Saudi Banking Sector Saudi Banking Sector
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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Saudi Banking Sector – 1Q 2017 In 1Q2017, the balance sheet of Saudi Arabia’s banking sector increased 1.9% YoY and 0.5% QoQ to SAR 2,267bn. Total loans accounted for 72.3% of total assets, whereas deposits formed 71.0% of total liabilities. The banking sector’s balance sheet grew at a 10-year CAGR of 10.9%.
Saudi banking Sector Balance Sheet Growth
2,000
Saudi Banking Sector Balance Sheet Growth – 1Q2017 30%
2,500
25%
2,000
20% In Bn SAR
1,500 15%
2.3%
2.3%
2.2% 2.1%
1,500 In Bn SAR
2,500
2.0%
1,000
1,000
1.9%
10%
1.9%
500
500
1.8%
5% -
-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q 2017
Saudi Banking Assets-LHS
Q1-2016
0%
Saudi Banking Assets-LHS
% Growth-RHS
Banking Sector – Assets Breakdown – 1Q2017
1.7%
Q1-2017 % Growth (YoY)-RHS
Banking Sector – Liabilities & Capital Breakdown – 1Q2017
1%
1% 5%
10%
10%
Cash In Vault
1%
10%
Deposits with SAMA 10%
SAMA Bills
Deposits 15% Foreign Liabilities
Foreign Assets Loans to Private Sector
4%
Capital accounts
Loan to Gov & Quasi- Gov 71%
Fixed Assets 62%
Other Liabilities
OtherAssets Source: SAMA
The Saudi banking sector has 12 listed banks and other non-listed banks. In terms of the balance sheet size, National Commercial Bank (NCB) (assets of more than SAR 448.7bn) is the biggest bank in the Kingdom, accounting for 20.2% of the total market, followed by Al Rajhi Bank (an asset base of SAR 337.2bn and 15.2% of the market share). Samba (asset base of SAR 231.9bn) accounts for 10.5% while Riyadh Bank (total assets worth SAR 216.3bn) accounts for 9.8% of total banking assets. Of the 12 banks, Al Rajhi Bank, Alinma Bank, Bank Albilad, and Bank AlJazira are Shariah-compliant banks, accounting for 25.5% of total banking assets. Al Rajhi Bank is the largest Shariah-compliant bank in the Kingdom, accounting for 59.7% of the total market share in 1Q 2017 (down from 60.2% in 4Q 2016) among Shariah banks.
Market Share of Total Banking Assets – 1Q2017 5%
NCB
3% 3%
10%
Al Rajhi
20%
4%
Asset Market Share of Shariah-compliant Banks – 1Q2017
Samba
5%
Riyad
Al Rajhi
11%
SAAB 8%
Alinma
Saudi Fransi 15%
ANB Alawwal Bank
9%
19%
60%
Aljazira
SAIB
Albilad
Alinma 8%
10% 10%
Aljazira Albilad Source: Bloomberg
Acting Head of Research
Talha Nazar +966 11 2256250 [email protected]
1
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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Deposits Growth
Deposits Saudi banking deposits and money supply rose steadily at a
1,600
10-year CAGR of 8.4% and 8.5%, respectively. Total deposits
20%
1,400 1,200
in 1Q2016.
1,000
In Bn SAR
declined 0.01% YoY to SAR 1.608tn in 1Q2017 from SAR 1.609tn
Demand deposits advanced 1.1% YoY to SAR 995.9bn in 1Q2017
25%
1,800
15% 10%
800 5%
600 400
compared to SAR 985.4bn in 1Q2016.
0%
0
Of the total deposits, demand deposits account for 61.9% (up from 60.2% in 4Q2016), whereas time and savings deposits
Deposits-LHS
account for only 28.9%. The breakdown of deposits shows that almost 78.7% of the total deposits are held by individuals and 19.7% by government entities.
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q 2017
200
Money Supply(M3)-LHS
% Growth in deposits-RHS
Deposit Growth – 1Q2017 1,800
0.00%
-0.01%
1,600
-0.10%
1,400
while the government holds the remaining 9.0% (up from 6.3% in 4Q2016).
-0.20%
1,200
Bn SAR
Businesses and individuals hold 91.0% of the demand deposits,
1,000
-0.30%
800
-0.40%
600
With regard to time and savings deposits, businesses and individuals hold nearly 55.6%, while government entities hold
-0.50%
400
-0.60%
-0.59%
200 -
1Q2016 Demand-LHS Quasi-Monetary-LHS
44.4%.
Demand Deposits Break Down
-5%
-0.70%
1Q2017 Time & Savings-LHS % Growth (YoY)-RHS
Deposits Break Down
9%
9.2%
Business and Individuals Government Entities
Demand
28.9%
Time & Savings 60.6%
Quasi-Monetary
91%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 19.7%
44%
Business and Individuals Government Entities Others
Business and Individuals 56%
Government Entities
78.7%
Source: SAMA
2
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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Bank Deposits Growth
Deposits – Breakdown by Bank
350
Alinma Bank recorded the highest growth (18.4% YoY) in
300
deposits, improving its’ market share from 4.1% to 4.9% in
250
1Q2017. Banque Saudi Fransi stood second, increasing the
200
deposit base by 11.7% YoY and market share to 9.5% in 1Q2017 from 8.4% in 1Q2016.
