Saudi Arabian Banking Sector Report
FALCOM SECTOR REPORT
SAUDI ARABIAN BANKING SECTOR REPORT First Half 2009
September 1, 2009
Gaurav Kumar Analyst Snehdeep Fulzele Head of Research +966 1 211 8455 [email protected]
FALCOM Financial Services P.O. Box 884 Riyadh 11421 Kingdom of Saudi Arabia
2009
EXECUTIVE SUMMARY
Saudi Arabian Banking Sector – Sturdy in the Storm With its epicentre in the US, the global financial crisis has sent shock waves throughout the world. Unlike the dot com bubble which emanated from the overvaluation of the software industry and crises related to currency and policy imbalances, the current crisis has its resemblance with the Great Depression of 1929 and the savings and loans crisis of 1980s, where banks involvement had been central to the crisis. Without exception, the Saudi Banking system also felt the tremors, however, the contraction here was relatively low and the banking system has been relatively resilient to the crisis. Continued growth in total assets, increasing deposits, diversified loan portfolios and rise in investments further attest the sturdiness and resilience of the Saudi Banking sector. Twelve domestic banks and growing number of foreign banks (eight as of now) are managing the expectations and needs of the burgeoning consumption oriented Saudi economy. In the second quarter of 2009, Saudi Arabia faced the defaults by two high profile families. Saudi Arabian Monetary Agency (SAMA) froze the bank accounts of Mr. Maan Al Sanea, the founder of Saad group, and his family. Apart from those mentioned above, there have not been any further threats of significant defaults. In a recent interview, Mr. Al-Jasser, governor of SAMA expressed his views on the two families and mentioned that there are no systemic risks on the Saudi banking system from their debt; however, he said the profitability of banks might get affected. He also mentioned about the setting up of a special committee which will investigate the two firms and take appropriate actions. He also ruled out the moves to buy the debts of the two troubled families. The Saudi Central Bank, SAMA (Saudi Arabian Monetary Agency) has been proactively managing the liquidity in the Saudi economy. Amid global financial crises, SAMA undertook a number of measures to pump in liquidity into the local market and spur lending by the commercial banks; the regulator cut the official repo and reverse repo rates to 2% and 0.25% respectively since October 2008, decreased the reserve requirement on demand deposits from 13% to 7%, injected liquidity into the banking sector through demand deposits and provided guarantees for deposits at commercial banks. In order to apply international control and strengthen risk management practices of KSA banks, SAMA has also implemented the Basel II standard in The Kingdom. The Saudi banks have relatively better capital adequacy ratios compared to their global peers. Nominal GDP of the Kingdom grew at a CAGR of 17.1% over five years until 2008. IMF estimates real GDP to shrink by 1% in 2009, however, the forecasted growth of real GDP for 2010 is 2.9%. As per SAMA annual report, the country had a population of 24.8 million in 2008. IMF expects the Saudi population to grow at around 2.5% in 2009 and at a CAGR of 3.2% from 2009 to 2014. According to SAMA, around 27% of the population is Non-Saudi and 78% of the population is below the age of 40 th years. The Kingdom was the 37 richest country in the world with per capita GDP of USD 23,834. The per capita GDP of The Kingdom increased at a CAGR of 4% from 2006 to 2008. To manage the expectations of such diverse and growing population is a challenge that is constantly accomplished by the technology savvy banks. Islamic banking is attracting world attention for its conservative policies. Banks in The Kingdom give special importance to Sharia’ compliant banking practices. Four banks viz. Al Rajhi Bank, Al Inma Bank, Al Bilad Bank and Al Jazira Bank undertake only Islamic transactions of which Al Rajhi Bank is the largest Islamic bank in the world. These banks have comparatively higher capital adequacy ratios and also enjoy relatively higher spreads. With increasing competition in domestic market due to entry of foreign banks, domestic banks are tapping opportunities beyond the country’s boundaries as well. This report takes stock of Saudi Banking Sector and discusses drivers, challenges, emerging trends among other aspects of the sector. FALCOM Research has calculated various financial ratios and provided the ranking matrix on various parameters.
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Contents Contents
Banking Banking Sector Sector –– Kingdom Kingdom of of Saudi Saudi Arabia Arabia................................................................................ ................................................................................1 1 1. O verview .................................................................................................................................................... 1 1.Overview .................................................................................................................................................... 1 2. 2.D Drivers rivers for for Banking Banking Sector Sector in in Saudi Saudi Arabia Arabia............................................................................................... ...............................................................................................11 3. C hallenges for Banking Sector in Saudi Arabia 3.Challenges for Banking Sector in Saudi Arabia........................................................................................ ........................................................................................33 4. 4.KKey ey Trends Trends................................................................................................................................................ ................................................................................................................................................44 5. T he Banks .................................................................................................................................................. 5.The Banks..................................................................................................................................................77 6. 6.PPorter’s orter’s Five Five Forces................................................................................................................................. Forces.................................................................................................................................11 11 7. O ur Outlook ............................................................................................................................................. 11 7.Our Outlook ............................................................................................................................................. 11 8. 8.SStock tock Market Market Perspective Perspective........................................................................................................................ ........................................................................................................................12 12
Key Key Highlights Highlights xx
The The total total assets assets of of commercial commercial banks’ banks’ in in The The Kingdom Kingdom increased increased at at aa CAGR CAGR of of 18.5% 18.5% which which isis in in line line with with the the growth growth in in nominal nominal GDP GDP of of 17.1% 17.1% (2003-08). (2003-08).
xx
SAMA SAMA cut cut the the official official repo repo and and reverse reverse repo repo rates rates to to 2% 2% and and 0.25% 0.25% respectively respectively since since October October 2008 and decreased the reserve requirement on demand deposits from 13% to 7%. 2008 and decreased the reserve requirement on demand deposits from 13% to 7%.
xx
The The average average interbank interbank lending lending rate rate in in The The Kingdom Kingdom has has declined declined significantly significantly from from September September 2008 2008 levels. levels.
xx
Total Total number number of of bank bank branches branches in in The The Kingdom Kingdom increased increased by by 17% 17% from from 1,203 1,203 in in 2003 2003 to to 1,410 1,410 in in June 2009. June 2009.
xx
Number Number of of ATMs ATMs increased increased at at aa CAGR CAGR of of 19% 19% from from 2003 2003 to to 2008; 2008; in in H1 H1 2009 2009 itit increased increased by by 7%. 7%.
xx
The The total total assets assets of of commercial commercial banks banks in in The The Kingdom Kingdom grew grew by by 2.7% 2.7% in in H1 H1 2009. 2009.
xx
The The loans loans and and advances advances to to the the private private sector sector declined declined by by around around 1% 1% in in H1 H1 2009 2009 due due to to bank’s bank’s preference preference towards towards holding holding cash cash which which led led to to the the increase increase in in cash cash and and deposits deposits with with SAMA. SAMA.
xx
Short Short term term loans loans isis more more prevalent prevalent in in The The Kingdom Kingdom accounting accounting for for around around 60% 60% of of the the loans loans && advances to private & govt. sector. advances to private & govt. sector.
xx
The The deposits deposits grew grew at at CAGR CAGR of of 18.5% 18.5% from from 2003 2003 to to 2008, 2008, however, however, in in H1 H1 2009 2009 the the deposits deposits increased increased at at aa slower slower pace pace of of 8%. 8%.
xx
After After declining declining for for the the last last two two years, years, net net foreign foreign assets assets increased increased by by 8% 8% in in H1 H1 2009. 2009.
xx
In In order order to to measure measure and and compare compare the the financial financial health health of of the the banks, banks, FALCOM FALCOM has has assigned assigned rankings rankings to to each each of of the the banks banks on on the the basis basis of of various various financial financial parameters. parameters.
xx
The The total total market market capitalization capitalization of of eleven eleven listed listed banks banks represents represents around around 28.5% 28.5% of of the the market market th capitalization capitalization of of the the index index (as (as on on 26 26th August August 2009). 2009).
xx
th Banking Banking sector sector index index gained gained 10.5% 10.5% till till 26 26th August August 2009. 2009.
xx
th As As on on 26 26th August August 2009, 2009, the the banking banking sector sector index index had had aa lower lower PE PE ratio ratio than than TASI. TASI.
xx
FALCOM FALCOM Research Research has has ranked ranked the the banking banking stocks stocks on on the the basis basis of of the the valuation valuation and and capitalization parameters. capitalization parameters.
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SAUDI ARABIAN BANKING SECTOR REPORT
Banking Sector – Kingdom of Saudi Arabia
1.
Overview
Banking sector plays an important role in the economy by acting as an intermediary between the suppliers of credit on one side and those in need of it on the other side. The banking sector (as defined in this report) in Saudi Arabia consists of eleven publicly listed banks and National Commercial Bank (NCB). Prior to the discovery of oil in 1939, the financial services sector in The Kingdom consisted of money exchangers and trading houses. SAMA was established in 1952 to regulate the banking sector in The Kingdom. The first local bank to receive license from SAMA was NCB in 1953 followed by Riyad Bank in 1955 and Al-Watany Bank in 1958 (operations of Al-Watany bank merged with that of Riyad Bank). The most recent bank to get license was Alinma Bank (in May 2008). Prior to Alinma, Al Bilad Bank, which was formed by the merger of eight money exchangers, received the license in 2005. Five of the eleven listed banks (namely Riyad Bank, SAMBA, Al Rajhi Bank, Al Bilad Bank and Alinma Bank) and NCB are local whereas the rest have foreign participation with SABB, Saudi Hollandi Bank, Banque Saudi Fransi and Arab National Bank having substantial foreign ownership. In the last one decade, SAMA has offered licenses to a number of regional and international players to operate in The Kingdom. Gulf International Bank of Bahrain was the first to acquire the license in 2000. The regional and foreign banks having operations in The Kingdom currently include Gulf International Bank of Bahrain, National Bank of Kuwait, Emirates Bank and Bank Muscat.
