Saudi Banking Sector - Aljazira Capital
Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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Saudi Banking Sector - 3Q-2016 The Saudi banking sector’s balance sheet in 3Q-2016 stood at SAR 2,249bn, an increase of 1.1%YoY (down 0.4% QoQ). Total loans weighed in at 73.6% of the total assets, whereas deposits accounted for 70.0% of the total liabilities. The banking sector’s balance sheet grew at a 10-year CAGR of 11.3%.
Saudi banking Sector Balance Sheet Growth-3Q-2016
Saudi banking Sector Balance Sheet Growth
2,000
In Bn SAR
1,500
30%
2500.0
25%
2000.0
20%
1500.0
15%
1,000
8% 7% 6% 5%
In Bn SAR
2,500
4%
1000.0
3%
10%
2%
500.0
500
5%
-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Banking Sector-Assets Breakdown-3Q-2016 1%
9M 2016
0%
1% 0.0
Q3-2015 Saudi Banking Assets-LHS
Q3-2016 % Growth (YoY)-RHS
0%
Banking Sector- Liabilities & Capital Breakdown-3Q-2016
1% 5%
5%
1%
Cash In Vault
10%
10%
Deposits with SAMA
11%
SAMA Bills
Deposits 15% Foreign Liabilities
Foreign Assets Loans to Private Sector
5%
Capital accounts
Loan to Gov & Quasi- Gov 64%
70%
Other Liabilities
Fixed Assets OtherAssets
Source: SAMA
The Saudi banking sector has 12 listed banks and other non-listed banks. In terms of balance sheet size, National Commercial Bank (NCB) (assets of more than SAR 438.8bn) is the biggest bank in the Kingdom, accounting for 19.9% of the total market, followed by Alrajhi Bank (asset base of SAR 330.5bn and 15.0% of market share). Samba and Riyadh Bank account for more than 10% each of the total banking assets. Of the 12 banks, Alrajhi, Alinma, Albilad, and Aljazira are Shariah-compliant banks, accounting for 25.1% of the total banking assets. Alrajhi is the biggest Shariah-compliant bank in the Kingdom, controlling almost 59.5% of the total sharia market share.
Total Banking Asset Market Share-3Q-2016 5%
NCB
3% 2%
10%
Al Rajhi
20%
4%
Sharia Compliant Banks Assets Market Share-3Q-2016
Samba Riyad
5%
Al Rajhi
12%
SAAB 8%
Alinma
Saudi Fransi 15%
ANB Alawwal Bank
9%
19%
59%
Aljazira
SAIB
Albilad
Alinma 8%
11% 10%
Aljazira Albilad Source: Bloomberg
Acting Head of Research
Talha Nazar +966 11 2256250 [email protected]
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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Deposits Growth
Deposits grown steadily, with a 10-year CAGR of 10.5% and 10.4%,
In Bn SAR
by the government for balancing its budget deficit.
1,600
20%
1,400
15%
1,200
respectively. Deposits declined by 4.3% YoY to SAR 1.58tn in 3Q2016 from SAR 1.65tn in 3Q2015, aggravated by draw down
25%
Orange line shows 1Q-2016 Money Supply
1,800
Saudi banking deposits along with the money supply has
10%
1,000
5%
800 600
Yellow line shows YoY change in 3Q-2016 Deposits.
400
Demand deposits fell further to -11.4%YoY to SAR 942.5bn in
200
0% -10%
0 19 94 19 95 19 9 19 6 1997 9 19 8 9 20 9 0 20 0 0 20 1 02 20 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 1 20 0 1 20 1 1 20 2 1 20 3 1 2 4 Q1 015 -2 Q2 01 - 6 Q3 201 -2 6 01 6
3Q-2016. Of the total deposits, demand deposits account for 59.6%, whereas time and savings deposits account for only 30.0%. Further breakdown of deposits shows almost 77.6% of the total
Deposits-LHS
1,800 1,600
entities.