15.0%
1.8%
8.8% YoY in its deposit base, as deposits fell from SAR 71bn to
0
YoY to SAR 154bn, causing its market share to fall to 9.3% in
0.0% -6.1%
-8.8%
-5.0% -10.0%
Al Rajhi Alinma
ANB Albilad Aljazira Saudi Fransi
1Q2016
NCB
Riyad Samba SAAB
1Q2017
Alawwal SAIB Bank
-15.0%
% Growth
Deposits Market Share Comparison
1Q2017 from 9.9% in the same period of the previous year.
2.6% 2.6% 3.0% 3.0% 3.9% 4.2% 4.9% 4.1% 4.8% 5.1%
Albilad AlJazira
Al Rajhi Bank, the largest Shariah-compliant bank, recorded a
SAIB
1.8% YoY rise in deposit base and an improvement in market
Alinma
share from 15.8% to 16.3% in 1Q2017. NCB with deposits of
5.0% -6.8%
-0.9% -1.7%
SAR 64bn and market share from 4.2% to 3.9% in 1Q2017. It was followed by Riyad Bank, which saw its deposits fall 7.0%
-7.0% -4.4%
-0.1%
100
Saudi Investment Bank registered the biggest decline of
10.0%
11.7%
150
50
20.0%
-3.8% 18.4%
Alawwal Bank ANB
SAR 314bn (fall of 1.8%YoY) in 1Q-2017, saw it market share
SAAB
decline to 18.9% from 19.4% in 1Q-2016. Alawwal Bank’s
Saudi Fransi Riyad
deposits fell 6.1% YoY in 1Q2017, which reduced its market
Samba
share from 5.1% to 4.8%.
Al Rajhi
1Q-2017 1Q-2016
7.9% 7.9% 8.5% 9.0% 9.5% 8.4% 9.3% 9.9% 10.3% 10.6%
16.3% 15.8%
NCB
Loans
0.0%
5.0%
10.0%
15.0%
18.9%
20.0%
19.4%
25.0%
Source: Company Financials, Bloomberg
The total loan book of Saudi Arabia’s banking sector
Loans Growth
declined 0.1% YoY to SAR 1.41tn toward the end of 1Q2017,
1,600
40%
registering a 10-year CAGR of 10.8%.
1,400
35%
than a year. Loans with a maturity of one to three years
1,000
posted a strong decline of 7.4% YoY, due to which its share contracted from 20.2% in 1Q2016 to 18.7% in 1Q2017.
In Bn SAR
About 49.9% of the loans extended have a maturity of less
1,200
20% 15%
600
10%
400 200
interest rate environment makes it easier for the banks to re-
0
price new loans.
5% 0% -5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q-2017
Loans
Loans Maturity- Growth
% Growth-RHS
Loans Share According to Maturity Profile
1,600
100% 90%
1,400 1,200 In Bn SAR
25%
800
The high concentration of short-term loans in a rising
390
th Grow % 13.3
442
284
Declin e 7.4%
263
1,000 800 600 400
734
Dec lin 4.4% e
28%
31%
80% 70% 60%
20.2%
18.7%
50% 40% 30%
702
200 -
30%
20%
52%
49.9%
10% Q1-2017
Q1-2016 Less than 1 Year
1 to 3 Years
Over 3 Years
0%
Q1-2016 Less than 1 Year
Q1-2017 1 to 3 Years
Over 3 Years Source: SAMA
3
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
Loans Breakdown
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Sector wise Loans Distribution
The commerce sector is the largest borrower among all
12.5%
sectors, accounting for 21.6% of total loans, followed by the manufacturing sector (12.5% of total loans). The construction
Manufacturing
7%
Construction
sector, which ranks third, witnessed a decline in borrowing due to which its share fell from 7.5% in 4Q2016 to 7.2% in 1Q2017.
Commerce
50%
Services
Retail Loans
Gov & Quasi Gov
21.6%
Miscellaneous
The sector’s retail loans [excluding real estate financing, finance leasing, and financing against shares (margin lending)] edged
3%
down 0.2% YoY (down 1.1% QoQ) to SAR 348.99bn in 1Q2017. Loans for vehicles are the biggest constituent of retail loans, accounting for almost 8.9% in 1Q2017. Loans for home renovation financing accounted for 7.9% of total retail loans. Of total retail loans, those acquired through credit cards accounted for 2.99% in 1Q2017, a jump from 2.95% in 1Q2016.
Retail Loans-Break down 90.0% 77.6%
80.0%
50.0% 40.0%
Starting 1Q2010, real estate loans registered a seven-year CAGR
10.0%
of 22.3% standing at SAR 212.5bn in 1Q2017. The retail and
0.0%
20.0% 10.5%
9.0%
7.9%
Home Renovation
18.7% in 1Q2016. Al Rajhi Bank, with the second largest market
Q12017
60% 50%
200
In Bn SAR
40%
150
30% 100
20%
50 0
10%
2010
2011
% Growth-Retail
2012
2013
2014
% Growth-Corporate
2015
% Growth-Total
share, witnessed an increase to 16.5% in 1Q2017 from 15.4% in 1Q2016. Alinma Bank was the second biggest gainer in terms of market share (after Al Rajhi Bank) in the loan market, while Saudi British Bank (SABB) was the biggest loser. SABB’s market share accounted for 8.6% in 1Q2017, a drop from 9.2% in 1Q2016. The market share of Shariah-compliant banks rose to 27.4% in
4
Albilad Aljazira SAIB Alinma Alawwal Bank
2.8% 2.6% 2.9% 3.0% 4.3% 4.3% 5.2% 4.2% 5.1% 5.5%
Corporate
0% Retail
Among other Shariah-compliant banks, Alinma’s market share
Riyad
increased from 4.2% in 1Q2016 to 5.2% in 1Q2017. In addition,
Al Rajhi
Bank Albilad witnessed a marginal increase in market share from
NCB 0.0%
1Q-2017 1Q-2016
8.3% 8.2% 8.6% 9.2% 8.8% 9.3% 9.2% 8.8% 10.1% 10.7%
ANB SAAB Samba
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1Q2017
Bank Market Share
Saudi Fransi
market share declined from 3.0% in 1Q2016 to 2.9% in 1Q2017.
