Al Rajhi Bank, the largest Gulf Arab bank by market value, last week posted second quarter profit near the top end of analysts' forecasts on higher income from its core activities.
The Islamic Saudi lender made a net profit of US$464.5m in the three months ending June 30th up 8.2% from the US$428m it made in the year-earlier period.
Analysts' forecasts for Al Rajhi's second-quarter profit ranged from US$428m to US$465m in a Reuters survey last month.
It was the strongest rise quarterly net profit since December 2006, after which the bank had a run of negative results on the back of a 2006 regional stock market crash which slashed banks' brokerage and fund management revenue.
Al Rajhi's net investment income - the equivalent of net income from lending in traditional banking - rose 12% in the second quarter to US$569m.
Banking services income rose 44% to US$153.5m, it said, without giving details about other sources of revenue such as from trading and foreign exchange operations.
Earnings per share at the end of the first six months of this year reached 2.23 riyals up from 2.12 riyals a year earlier, it added The bank raised its paid-up capital by 11.1% earlier this year through a bonus share issue.
"The bank has continued to develop its investment and banking resources," chief executive Abdullah Sulaiman Al Rajhi said in the statement.
Hisham Abu Jamea, head of asset management at Bakheet Financial Services, said Al Rajhi, like other Saudi peers, has been boosting lending in an environment marked by low interest rates and excessive liquidity from record oil receipts.
"The second-quarter earnings set Al-Rgjhi on course to end 2008 with an 8% rise in its net profit over the previous year," Abu Jamea said.
Banks in the world's largest oil exporter have moved away from relying on income related to stock market activities since the 2006 crash.
The Saudi bourse is the Gulf region's worst performer so far this year. Shares of Al Rajhi are down more than 26% this year, in line with the banking and financial benchmark index and above the 15.8% year-to-date underperformance of the main stock index.
Al Rajhi said gross operating income in the six months to June 30 rose 15.2% to US$1.38bn and net profit for the same period rose 5.2% to US$888m.