1,400
With regard to time and savings deposits, nearly 55.9% are held by business and individuals and 44.1% by government entities.
10.00%
6.00% 4.00%
1,000
2.00%
800
0.00%
600 400
-2.00%
-4.27%
200 -
Demand Deposits Break Down
8.00%
8.31%
1,200 Bn SAR
with the government holding the remaining 6.8%.
% Growth in deposits-RHS
Deposit Growth-3Q-2016
deposits are held by individuals and 20.5% by government
Business and individuals hold 93.2% of the demand deposits,
Money Supply(M3)-LHS
-5%
Q3-2015 Demand-LHS Quasi-Monetary-LHS
-4.00% -6.00%
Q3-2016 Time & Savings-LHS % Growth (YoY)-RHS
Deposits Break Down
7% 10.4%
Business and Individuals Government Entities
Demand 30.0%
Time & Savings Quasi-Monetary 59.6%
93%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 20%
44%
Business and Individuals Government Entities Others
Business and Individuals 56%
Government Entities 78%
Source: SAMA
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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Bank Deposits Growth
Deposits - Breakdown by Bank
400
-15.3%
National Commercial Bank (deposit base of SAR 311bn) is the
350
largest bank, followed by Alrajhi Bank (deposit base of SAR
300 0.4%
273bn).
250
The highest growth in deposits was recorded by Alinma Bank,
150
which posted growth of 28.1% YoY and improved market share
100
from 3.5% to 4.7% in 3Q-2016. Banque Saudi Fransi stood
50
28.1%
200
second, increasing deposit base by 2.3%YoY and market share
0
-3.3%
2.3%
1.3% -10.1%
Al Rajhi Alinma
ANB Albilad Aljazira Saudi Fransi
to 8.9%.
3Q-2015
National Commercial Bank registered the biggest decline of 15.3%YoY in deposit base, as deposits fell from SAR 367bn to
3Q-2016
Alawwal SAIB Bank
% Growth
2.5% 2.4% 3.0% 3.3%
Albilad Aljazira
5.1% 4.8% 4.0% 3.9% 4.7% 3.5%
Alawwal Bank SAIB
bank, recorded 0.4%YoY rise in deposit base and improvement in market share from 15.8% to 16.4% in 3Q-2016.
Riyad Samba SAAB
Deposits Market Share Comparison
SAR 311bn and market share from 21.4% to 18.8% in 3Q-2016. Alrajhi Bank, the second biggest and largest Shariah-compliant
NCB
35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 1.5% -0.2% -0.5% -0.6% 5.0% -7.5% 0.0% -5.0% -10.0% -15.0% -20.0%
Alinma ANB Saudi Fransi SAAB
Alawwal Bank’s(Formerly: Saudi Hollandi) deposits grew 1.5%YoY
Riyad
in 3Q-2016, improving its market share from 4.8% to 5.1%.
Samba Al Rajhi
3Q-2016 3Q-2015
7.7% 7.7% 8.9% 8.4% 8.7% 9.1% 9.7% 9.4% 10.5% 10.2%
16.4% 15.8%
NCB
Loans
0.0%
The Saudi banking sector’s total loan book advanced 7.5%YoY to SAR 1.43tn toward the end of 3Q-2016. Until 2015, the
5.0%
10.0%
15.0%
18.8%
20.0%
21.4%
25.0%
Source: Company Financials, Bloomberg
Loans Growth 1,600
sector’s loan book registered a 10-year CAGR of 11.6%.
40%
Yellow Line Shows 3Q-2016 vs 2Q-2015
35%
1,400 1,200
one year. However, loans with maturity of one to three years
1,000
posted strong growth of 19.3%, increasing its share from 17.2% in 3Q-2015 to 19.1% in 3Q-2016.