2.
Drivers for Banking Sector in Saudi Arabia 1. Economic growth – The growth of the banking sector is directly correlated with the growth of the economy. The increase in economic activity is funded by the growth in credit from banking institutions. The total assets of commercial banks’ in The Kingdom increased at a CAGR of 18.5% which is in line with the growth in nominal GDP of 17.1% (2003-08). As per the IMF estimates, the real GDP of The Kingdom is expected to reduce by around 1% in 2009 which might lead to a decline in credit growth. 2. Monetary policies of SAMA – The monetary policies undertaken by the regulator also has a direct impact on banking activities in an Economy. SAMA uses tools such as the repurchase rate, reverse repurchase rate and reserve requirements to monitor the growth of banking sector. Amid global financial crises, SAMA undertook a number of measures to pump in liquidity into the local market and spur lending by the commercial banks; the regulator cut the official repo and reverse repo rates to 2% and 0.25% respectively since October 2008, decreased the reserve requirement on demand deposits from 13% to 7%, injected liquidity into the banking sector through demand deposits and provided guarantees for deposits at commercial banks. All these positive efforts by SAMA have helped the banking sector in The Kingdom to weather the global crisis relatively well. However, lately the banks in The Kingdom are feeling some pain related to credit problems.
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Figure 1: Historical Repurchase and Reverse Repurchase Rates in The Kingdom
8
%
6 4 2
Repo
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
0
Reverse Repo
th
Source: Bloomberg. Data till 6 August 2009.
3. Improving liquidity and confidence levels among banks – The average interbank lending rate in The Kingdom has declined significantly from September 2008 levels suggesting increasing liquidity and rising confidence in the banking sector. Figure 2: One month and three month Average Saudi Inter Bank Offer rates
6 5
%
4 3 2 1
1 Month Avg. SIBOR
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
0
3 Month Avg. SIBOR
th
Source: Bloomberg. Data till 6 August 2009.
4. Income levels – The income levels in The Kingdom are relatively high. As per IMF 2008 estimates, The Kingdom was the 37th richest country in the world with per capita GDP of USD 23,834. The per capita GDP of The Kingdom increased at a CAGR of 4% from 2006 to 2008. The value is expected to increase at a slower pace in 2009 mainly due to expected 1% decline in real GDP.
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Figure 3: Per capita GDP and its growth rate for The Kingdom
5%
24,000
4%
23,500
3%
USD
23,000
2% 1%
22,500
0%
22,000
-1%
21,500
-2% -3%
21,000 2006
2007 GDP per capita
2008E
2009E
Annual Growth
Source: IMF
5. Population growth and favourable demographic profile – %. As per SAMA annual report, the country had a population of 24.8 million in 2008. IMF expects the Saudi population to grow at around 2.5% in 2009 and at a CAGR of 3.2% from 2009 to 2014. In 2008, around 32% of the population was below the age of 15, the income levels are expected to increase in coming years as this set of population starts earning. The increase in income levels are expected to increase the deposits for the banks.
3.
Challenges for Banking Sector in Saudi Arabia 1. Declining savings rate – The savings rate (private & govt., at current prices) in The Kingdom declined from 47% in 2005 to around 42% in 2008 (Source: Central Department of Statistics & Information, and Ministry of Economy & Planning of Saudi Arabia). 2. Decline in International Trade – Due to the decline in international trade, the private sector lending related to imports and exports in The Kingdom are expected to grow at a slower pace than historical levels. However, our outlook remains positive for 2010 as the global economy starts to recover. 3. Lack of mortgage laws – Due to the lack of proper mortgage laws in The Kingdom, banks are not tapping the potential mortgage market.
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4.
Key Trends
Increasing branch and ATM coverage Total number of bank branches in The Kingdom increased by 17% from 1,203 in 2003 to 1,410 in June 2009. Number of ATMs increased at a CAGR of 19% from 2003 to 2008; in H1 2009 it increased by 7%. The bank branch and ATM coverage as indicated by number of branches and ATMs per 10,000 sq. km also increased significantly from 2003 to June 2009.
50
6.8
45
6.6
40
6.4
35
6.2
30
6.0
25
5.8
20
5.6
15 10
5.4
5
5.2 5.0
0 2003
2004
2005
2006
ATMs per 10,000 sq km
2007
2008
Number of Branches per 10,000 sq. km
Number of ATMs per 10,000 sq. km
Figure 4: Branch and ATM coverage in The Kingdom
Q2 2009
Number of Branches per 10,000 sq km
Source: SAMA, FALCOM Research, IMF
Increasing use of banking services like cards and POS transactions in The Kingdom The number of ATM cards issued in The Kingdom doubled from 6 million in 2003 to 13 million in June 2009. Also, the number of ATM and POS transactions done per day tripled from around 1 million in 2003 to 3 million in June 2009, suggesting the increasing penetration of banking services in The Kingdom. Given the fact that around one third of the population is below 15 and the high spending habits of residents, we expect the penetration to increase further in coming years.
0.6
3,500
0.5
3,000 2,500
0.4
2,000 0.3 1,500 0.2
1,000
0.1
500 0
0.0 2003
2004
2005
Number of cards per person
2006
2007
2008
Number of ATM and POS transactions per day ('000)
Number of cards issued per person
Figure 5: Penetration of transaction services of banks in The Kingdom
Q2 2009
Number of POS and ATM transactions per day
Source: SAMA, FALCOM Research, IMF
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Increasing total assets of commercial banks The total assets of commercial banks in The Kingdom grew at a CAGR of 19% from 2003 to 2008 and by 2.7% in H1 2009. The growth was mainly fuelled by the inflow of petrodollars in the last five years. The growth is expected to be sluggish for 2009; however, from 2010 onwards we expect healthy growth. Figure 6: Commercial Banks’ Total Assets Composition (SR million)
100%
Total - SR 861,089 million 19,943
Total - SR 1,075,222 million
Total - SR 1,302,272 million
35,586
42,873
8,353
9,757
Total - SR 1,337,681 million 36,171
10,624
12,121
90% 80% 70% 60%
773,552
650,936
981,749
997,616
50% 40% 30% 20%
147,712
129,796
10%
39,843
0%
98,595
12,218
2006 Cash in Vault
86,164
10,019
2007 Deposits with SAMA
178,872
153,986 11,007
118,479
2008
Foreign Assets
Total Claims*
10,289
Jun-09 Fixed Assets
Other Assets
Source: SAMA. *Total claims include claims on private sector, govt. & quasi-govt. sector, non-monetary financial institutions and banks.
Lending to private sector declined in H1 2009 The loans and advances to the private sector increased at a CAGR of 27% from 2003 to 2008, however, in H1 2009 the loans have declined by around 1% due to bank’s preference towards holding cash which is evident from the increase in cash and deposits with SAMA. We expect the lending to start growing by the end of 2009 as the global markets recover and the economic activity in The Kingdom picks up.
Short term lending is more prevalent in The Kingdom Short term lending is more prevalent in The Kingdom than medium/long term. Short term loans account for around 60% of the loans & advances to private & govt. sector followed by long term (25%). Figure 7: Bank credit to private and govt. sector by maturity 800,000 700,000
SR million
600,000 500,000 400,000 300,000 200,000 100,000 0 2003
2004
Short Term (less than 1 year)
2005
2006
Medium Term (1-3 years)
2007
2008
Jun-09
Long Term (over 3 years)
Source: SAMA
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Growing deposit base The deposits grew at CAGR of 18.5% from 2003 to 2008, however, in H1 2009 the deposits increased at a slower pace of 8%. Though demand deposits and quasi monetary deposits (mainly foreign currency reserves) recorded increase in value, time & savings deposits decreased in H1 2009. Figure 8: Commercial Banks’ Total Liabilities Composition (SR million) 100%
Total - SR 861,089 million
Total - SR 1,075,222 million
Total - SR 1,302,272 million
Total - SR 1,337,681 million 101,168
90%
76,835 16,731
80%
114,612
90,029 20,832 136,290
70%
59,199
105,213
112,466
78,116
591,259
717,564
846,118
916,444
2006
2007
2008
Jun-09
2,453
5,294
116,639 28,521 161,750
36,778
34,407
25,863
181,683
60% 50% 40% 30% 20% 10% 0%
Total Deposits
Foreign Liabilities
Capital Accounts*
Interbank Liabilities
Repos
Other Liabilities
Source: SAMA. *Capital Accounts include reserves, capital and period profits
Figure 9: Deposit composition of commercial banks 1,000,000 900,000 800,000
SR million
700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2003
2004
2005 Demand
2006 Time & savings
2007
2008
Jun-09
Other Quasi Monetary
Source: SAMA
Investments by banks in private and govt. sector as a percentage of deposits declined in H1 2009 The investments by banks in the private sector & govt. sector increased at a CAGR of 24% and 7% respectively from 2003 to 2008. However, in H1 2009, the investments in private sector and government sector declined by 2% and 13% respectively. The decline in govt. sector securities might be because of buyback of securities by SAMA in the open market to inject liquidity.
