Strong Profit Growth#
Arab National Bank has announced a first-quarter profit of SAR 1.4 billion, translating to SAR 0.60 per share. This marks an 18% increase compared to the previous quarter and a 4% rise from the same period last year.
Key Drivers of Profit#
The bank's impressive results surpassed expectations, primarily due to stronger net interest income, which is the money earned from loans minus what it pays on deposits, and lower provisioning costs. Provisioning costs refer to the funds set aside to cover potential loan losses.
Revenue and Costs#
Revenue for the bank increased by 7% from the fourth quarter. Specifically, net interest income rose by 6%, while non-interest income, which includes fees and commissions, saw an 11% increase. However, operating costs grew by 10% year-over-year, outpacing the 3% annual revenue growth, indicating rising expenses.
Loan and Deposit Trends#
The cost of risk, which measures the likelihood of loan defaults, improved to 27 basis points from 31 basis points in the previous quarter. Loan balances increased by 2% from the last quarter, while deposits saw a slight decline of 0.6%. Consequently, the loan-to-deposit ratio, a measure of how much of the bank's deposits are lent out, rose to 95.5% from 93.3% in the fourth quarter.