In Bn SAR
Almost 52% of the loans extended have a maturity of less than
30% 25% 20%
800
15%
600
In a scenario of rising interest rate environment, the higher
400
concentration of short-term loans makes it easier for KSA banks
200 0
to re-price new loans.
10% 5% 0% 2005
2006
2007
2008
2009
2010
Loans
Loans Maturity- Growth
90%
414
1,000 229
600 400
686
th Grow 1.3% th Grow % 22.1
th Grow 9.0%
415
273
2014
2015 Q3-2016
-5%
% Growth-RHS
80%
31%
29%
17.2%
19.1%
52%
52%
70% 60% 50% 40%
741
200 -
2013
100%
1,400
800
2012
Loans Share According to Maturity Profile
1,600
1,200
2011
30% 20% 10%
Q3-2015 Less than 1 Year
Q3-2016 1 to 3 Years
Over 3 Years
0%
Q3-2015 Less than 1 Year
Q3-2016 1 to 3 Years
Over 3 Years Source: SAMA
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
Loans Breakdown
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Sector wise Loans Distribution
Commerce sector is the largest borrower, accounting for 21.4%
12.7%
of the total loans, followed by the manufacturing sector (12.7% of the total loans). The Building and Construction stood at the
Manufacturing
8%
Construction
third place, accounting for 8.0% of the total loan.
Commerce
49%
Retail Loans
Services Gov & Quasi Gov
21.4%
The sector’s retail loans (excluding real estate financing, finance
Miscellaneous
leasing, and financing against shares (margin lending)) jumped 7.8% YoY and 0.2% QoQ to SAR 343bn in 3Q-2016. Vehicles are the biggest constituent of retail loans, accounting for almost 9.6% in 3Q-2016. Loans for home Renovation
3%
Retail Loans-Break down
financing accounted for 8.7% of the total retail loans.
90.0%
Of the total retail loans, those acquired through credit cards
70.0%
accounted for 3.32% in 3Q-2016, a jump from 3.26% in 3Q-2015.
80.2%
80.0%
Starting 2009, real estate loans registered a six-year CAGR of
20.0%
23%, standing at SAR 186bn in 2015. In 1H 2016, the retail and
10.0%
30.0% 11.2%
0.0%
8.7%
8.7%
Home Renovation
in 3Q-2015. Alrajhi stood second, with market share increasing to 15.9% in Q3-2016 from 15.8% in 3Q-2015. Alinma Bank was
Others
Credit Cards/ Total Retail Loans
Q3-2016
250
80% 70%
200
In Bn SAR
60% 50%
150
40% 100
30% 20%
50
10%
the biggest gainer in terms of market share in the loan market,
0
while Saudi British Bank was the biggest loser.
% Growth-Retail
2010
2011
2012
2013
% Growth-Corporate
2014 % Growth-Total
2015
1H2016
Corporate
Samba Financial Groups market share accounted for 9.0% in 3Q-2016, a drop from 9.5% in 3Q-2015. The market share of Shariah-compliant banks rose to 26.3% in 3Q-2016 from 25.3% in 3Q-2015. This was primarily led by
Albilad Aljazira
2.6% 2.4% 3.0% 3.1%
Alinma
3Q-2016 3Q-2015
4.3% 4.3% 4.8% 4.0% 5.4% 5.5%
SAIB Alawwal Bank
3Q2016.
Retail
Bank Market Share
2015 to 4.8% 3Q-2016. Alrajhi market share increased from an increase in market share from 2.4% in 3Q2015 to 2.6% in
0%
Source: SAMA
Alinma Bank, whose market share increased from 4.0% in 3Q15.8% in 3Q2015 to15.9% in 3Q2016. Also, Albilad witnessed
3.3%
Real Estate Loans
Bank Wise Market Share in Loans whose market share improved to 18.2% in 3Q-2016 from 17.8%
3.3%
Q3-2015
real estate sector.