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After declining for the last two years, net foreign assets increased by 8% in H1 2009 The foreign assets and liabilities grew at a CAGR of 14% and 23% respectively from 2003 to 2008 causing the net foreign assets to increase slightly at a CAGR of 0.2%. However, in first half 2009, the foreign assets increased by 16% and foreign liabilities declined by 31% causing the net foreign assets to boost by 143%. Table 1: Key Ratios Ratio Analysis
2006
2007
2008
Jun-09
Growth of Total Assets
13.4%
24.9%
21.1%
2.7%
Growth of Total Deposits
20.8%
21.4%
17.9%
8.3%
Growth of Loans and Advances
10.3%
21.7%
28.0%
-0.7%
167.5%
-39.8%
-2.3%
142.7%
107.3%
105.8%
115.4%
103.2%
Cash in Vault/Total Deposits
2.1%
1.4%
1.3%
1.1%
Deposits with SAMA/Total Deposits
6.7%
13.7%
10.2%
12.9%
15.1%
13.7%
11.8%
13.4%
2.4%
2.9%
2.6%
2.3%
20.8%
20.1%
24.8%
20.0%
Growth Ratios
Growth of Net Foreign Assets Performance Ratios Bank Claims on Private & Govt./Total Deposits
Foreign Assets/Total Assets Investments in private sector/Total Deposits Investments in government sector/Total Deposits Source: SAMA
Geographic Diversification The banks in The Kingdom lately have started to look for opportunities outside where Islamic banking services are prevalent. Al Rajhi Bank started its operations in Malaysia in 2006 and was the first foreign bank to receive full-banking license in Malaysia. Al Rajhi Bank currently has 19 branches in Malaysia with plans to increase this number in the future. Saudi American Bank (SAMBA) has international presence since long time now; SAMBA has full-fledged banking operations in UK (for over 20 years), Dubai (started last year) and Pakistan (started last year).
5.
The Banks
Asset market share, growth and return on assets The total assets of the banking sector grew by 8.8% from SR 1.21 trillion on 30th June 2008 to SR 1.31 trillion on 30th June 2009. National Commercial Bank had the maximum share of the total assets whereas Riyad Bank’s assets experienced maximum annual growth. Al Rajhi had highest returns on average assets for the period June 2008 – June 2009.
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Figure 10: Market Share of total assets, growth of assets and return on assets
y-o-y Total Asset Growth f or H1 2009
28.0%
Size of the bubble represents the annualized return on average assets
23.0%
13.2%, 19.9%, 1.5%
2.2%, 19.2%, 0.7% 5.3%, 18.0%, 1.6%
18.0% 19.6%, 13.3%, 0.3%
12.5%, 9.7%, 4.2%
13.0%
9.4%, 6.7%, 2.3%
1.2%, 7.0%, 0.4%
8.0% 1.3%, 0.0%, 3.4%
3.0% -2.0%0.0%
8.8%, 4.3%, 2.2%
5.0%
10.0%
3.9%, -2.3%, 0.8%
-7.0%
15.0%
20.0%
13.5%, -3.6%, 2.5%
9.3%, -3.3%, 2.3%
Market Share of Total Assets (H1 2009) Al Rajhi
Alinma*
ANB
Al Bilad
Al Jazira
Saudi Fransi
NCB
Riyad Bank
SABB
Samba
Saudi Hollandi
Saudi Investment
Source: Zawya, FALCOM Research. *Annualized Net Income for Alinma Bank has been taken for the last 13 months (since listing) and the growth is zero since the bank didn't start operations in H1 2008
Total Income market share, growth and margins Figure 11: Market Share of total income, growth of total income and net income margin
y-o-y Total Income Growth f or H1 2009
25.0%
Size of the bubble represents the annualized net income margin (H1 2008 - 09)
20.0%
17.9%, 19.9%, 53.5%
15.0% 10.0%
1.0%, 0.0%, 83.7%
5.0%
10.6%, -2.0%, 37.8%
3.4%, -7.7%, 17.0%
0.0% 0.0% -5.0% -10.0%
2.0%
4.0%
8.0%
10.0%
12.0%
14.0%
16.0%
4.9%, -9.3%, 28.9%
2.1%, -7.1%, 12.9%
18.0%
20.0%
16.2%, -10.3%, 5.4%
11.0%, -5.1%, 31.3%
1.3%, -8.6%, 7.2%
-15.0%
6.0%
8.8%, -8.9%, 40.8%
8.8%, -9.6%, 44.3%
13.8%, -10.8%, 47.2%
-20.0% Market Share of Total Income (H1 2008-09) Al Rajhi
Alinma*
ANB
Al Bilad
Al Jazira
Saudi Fransi
NCB
Riyad Bank
SABB
Samba
Saudi Hollandi
Saudi Investment
Source: Zawya, FALCOM Research. *Annualized Total Income and Net Income for Alinma Bank has been taken for the last 13 months and the growth is zero since the bank didn't start operations in H1 2008(since listing)
The total income of Saudi banks declined by 3.4% from first half 2008 to first half 2009 mainly due to decline in banking fees and commissions and interest income. The total net income after tax/zakat declined by around 11% mainly due to increase in provisions given the increasing credit related problems. Al Rajhi Bank
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had the highest market share in terms of total income and was the only bank which recorded annual increase in total income whereas Alinma Bank had the highest net income margin followed by Al Rajhi Bank.
Deposit market share, growth and credit to deposit ratio Figure 12: Market share of customer deposits, its growth and credit to deposit ratios
y-o-y Customer Deposits/CD Growth f or H1 200809
40.0% 35.0%
12.4%, 38.0%, 85.7%
Size of the bubble represents the credit to deposit ratio (H1 2009)
30.0%
2.3%, 28.1%, 71.4%
25.0%
5.3%, 23.3%, 76.7%
20.0%
12.5%, 13.3%, 116.8%
14.1%, 13.5%, 63.7%
15.0% 1.3%, 11.6%, 92.5%
10.0%
0.1%, 0.0%, 528.7%
5.0%
9.2%, 5.8%, 90.1%
3.7%, -1.4%, 82.9%
8.7%, 0.4%, 83.5%
9.3%, 2.7%, 86.0%
0.0% -1.0% -5.0%
1.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
-10.0% Market Share of Customer Deposits and CDs (H1 2009) Al Rajhi Al Jazira SABB
Alinma* Saudi Fransi Samba
ANB NCB Saudi Hollandi
Al Bilad Riyad Bank Saudi Investment
Source: Zawya, FALCOM Research. *Growth for Alimna Bank is zero since the bank didn't start operations in H1 2008. Credit for Al Rajhi, Alinma and Al Bilad Bank is equal to Islamic financing and investment
The expansionary monetary policy and the flight of stock market investors to safety boosted the deposits of banks causing it to increase by 17% from H1 2008 to H1 2009. The credit to deposit ratio for the Saudi banking industry stood at 79% at the end of H1 2009 which is below the statutory limit of 85%. As of the end of first half of 2009, Samba had the maximum market share in terms of total deposits closely followed by Saudi Fransi and Al Rajhi banks. Saudi Fransi experienced maximum growth of 38% in its customer deposits whereas Alinma Bank had maximum credit to deposit ratio.
Other Key Ratios Table 2: Other Key Ratios for Banks Other Key Ratios for Banks for H1 2009 ROE*
Cost of Funds*
Yield on Investments & loans*
Spread
Capital adequacy ratio (Tier 1 + tier 2)
Tier 1 ratio
Al Rajhi
24.4%
0.8%
7.3%
6.5%
17.3%
21.0%
Alinma
3.6%
0.1%
23.6%
23.5%
379.0%
367.0%
19.0%
1.9%
4.8%
2.9%
15.0%
11.7%
Al Bilad
2.0%
0.5%
5.5%
5.0%
22.6%
22.4%
Al Jazira
4.1%
2.0%
5.6%
4.1%
17.8%
17.3%
18.4%
2.0%
4.7%
2.7%
12.4%
11.8%
NCB
2.2%
1.6%
5.5%
3.9%
17.4%
16.5%
Riyad Bank
9.0%
1.8%
4.4%
2.6%
17.4%
15.9%
21.4%
2.3%
5.2%
2.9%
12.6%
10.5%
ANB
Saudi Fransi
SABB
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
9
ROE*
Cost of Funds*
Yield on Investments & loans*
Spread
Capital adequacy ratio (Tier 1 + tier 2)
Tier 1 ratio
Samba
23.1%
1.7%
5.2%
3.5%
15.2%
12.3%
Saudi Hollandi
16.8%
2.2%
5.1%
2.9%
13.6%
9.8%
5.7%
3.4%
5.1%
1.7%
14.4%
13.2%
Saudi Investment
Source: Financial Statements, Tadawul, Zawya, FALCOM Research. *Annualized from H1 2008 – H1 2009
In order to apply international control and strengthen risk management practices of KSA banks, SAMA implemented the Basel II standard in The Kingdom. The capital adequacy ratios of the banks in The Kingdom are robust mainly due to lack of debt financing. Islamic banks namely, Al Rajhi, Alinma, Al Bilad and Al Jazira have higher capital adequacy ratios then their peers. The Islamic banks also enjoy relatively higher spreads, given their low cost of funds.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
10
6.
