Al Rajhi Bank reports 24% rise in Q1 profit

Al Rajhi Bank, Saudi Arabia’s second-biggest lender, reported a nearly 24 percent rise in quarterly earnings, fuelled by a jump in net financing for customers, and higher investment income and fees from banking services.

The bank reported a net profit of SR 4.1 billion ($1.09 billion) for first quarter ended March 31, up SR 3.34 billion in the same period a year earlier.

The result was in line with an average forecast of SR 4.056 billion made by analysts in Refintiv Eikon data.

Saudi Arabia’s banking sector is benefiting from higher interest rates, as a hike by US Federal Reserve is typically followed by the Saudi central bank due to the Saudi riyal’s peg to the US dollar.

S&P Global Ratings calculates for every 100 basis point increase in rates, Saudi banks’ net income is likely to rise 13 percent and return on equity an additional 1.5 percentage points, based on data from the country’s 10 listed banks.

Loan demand from private-sector businesses continues to be strong in Saudi Arabia, as the economy rebounds from the pandemic amid higher oil prices, analysts say.

The International Monetary Fund earlier this month upgraded top oil exporter Saudi Arabia’s economic growth outlook to 7.6 percent in 2022, citing higher oil output and prices, from 3.2 percent in 2021. Its previous forecast was 4.8 percent.