The sector’s biggest lender is National Commercial bank (NCB),
9.6%
Vehicles
of the total real estate loans.
in 1H-2016 compared with a 10% YoY rise in the retail loans to
Credit Card Includes Retail Loans, acquired through credit cards
50.0% 40.0%
Corporate sector real estate loans advanced 14% YoY to 83.6bn
81.7%
60.0%
Real Estate Loans
corporate sectors accounted for 56.4% and 43.6% respectively
5%
8.1% 8.5% 8.8% 9.6% 9.0% 9.5% 9.3% 9.3% 10.6% 10.3%
ANB SAAB Samba Saudi Fransi Riyad
15.9% 15.8%
Al Rajhi NCB 0.0%
2.0%
4.0%
6.0%
8.0%
18.2% 17.8%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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Among the 12 banks in the sector, 11 registered a YoY increase Bank Loans Distribution in gross loans. 300 Bank Alinma registered the strongest growth of 29.1%YoY in its loan book in 3Q-2016, which helped it increase market share.
250
30.0%
7.8%
25.0%
200 In Bn SAR
Albilad, with 12.3%YoY growth in gross loans, was the second best performer in terms of gross loans growth. Arab National Bank showed lowest growth of 2.0% YoY.
35.0% 9.0%
29.1%
20.0%
150
10.4%
12.3%
7.6%
2.0%
15.0%
1.8% -2.6%
100
5.8%
5.2%
50
Saudi British Bank’s with a decline of 2.6%YoY, was the only bank to register a YoY decline in gross loans.
-
10.0% 5.0%
2.3%
0.0% Al Rajhi Alinma ANB
Shariah-compliant banks showed cumulative growth of 10.9%YoY in gross loans in Q3-2016.
Albilad Aljazira Saudi Fransi
Q3-2015
NCB
Q3-2016
Riyad Samba SAAB Alawwal SAIB Bank
-5.0%
% growth
Non-Performing Loans
Alinma and Banque Saudi Fransi, with NPL ratios of 0.69% and 0.80%, respectively, were the best in the industry. Alinma and Saudi Fransi’s NPL coverage stood at 172% and 220%, respectively, in 3Q-2016. However, it should be noted Alinma recorded a drop in NPL coverage, which stood at 202% in 3Q-2015.
In Bn SAR
The sector’s non-performing loan ratio in 3Q-2016 stood at Performing Loans to NPLs 300 1.14% compared with 1.11% in 3Q-2015. The NPL coverage ratio 1.47% 250 1.38% improved marginally to 178% in 3Q-2016 from 177% in 3Q-2015.
1.8%
1.6%
1.6% 1.4%
200
NPLs-Industry Average Q3-2016 , 1.1%
150
NPLs-Industry Average Q3-2015, 1.1% 0.80%
1.3%
1.1%
0.83%
0.9% 100
1.2%
1.2%
1.0%
0.83% 0.81%
0.69%
0.8% 0.6% 0.4%
50
0.2% -
NCB has the highest NPL ratio of 1.6% and its NPL coverage ratio stood at 147% in 3Q-2016. ANB registered the greatest improvement in NPL coverage from 218% in 3Q-2015 to 259% in 3Q-2016.
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
NCB
0.0%
Riyad Samba SAAB
Performing Loans-Q3-2016
Non-performing Loans-Q3-2015
NPLs-Industry Average Q3-2016
NPLs-Industry Average Q3-2015
Alawwal SAIB Bank % Share of NPLs-RHS
Alinma posted the biggest drop in NPL coverage ratio from 202% ADR ratio in 3Q-2015 to 172% in 3Q-2016.
Advances to Deposit Ratio
100% 85%
The industry ADR ratio jumped to 90.0% in Q3-2016 from 88.1% in 3Q-2015. This was partly led by a 3.3%YoY decline in deposits and 6.8%YoY increase in loans. Riyadh Bank posted the highest ADR of 96.3%, whereas Samba recorded the lowest ADR of 75.7% in 3Q-2016 compared with 74.0% in 3Q-2015. Notably, Saudi Arabian Monetary Agency (SAMA) increased the regulatory ADR limit from 85% to 90%.