Porter’s Five Forces
In order to assess the attractiveness of the banking sector we have used Porter’s Five Forces model. Bargaining Power of Customers – Medium The customers for the banking sector include the private sector (retail and corporate) as well as the public sector entities that receive credit from banks. The bargaining power of customers in this sector is affected by the socio economic conditions in The Kingdom, the concentration of customers and the service levels offered by the banks. Given the favourable and improving socio economic health of The Kingdom and the need of credit, the bargaining power of customers is expected to be low, however, taking into account the opportunity costs and relatively low savings rate in The Kingdom, we have assigned a medium rating to this force. Bargaining Power of Suppliers – Medium The suppliers for the banking sector are the sources of funding for banks which again can be retail or corporate entities (deposits) or public entities. The financing for banks can also come from capital markets through issue of equities or debts. In The Kingdom, deposits are the main source of financing constituting for around 65% of the total assets of commercial banks. Given the low cost of funds and the need for deposits, the bargaining power of suppliers should be low, however, given the increasing competition in the industry with new banks coming up (both local and international), we have assigned a medium rank to this force as well. Threat of Substitutes – Low The banking services and products are necessary for the customers and as such don’t have threat of substitutes. However, within the industry there are different kinds of products and levels of service available which compete as substitutes. We have assigned a low ranking to this force as it doesn’t have much significance in this industry. Threat of New Entrants – Low With improving role of the region in the global economy and increasing fiscal balances and discretionary income, foreign and local players have already entered the market in the recent past. Banking sector is one of the most regulated sectors in The Kingdom and the capital requirements are also substantial, this in addition to the relatively low market concentration reduces the threat of new entrants. Industry Rivalry – Medium The top four banks namely, NCB, Samba, Riyad Bank and Al Rajhi share around 60% of the market in terms of total assets. The Herfindahl-Hirschman Index, which is calculated to be around 1,200, suggests moderate level of competition.
7.
FALCOM Outlook
Our outlook for the rest of the year for banking sector is neutral given the expected decline in real GDP and fiscal deficit. The growth of loans to private sector will remain sluggish for rest of the year due to contraction in the economic activity and low risk taking by banks. The net income might also decline slightly (from 2008 levels) due to losses related to banks’ investment portfolios and high provisions. However, we are optimistic for 2010 as the world economy recovers, the monetary and fiscal measures start providing desirable results and the international trade kicks in again. The expected increase in economic activity (infrastructure and manufacturing), increasing number of Small & Medium Enterprises (SMEs) and trade activity is also expected to cause growth in loans and income for the banks in The Kingdom in 2010.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
11
8.
Stock Market Perspective
The Banking Sector Index – Trending with TASI The banking sector index consists of the eleven listed banks in The Kingdom and over the last one year has moved steadily with TASI. The total market capitalization of eleven listed banks represents around 28.5% of the total market capitalization of the index (as on 26th August 2009).
10,000
24,000
9,000
22,000 20,000
TASI
8,000
18,000
7,000
16,000
6,000
14,000
5,000
12,000
4,000
10,000
TASI
Banking & Financial Services Sector
Figure 13: TASI and Banking Sector Index
Banking & Financial Services Sector
Source: Tadawul, FALCOM Research
Performance & Statistical Analysis of Banking Stocks Table 3: Price Performance & Statistical Indicators for Banking Stocks Price Performance & Statistical Indicators for Banking Stocks* Company
Close Price
YTD
2008
30 day average volume
One year High
One year Low
Volatility**
Correlation with TASI#
1 yr Beta
RIBL
23.4
10.1%
-57.1%
373,924
36.5
18.0
2.83%
77.4%
0.83
BJAZ
19.8
31.6%
-69.4%
432,842
32.3
13.3
3.24%
82.5%
1.02
SIBC
17.6
6.0%
-67.6%
143,273
32.8
14.1
3.19%
69.5%
0.83
Saudi Hollandi
33.4
4.4%
-36.0%
50,020
65.0
31.5
3.23%
67.0%
0.82
Saudi Fransi
40.0
14.0%
-61.0%
61,879
63.0
31.0
3.21%
73.7%
0.90
SABB
44.1
2.1%
-39.6%
64,259
70.2
36.4
3.20%
67.4%
0.82
Arab National
44.0
41.0%
-63.2%
107,483
63.0
25.7
3.48%
79.9%
1.05
SAMBA
45.0
-12.2%
-57.3%
138,527
82.5
38.2
2.96%
67.0%
0.75
Al Rajhi
67.8
21.0%
-52.3%
1,786,241
91.0
40.6
3.15%
91.2%
1.09
AL Bilad
20.0
-28.8%
-30.4%
556,377
43.5
17.6
2.95%
63.8%
0.71
Alinma Bank
12.9
16.2%
11.0%
17,964,122
18.0
10.0
2.77%
85.3%
0.90
15,028.6
10.5%
-55.5%
21,678,947
22,572.1
11,242.3
2.53%
95.7%
0.92
5,762.8
20.0%
-56.5%
167,420,973
9,001.2
4,068.1
2.64%
100.0%
1.00
Banks & Financial TASI
th
Source: Tadawul, FALCOM Research. *As of 26 August 2009;**Standard Deviation of daily returns for last one year; #correlation of daily returns for last one year.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
12
Year till date (as on 26th August 2009) the banking index is 11% up, thus underperforming the TASI which is 20% up. The banking sector has very high correlation with TASI returns over the past one year and also has equivalent risk (measured by the standard deviation of daily returns for last one year). Following are some of the highlights for the banking stocks. Among the banking stocks, ANB has the best price performance for the year 2009 whereas Alinma bank has the minimum standard deviation of daily returns (for last one year). Al Rajhi Bank has the highest return correlation with TASI and Al Bilad Bank has the lowest. Three of the eleven banks namely Bank Al Jazira, ANB and Al Rajhi Bank have beta greater than 1 whereas the rest other banks have beta less than 1 (with TASI). The most active banking stock in the last one month, in terms of volume, was Alinma Bank.
x x x x
Valuation and Market Capitalization Table 4: Valuation and Market Capitalization Parameters for Banking Stocks Banking Sector Stock Valuations and Market Capitalizations* Valuation Parameters Company
PE
PBV
Market Capitalization
Dividend Yield
Total Mkt. Cap (SR million)
% Floated
RIBL
14.6
1.3
6.0%
34,950
38.7%
BJAZ
31.2
1.3
2.5%
6,000
73.6%
SIBC
19.2
1.1
0.0%
7,763
61.2%
Saudi Hollandi
11.0
1.8
1.8%
10,882
29.4%
Saudi Fransi
10.5
1.9
2.0%
28,784
54.7%
SABB
11.8
2.5
1.7%
33,075
32.9%
Arab National
11.4
2.2
2.3%
28,405
49.1%
SAMBA
9.0
2.1
3.7%
40,680
55.4%
Al Rajhi
15.7
3.9
4.3%
104,625
49.9%
AL Bilad
90.5
1.9
0.0%
6,015
77.0%
109.1
1.2
0.0%
19,350
69.9%
13.6
2.1
3.2%
320,528
52.4%
2.0
3.6%
1,135,855
37.4%
Alinma Bank Banks & Financial TASI
16.5** th
Source: Tadawul, FALCOM Research. *As of 26 August 2009. **Excluding loss making companies
Highlights: x x x x
The banking sector index had a lower PE and slightly higher PBV ratio than TASI. Five of the banking stocks namely Saudi Hollandi, Saudi Fransi, SABB, ANB and SAMBA are trading at PE ratios lower than that of the sector. Riyad Bank has the highest dividend yield followed by Al Rajhi Bank. Al Rajhi Bank has the highest market capitalization whereas Bank Al Bilad has maximum % of floating stocks.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
13
FALCOM Valuation and Capitalization Parameter Matrix FALCOM Research ranked the banking stocks on the basis of the valuation parameters and market capitalization figures. Table 5: FALCOM Valuation and Capitalization Parameter Matrix Table 6: FALCOM Valuation and Capitalization Parameter Matrix Company
PE
PBV
Dividend Yield
Total Market Capitalization
% Floated
RIBL
6
4
1
3
9
BJAZ
9
3
4
11
2
SIBC
8
1
9
9
4
Saudi Hollandi
3
5
7
8
11
Saudi Fransi
2
7
6
5
6
SABB
5
10
8
4
10
Arab National
4
9
5
6
8
SAMBA
1
8
3
2
5
Al Rajhi
7
11
2
1
7
AL Bilad
10
6
9
10
1
Alinma Bank
11
2
9
7
3
Source: FALCOM Research. First, second and third ranks for each parameter are marked in darker shades of grey for reference.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
14
SAUDI ARABIAN BANKING SECTOR REPORT First Half 2009
September 1, 2009
Gaurav Kumar Analyst Snehdeep Fulzele Head of Research +966 1 211 8455 [email protected]
FALCOM Financial Services P.O. Box 884 Riyadh 11421 Kingdom of Saudi Arabia
2009
EXECUTIVE SUMMARY
Saudi Arabian Banking Sector – Sturdy in the Storm With its epicentre in the US, the global financial crisis has sent shock waves throughout the world. Unlike the dot com bubble which emanated from the overvaluation of the software industry and crises related to currency and policy imbalances, the current crisis has its resemblance with the Great Depression of 1929 and the savings and loans crisis of 1980s, where banks involvement had been central to the crisis. Without exception, the Saudi Banking system also felt the tremors, however, the contraction here was relatively low and the banking system has been relatively resilient to the crisis. Continued growth in total assets, increasing deposits, diversified loan portfolios and rise in investments further attest the sturdiness and resilience of the Saudi Banking sector. Twelve domestic banks and growing number of foreign banks (eight as of now) are managing the expectations and needs of the burgeoning consumption oriented Saudi economy. In the second quarter of 2009, Saudi Arabia faced the defaults by two high profile families. Saudi Arabian Monetary Agency (SAMA) froze the bank accounts of Mr. Maan Al Sanea, the founder of Saad group, and his family. Apart from those mentioned above, there have not been any further threats of significant defaults. In a recent interview, Mr. Al-Jasser, governor of SAMA expressed his views on the two families and mentioned that there are no systemic risks on the Saudi banking system from their debt; however, he said the profitability of banks might get affected. He also mentioned about the setting up of a special committee which will investigate the two firms and take appropriate actions. He also ruled out the moves to buy the debts of the two troubled families. The Saudi Central Bank, SAMA (Saudi