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 asset and loan growth, a 30% reduction in impairment charges, and strategic execution across banking segments and digital transformation, despite margin and cost pressures.

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

• 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, mainly interest-bearing.

• Operating income declined 1% year-over-year to SAR 7,086 million; net interest income down 2% due to NIM contraction and higher funding costs, while non-interest income increased 7% year-over-year.

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

• Net income up 1% year-over-year, aided by a 30% reduction in impairment charges.

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 onwards.

• Return on equity guidance refined to around 11%, targeting higher levels next year.

• Board approved interim cash dividend of SAR 1.00 per share for H1 2024 and a final dividend of SAR 1.00 per share for 2023.