2016
Source: SAMA
1Q2017 from 25.3% in 1Q2016. This was primarily led by Al Rajhi.
2.6% in 1Q2016 to 2.8% in 1Q2017. However, Bank AlJazira’s
Credit Cards/ Total Retail Loans
250
a decline in growth from 25.6% YoY in 1Q2016 to 14.4% in
witnessed a decline in market share to 18.2% in 1Q2017 from
Others
3.0%
Real Estate Loans
to SAR 112.5bn. However, corporate-sector loans witnessed
The sector’s biggest lender, National Commercial bank (NCB),
3.0%
Q12016
100.0bn in 1Q2017, whereas retail loan advanced 5.9% YoY
Bank-wise Market Share in Loans
8.9%
Vehicles
corporate sectors accounted for 52.9% and 47.1% of total real
1Q2017.
Credit Card Includes Retail Loans, acquired through credit cards
60.0%
30.0%
Corporate-sector real estate loans rose 14.4% YoY to SAR
80.2%
70.0%
Real Estate Loans
estate loans, respectively.
5%
16.5% 15.4%
2.0%
4.0%
6.0%
8.0%
18.2% 18.7%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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Among the 12 banks in the sector, five registered a YoY increase Bank Loans Distribution 300 22.3% in gross loans. Alinma Bank registered the strongest growth of 22.3% YoY in its loan book in 1Q2017, which helped it increase its market share.
20.0%
5.9%
250
15.0% 200 In Bn SAR
Al Rajhi, with a 5.9% YoY growth in gross loans, was the second best performer. Alawwal Bank, which saw its gross loans declined 8.8% YoY in 1Q2017, was the worst performer, followed by the Saudi British Bank (down 8.0% YoY). Albilad witnessed the slowest growth in loans (3.6% YoY).
25.0%
-4.0%
150
10.0%
-7.0%
3.7%
3.6%
-6.1%
0.0%
5.0%
-8.0% -2.0%
-4.2%
100
0.0%
-8.8%
-5.0% 50
-10.0%
-
Shariah-compliant banks showed an average growth rate of 6.9% YoY in gross loans in 1Q2017.
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
Q1-2016
Q1-2017
NCB
Riyad Samba SAAB Alawwal SAIB Bank
-15.0%
% growth
Non-Performing Loans
2.4% 1.77% 1.3%
0.85%
1.40%
Riyad Samba SAAB Alawwal SAIB Bank
0.00%
% Share of NPLs-RHS
89%
75.4%
74.1%
87%
93.3% 93%
83% 83%
83% 90%
87%
87%
90% 89%
83%
90%
60%
92%
Saudi Investment Bank posted the highest ADR of 95.2%, followed by Riyad Bank at 93.3% in 1Q2017. Samba recorded the lowest ADR of 74.1% in 1Q2017 compared to 75.4% in 1Q2016.
87%
The industry ADR ratio remained flat at 86.1% in 1Q2017 as total gross loans declined 1.2% while deposits saw a similar decline.
85%
NPLs-Industry Average Q1-2016
91%
Non-performing Loans-Q1-2017
93%
NCB
95.2%
1.2%
Albilad Aljazira Saudi Fransi
NPLs-Industry Average Q1-2017
ADR ratio
40%
0.50%
Performing Loans-Q1-2017
100%
80%
1.00%
91%
Al Rajhi Alinma ANB
2.00% 1.50%
88%
50 -
2.50%
NPLs-Industry Average Q1-2016 , 1.1%
Advances to Deposit Ratio
Notably, the Saudi Arabian Monetary Agency (SAMA) increased the regulatory ADR limit to 90% from 85%.
0.96%
100
1.4%
0.91%
150
NPLs-Industry Average Q1-2017 , 1.3%
0.80%
1.01%
Alawwal Bank had the highest NPL ratio of 2.40% and its NPL coverage ratio stood at 135% in 1Q2017. Riyad Bank registered the greatest improvement in NPL coverage from 144% in 1Q2016 to 251% in 1Q2017, while Saudi Investment Bank posted the biggest drop in NPL coverage ratio from 211% in 1Q2016 to 94% in 1Q2017.
200
In Bn SAR
Riyad Bank and SAMBA, with NPL ratios of 0.80% and 0.85%, respectively, are the best in the industry. The NPL coverage of Riyad Bank and SAMBA stood at 251% and 181%, respectively, in 1Q2017.
