Preliminary Earnings Release
SNB reports 12% year-on-year net income growth to
SAR 5.0 billion in 1Q 2023
Riyadh, 1 May 2023. Saudi National Bank (SNB) announced its preliminary financial results for 1Q 2023 ahead of reporting its audited earnings for the period ending 31 March 2023, recording 12% year-on-year net income growth. This growth was primarily the result of an 8% improvement in operating income, which was boosted by higher net special commission income from margin expansion and earning assets growth. The overall balance sheet expanded by 3% during the first quarter. The main driver was 4% growth in financing, principally from 3% growth in Retail financing derived from 4% mortgage growth, as well as 4% Wholesale financing growth. Customers' deposits rose 8% in the first quarter, driven by strong domestic CASA growth. SNB has also maintained healthy capitalization levels and a strong liquidity position.
SNB Credit Suisse Investment:
SNB's investment in Credit Suisse was SAR 5.5 billion (through a share placement on 24 November 2022 and a rights issue on 8 December 2022).
At 31 December 2022, SNB's investment in Credit Suisse had declined by approximately 20%. During the three months period ending 31 March 2023, SNB's investment in Credit Suisse had further declined by approximately 70%.
The financial impact on SNB's balance sheet was a result of the decline in the Credit Suisse investment carrying value by approximately 70% during the first quarter of 2023 (the carrying value of the Credit Suisse investment as at 31 March 2023 was SAR 1.3 billion).
The financial impact on SNB's equity was a decline of SAR 3.1 billion during the first quarter of 2023. There was no income statement impact as SNB had made an irrevocable election, as permitted by the accounting standards, to present subsequent changes in the fair value of the Credit Suisse investment through other comprehensive income.
SNB's shareholding in Credit Suisse of 9.88% will convert into a shareholding in UBS of approximately 0.5% upon completion of the merger.
From now until the completion of the merger, we do not expect to see a material difference between the valuation of our investment in Credit Suisse and theoretical valuation of our investment in UBS as the terms of the merger have been publicly announced.
1Q 2023 Financial Results Highlights:
12% net income growth to SAR 5.0 billion in 1Q 2023 on higher operating income
Total operating income improved by 8% to SAR 8.7 billion, driven by an increase in net special commission income from margin and balance sheet expansion; Net Special Commission Income Margin for the quarter was 3.24%
Operating expenses, including net impairment charge for expected credit losses for 1Q 2023 increased by 4% to SAR 2.9 billion from an increase in credit impairments, while operating expenses were stable; the cost-to-income ratio improved year-on-year
Total assets were SAR 976 billion, 3% higher year to date primarily on growth of financing
Net financing and advances up SAR 21 billion to reach SAR 566 billion, posting a 4% increase since 31 December 2022
Customers' deposits grew 8% to SAR 611 billion year to date, leading to an improved CASA ratio
The Bank maintained a healthy capitalization level and strong and stable liquidity position