Riyad Bank said second quarter net profit rose 1.8 percent rise as its core banking activities grew but it made no mention of new provisions despite worries about exposure to two troubled conglomerates. Riyad, Saudi Arabia's third-largest lender by market value, made a net profit of SR918 million ($244.8 million) in the three months ending June 30, 2009, up from 906 million riyals in the year-earlier period. “The core banking activities realized marked and continued growth,” the bank, the first Saudi lender to announce its second-quarter results, said in a statement on the Saudi bourse website. It made no reference to provisions during the second quarter. In the first quarter, its net profit fell 36.2 percent after it booked 283 million riyals in provisions for a fall in the value of investments. Two analysts polled by Reuters had both expected Riyad to post an almost 35 percent drop in second-quarter profit. One, Bakheet Investment Group, included a SR200 million provision in its forecast. “The 200 million provisions should address both the repercussions of the global financial crisis and the financial troubles of Saad Group and AHAB,” Hesham Abu-Jamee, head of Bakheet asset management, said. “Riyad is not telling the full story about its earnings. The (second-quarter) net profit must have included some extraordinary items or cashed in old provisions,” he added. Numerous banks from the Gulf Arab region have said they face potential writedowns on loans made to troubled privately owned conglomerates Ahmad Hamad Algosaibi and Bros Group (AHAB) and Saad Group. Saudi banks have not commented on the degree of their exposure to the two firms. Riyad said operating income rose to SR1.52 billion in the second quarter from SR1.45 billion a year earlier. Over the first half of 2009, loans rose 27.1 percent to SR104.6 billion compared with a year earlier, while deposits rose 38 percent to SR122.1 billion, it added. Based on its previous quarter's earnings, Riyad's loans increased by SR4.41 billion, or 4.4 percent, in the second quarter, while deposits added SR2.87 billion or 2.4 percent.