3.00%
1.6%
The sector’s non-performing loan ratio in 1Q2017 stood at Performing Loans to NPLs 1.27% compared to 1.15% in 1Q2016. The NPL coverage ratio 300 improved to 177% in 1Q2017 from 170% in 1Q2016. 250
20%
0%
Al Rajhi Alinma
ANB
Albilad AlJazira Saudi Fransi
Q12017 ADR
NCB
Riyad
Samba SAAB Alawwal SAIB Bank
Q12016 ADR Source: Company Financials
5
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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NIMS
NIM
1.80%
0.60% 0.40% 0.20% 0.00%
Al Rajhi Alinma ANB
Albilad AlJazira Saudi Fransi
Q12016
Absolute Cost on Saving and Time Deposits 80%
700 68%
600
60%
500 36%
36%
17% 10%
Al Rajhi Alinma ANB Albilad AlJazira Saudi NCB Fransi
Q12016
-20%
% Change Source: Company Financials, Bloomberg
Lending rates
1.43%
1.37%
1.23%
1.22%
1.00%
1.27%
1.35%
1.50%
1.35%
1.62%
2.00%
1.24%
2.36%
2.50%
Al Rajhi Alinma ANB
Albilad AlJazira Saudi NCB Fransi
1.15%
1.12%
1.07%
2.03%
0.00%
1.04%
0.50%
1Q 2016
5,000
Riyad Samba SAAB Alawwal SAIB Bank
Q1-2017
5.3%
4.0%
2.1% 3.6%
4,000 In MN SAR
Riyad Samba SAAB Alawwal SAIB Bank
Operating Income Breakdown
6,000
17.8% 17.9%
3,000
Retail
1Q 2017 43.1%
42.5%
Corporate Treasury
2,000
Investment Services and Brokerage Others
1,000 -
-10%
Q12017
Q1-2016
Company-wise Operating Income
0%
-10%
1.08%
NCB, with an operating income of SAR 4.9bn, contributed 22.5% to total sector earnings in 1Q2017, followed by Al Rajhi’s contribution of 17.9% (earnings of SAR 3.9bn).
10%
1%
1.28%
Treasury income rose 4.0% YoY, whereas investment income declined 8.3% YoY. Other income contracted 58.3% YoY.
20%
8%
1.20%
The corporate sector’s contribution advanced 2.9% from 30.3% in 1Q2016 to 33.2% in 1Q2017. Earnings from the corporate sector stood at SAR 7.2bn.
40% 30%
23%
300
-
50%
45%
44%
400
200
70%
60%
1.21%
Retail accounted for 43.1% of the total operating income in 1Q2017 compared to a share of 42.5% in 1Q2016. Retail income increased 4.8% YoY.
Riyad Samba SAAB Alawwal SAIB Bank
Q12017
100
The sector posted an operating income of SAR 21.6bn in 1Q2017 compared to SAR 20.9bn in 1Q2016, depicting a 3.3% YoY jump.
NCB
1.03%
Operating Income Breakdown
0.80%
1.28%
Saudi British Bank’s return on time and saving deposits of 0.48% was the lowest in the market, followed by Albilad (0.59%).
1.00%
1.11%
NCB recorded the highest return on time and savings deposits at 1.30%, followed by SAIB at 1.05%.
1.20%
1.08%
NCB reported the highest cost of SAR 861mn in 1Q2017 on savings deposits compared to SAR 961mn in 1Q2016, a decrease of 10.4% YoY. The highest jump in return on deposit was posted by Banque Saudi Fransi at 68.3% YoY.
1.40%
1.62%
Saudi Investment Bank recorded the greatest drop in NIM from 0.51% in 1Q2016 to 0.38% in 1Q2017, followed by NCB (0.43% to 0.32%). Al Rajhi Bank registered the largest increase in NIM. Its NIM rose by 0.27% in 1Q2017 to 0.47% from 0.20% in 1Q2016. Overall, the sector’s return on savings and time deposits increased 19% YoY in 1Q2017 compared to 103% YoY in 4Q2016.
1.60%
IN Mn SAR
Of the 12 banks, only three posted a decrease in its net interest margin (NIM).
33.2% Al Rajhi Alinma ANB
(1,000) Retail
Corporate
Albilad AlJazira Saudi Fransi
Treasury
NCB
Riyad
Samba SAAB Alawwal SAIB Bank
Investment Services and Brokerage
30.3%
Others Source: Company Financials
6
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RESEARCH DIVISION
Acting Head of Research
RESEARCH DIVISION
BROKERAGE AND INVESTMENT CENTERS DIVISION
Talha Nazar
Sultan Al Kadi, CAIA
Analyst
Jassim Al-Jubran
+966 11 2256250 [email protected]
+966 11 2256374 [email protected]
Analyst
Analyst
Waleed Al-jubayr
Muhanad Al-Odan
+966 11 2256146 [email protected]
+966 11 2256115 [email protected]
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment
sales
brokerage
Centers
Alaa Al-Yousef
Luay Jawad Al-Motawa
Mansour Hamad Al-shuaibi
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
+966 11 2256248 [email protected]
+966 12 6618443 [email protected]
Central Region
Sultan Ibrahim AL-Mutawa
Abdullah Al-Rahit
+966 11 2256364 [email protected]
+966 16 3617547 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
2. 3. 4.
Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
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Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
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Saudi Banking Sector – 1Q 2017 In 1Q2017, the balance sheet of Saudi Arabia’s banking sector increased 1.9% YoY and 0.5% QoQ to SAR 2,267bn. Total loans accounted for 72.3% of total assets, whereas deposits formed 71.0% of total liabilities. The banking sector’s balance sheet grew at a 10-year CAGR of 10.9%.
Saudi banking Sector Balance Sheet Growth
2,000
Saudi Banking Sector Balance Sheet Growth – 1Q2017 30%
2,500
25%
2,000
20% In Bn SAR
1,500 15%
2.3%
2.3%
2.2% 2.1%
1,500 In Bn SAR
2,500
2.0%
1,000
1,000
1.9%
10%
1.9%
500
500
1.8%
5% -
-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q 2017
Saudi Banking Assets-LHS
Q1-2016
0%
Saudi Banking Assets-LHS
% Growth-RHS
Banking Sector – Assets Breakdown – 1Q2017
1.7%
Q1-2017 % Growth (YoY)-RHS
Banking Sector – Liabilities & Capital Breakdown – 1Q2017
1%
1% 5%
10%
10%
Cash In Vault
1%
10%
Deposits with SAMA 10%
SAMA Bills
Deposits 15% Foreign Liabilities
Foreign Assets Loans to Private Sector
4%
Capital accounts
Loan to Gov & Quasi- Gov 71%
Fixed Assets 62%
Other Liabilities
OtherAssets Source: SAMA
The Saudi banking sector has 12 listed banks and other non-listed banks. In terms of the balance sheet size, National Commercial Bank (NCB) (assets of more than SAR 448.7bn) is the biggest bank in the Kingdom, accounting for 20.2% of the total market, followed by Al Rajhi Bank (an asset base of SAR 337.2bn and 15.2% of the market share). Samba (asset base of SAR 231.9bn) accounts for 10.5% while Riyadh Bank (total assets worth SAR 216.3bn) accounts for 9.8% of total banking assets. Of the 12 banks, Al Rajhi Bank, Alinma Bank, Bank Albilad, and Bank AlJazira are Shariah-compliant banks, accounting for 25.5% of total banking assets. Al Rajhi Bank is the largest Shariah-compliant bank in the Kingdom, accounting for 59.7% of the total market share in 1Q 2017 (down from 60.2% in 4Q 2016) among Shariah banks.
Market Share of Total Banking Assets – 1Q2017 5%
NCB
3% 3%
10%
Al Rajhi
20%
4%
Asset Market Share of Shariah-compliant Banks – 1Q2017
Samba
5%
Riyad
Al Rajhi
11%
SAAB 8%
Alinma
Saudi Fransi 15%
ANB Alawwal Bank
9%
19%
60%
Aljazira
SAIB
Albilad
Alinma 8%
10% 10%
Aljazira Albilad Source: Bloomberg
Acting Head of Research
Talha Nazar +966 11 2256250 [email protected]
1
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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Deposits Growth
Deposits Saudi banking deposits and money supply rose steadily at a
1,600
10-year CAGR of 8.4% and 8.5%, respectively. Total deposits
20%
1,400 1,200
in 1Q2016.
1,000
In Bn SAR
declined 0.01% YoY to SAR 1.608tn in 1Q2017 from SAR 1.609tn
Demand deposits advanced 1.1% YoY to SAR 995.9bn in 1Q2017
25%
1,800
15% 10%
800 5%
600 400
compared to SAR 985.4bn in 1Q2016.
0%
0
Of the total deposits, demand deposits account for 61.9% (up from 60.2% in 4Q2016), whereas time and savings deposits
Deposits-LHS
account for only 28.9%. The breakdown of deposits shows that almost 78.7% of the total deposits are held by individuals and 19.7% by government entities.
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q 2017
200
Money Supply(M3)-LHS
% Growth in deposits-RHS
Deposit Growth – 1Q2017 1,800
0.00%
-0.01%
1,600
-0.10%
1,400
while the government holds the remaining 9.0% (up from 6.3% in 4Q2016).
-0.20%
1,200
Bn SAR
Businesses and individuals hold 91.0% of the demand deposits,
1,000
-0.30%
800
-0.40%
600
With regard to time and savings deposits, businesses and individuals hold nearly 55.6%, while government entities hold
-0.50%
400
-0.60%
-0.59%
200 -
1Q2016 Demand-LHS Quasi-Monetary-LHS
44.4%.
Demand Deposits Break Down
-5%
-0.70%
1Q2017 Time & Savings-LHS % Growth (YoY)-RHS
Deposits Break Down
9%
9.2%
Business and Individuals Government Entities
Demand
28.9%
Time & Savings 60.6%
Quasi-Monetary
91%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 19.7%
44%
Business and Individuals Government Entities Others
Business and Individuals 56%
Government Entities
78.7%
Source: SAMA
2
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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Bank Deposits Growth
Deposits – Breakdown by Bank
350
Alinma Bank recorded the highest growth (18.4% YoY) in
300
deposits, improving its’ market share from 4.1% to 4.9% in
250
1Q2017. Banque Saudi Fransi stood second, increasing the
200
deposit base by 11.7% YoY and market share to 9.5% in 1Q2017 from 8.4% in 1Q2016.
