SABB bank, HSBC's Saudi affiliate, reported on Tuesday a near-20 per cent fall in third-quarter net profit which it said was due to 'conservative' policy.

SABB made SR570 million ($152 million) in the three months to September 30 against SR711.1 million a year earlier, it said in a statement posted on the bourse's website.

The drop in SABB's quarterly earnings is the sharpest reported so far by four listed Saudi banks. 'The decline in the profit is mainly due to the bank's conservative policy,' SABB said in the statement.

Several research reports said the profitability of Saudi banks will continue to be strained by provisions for possible loan losses linked to troubled conglomerates Saad Group and Ahmad Hamad Algosaibi and Bros Company (AHAB).

Net operating income rose 10.7 per cent to SR1.3 billion after net income from lending rose 13.1 per cent to SR854 million, the bank said.

This means that net income from non-lending operations rose 6.4 per cent to SR450 million.-Reuters