Al Rajhi Bank, Saudi Arabia's second-largest listed lender, posted a 1.8 percent drop in its fourth-quarter net profit, it said on Thursday, missing analysts' forecasts. The bank made 1.52 billion riyals ($405 million) in the three months to December 31 compared with 1.55 billion riyals in the same period a year earlier, it said in a bourse statement.
Seven analysts surveyed by Reuters had expected the bank to post an average net profit of 1.70 billion riyals for the quarter.
The decrease was the sixth straight drop in quarterly profit posted by the bank, which it attributed to lower total operating income.
Saudi lenders are facing strong headwinds as net interest income comes under pressure from weakening loan growth and fierce competition, especially in the retail market. Analysts also warn that a prolonged slump in oil prices could dent confidence in the banking sector.
Banks have felt ripples from the government's crackdown in late 2013 on illegal foreign workers in the construction industry. Many banks had ramped up lending to such companies, which have suffered from delayed contracts and higher expenses caused by new laws aimed at employing more Saudis - who usually command higher salaries than expatriates.
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