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91%
92%
90%
87%
96.3%
93%
89%
85%
80%
94%
94%
75.7%
60% 40%
79%
90%
87%
82%
77%
88%
87% 74.0%
66%
85%
90%
88%
20% 0%
Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
Q3-2016 ADR
NCB
Riyad
Samba
SAAB
Alawwal SAIB Bank
Q3-2015 ADR Source: Company Financials
Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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NIMS
NIMs under Pressure Of the 12 banks, only two posted increase in the net interest margin (NIM).
1.00%
Alawwal Bank recorded the greatest drop in NIM from 0.58% in 3Q-2015 to 0.10% in 3Q-2016. Samba and Saudi Fransi were the two banks to register increase in NIM. Samba registered a rise of 0.08% in 3Q-2016 to 0.86% from 0.78% in 3Q-2015. Saudi Fransi recorded 0.07% growth to 0.43% in 3Q-2016 from 0.35% in 3Q-2015. Overall,
0.70%
0.80% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%
Al Rajhi Alinma ANB Albilad Aljazira
Saudi NCB Fransi
Q3-2015
Riyad Samba SAAB
NCB reported the highest cost of SAR 904mn on savings deposit compared with SAR 613mn, an increase of 47.4% YoY. Alawwal Bank recorded the highest return on time and savings deposit at 1.28%.
Absolute Cost on Saving and Time Deposits
The highest jump in return on deposit was posted by Albilad Bank at 408%YoY. Samba’s return on time and saving deposit of 0.49% was the lowest in the market, closely followed by SAAB and Alinma (0.59% and 0.62%, respectively).
450%
700 408%
600
350%
300
300%
208%
285%
400
255%
230%
250%
234%
200%
178%
188%
159%
139%
118%
200
150% 100%
100
Operating Income Breakdown
50%
47% Al Rajhi Alinma ANB Albilad Aljazira Saudi NCB Fransi
The sector posted operating income of SAR 62.8bn for 9M-2016 against SAR 60.5bn for 9M-2015, depicting a 3.9% YoY jump.
Corporate’s contribution fell -0.7%YoY from 33.2% to 31.8%. Earnings from the corporate sector stood at SAR 19.9bn.
400%
500
-
Retail accounted for 42.8% of the total operating income for 9M-2016 compared with 40.1% for 9M-2015. Retail income increased 11.0%YoY.
Alawwal SAIB Bank
Q3-2016
IN Mn SAR
the sector’s return on savings and time deposits increased 146% YoY.
0.90%
Riyad Samba SAAB Alawwal SAIB Bank
Q3-2016
Q3-2015
0%
% Change
Source: Company Financials, Bloomberg
Lending rates 1.80%
1.64%
1.60% 1.40%
1.32%
1.42% 1.27%
1.26%
1.38% 1.38%
1.35%
1.25%
1.24%
1.22%
1.15%
1.20% 1.00%
Treasury and investment income declined -0.9%YoY and -10.8%YoY, respectively.
0.80%
Other income increased 7.4%YoY.
0.40%
NCB, with operating income of SAR 14.0bn, contributed 22.4% to the total 3Q-2016 sector earnings, followed by Alrajhi contributing 18.3%, with earning of SAR 11.5bn.
