Banque Saudi Fransi (1050) Q2 2024 earnings summary

Executive summary

• Net income grew 6% year-over-year to SAR 2,279 million in H1 2024, driven by a 34% reduction in impairment charges despite higher operating expenses and supported by strong loan and deposit growth.

• Total assets rose 18% year-over-year to SAR 288.8 billion as of June 30, 2024.

• Strategic execution advanced, with 72% overall completion and significant progress in wholesale, personal, private, and capital banking, alongside digital transformation and rebranding initiatives.

• The interim financial statements received an unqualified review from independent auditors.

• Rebranding and digital initiatives led to a surge in customer engagement and account openings.

Financial highlights

• Loans and advances increased 16% year-over-year to SAR 197.2 billion; customer deposits up 22% to SAR 196.2 billion, mainly from interest-bearing deposits.

• Net income for H1 2024 reached SAR 2,279 million, up 6% year-over-year, with operating income flat and non-interest income up 6%.

• Net interest margin contracted by 52bps year-over-year to 3.10% due to higher funding costs.

• Cost-to-income ratio rose to 33.9%, up 3.1 percentage points year-over-year.

• Return on equity reached 11.0%, up 6bps year-over-year; EPS increased 7% to 1.81.

Outlook and guidance

• Full-year loan growth guidance raised to mid-teens, with NIM guidance revised down to 3.00–3.15% due to higher funding costs.

• Cost of risk guidance lowered to 55–65bps, and cost-to-income ratio target set below 33% by year-end.

• CET1 ratio guidance revised down to 16–17% by year-end, still above regulatory minimums.

• The Board approved an interim cash dividend of SAR 1.00 per share for H1 2024.

• The bank continues to monitor capital adequacy and regulatory compliance under Basel IV.