Banque Saudi Fransi (1050) Q2 2024 earnings summary

Executive summary

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

• Total assets rose 18% year-over-year to SAR 288.8 billion, with customer deposits up 22% to SAR 196.2 billion and loans up 16%.

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

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

Financial highlights

• Operating income for H1 2024 was SAR 4,674 million, nearly flat year-over-year; non-interest income grew 6%, net interest income declined 1%.

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

• Cost-to-income ratio increased to 33.9%, up 3.1 percentage points year-over-year, due to higher employee and rebranding costs.

• Return on equity improved to 10.95% for H1 2024.

• Basic and diluted EPS for H1 2024 was SAR 1.81, up from SAR 1.70 in H1 2023.

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 55–65 bps, and cost-to-income ratio target set below 33% by year-end.

• Core equity Tier 1 ratio guidance revised down to around 16% 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.