’s comparable period, representing a rise of 8%.

Earnings per share in the current period were SR2.25, compared to SR2.59 in the previous year’s same period.

The bank’s merger with the Samba Financial Group, which took effect on April 1, 2021, is the reason for the increase’s (reduction) in net profit, in the current quarter compared to the same quarter the previous year.

However, the rise in total operating income was offset by an increase in operating expenses, which included credit losses linked to the merger, resulting in a 19.9% increase in net income attributable to shareholders’ equity.

The rise in income, whether the net special commission, banking services fees, and foreign currency conversion got a leverage more than offset an increase in other operating expenses, resulting in a 38.4% increase in total operating income.

The net impairment allowance for predicted credit losses, other general and administrative expenses, wages and employee expenses, rent and building expenses, and depreciation/amortization of property, equipment, software, and right-of-use assets, all increased by 72.2%.

The rise in net profit in the current quarter over the previous quarter is owing to a 78.8% increase in net income attributable to shareholders’ equity, primarily due to an increase in total operating income and a decrease in operating expenses, including the provision for projected credit losses.
Because of higher net special commission income and foreign exchange income, total operating income increased by 4%.

The drop in overall operating expenditures, including credit losses of 31.7% is primarily attributable to lower net impairment allowances for predicted credit losses, as well as lower rental and premises expenses.

Due to the bank’s merger with the Samba Financial Group, net income attributable to shareholders’ equity increased by 15.2% as of April 1, 2021, due to an increase in total operating income, partially offset by an increase in operational expenses, which included the provision for expected credit losses.

The rise in net special commission income, investment income, income from banking services fees, and foreign currency conversion income more than offset an increase in other operating expenses, resulting in a 34.2% increase in total operating income.

Total operating expenses increased by 61.9%, owing to an increase in the net impairment allowance for expected credit losses related to the first day of the merger, in accordance with the international accounting standards, other general and administrative expenses, salaries and employee expenses, and depreciation/amortization of property, equipment, and programs.

The right to use merger-related assets, leases, and building expenses.
According to the management, some data from the prior year has been reclassified for comparative purposes.

Additional information
During the current quarter, the net impairment allowance for projected credit losses was SR725 million Saudi, up from SR379 million Saudi, at the same time the previous year, a 91.3% rise.

On the other hand, the net impairment allowance for expected credit losses was SR725 million, down from SR2,408 million in the previous quarter, a decrease of 69.9%.

The net impairment allowance for expected credit losses for the current period was SR3,412 million, up from SR1,603 million in the previous year’s comparable period, a 112.9% rise.

Earnings per share were computed by dividing net income attributable to shareholders’ equity for the year (after subtracting expenditures associated with the first tranche contracts) by the weighted average number of shares outstanding, during the period (3,954,806) for the current and preceding years (2020: 2,992,522).

According to accounting standards, the results of Samba Financial Group’s income statement have been consolidated for a period of six months beginning April 1, 2021.

*Net income from investments carried at fair value in the income statement and gains on financial instruments, not recorded at fair value, are included in investment income.