15.0%
1.8%
8.8% YoY in its deposit base, as deposits fell from SAR 71bn to
0
YoY to SAR 154bn, causing its market share to fall to 9.3% in
0.0% -6.1%
-8.8%
-5.0% -10.0%
Al Rajhi Alinma
ANB Albilad Aljazira Saudi Fransi
1Q2016
NCB
Riyad Samba SAAB
1Q2017
Alawwal SAIB Bank
-15.0%
% Growth
Deposits Market Share Comparison
1Q2017 from 9.9% in the same period of the previous year.
2.6% 2.6% 3.0% 3.0% 3.9% 4.2% 4.9% 4.1% 4.8% 5.1%
Albilad AlJazira
Al Rajhi Bank, the largest Shariah-compliant bank, recorded a
SAIB
1.8% YoY rise in deposit base and an improvement in market
Alinma
share from 15.8% to 16.3% in 1Q2017. NCB with deposits of
5.0% -6.8%
-0.9% -1.7%
SAR 64bn and market share from 4.2% to 3.9% in 1Q2017. It was followed by Riyad Bank, which saw its deposits fall 7.0%
-7.0% -4.4%
-0.1%
100
Saudi Investment Bank registered the biggest decline of
10.0%
11.7%
150
50
20.0%
-3.8% 18.4%
Alawwal Bank ANB
SAR 314bn (fall of 1.8%YoY) in 1Q-2017, saw it market share
SAAB
decline to 18.9% from 19.4% in 1Q-2016. Alawwal Bank’s
Saudi Fransi Riyad
deposits fell 6.1% YoY in 1Q2017, which reduced its market
Samba
share from 5.1% to 4.8%.
Al Rajhi
1Q-2017 1Q-2016
7.9% 7.9% 8.5% 9.0% 9.5% 8.4% 9.3% 9.9% 10.3% 10.6%
16.3% 15.8%
NCB
Loans
0.0%
5.0%
10.0%
15.0%
18.9%
20.0%
19.4%
25.0%
Source: Company Financials, Bloomberg
The total loan book of Saudi Arabia’s banking sector
Loans Growth
declined 0.1% YoY to SAR 1.41tn toward the end of 1Q2017,
1,600
40%
registering a 10-year CAGR of 10.8%.
1,400
35%
than a year. Loans with a maturity of one to three years
1,000
posted a strong decline of 7.4% YoY, due to which its share contracted from 20.2% in 1Q2016 to 18.7% in 1Q2017.
In Bn SAR
About 49.9% of the loans extended have a maturity of less
1,200
20% 15%
600
10%
400 200
interest rate environment makes it easier for the banks to re-
0
price new loans.
5% 0% -5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q-2017
Loans
Loans Maturity- Growth
% Growth-RHS
Loans Share According to Maturity Profile
1,600
100% 90%
1,400 1,200 In Bn SAR
25%
800
The high concentration of short-term loans in a rising
390
th Grow % 13.3
442
284
Declin e 7.4%
263
1,000 800 600 400
734
Dec lin 4.4% e
28%
31%
80% 70% 60%
20.2%
18.7%
50% 40% 30%
702
200 -
30%
20%
52%
49.9%
10% Q1-2017
Q1-2016 Less than 1 Year
1 to 3 Years
Over 3 Years
0%
Q1-2016 Less than 1 Year
Q1-2017 1 to 3 Years
Over 3 Years Source: SAMA
3
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
Loans Breakdown
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Sector wise Loans Distribution
The commerce sector is the largest borrower among all
12.5%
sectors, accounting for 21.6% of total loans, followed by the manufacturing sector (12.5% of total loans). The construction
Manufacturing
7%
Construction
sector, which ranks third, witnessed a decline in borrowing due to which its share fell from 7.5% in 4Q2016 to 7.2% in 1Q2017.
Commerce
50%
Services
Retail Loans
Gov & Quasi Gov
21.6%
Miscellaneous
The sector’s retail loans [excluding real estate financing, finance leasing, and financing against shares (margin lending)] edged
3%
down 0.2% YoY (down 1.1% QoQ) to SAR 348.99bn in 1Q2017. Loans for vehicles are the biggest constituent of retail loans, accounting for almost 8.9% in 1Q2017. Loans for home renovation financing accounted for 7.9% of total retail loans. Of total retail loans, those acquired through credit cards accounted for 2.99% in 1Q2017, a jump from 2.95% in 1Q2016.
Retail Loans-Break down 90.0% 77.6%
80.0%
50.0% 40.0%
Starting 1Q2010, real estate loans registered a seven-year CAGR
10.0%
of 22.3% standing at SAR 212.5bn in 1Q2017. The retail and
0.0%
20.0% 10.5%
9.0%
7.9%
Home Renovation
18.7% in 1Q2016. Al Rajhi Bank, with the second largest market
Q12017
60% 50%
200
In Bn SAR
40%
150
30% 100
20%
50 0
10%
2010
2011
% Growth-Retail
2012
2013
2014
% Growth-Corporate
2015
% Growth-Total
share, witnessed an increase to 16.5% in 1Q2017 from 15.4% in 1Q2016. Alinma Bank was the second biggest gainer in terms of market share (after Al Rajhi Bank) in the loan market, while Saudi British Bank (SABB) was the biggest loser. SABB’s market share accounted for 8.6% in 1Q2017, a drop from 9.2% in 1Q2016. The market share of Shariah-compliant banks rose to 27.4% in
4
Albilad Aljazira SAIB Alinma Alawwal Bank
2.8% 2.6% 2.9% 3.0% 4.3% 4.3% 5.2% 4.2% 5.1% 5.5%
Corporate
0% Retail
Among other Shariah-compliant banks, Alinma’s market share
Riyad
increased from 4.2% in 1Q2016 to 5.2% in 1Q2017. In addition,
Al Rajhi
Bank Albilad witnessed a marginal increase in market share from
NCB 0.0%
1Q-2017 1Q-2016
8.3% 8.2% 8.6% 9.2% 8.8% 9.3% 9.2% 8.8% 10.1% 10.7%
ANB SAAB Samba
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1Q2017
Bank Market Share
Saudi Fransi
market share declined from 3.0% in 1Q2016 to 2.9% in 1Q2017.