0.20%
Company-wise Operating Income
Operating Income Breakdown
0.60%
0.00%
1.19% 1.12% 0.97%
0.94% 1.13%
Al Rajhi Alinma ANB
0.98%
1.59%
Albilad Aljazira Saudi Fransi
1.01%
NCB
1.00%
0.90%
0.99%
1.03%
Riyad Samba SAAB Alawwal SAIB Bank
Q3-2016
Q3-2015
16,000 4.2%
14,000
4.4%
12,000
3.8%
In MN SAR
10,000
18.1%
8,000 6,000
17.3%
Retail 40.1%
9M -2016
4,000
42.8%
Corporate Treasurey Investment Services and Brokerage
2,000 -
9M-2015
4.4%
31.8% Al Rajhi Alinma ANB
(2,000) Retail
Corporate
Albilad Aljazira Saudi Fransi
Treasurey
NCB
Riyad Samba SAAB Alawwal SAIB Bank
Others
33.2%
Investment Services and Brokerage 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
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
Central Region
Abdullah Al-Rahit
Sultan Ibrahim AL-Mutawa
+966 16 3617547 [email protected]
+966 11 2256364 [email protected]
+966 11 2256248 [email protected]
+966 12 6618443 [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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Saudi Banking Sector - 3Q-2016 The Saudi banking sector’s balance sheet in 3Q-2016 stood at SAR 2,249bn, an increase of 1.1%YoY (down 0.4% QoQ). Total loans weighed in at 73.6% of the total assets, whereas deposits accounted for 70.0% of the total liabilities. The banking sector’s balance sheet grew at a 10-year CAGR of 11.3%.
Saudi banking Sector Balance Sheet Growth-3Q-2016
Saudi banking Sector Balance Sheet Growth
2,000
In Bn SAR
1,500
30%
2500.0
25%
2000.0
20%
1500.0
15%
1,000
8% 7% 6% 5%
In Bn SAR
2,500
4%
1000.0
3%
10%
2%
500.0
500
5%
-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Banking Sector-Assets Breakdown-3Q-2016 1%
9M 2016
0%
1% 0.0
Q3-2015 Saudi Banking Assets-LHS
Q3-2016 % Growth (YoY)-RHS
0%
Banking Sector- Liabilities & Capital Breakdown-3Q-2016
1% 5%
5%
1%
Cash In Vault
10%
10%
Deposits with SAMA
11%
SAMA Bills
Deposits 15% Foreign Liabilities
Foreign Assets Loans to Private Sector
5%
Capital accounts
Loan to Gov & Quasi- Gov 64%
70%
Other Liabilities
Fixed Assets OtherAssets
Source: SAMA
The Saudi banking sector has 12 listed banks and other non-listed banks. In terms of balance sheet size, National Commercial Bank (NCB) (assets of more than SAR 438.8bn) is the biggest bank in the Kingdom, accounting for 19.9% of the total market, followed by Alrajhi Bank (asset base of SAR 330.5bn and 15.0% of market share). Samba and Riyadh Bank account for more than 10% each of the total banking assets. Of the 12 banks, Alrajhi, Alinma, Albilad, and Aljazira are Shariah-compliant banks, accounting for 25.1% of the total banking assets. Alrajhi is the biggest Shariah-compliant bank in the Kingdom, controlling almost 59.5% of the total sharia market share.
Total Banking Asset Market Share-3Q-2016 5%
NCB
3% 2%
10%
Al Rajhi
20%
4%
Sharia Compliant Banks Assets Market Share-3Q-2016
Samba Riyad
5%
Al Rajhi
12%
SAAB 8%
Alinma
Saudi Fransi 15%
ANB Alawwal Bank
9%
19%
59%
Aljazira
SAIB
Albilad
Alinma 8%
11% 10%
Aljazira Albilad Source: Bloomberg
Acting Head of Research
Talha Nazar +966 11 2256250 [email protected]
1
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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Deposits Growth
Deposits grown steadily, with a 10-year CAGR of 10.5% and 10.4%,
In Bn SAR
by the government for balancing its budget deficit.
1,600
20%
1,400
15%
1,200
respectively. Deposits declined by 4.3% YoY to SAR 1.58tn in 3Q2016 from SAR 1.65tn in 3Q2015, aggravated by draw down
25%
Orange line shows 1Q-2016 Money Supply
1,800
Saudi banking deposits along with the money supply has
10%
1,000
5%
800 600
Yellow line shows YoY change in 3Q-2016 Deposits.
