SNB Write off as much as SR1.6 bln worth Debts

During the first 9 months of the year, the Saudi National Bank (SNB) boosted its provisions for non-performing loans to as many as SR3412.2 million, an increase of 112.9% over the SR1602.9 million, set aside, at the same time the previous year.

The allocations earmarked for the individual sector increased by 188.3% to SR590.9 million by the end of the first 9 months of the year, compared to SR204.9 million, in the same period of 2020, according to the bank’s financial statements, published on the financial market website Tadawul.

Provisions for the comprehensive commercial banking sector climbed by 170.9% to SR2738.8 million, at the end of September last year, up from SR1010.9 million, the previous year.

International banking provisions, on the other hand, fell to SR82.5 million at the end of September, down 78.7% from the previous year’s equivalent period at SR387.1 million.

Sector Provisions set aside during the 9-month (million Riyal) Change
2021 2020
Individuals 590.9 204.9 188.3
Banking not comprehensive commercial 2738.8 1010.9 170.9
International banking 82.5 387.1 -78.7
Total 3412.2 1602.9 112.9

On the other hand, SNB wrote off as much as SR1.6 billion, in debts, during the 9-month period ending, in September 2021, while non-performing loans, at the bank reached SR8.08 billion, at the end of September, and the cumulative balance of the provision for credit losses reached SR10.8 billion, bringing the bank’s coverage of non-performing loans up to 134.5%.

The National Bank’s net financing stood at SR503.7 billion, at the end of the first 9 months of 2021, up from SR346.7 billion on December 31, 2020, and SR336.4 billion, in the same period of 2020.

SNB profits increased by 15.2% to SR9.3 billion in the nine months ended in September, compared to SR8.08 billion, in the same period the previous year, and the bank ascribed the increase to the merger (with Samba).

As of April 1, 2021, following the merger, SNB entertains a 15.2% increase in net income, attributable to shareholders’ equity, due to an increase in total operating income, partially offset by an increase in operating expenses, including the provision for expected credit losses.

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

In addition, the total operating expenses, including credit losses, 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 internationally recognized accounting standards, other general and administrative expenses, salaries and employee expenses, depreciation/amortization of property, equipment and soft costs.

Net financing and advances
Thousands of Saudi Riyal
September 30, 2021 (Unaudited)

Individuals Co. Int’l banking Other Total
Finance and mobile advances 245,679.116 222,813,487 20,659,634 14,486,779 503,639,016
Non-performing financing and advances 809,707 6,136,245 1,137,762 8,083,714
Total financing and advances 246,488,823 228,949,732 21,797,396 14,486,779 511,722,730
Provision for financing losses
(Expected credit losses) (1,769,717) (7,955,314) (1,104,463) (41,287) (10,870,781)
Low value credit purchased or originated 10.195 2,833,819 2,844,014
Net financing and advances 244,729,301 223,828,237 20,692,933 14,445,492 503,695,963
For the period, the following is the movement in the provision for losses for financing and advances at amortized cost:
(Thousands of Saudi Riyal)
September 30, 2021 (Unaudited)
level (1)
12-month expected credit loss Level (2)
Expected credit loss that is not credit impaired over the life time Level (3)
Credit impaired expected credit loss over the life time Total
Balance as of January 1, 2021
Net impairment allowance
Transfer to the first stage
Transfer to the second stage
Transfer to the third stage
Bad debts written off
Adjusting foreign currency differences
Other 1,897,770
643,067
100,320
(78,901)
(9,470)
–
(11,549)
1,684 2,447,924
1,447,924
(86,383)
87,108
(722,234)
–
(18,204)

4,986 4,535,683
1,718.417
(13,937)
(8,207)
731,704
(1,634,777)
(127,458)

60,980 8,791,377
3,803,742
–
–
–
(1,634,777)
(157,211)

67,650
Balance as on September 30, 2021 2,452,921 3,155,455 5,262,405 10,870,781

Source: SNB financial statements, Tadawul website, Maaal