Al-Rajhi says on prowl for foreign expansion

By Souhail Karam

RIYADH (Reuters) - Al-Rajhi Banking & Investment Corp. 1120.SE, the Gulf's largest bank by market value, is considering further expansion abroad beyond Malaysia where it opened a subsidiary in 2006, its chief executive said on Monday.

"We are always open to the idea of further international expansion. We evaluate any business opportunity that may be arising from time to time anywhere and would be willing and ready to go for it," Abdullah Sulaiman Al-Rajhi said in written replies to Reuters questions. He did not elaborate.

Al-Rajhi plans to expand its branch network in Malaysia from 13 to 50 within three years. "The Malaysian banking clients' response has been very positive," he said.

The Islamic lender expects positive growth in earnings this year despite a slowdown in consumer lending and a drop in brokerage fees, he added.

"The bank has met its first half-year's budget and as originally planned we expect to close the year with positive growth," Al-Rajhi said.

The bank made a net profit of 1.61 billion riyals ($429.3 million) in the second quarter, down 9.3 percent from the year-earlier period. The annual decline in net profit was 10.3 percent in the first quarter of 2007.

The bank's total net income has been growing with a cumulative annual growth rate of 53 percent during the 2003-2006 period, mainly through strong growth in retail operations supported by brokerage fees, he said.

"Throughout this period, the bank's dependency on brokerage income has been substantially lower compared to its key competitors," Al-Rajhi said.