Arabian Monetary Agency) has been proactively managing the liquidity in the Saudi economy. Amid global financial crises, SAMA undertook a number of measures to pump in liquidity into the local market and spur lending by the commercial banks; the regulator cut the official repo and reverse repo rates to 2% and 0.25% respectively since October 2008, decreased the reserve requirement on demand deposits from 13% to 7%, injected liquidity into the banking sector through demand deposits and provided guarantees for deposits at commercial banks. In order to apply international control and strengthen risk management practices of KSA banks, SAMA has also implemented the Basel II standard in The Kingdom. The Saudi banks have relatively better capital adequacy ratios compared to their global peers. Nominal GDP of the Kingdom grew at a CAGR of 17.1% over five years until 2008. IMF estimates real GDP to shrink by 1% in 2009, however, the forecasted growth of real GDP for 2010 is 2.9%. As per SAMA annual report, the country had a population of 24.8 million in 2008. IMF expects the Saudi population to grow at around 2.5% in 2009 and at a CAGR of 3.2% from 2009 to 2014. According to SAMA, around 27% of the population is Non-Saudi and 78% of the population is below the age of 40 th years. The Kingdom was the 37 richest country in the world with per capita GDP of USD 23,834. The per capita GDP of The Kingdom increased at a CAGR of 4% from 2006 to 2008. To manage the expectations of such diverse and growing population is a challenge that is constantly accomplished by the technology savvy banks. Islamic banking is attracting world attention for its conservative policies. Banks in The Kingdom give special importance to Sharia’ compliant banking practices. Four banks viz. Al Rajhi Bank, Al Inma Bank, Al Bilad Bank and Al Jazira Bank undertake only Islamic transactions of which Al Rajhi Bank is the largest Islamic bank in the world. These banks have comparatively higher capital adequacy ratios and also enjoy relatively higher spreads. With increasing competition in domestic market due to entry of foreign banks, domestic banks are tapping opportunities beyond the country’s boundaries as well. This report takes stock of Saudi Banking Sector and discusses drivers, challenges, emerging trends among other aspects of the sector. FALCOM Research has calculated various financial ratios and provided the ranking matrix on various parameters.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
Contents Contents
Banking Banking Sector Sector –– Kingdom Kingdom of of Saudi Saudi Arabia Arabia................................................................................ ................................................................................1 1 1. O verview .................................................................................................................................................... 1 1.Overview .................................................................................................................................................... 1 2. 2.D Drivers rivers for for Banking Banking Sector Sector in in Saudi Saudi Arabia Arabia............................................................................................... ...............................................................................................11 3. C hallenges for Banking Sector in Saudi Arabia 3.Challenges for Banking Sector in Saudi Arabia........................................................................................ ........................................................................................33 4. 4.KKey ey Trends Trends................................................................................................................................................ ................................................................................................................................................44 5. T he Banks .................................................................................................................................................. 5.The Banks..................................................................................................................................................77 6. 6.PPorter’s orter’s Five Five Forces................................................................................................................................. Forces.................................................................................................................................11 11 7. O ur Outlook ............................................................................................................................................. 11 7.Our Outlook ............................................................................................................................................. 11 8. 8.SStock tock Market Market Perspective Perspective........................................................................................................................ ........................................................................................................................12 12
Key Key Highlights Highlights xx
The The total total assets assets of of commercial commercial banks’ banks’ in in The The Kingdom Kingdom increased increased at at aa CAGR CAGR of of 18.5% 18.5% which which isis in in line line with with the the growth growth in in nominal nominal GDP GDP of of 17.1% 17.1% (2003-08). (2003-08).
xx
SAMA SAMA cut cut the the official official repo repo and and reverse reverse repo repo rates rates to to 2% 2% and and 0.25% 0.25% respectively respectively since since October October 2008 and decreased the reserve requirement on demand deposits from 13% to 7%. 2008 and decreased the reserve requirement on demand deposits from 13% to 7%.
xx
The The average average interbank interbank lending lending rate rate in in The The Kingdom Kingdom has has declined declined significantly significantly from from September September 2008 2008 levels. levels.
xx
Total Total number number of of bank bank branches branches in in The The Kingdom Kingdom increased increased by by 17% 17% from from 1,203 1,203 in in 2003 2003 to to 1,410 1,410 in in June 2009. June 2009.
xx
Number Number of of ATMs ATMs increased increased at at aa CAGR CAGR of of 19% 19% from from 2003 2003 to to 2008; 2008; in in H1 H1 2009 2009 itit increased increased by by 7%. 7%.
xx
The The total total assets assets of of commercial commercial banks banks in in The The Kingdom Kingdom grew grew by by 2.7% 2.7% in in H1 H1 2009. 2009.
xx
The The loans loans and and advances advances to to the the private private sector sector declined declined by by around around 1% 1% in in H1 H1 2009 2009 due due to to bank’s bank’s preference preference towards towards holding holding cash cash which which led led to to the the increase increase in in cash cash and and deposits deposits with with SAMA. SAMA.
xx
Short Short term term loans loans isis more more prevalent prevalent in in The The Kingdom Kingdom accounting accounting for for around around 60% 60% of of the the loans loans && advances to private & govt. sector. advances to private & govt. sector.
xx
The The deposits deposits grew grew at at CAGR CAGR of of 18.5% 18.5% from from 2003 2003 to to 2008, 2008, however, however, in in H1 H1 2009 2009 the the deposits deposits increased increased at at aa slower slower pace pace of of 8%. 8%.
xx
After After declining declining for for the the last last two two years, years, net net foreign foreign assets assets increased increased by by 8% 8% in in H1 H1 2009. 2009.
xx
In In order order to to measure measure and and compare compare the the financial financial health health of of the the banks, banks, FALCOM FALCOM has has assigned assigned rankings rankings to to each each of of the the banks banks on on the the basis basis of of various various financial financial parameters. parameters.
xx
The The total total market market capitalization capitalization of of eleven eleven listed listed banks banks represents represents around around 28.5% 28.5% of of the the market market th capitalization capitalization of of the the index index (as (as on on 26 26th August August 2009). 2009).
xx
th Banking Banking sector sector index index gained gained 10.5% 10.5% till till 26 26th August August 2009. 2009.
xx
th As As on on 26 26th August August 2009, 2009, the the banking banking sector sector index index had had aa lower lower PE PE ratio ratio than than TASI. TASI.
xx
FALCOM FALCOM Research Research has has ranked ranked the the banking banking stocks stocks on on the the basis basis of of the the valuation valuation and and capitalization parameters. capitalization parameters.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
Banking Sector – Kingdom of Saudi Arabia
1.
Overview
Banking sector plays an important role in the economy by acting as an intermediary between the suppliers of credit on one side and those in need of it on the other side. The banking sector (as defined in this report) in Saudi Arabia consists of eleven publicly listed banks and National Commercial Bank (NCB). Prior to the discovery of oil in 1939, the financial services sector in The Kingdom consisted of money exchangers and trading houses. SAMA was established in 1952 to regulate the banking sector in The Kingdom. The first local bank to receive license from SAMA was NCB in 1953 followed by Riyad Bank in 1955 and Al-Watany Bank in 1958 (operations of Al-Watany bank merged with that of Riyad Bank). The most recent bank to get license was Alinma Bank (in May 2008). Prior to Alinma, Al Bilad Bank, which was formed by the merger of eight money exchangers, received the license in 2005. Five of the eleven listed banks (namely Riyad Bank, SAMBA, Al Rajhi Bank, Al Bilad Bank and Alinma Bank) and NCB are local whereas the rest have foreign participation with SABB, Saudi Hollandi Bank, Banque Saudi Fransi and Arab National Bank having substantial foreign ownership. In the last one decade, SAMA has offered licenses to a number of regional and international players to operate in The Kingdom. Gulf International Bank of Bahrain was the first to acquire the license in 2000. The regional and foreign banks having operations in The Kingdom currently include Gulf International Bank of Bahrain, National Bank of Kuwait, Emirates Bank and Bank Muscat.
