Banque Saudi Fransi (1050) Q3 2024 earnings summary

Executive summary

• Net income grew 1% year-over-year to SAR 3,427 million for 9M 2024, supported by robust loan and asset growth, a 30% reduction in impairment charges, and strategic execution across all segments, despite higher operating expenses and margin pressure.

• Total assets increased to SAR 287.7 billion, up 15% year-over-year, with strong lending and a 24% expansion in the investment portfolio.

• Strategic initiatives advanced, including technology upgrades, digital transformation, rebranding, and new product launches, boosting customer engagement and operational efficiency.

• Maintained robust capital and liquidity positions, with capital ratios comfortably above regulatory requirements.

Financial highlights

• Loans and advances rose 15% year-over-year to SAR 201.0 billion; customers' deposits increased 16% to SAR 193.3 billion.

• Operating income declined 1% year-over-year to SAR 7,086 million; net interest income fell 2% due to NIM contraction, while non-interest income rose 7%.

• Cost-to-income ratio increased by 3.9 percentage points to 34.4% due to higher expenses.

• Return on equity declined by 79bps to 10.7%; EPS up 1% to SAR 2.71.

• Liquidity Coverage Ratio at 162% and Net Stable Funding Ratio at 118%.

Outlook and guidance

• Loan growth guidance maintained in the mid-teens for full year 2024, with a selective approach to corporate lending.

• Net interest margin guidance at 3%-3.15%; cost of risk expected to remain stable at 55-65 bps.

• Cost-to-income ratio guidance revised to around 34%, with improvement expected from Q4 as cost management gains traction.

• Return on equity guidance refined to around 11%, targeting further improvement next year.

• Board approved interim and final dividends of SAR 1.00 per share and a capital increase to SAR 25.00 billion via bonus shares.