2016
Source: SAMA
1Q2017 from 25.3% in 1Q2016. This was primarily led by Al Rajhi.
2.6% in 1Q2016 to 2.8% in 1Q2017. However, Bank AlJazira’s
Credit Cards/ Total Retail Loans
250
a decline in growth from 25.6% YoY in 1Q2016 to 14.4% in
witnessed a decline in market share to 18.2% in 1Q2017 from
Others
3.0%
Real Estate Loans
to SAR 112.5bn. However, corporate-sector loans witnessed
The sector’s biggest lender, National Commercial bank (NCB),
3.0%
Q12016
100.0bn in 1Q2017, whereas retail loan advanced 5.9% YoY
Bank-wise Market Share in Loans
8.9%
Vehicles
corporate sectors accounted for 52.9% and 47.1% of total real
1Q2017.
Credit Card Includes Retail Loans, acquired through credit cards
60.0%
30.0%
Corporate-sector real estate loans rose 14.4% YoY to SAR
80.2%
70.0%
Real Estate Loans
estate loans, respectively.
5%
16.5% 15.4%
2.0%
4.0%
6.0%
8.0%
18.2% 18.7%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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Among the 12 banks in the sector, five registered a YoY increase Bank Loans Distribution 300 22.3% in gross loans. Alinma Bank registered the strongest growth of 22.3% YoY in its loan book in 1Q2017, which helped it increase its market share.
20.0%
5.9%
250
15.0% 200 In Bn SAR
Al Rajhi, with a 5.9% YoY growth in gross loans, was the second best performer. Alawwal Bank, which saw its gross loans declined 8.8% YoY in 1Q2017, was the worst performer, followed by the Saudi British Bank (down 8.0% YoY). Albilad witnessed the slowest growth in loans (3.6% YoY).
25.0%
-4.0%
150
10.0%
-7.0%
3.7%
3.6%
-6.1%
0.0%
5.0%
-8.0% -2.0%
-4.2%
100
0.0%
-8.8%
-5.0% 50
-10.0%
-
Shariah-compliant banks showed an average growth rate of 6.9% YoY in gross loans in 1Q2017.
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
Q1-2016
Q1-2017
NCB
Riyad Samba SAAB Alawwal SAIB Bank
-15.0%
% growth
Non-Performing Loans
2.4% 1.77% 1.3%
0.85%
1.40%
Riyad Samba SAAB Alawwal SAIB Bank
0.00%
% Share of NPLs-RHS
89%
75.4%
74.1%
87%
93.3% 93%
83% 83%
83% 90%
87%
87%
90% 89%
83%
90%
60%
92%
Saudi Investment Bank posted the highest ADR of 95.2%, followed by Riyad Bank at 93.3% in 1Q2017. Samba recorded the lowest ADR of 74.1% in 1Q2017 compared to 75.4% in 1Q2016.
87%
The industry ADR ratio remained flat at 86.1% in 1Q2017 as total gross loans declined 1.2% while deposits saw a similar decline.
85%
NPLs-Industry Average Q1-2016
91%
Non-performing Loans-Q1-2017
93%
NCB
95.2%
1.2%
Albilad Aljazira Saudi Fransi
NPLs-Industry Average Q1-2017
ADR ratio
40%
0.50%
Performing Loans-Q1-2017
100%
80%
1.00%
91%
Al Rajhi Alinma ANB
2.00% 1.50%
88%
50 -
2.50%
NPLs-Industry Average Q1-2016 , 1.1%
Advances to Deposit Ratio
Notably, the Saudi Arabian Monetary Agency (SAMA) increased the regulatory ADR limit to 90% from 85%.
0.96%
100
1.4%
0.91%
150
NPLs-Industry Average Q1-2017 , 1.3%
0.80%
1.01%
Alawwal Bank had the highest NPL ratio of 2.40% and its NPL coverage ratio stood at 135% in 1Q2017. Riyad Bank registered the greatest improvement in NPL coverage from 144% in 1Q2016 to 251% in 1Q2017, while Saudi Investment Bank posted the biggest drop in NPL coverage ratio from 211% in 1Q2016 to 94% in 1Q2017.
200
In Bn SAR
Riyad Bank and SAMBA, with NPL ratios of 0.80% and 0.85%, respectively, are the best in the industry. The NPL coverage of Riyad Bank and SAMBA stood at 251% and 181%, respectively, in 1Q2017.
