UPDATE 1-Banque Saudi Fransi Q3 net drops 12.9 pct; misses view

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RIYADH, Oct 10 (Reuters) - Banque Saudi Fransi ,the lender part-owned by Credit Agricole , posted a12.9-percent drop in its third-quarter net profit that missedanalysts forecasts, it said in a bourse statement on Wednesday.

The kingdom's fifth largest bank by market capitalisationsaid it made 662 million riyals ($177 million) in the quartercompared with 760 million riyals in the three months endingSeptember 30 2011.

Eight analysts surveyed by Reuters forecast the firm topost, on average, a net profit of 775 million riyals.

The bank attributed its drop in profits to higher operatingexpenses.

Total operating income for the third-quarter was 1.2 billionriyals, a rise of 4.8 percent from the previous year.

Profit from special commissions grew 2.2 percent over lastyear to 826 million riyals.

The bank's loan portfolio grew 13.3 percent over last yearto 102 billion riyals by the end of the quarter.

Saudi Fransi priced a $750 million five-year Islamic bond inMay, attracting orders worth $4 billion.

Saudi Arabian banks are benefiting from expansionary fiscalpolicies, ample liquidity and improving corporate loan demand,according to a July 2 report from Deutsche Bank.

Bank lending to the private sector grew by 14 percent inAugust over the same month last year, Saudi Arabian MonetaryAuthority (SAMA - central bank), said in September.

A report by Credit Suisse in August predicted Saudi banksshould deliver double-digit earnings growth for the next threeyears thanks to higher credit volumes.

(Reporting by Angus McDowall; Editing by Dinesh Nair)

((angus.mcdowall@thomsonreuters.com)(+971 4 3625835)(ReutersMessaging: angus.mcdowall.thomsonreuters.com@reuters.net))