* Q3 profit 1.34 bln riyals vs 1.37 bln riyals yr ago -
* Earnings weighed by higher impairments
* Saudi banks have suffered poor Q3 earnings season
(Adds detail, context)
By David French
DUBAI, Oct 18 Samba Financial Group
became the latest Saudi bank to report a drop in third quarter
earnings, as the kingdom's third-largest lender by assets said
an increase in provisions against bad loans led to a 2.2 percent
drop in profit.
Saudi Arabia's banks are having to adapt to weaker growth as
cheap oil slashes state revenues and pushes the government into
spending cuts, which are weighing on the private sector and
Other Saudi banks, including the kingdom's largest, National
Commercial Bank, have reported falling profits for the
quarter due to a rise in bad loans.
Samba made a profit of 1.34 billion riyals ($357.4 million)
for the three months to Sept. 30, down from 1.37 billion riyals
in the same period a year earlier, it said in a statement.
The result was in line with the average estimate of five
analysts polled by Reuters.
Samba's earnings were dragged down by a 9.4 percent increase
in operating expenses as it was forced to set aside more cash to
cover bad loans.
Like a number of other banks, Samba also reported a decline
in deposit levels, although the 0.6 percent year-on-year drop to
173.96 billion riyals as of Sept. 30 was not as steep as other
lenders have experienced.
Deposit levels have been falling as the government, which
had placed substantial amounts of oil revenue with banks when
prices were high, withdraws cash to help bridge the budget
($1 = 3.7495 riyals)
(Editing by Mark Potter, editing by Louise Heavens)