400
Demand deposits fell further to -11.4%YoY to SAR 942.5bn in
200
0% -10%
0 19 94 19 95 19 9 19 6 1997 9 19 8 9 20 9 0 20 0 0 20 1 02 20 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 1 20 0 1 20 1 1 20 2 1 20 3 1 2 4 Q1 015 -2 Q2 01 - 6 Q3 201 -2 6 01 6
3Q-2016. Of the total deposits, demand deposits account for 59.6%, whereas time and savings deposits account for only 30.0%. Further breakdown of deposits shows almost 77.6% of the total
Deposits-LHS
1,800 1,600
entities.
1,400
With regard to time and savings deposits, nearly 55.9% are held by business and individuals and 44.1% by government entities.
10.00%
6.00% 4.00%
1,000
2.00%
800
0.00%
600 400
-2.00%
-4.27%
200 -
Demand Deposits Break Down
8.00%
8.31%
1,200 Bn SAR
with the government holding the remaining 6.8%.
% Growth in deposits-RHS
Deposit Growth-3Q-2016
deposits are held by individuals and 20.5% by government
Business and individuals hold 93.2% of the demand deposits,
Money Supply(M3)-LHS
-5%
Q3-2015 Demand-LHS Quasi-Monetary-LHS
-4.00% -6.00%
Q3-2016 Time & Savings-LHS % Growth (YoY)-RHS
Deposits Break Down
7% 10.4%
Business and Individuals Government Entities
Demand 30.0%
Time & Savings Quasi-Monetary 59.6%
93%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 20%
44%
Business and Individuals Government Entities Others
Business and Individuals 56%
Government Entities 78%
Source: SAMA
2
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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Bank Deposits Growth
Deposits - Breakdown by Bank
400
-15.3%
National Commercial Bank (deposit base of SAR 311bn) is the
350
largest bank, followed by Alrajhi Bank (deposit base of SAR
300 0.4%
273bn).
250
The highest growth in deposits was recorded by Alinma Bank,
150
which posted growth of 28.1% YoY and improved market share
100
from 3.5% to 4.7% in 3Q-2016. Banque Saudi Fransi stood
50
28.1%
200
second, increasing deposit base by 2.3%YoY and market share
0
-3.3%
2.3%
1.3% -10.1%
Al Rajhi Alinma
ANB Albilad Aljazira Saudi Fransi
to 8.9%.
3Q-2015
National Commercial Bank registered the biggest decline of 15.3%YoY in deposit base, as deposits fell from SAR 367bn to
3Q-2016
Alawwal SAIB Bank
% Growth
2.5% 2.4% 3.0% 3.3%
Albilad Aljazira
5.1% 4.8% 4.0% 3.9% 4.7% 3.5%
Alawwal Bank SAIB
bank, recorded 0.4%YoY rise in deposit base and improvement in market share from 15.8% to 16.4% in 3Q-2016.
Riyad Samba SAAB
Deposits Market Share Comparison
SAR 311bn and market share from 21.4% to 18.8% in 3Q-2016. Alrajhi Bank, the second biggest and largest Shariah-compliant
NCB
35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 1.5% -0.2% -0.5% -0.6% 5.0% -7.5% 0.0% -5.0% -10.0% -15.0% -20.0%
Alinma ANB Saudi Fransi SAAB
Alawwal Bank’s(Formerly: Saudi Hollandi) deposits grew 1.5%YoY
Riyad
in 3Q-2016, improving its market share from 4.8% to 5.1%.
Samba Al Rajhi
3Q-2016 3Q-2015
7.7% 7.7% 8.9% 8.4% 8.7% 9.1% 9.7% 9.4% 10.5% 10.2%
16.4% 15.8%
NCB
Loans
0.0%
The Saudi banking sector’s total loan book advanced 7.5%YoY to SAR 1.43tn toward the end of 3Q-2016. Until 2015, the
5.0%
10.0%
15.0%
18.8%
20.0%
21.4%
25.0%
Source: Company Financials, Bloomberg
Loans Growth 1,600
sector’s loan book registered a 10-year CAGR of 11.6%.