2.
Drivers for Banking Sector in Saudi Arabia 1. Economic growth – The growth of the banking sector is directly correlated with the growth of the economy. The increase in economic activity is funded by the growth in credit from banking institutions. The total assets of commercial banks’ in The Kingdom increased at a CAGR of 18.5% which is in line with the growth in nominal GDP of 17.1% (2003-08). As per the IMF estimates, the real GDP of The Kingdom is expected to reduce by around 1% in 2009 which might lead to a decline in credit growth. 2. Monetary policies of SAMA – The monetary policies undertaken by the regulator also has a direct impact on banking activities in an Economy. SAMA uses tools such as the repurchase rate, reverse repurchase rate and reserve requirements to monitor the growth of banking sector. Amid global financial crises, SAMA undertook a number of measures to pump in liquidity into the local market and spur lending by the commercial banks; the regulator cut the official repo and reverse repo rates to 2% and 0.25% respectively since October 2008, decreased the reserve requirement on demand deposits from 13% to 7%, injected liquidity into the banking sector through demand deposits and provided guarantees for deposits at commercial banks. All these positive efforts by SAMA have helped the banking sector in The Kingdom to weather the global crisis relatively well. However, lately the banks in The Kingdom are feeling some pain related to credit problems.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
1
Figure 1: Historical Repurchase and Reverse Repurchase Rates in The Kingdom
8
%
6 4 2
Repo
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
0
Reverse Repo
th
Source: Bloomberg. Data till 6 August 2009.
3. Improving liquidity and confidence levels among banks – The average interbank lending rate in The Kingdom has declined significantly from September 2008 levels suggesting increasing liquidity and rising confidence in the banking sector. Figure 2: One month and three month Average Saudi Inter Bank Offer rates
6 5
%
4 3 2 1
1 Month Avg. SIBOR
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
0
3 Month Avg. SIBOR
th
Source: Bloomberg. Data till 6 August 2009.
4. Income levels – The income levels in The Kingdom are relatively high. As per IMF 2008 estimates, The Kingdom was the 37th richest country in the world with per capita GDP of USD 23,834. The per capita GDP of The Kingdom increased at a CAGR of 4% from 2006 to 2008. The value is expected to increase at a slower pace in 2009 mainly due to expected 1% decline in real GDP.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
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Figure 3: Per capita GDP and its growth rate for The Kingdom
5%
24,000
4%
23,500
3%
USD
23,000
2% 1%
22,500
0%
22,000
-1%
21,500
-2% -3%
21,000 2006
2007 GDP per capita
2008E
2009E
Annual Growth
Source: IMF
5. Population growth and favourable demographic profile – %. As per SAMA annual report, the country had a population of 24.8 million in 2008. IMF expects the Saudi population to grow at around 2.5% in 2009 and at a CAGR of 3.2% from 2009 to 2014. In 2008, around 32% of the population was below the age of 15, the income levels are expected to increase in coming years as this set of population starts earning. The increase in income levels are expected to increase the deposits for the banks.
3.
Challenges for Banking Sector in Saudi Arabia 1. Declining savings rate – The savings rate (private & govt., at current prices) in The Kingdom declined from 47% in 2005 to around 42% in 2008 (Source: Central Department of Statistics & Information, and Ministry of Economy & Planning of Saudi Arabia). 2. Decline in International Trade – Due to the decline in international trade, the private sector lending related to imports and exports in The Kingdom are expected to grow at a slower pace than historical levels. However, our outlook remains positive for 2010 as the global economy starts to recover. 3. Lack of mortgage laws – Due to the lack of proper mortgage laws in The Kingdom, banks are not tapping the potential mortgage market.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
3
4.
Key Trends
Increasing branch and ATM coverage Total number of bank branches in The Kingdom increased by 17% from 1,203 in 2003 to 1,410 in June 2009. Number of ATMs increased at a CAGR of 19% from 2003 to 2008; in H1 2009 it increased by 7%. The bank branch and ATM coverage as indicated by number of branches and ATMs per 10,000 sq. km also increased significantly from 2003 to June 2009.
50
6.8
45
6.6
40
6.4
35
6.2
30
6.0
25
5.8
20
5.6
15 10
5.4
5
5.2 5.0
0 2003
2004
2005
2006
ATMs per 10,000 sq km
2007
2008
Number of Branches per 10,000 sq. km
Number of ATMs per 10,000 sq. km
Figure 4: Branch and ATM coverage in The Kingdom
Q2 2009
Number of Branches per 10,000 sq km
Source: SAMA, FALCOM Research, IMF
Increasing use of banking services like cards and POS transactions in The Kingdom The number of ATM cards issued in The Kingdom doubled from 6 million in 2003 to 13 million in June 2009. Also, the number of ATM and POS transactions done per day tripled from around 1 million in 2003 to 3 million in June 2009, suggesting the increasing penetration of banking services in The Kingdom. Given the fact that around one third of the population is below 15 and the high spending habits of residents, we expect the penetration to increase further in coming years.
0.6
3,500
0.5
3,000 2,500
0.4
2,000 0.3 1,500 0.2
1,000
0.1
500 0
0.0 2003
2004
2005
Number of cards per person
2006
2007
2008
Number of ATM and POS transactions per day ('000)
Number of cards issued per person
Figure 5: Penetration of transaction services of banks in The Kingdom
Q2 2009
Number of POS and ATM transactions per day
Source: SAMA, FALCOM Research, IMF
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
4
Increasing total assets of commercial banks The total assets of commercial banks in The Kingdom grew at a CAGR of 19% from 2003 to 2008 and by 2.7% in H1 2009. The growth was mainly fuelled by the inflow of petrodollars in the last five years. The growth is expected to be sluggish for 2009; however, from 2010 onwards we expect healthy growth. Figure 6: Commercial Banks’ Total Assets Composition (SR million)
100%
Total - SR 861,089 million 19,943
Total - SR 1,075,222 million
Total - SR 1,302,272 million
35,586
42,873
8,353
9,757
Total - SR 1,337,681 million 36,171
10,624
12,121
90% 80% 70% 60%
773,552
650,936
981,749
997,616
50% 40% 30% 20%
147,712
129,796
10%
39,843
0%
98,595
12,218
2006 Cash in Vault
86,164
10,019
2007 Deposits with SAMA
178,872
153,986 11,007
118,479
2008
Foreign Assets
Total Claims*
10,289
Jun-09 Fixed Assets
Other Assets
Source: SAMA. *Total claims include claims on private sector, govt. & quasi-govt. sector, non-monetary financial institutions and banks.
Lending to private sector declined in H1 2009 The loans and advances to the private sector increased at a CAGR of 27% from 2003 to 2008, however, in H1 2009 the loans have declined by around 1% due to bank’s preference towards holding cash which is evident from the increase in cash and deposits with SAMA. We expect the lending to start growing by the end of 2009 as the global markets recover and the economic activity in The Kingdom picks up.
Short term lending is more prevalent in The Kingdom Short term lending is more prevalent in The Kingdom than medium/long term. Short term loans account for around 60% of the loans & advances to private & govt. sector followed by long term (25%). Figure 7: Bank credit to private and govt. sector by maturity 800,000 700,000
SR million
600,000 500,000 400,000 300,000 200,000 100,000 0 2003
2004
Short Term (less than 1 year)
2005
2006
Medium Term (1-3 years)
2007
2008
Jun-09
Long Term (over 3 years)
Source: SAMA
FALCOM Research
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Growing deposit base The deposits grew at CAGR of 18.5% from 2003 to 2008, however, in H1 2009 the deposits increased at a slower pace of 8%. Though demand deposits and quasi monetary deposits (mainly foreign currency reserves) recorded increase in value, time & savings deposits decreased in H1 2009. Figure 8: Commercial Banks’ Total Liabilities Composition (SR million) 100%
Total - SR 861,089 million
Total - SR 1,075,222 million
Total - SR 1,302,272 million
Total - SR 1,337,681 million 101,168
90%
76,835 16,731
80%
114,612
90,029 20,832 136,290
70%
59,199
105,213
112,466
78,116
591,259
717,564
846,118
916,444
2006
2007
2008
Jun-09
2,453
5,294
116,639 28,521 161,750
36,778
34,407
25,863
181,683
60% 50% 40% 30% 20% 10% 0%
Total Deposits
Foreign Liabilities
Capital Accounts*
Interbank Liabilities
Repos
Other Liabilities
Source: SAMA. *Capital Accounts include reserves, capital and period profits
Figure 9: Deposit composition of commercial banks 1,000,000 900,000 800,000
SR million
700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2003
2004
2005 Demand
2006 Time & savings
2007
2008
Jun-09
Other Quasi Monetary
Source: SAMA
Investments by banks in private and govt. sector as a percentage of deposits declined in H1 2009 The investments by banks in the private sector & govt. sector increased at a CAGR of 24% and 7% respectively from 2003 to 2008. However, in H1 2009, the investments in private sector and government sector declined by 2% and 13% respectively. The decline in govt. sector securities might be because of buyback of securities by SAMA in the open market to inject liquidity.