3.00%
1.6%
The sector’s non-performing loan ratio in 1Q2017 stood at Performing Loans to NPLs 1.27% compared to 1.15% in 1Q2016. The NPL coverage ratio 300 improved to 177% in 1Q2017 from 170% in 1Q2016. 250
20%
0%
Al Rajhi Alinma
ANB
Albilad AlJazira Saudi Fransi
Q12017 ADR
NCB
Riyad
Samba SAAB Alawwal SAIB Bank
Q12016 ADR Source: Company Financials
5
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2017
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NIMS
NIM
1.80%
0.60% 0.40% 0.20% 0.00%
Al Rajhi Alinma ANB
Albilad AlJazira Saudi Fransi
Q12016
Absolute Cost on Saving and Time Deposits 80%
700 68%
600
60%
500 36%
36%
17% 10%
Al Rajhi Alinma ANB Albilad AlJazira Saudi NCB Fransi
Q12016
-20%
% Change Source: Company Financials, Bloomberg
Lending rates
1.43%
1.37%
1.23%
1.22%
1.00%
1.27%
1.35%
1.50%
1.35%
1.62%
2.00%
1.24%
2.36%
2.50%
Al Rajhi Alinma ANB
Albilad AlJazira Saudi NCB Fransi
1.15%
1.12%
1.07%
2.03%
0.00%
1.04%
0.50%
1Q 2016
5,000
Riyad Samba SAAB Alawwal SAIB Bank
Q1-2017
5.3%
4.0%
2.1% 3.6%
4,000 In MN SAR
Riyad Samba SAAB Alawwal SAIB Bank
Operating Income Breakdown
6,000
17.8% 17.9%
3,000
Retail
1Q 2017 43.1%
42.5%
Corporate Treasury
2,000
Investment Services and Brokerage Others
1,000 -
-10%
Q12017
Q1-2016
Company-wise Operating Income
0%
-10%
1.08%
NCB, with an operating income of SAR 4.9bn, contributed 22.5% to total sector earnings in 1Q2017, followed by Al Rajhi’s contribution of 17.9% (earnings of SAR 3.9bn).
10%
1%
1.28%
Treasury income rose 4.0% YoY, whereas investment income declined 8.3% YoY. Other income contracted 58.3% YoY.
20%
8%
1.20%
The corporate sector’s contribution advanced 2.9% from 30.3% in 1Q2016 to 33.2% in 1Q2017. Earnings from the corporate sector stood at SAR 7.2bn.
40% 30%
23%
300
-
50%
45%
44%
400
200
70%
60%
1.21%
Retail accounted for 43.1% of the total operating income in 1Q2017 compared to a share of 42.5% in 1Q2016. Retail income increased 4.8% YoY.
Riyad Samba SAAB Alawwal SAIB Bank
Q12017
100
The sector posted an operating income of SAR 21.6bn in 1Q2017 compared to SAR 20.9bn in 1Q2016, depicting a 3.3% YoY jump.
NCB
1.03%
Operating Income Breakdown
0.80%
1.28%
Saudi British Bank’s return on time and saving deposits of 0.48% was the lowest in the market, followed by Albilad (0.59%).
1.00%
1.11%
NCB recorded the highest return on time and savings deposits at 1.30%, followed by SAIB at 1.05%.
1.20%
1.08%
NCB reported the highest cost of SAR 861mn in 1Q2017 on savings deposits compared to SAR 961mn in 1Q2016, a decrease of 10.4% YoY. The highest jump in return on deposit was posted by Banque Saudi Fransi at 68.3% YoY.
1.40%
1.62%
Saudi Investment Bank recorded the greatest drop in NIM from 0.51% in 1Q2016 to 0.38% in 1Q2017, followed by NCB (0.43% to 0.32%). Al Rajhi Bank registered the largest increase in NIM. Its NIM rose by 0.27% in 1Q2017 to 0.47% from 0.20% in 1Q2016. Overall, the sector’s return on savings and time deposits increased 19% YoY in 1Q2017 compared to 103% YoY in 4Q2016.
1.60%
IN Mn SAR
Of the 12 banks, only three posted a decrease in its net interest margin (NIM).
33.2% Al Rajhi Alinma ANB
(1,000) Retail
Corporate
Albilad AlJazira Saudi Fransi
Treasury
NCB
Riyad
Samba SAAB Alawwal SAIB Bank
Investment Services and Brokerage
30.3%
Others Source: Company Financials
6
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RESEARCH DIVISION
Acting Head of Research
RESEARCH DIVISION
BROKERAGE AND INVESTMENT CENTERS DIVISION
Talha Nazar
Sultan Al Kadi, CAIA
Analyst
Jassim Al-Jubran
+966 11 2256250 [email protected]
+966 11 2256374 [email protected]
Analyst
Analyst
Waleed Al-jubayr
Muhanad Al-Odan
+966 11 2256146 [email protected]
+966 11 2256115 [email protected]
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment
sales
brokerage
Centers
Alaa Al-Yousef
Luay Jawad Al-Motawa
Mansour Hamad Al-shuaibi
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
+966 11 2256248 [email protected]
+966 12 6618443 [email protected]
Central Region
Sultan Ibrahim AL-Mutawa
Abdullah Al-Rahit
+966 11 2256364 [email protected]
+966 16 3617547 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
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Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Asset Management | Brokerage | Corporate Finance | Custody | Advisory Head Office: King Fahad Road, P.O. Box: 20438, Riyadh 11455, Saudi Arabia، Tel: 011 2256000 - Fax: 011 2256068
Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
