UPDATE 2-Saudi Riyad Bank's 2nd-qtr profit up, no new provisions

* Net profit rises 1.8 percent

* Core banking activities grow

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By Souhail Karam

RIYADH, July 13 (Reuters) - Saudi-based Riyad Bank 1010.SE said second-quarter net profit rose 1.8 percent rise as its core banking activities grew but it made no mention of new provisions despite worries about exposure to two troubled conglomerates.

Riyad, Saudi Arabia's third-largest lender by market value, made a net profit of 918 million riyals ($244.8 million) in the three months ending June 30, 2009, up from 906 million riyals in the year-earlier period.

"The core banking activities realised marked and continued growth," the bank, the first Saudi lender to announce its second-quarter results, said in a statement on the Saudi bourse website.

It made no reference to provisions during the second quarter. In the first quarter, its net profit fell 36.2 percent after it booked 283 million riyals in provisions for a fall in the value of investments. [ID:nLM690657]

Two analysts polled by Reuters had both expected Riyad to post an almost 35 percent drop in second-quarter profit. [ID:nL5613857] One, Bakheet Investment Group, included a 200 million riyals provision in its forecast.

"The 200 million provisions should address both the repercussions of the global financial crisis and the financial troubles of Saad Group and AHAB," Hesham Abu-Jamee, head of Bakheet asset management, said.

"Riyad is not telling the full story about its earnings. The (second-quarter) net profit must have included some extraordinary items or cashed in old provisions," he added.

AHAB, SAAD

Numerous banks from the Gulf Arab region have said they face potential writedowns on loans made to troubled privately owned Saudi conglomerates Ahmad Hamad Algosaibi and Bros Group (AHAB) and Saad Group [SAADG.UL]. [ID:nL8448580]

But Saudi banks have not commented on the degree of their exposure to the two firms.