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SAUDI ARABIAN BANKING SECTOR REPORT
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After declining for the last two years, net foreign assets increased by 8% in H1 2009 The foreign assets and liabilities grew at a CAGR of 14% and 23% respectively from 2003 to 2008 causing the net foreign assets to increase slightly at a CAGR of 0.2%. However, in first half 2009, the foreign assets increased by 16% and foreign liabilities declined by 31% causing the net foreign assets to boost by 143%. Table 1: Key Ratios Ratio Analysis
2006
2007
2008
Jun-09
Growth of Total Assets
13.4%
24.9%
21.1%
2.7%
Growth of Total Deposits
20.8%
21.4%
17.9%
8.3%
Growth of Loans and Advances
10.3%
21.7%
28.0%
-0.7%
167.5%
-39.8%
-2.3%
142.7%
107.3%
105.8%
115.4%
103.2%
Cash in Vault/Total Deposits
2.1%
1.4%
1.3%
1.1%
Deposits with SAMA/Total Deposits
6.7%
13.7%
10.2%
12.9%
15.1%
13.7%
11.8%
13.4%
2.4%
2.9%
2.6%
2.3%
20.8%
20.1%
24.8%
20.0%
Growth Ratios
Growth of Net Foreign Assets Performance Ratios Bank Claims on Private & Govt./Total Deposits
Foreign Assets/Total Assets Investments in private sector/Total Deposits Investments in government sector/Total Deposits Source: SAMA
Geographic Diversification The banks in The Kingdom lately have started to look for opportunities outside where Islamic banking services are prevalent. Al Rajhi Bank started its operations in Malaysia in 2006 and was the first foreign bank to receive full-banking license in Malaysia. Al Rajhi Bank currently has 19 branches in Malaysia with plans to increase this number in the future. Saudi American Bank (SAMBA) has international presence since long time now; SAMBA has full-fledged banking operations in UK (for over 20 years), Dubai (started last year) and Pakistan (started last year).
5.
The Banks
Asset market share, growth and return on assets The total assets of the banking sector grew by 8.8% from SR 1.21 trillion on 30th June 2008 to SR 1.31 trillion on 30th June 2009. National Commercial Bank had the maximum share of the total assets whereas Riyad Bank’s assets experienced maximum annual growth. Al Rajhi had highest returns on average assets for the period June 2008 – June 2009.
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SAUDI ARABIAN BANKING SECTOR REPORT
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Figure 10: Market Share of total assets, growth of assets and return on assets
y-o-y Total Asset Growth f or H1 2009
28.0%
Size of the bubble represents the annualized return on average assets
23.0%
13.2%, 19.9%, 1.5%
2.2%, 19.2%, 0.7% 5.3%, 18.0%, 1.6%
18.0% 19.6%, 13.3%, 0.3%
12.5%, 9.7%, 4.2%
13.0%
9.4%, 6.7%, 2.3%
1.2%, 7.0%, 0.4%
8.0% 1.3%, 0.0%, 3.4%
3.0% -2.0%0.0%
8.8%, 4.3%, 2.2%
5.0%
10.0%
3.9%, -2.3%, 0.8%
-7.0%
15.0%
20.0%
13.5%, -3.6%, 2.5%
9.3%, -3.3%, 2.3%
Market Share of Total Assets (H1 2009) Al Rajhi
Alinma*
ANB
Al Bilad
Al Jazira
Saudi Fransi
NCB
Riyad Bank
SABB
Samba
Saudi Hollandi
Saudi Investment
Source: Zawya, FALCOM Research. *Annualized Net Income for Alinma Bank has been taken for the last 13 months (since listing) and the growth is zero since the bank didn't start operations in H1 2008
Total Income market share, growth and margins Figure 11: Market Share of total income, growth of total income and net income margin
y-o-y Total Income Growth f or H1 2009
25.0%
Size of the bubble represents the annualized net income margin (H1 2008 - 09)
20.0%
17.9%, 19.9%, 53.5%
15.0% 10.0%
1.0%, 0.0%, 83.7%
5.0%
10.6%, -2.0%, 37.8%
3.4%, -7.7%, 17.0%
0.0% 0.0% -5.0% -10.0%
2.0%
4.0%
8.0%
10.0%
12.0%
14.0%
16.0%
4.9%, -9.3%, 28.9%
2.1%, -7.1%, 12.9%
18.0%
20.0%
16.2%, -10.3%, 5.4%
11.0%, -5.1%, 31.3%
1.3%, -8.6%, 7.2%
-15.0%
6.0%
8.8%, -8.9%, 40.8%
8.8%, -9.6%, 44.3%
13.8%, -10.8%, 47.2%
-20.0% Market Share of Total Income (H1 2008-09) Al Rajhi
Alinma*
ANB
Al Bilad
Al Jazira
Saudi Fransi
NCB
Riyad Bank
SABB
Samba
Saudi Hollandi
Saudi Investment
Source: Zawya, FALCOM Research. *Annualized Total Income and Net Income for Alinma Bank has been taken for the last 13 months and the growth is zero since the bank didn't start operations in H1 2008(since listing)
The total income of Saudi banks declined by 3.4% from first half 2008 to first half 2009 mainly due to decline in banking fees and commissions and interest income. The total net income after tax/zakat declined by around 11% mainly due to increase in provisions given the increasing credit related problems. Al Rajhi Bank
FALCOM Research
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had the highest market share in terms of total income and was the only bank which recorded annual increase in total income whereas Alinma Bank had the highest net income margin followed by Al Rajhi Bank.
Deposit market share, growth and credit to deposit ratio Figure 12: Market share of customer deposits, its growth and credit to deposit ratios
y-o-y Customer Deposits/CD Growth f or H1 200809
40.0% 35.0%
12.4%, 38.0%, 85.7%
Size of the bubble represents the credit to deposit ratio (H1 2009)
30.0%
2.3%, 28.1%, 71.4%
25.0%
5.3%, 23.3%, 76.7%
20.0%
12.5%, 13.3%, 116.8%
14.1%, 13.5%, 63.7%
15.0% 1.3%, 11.6%, 92.5%
10.0%
0.1%, 0.0%, 528.7%
5.0%
9.2%, 5.8%, 90.1%
3.7%, -1.4%, 82.9%
8.7%, 0.4%, 83.5%
9.3%, 2.7%, 86.0%
0.0% -1.0% -5.0%
1.0%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
-10.0% Market Share of Customer Deposits and CDs (H1 2009) Al Rajhi Al Jazira SABB
Alinma* Saudi Fransi Samba
ANB NCB Saudi Hollandi
Al Bilad Riyad Bank Saudi Investment
Source: Zawya, FALCOM Research. *Growth for Alimna Bank is zero since the bank didn't start operations in H1 2008. Credit for Al Rajhi, Alinma and Al Bilad Bank is equal to Islamic financing and investment
The expansionary monetary policy and the flight of stock market investors to safety boosted the deposits of banks causing it to increase by 17% from H1 2008 to H1 2009. The credit to deposit ratio for the Saudi banking industry stood at 79% at the end of H1 2009 which is below the statutory limit of 85%. As of the end of first half of 2009, Samba had the maximum market share in terms of total deposits closely followed by Saudi Fransi and Al Rajhi banks. Saudi Fransi experienced maximum growth of 38% in its customer deposits whereas Alinma Bank had maximum credit to deposit ratio.
Other Key Ratios Table 2: Other Key Ratios for Banks Other Key Ratios for Banks for H1 2009 ROE*
Cost of Funds*
Yield on Investments & loans*
Spread
Capital adequacy ratio (Tier 1 + tier 2)
Tier 1 ratio
Al Rajhi
24.4%
0.8%
7.3%
6.5%
17.3%
21.0%
Alinma
3.6%
0.1%
23.6%
23.5%
379.0%
367.0%
19.0%
1.9%
4.8%
2.9%
15.0%
11.7%
Al Bilad
2.0%
0.5%
5.5%
5.0%
22.6%
22.4%
Al Jazira
4.1%
2.0%
5.6%
4.1%
17.8%
17.3%
18.4%
2.0%
4.7%
2.7%
12.4%
11.8%
NCB
2.2%
1.6%
5.5%
3.9%
17.4%
16.5%
Riyad Bank
9.0%
1.8%
4.4%
2.6%
17.4%
15.9%
21.4%
2.3%
5.2%
2.9%
12.6%
10.5%
ANB
Saudi Fransi
SABB
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
9
ROE*
Cost of Funds*
Yield on Investments & loans*
Spread
Capital adequacy ratio (Tier 1 + tier 2)
Tier 1 ratio
Samba
23.1%
1.7%
5.2%
3.5%
15.2%
12.3%
Saudi Hollandi
16.8%
2.2%
5.1%
2.9%
13.6%
9.8%
5.7%
3.4%
5.1%
1.7%
14.4%
13.2%
Saudi Investment
Source: Financial Statements, Tadawul, Zawya, FALCOM Research. *Annualized from H1 2008 – H1 2009
In order to apply international control and strengthen risk management practices of KSA banks, SAMA implemented the Basel II standard in The Kingdom. The capital adequacy ratios of the banks in The Kingdom are robust mainly due to lack of debt financing. Islamic banks namely, Al Rajhi, Alinma, Al Bilad and Al Jazira have higher capital adequacy ratios then their peers. The Islamic banks also enjoy relatively higher spreads, given their low cost of funds.
