Banque Saudi Fransi, the Saudi affiliate of France's Calyon, posted a 1.9 percent fall in third-quarter net profit on lower fees from deposit management and its local brokerage.

The lender made 714 million riyals ($190.4 million) in the three months to Sept. 30 compared to 728.6 million riyals a year earlier, it said in a statement posted on the bourse's website.

The decline is due to the important decrease in management fees despite an increase in deposits and also to the decrease in trading operations on local shares, it said in the statement.

Net operating income stood at 1.06 billion riyals, down 7 percent from the third quarter in 2008, while net lending income -- also known as net special commission income -- rose 10.8 percent to 758 million riyals, the bank said.

This means that net income from non-lending operations, which include brokerage fees, exchange and trading incomes, fell 33.4 percent to 299 million riyals, based on Reuters calculations and Fransi's previous financial statements.

Fransi's loans portfolio remained unchanged at 81 billion riyals at the end of September compared to the previous quarter, as did the bank's deposits at 90 billion riyals.

Compared to a year earlier, loans rose 2.5 percent and deposits added 7.1 percent in the third quarter.

Earnings per share stood at 2.97 riyals by the end of the third quarter down from 3.09 riyals a year earlier.

Fransi did not say if it had made provisions for potential bad debts linked to private troubled conglomerates Saad Group and Ahmad Hamad Algosaibi and Bros Co during the third quarter.

Fransi is the first Saudi bank to announce third-quarter earnings. Calyon, the investment banking arm of Credit Agricole, holds a 31.1 percent stake in Fransi, which is one of Saudi Arabia's five biggest lenders by market value.

Before its earnings announcement, Fransi's shares ended unchanged at 43.8 riyals, bringing its year-to-date performance to 24.8 percent. This is below both the all-share .TASI index which is up 32.6 percent and the banking industry's benchmark .TBFSI which has added 26.8 percent so far this year.

Like many lenders in the region, Fransi booked about 120 million riyals in provisions for loan losses during the second quarter.

Most Saudi banks posted lower net profits during the second quarter. Analysts believe some of these provisions were to cover their exposure to the two conglomerates.

Morgan Stanley said this month that Saudi Arabian banks' third-quarter net income would be under pressure due to the higher amount of money banks set aside to cover bad loans and on subdued fee income.

(Reporting by Souhail Karam; Editing by Andy Bruce)