Saudi Arabia's National Commercial Bank (NCB), the kingdom's largest lender, posted a 2.6 per cent fall in second-quarter net profit on Thursday, missing analysts' forecasts as fee income weakened and operating expenses rose.

NCB is the fifth Saudi bank to report earnings for the second-quarter. The sector's performance is more mixed than in the first quarter when all of the top seven lenders but one - Al Rajhi Bank - reported higher profits.

While Banque Saudi Fransi and Saudi Hollandi Bank continued the buoyant picture in the second quarter, reporting double-digit earnings growth, Al Rajhi Bank and Saudi British Bank (SABB) reported small declines in net profit.

NCB, which listed in November after the largest ever initial public offer of shares in the Arab world, reported a net profit in the three months to June 30 of SR2.36 billion  ($629 million).

This was below the SR2.43 billion made in the same period of 2014, and off the SR2.47 billion  forecast by four analysts surveyed by Reuters.

Despite the earnings decline, the bank's shares were up 1.46 per cent at 0915 GMT.

"NCB reported weak results driven by lower non-interest income, which may be perceived negatively by the market," Chiradeep Ghosh, banking analyst at SICO Bahrain, said in a research note. NCB's non-interest income fell 15.7 per cent year-on-year, according to SICO.

Banks in the kingdom have generally enjoyed strong profits in recent years as surging oil revenues have helped propel lending.

NCB, Banque Saudi Fransi and SABB all reported higher operating expenses during the quarter, which was partly attributed to the lenders likely spreading bonuses to staff over four quarters, said Ghosh.

To mark his accession in January, King Salman ordered the payment of two months' extra salary and pensions to government employees and retirees, a move that has been carried out by many of the kingdom's companies.

NCB's loans and advances climbed by 13 per cent year-on-year to SR233 billion  by the end of June, echoing generally-healthy double-digit loan growth across the other four banks that have reported so far.

This is despite flat sector-wide loan growth in May after the previous month's 9.5 per cent increase, which was a near-four-year low according to central bank data. – Reuters