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SAUDI ARABIAN BANKING SECTOR REPORT
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6.
Porter’s Five Forces
In order to assess the attractiveness of the banking sector we have used Porter’s Five Forces model. Bargaining Power of Customers – Medium The customers for the banking sector include the private sector (retail and corporate) as well as the public sector entities that receive credit from banks. The bargaining power of customers in this sector is affected by the socio economic conditions in The Kingdom, the concentration of customers and the service levels offered by the banks. Given the favourable and improving socio economic health of The Kingdom and the need of credit, the bargaining power of customers is expected to be low, however, taking into account the opportunity costs and relatively low savings rate in The Kingdom, we have assigned a medium rating to this force. Bargaining Power of Suppliers – Medium The suppliers for the banking sector are the sources of funding for banks which again can be retail or corporate entities (deposits) or public entities. The financing for banks can also come from capital markets through issue of equities or debts. In The Kingdom, deposits are the main source of financing constituting for around 65% of the total assets of commercial banks. Given the low cost of funds and the need for deposits, the bargaining power of suppliers should be low, however, given the increasing competition in the industry with new banks coming up (both local and international), we have assigned a medium rank to this force as well. Threat of Substitutes – Low The banking services and products are necessary for the customers and as such don’t have threat of substitutes. However, within the industry there are different kinds of products and levels of service available which compete as substitutes. We have assigned a low ranking to this force as it doesn’t have much significance in this industry. Threat of New Entrants – Low With improving role of the region in the global economy and increasing fiscal balances and discretionary income, foreign and local players have already entered the market in the recent past. Banking sector is one of the most regulated sectors in The Kingdom and the capital requirements are also substantial, this in addition to the relatively low market concentration reduces the threat of new entrants. Industry Rivalry – Medium The top four banks namely, NCB, Samba, Riyad Bank and Al Rajhi share around 60% of the market in terms of total assets. The Herfindahl-Hirschman Index, which is calculated to be around 1,200, suggests moderate level of competition.
7.
FALCOM Outlook
Our outlook for the rest of the year for banking sector is neutral given the expected decline in real GDP and fiscal deficit. The growth of loans to private sector will remain sluggish for rest of the year due to contraction in the economic activity and low risk taking by banks. The net income might also decline slightly (from 2008 levels) due to losses related to banks’ investment portfolios and high provisions. However, we are optimistic for 2010 as the world economy recovers, the monetary and fiscal measures start providing desirable results and the international trade kicks in again. The expected increase in economic activity (infrastructure and manufacturing), increasing number of Small & Medium Enterprises (SMEs) and trade activity is also expected to cause growth in loans and income for the banks in The Kingdom in 2010.
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8.
Stock Market Perspective
The Banking Sector Index – Trending with TASI The banking sector index consists of the eleven listed banks in The Kingdom and over the last one year has moved steadily with TASI. The total market capitalization of eleven listed banks represents around 28.5% of the total market capitalization of the index (as on 26th August 2009).
10,000
24,000
9,000
22,000 20,000
TASI
8,000
18,000
7,000
16,000
6,000
14,000
5,000
12,000
4,000
10,000
TASI
Banking & Financial Services Sector
Figure 13: TASI and Banking Sector Index
Banking & Financial Services Sector
Source: Tadawul, FALCOM Research
Performance & Statistical Analysis of Banking Stocks Table 3: Price Performance & Statistical Indicators for Banking Stocks Price Performance & Statistical Indicators for Banking Stocks* Company
Close Price
YTD
2008
30 day average volume
One year High
One year Low
Volatility**
Correlation with TASI#
1 yr Beta
RIBL
23.4
10.1%
-57.1%
373,924
36.5
18.0
2.83%
77.4%
0.83
BJAZ
19.8
31.6%
-69.4%
432,842
32.3
13.3
3.24%
82.5%
1.02
SIBC
17.6
6.0%
-67.6%
143,273
32.8
14.1
3.19%
69.5%
0.83
Saudi Hollandi
33.4
4.4%
-36.0%
50,020
65.0
31.5
3.23%
67.0%
0.82
Saudi Fransi
40.0
14.0%
-61.0%
61,879
63.0
31.0
3.21%
73.7%
0.90
SABB
44.1
2.1%
-39.6%
64,259
70.2
36.4
3.20%
67.4%
0.82
Arab National
44.0
41.0%
-63.2%
107,483
63.0
25.7
3.48%
79.9%
1.05
SAMBA
45.0
-12.2%
-57.3%
138,527
82.5
38.2
2.96%
67.0%
0.75
Al Rajhi
67.8
21.0%
-52.3%
1,786,241
91.0
40.6
3.15%
91.2%
1.09
AL Bilad
20.0
-28.8%
-30.4%
556,377
43.5
17.6
2.95%
63.8%
0.71
Alinma Bank
12.9
16.2%
11.0%
17,964,122
18.0
10.0
2.77%
85.3%
0.90
15,028.6
10.5%
-55.5%
21,678,947
22,572.1
11,242.3
2.53%
95.7%
0.92
5,762.8
20.0%
-56.5%
167,420,973
9,001.2
4,068.1
2.64%
100.0%
1.00
Banks & Financial TASI
th
Source: Tadawul, FALCOM Research. *As of 26 August 2009;**Standard Deviation of daily returns for last one year; #correlation of daily returns for last one year.
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SAUDI ARABIAN BANKING SECTOR REPORT
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Year till date (as on 26th August 2009) the banking index is 11% up, thus underperforming the TASI which is 20% up. The banking sector has very high correlation with TASI returns over the past one year and also has equivalent risk (measured by the standard deviation of daily returns for last one year). Following are some of the highlights for the banking stocks. Among the banking stocks, ANB has the best price performance for the year 2009 whereas Alinma bank has the minimum standard deviation of daily returns (for last one year). Al Rajhi Bank has the highest return correlation with TASI and Al Bilad Bank has the lowest. Three of the eleven banks namely Bank Al Jazira, ANB and Al Rajhi Bank have beta greater than 1 whereas the rest other banks have beta less than 1 (with TASI). The most active banking stock in the last one month, in terms of volume, was Alinma Bank.
x x x x
Valuation and Market Capitalization Table 4: Valuation and Market Capitalization Parameters for Banking Stocks Banking Sector Stock Valuations and Market Capitalizations* Valuation Parameters Company
PE
PBV
Market Capitalization
Dividend Yield
Total Mkt. Cap (SR million)
% Floated
RIBL
14.6
1.3
6.0%
34,950
38.7%
BJAZ
31.2
1.3
2.5%
6,000
73.6%
SIBC
19.2
1.1
0.0%
7,763
61.2%
Saudi Hollandi
11.0
1.8
1.8%
10,882
29.4%
Saudi Fransi
10.5
1.9
2.0%
28,784
54.7%
SABB
11.8
2.5
1.7%
33,075
32.9%
Arab National
11.4
2.2
2.3%
28,405
49.1%
SAMBA
9.0
2.1
3.7%
40,680
55.4%
Al Rajhi
15.7
3.9
4.3%
104,625
49.9%
AL Bilad
90.5
1.9
0.0%
6,015
77.0%
109.1
1.2
0.0%
19,350
69.9%
13.6
2.1
3.2%
320,528
52.4%
2.0
3.6%
1,135,855
37.4%
Alinma Bank Banks & Financial TASI
16.5** th
Source: Tadawul, FALCOM Research. *As of 26 August 2009. **Excluding loss making companies
Highlights: x x x x
The banking sector index had a lower PE and slightly higher PBV ratio than TASI. Five of the banking stocks namely Saudi Hollandi, Saudi Fransi, SABB, ANB and SAMBA are trading at PE ratios lower than that of the sector. Riyad Bank has the highest dividend yield followed by Al Rajhi Bank. Al Rajhi Bank has the highest market capitalization whereas Bank Al Bilad has maximum % of floating stocks.
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FALCOM Valuation and Capitalization Parameter Matrix FALCOM Research ranked the banking stocks on the basis of the valuation parameters and market capitalization figures. Table 5: FALCOM Valuation and Capitalization Parameter Matrix Table 6: FALCOM Valuation and Capitalization Parameter Matrix Company
PE
PBV
Dividend Yield
Total Market Capitalization
% Floated
RIBL
6
4
1
3
9
BJAZ
9
3
4
11
2
SIBC
8
1
9
9
4
Saudi Hollandi
3
5
7
8
11
Saudi Fransi
2
7
6
5
6
SABB
5
10
8
4
10
Arab National
4
9
5
6
8
SAMBA
1
8
3
2
5
Al Rajhi
7
11
2
1
7
AL Bilad
10
6
9
10
1
Alinma Bank
11
2
9
7
3
Source: FALCOM Research. First, second and third ranks for each parameter are marked in darker shades of grey for reference.
FALCOM Research
SAUDI ARABIAN BANKING SECTOR REPORT
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