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Al Rajhi Bank Quarterly Earnings Gain 8.1 Per Cent on Investments

DUBAI - Al Rajhi Bank, the largest bank by market value in Saudi Arabia, said its first-quarter profit gained 8.1 per cent as the Central Bank cut interest rates to improve liquidity and lowered funding costs.

Net income increased to SR1.73 billion ($460 million), or SR1.15 a share, from SR1.60 billion, or SR1.07 a share, in the year-earlier period, the Riyadh-based bank said in a statement to the Saudi bourse Web site on Friday. Investment income in the period gained 13 per cent to SR2.28 billion.

The Saudi Arabian Monetary Agency, known as Sama, has cut interest rates five times since October 15 as the Central Bank sought to guarantee deposits and avert a liquidity crisis after oil prices tumbled and economic growth was forecast to slow.

The largest economy in the Arab world, after last reducing on January 19 its key repurchase rate to 2 per cent, may extend interest- rate cuts this year, Standard Chartered Plc said on January 29.

“Sama improved the liquidity situation for banks,” Murad Ansari, an analyst in Riyadh with EFG-Hermes Holding SAE, said in a telephone interview on Friday.

Economic growth in Saudi Arabia, the world’s biggest oil exporter, will probably slow to 1.6 per cent this year from 4.8 per cent in 2008, according to the median estimate of eight economists surveyed by Bloomberg News.

First-quarter deposits rose to SR120 billion from SR101 billion in the year-earlier period, the bank said in the statement. Assets at the end of the first quarter increased to SR162 billion, compared with SR143 billion.