40%
Yellow Line Shows 3Q-2016 vs 2Q-2015
35%
1,400 1,200
one year. However, loans with maturity of one to three years
1,000
posted strong growth of 19.3%, increasing its share from 17.2% in 3Q-2015 to 19.1% in 3Q-2016.
In Bn SAR
Almost 52% of the loans extended have a maturity of less than
30% 25% 20%
800
15%
600
In a scenario of rising interest rate environment, the higher
400
concentration of short-term loans makes it easier for KSA banks
200 0
to re-price new loans.
10% 5% 0% 2005
2006
2007
2008
2009
2010
Loans
Loans Maturity- Growth
90%
414
1,000 229
600 400
686
th Grow 1.3% th Grow % 22.1
th Grow 9.0%
415
273
2014
2015 Q3-2016
-5%
% Growth-RHS
80%
31%
29%
17.2%
19.1%
52%
52%
70% 60% 50% 40%
741
200 -
2013
100%
1,400
800
2012
Loans Share According to Maturity Profile
1,600
1,200
2011
30% 20% 10%
Q3-2015 Less than 1 Year
Q3-2016 1 to 3 Years
Over 3 Years
0%
Q3-2015 Less than 1 Year
Q3-2016 1 to 3 Years
Over 3 Years Source: SAMA
3
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
Loans Breakdown
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Sector wise Loans Distribution
Commerce sector is the largest borrower, accounting for 21.4%
12.7%
of the total loans, followed by the manufacturing sector (12.7% of the total loans). The Building and Construction stood at the
Manufacturing
8%
Construction
third place, accounting for 8.0% of the total loan.
Commerce
49%
Retail Loans
Services Gov & Quasi Gov
21.4%
The sector’s retail loans (excluding real estate financing, finance
Miscellaneous
leasing, and financing against shares (margin lending)) jumped 7.8% YoY and 0.2% QoQ to SAR 343bn in 3Q-2016. Vehicles are the biggest constituent of retail loans, accounting for almost 9.6% in 3Q-2016. Loans for home Renovation
3%
Retail Loans-Break down
financing accounted for 8.7% of the total retail loans.
90.0%
Of the total retail loans, those acquired through credit cards
70.0%
accounted for 3.32% in 3Q-2016, a jump from 3.26% in 3Q-2015.
80.2%
80.0%
Starting 2009, real estate loans registered a six-year CAGR of
20.0%
23%, standing at SAR 186bn in 2015. In 1H 2016, the retail and
10.0%
30.0% 11.2%
0.0%
8.7%
8.7%
Home Renovation
in 3Q-2015. Alrajhi stood second, with market share increasing to 15.9% in Q3-2016 from 15.8% in 3Q-2015. Alinma Bank was
Others
Credit Cards/ Total Retail Loans
Q3-2016
250
80% 70%
200
In Bn SAR
60% 50%
150
40% 100
30% 20%
50
10%
the biggest gainer in terms of market share in the loan market,
0
while Saudi British Bank was the biggest loser.
% Growth-Retail
2010
2011
2012
2013
% Growth-Corporate
2014 % Growth-Total
2015
1H2016
Corporate
Samba Financial Groups market share accounted for 9.0% in 3Q-2016, a drop from 9.5% in 3Q-2015. The market share of Shariah-compliant banks rose to 26.3% in 3Q-2016 from 25.3% in 3Q-2015. This was primarily led by
Albilad Aljazira
2.6% 2.4% 3.0% 3.1%
Alinma
3Q-2016 3Q-2015
4.3% 4.3% 4.8% 4.0% 5.4% 5.5%
SAIB Alawwal Bank
3Q2016.
Retail
Bank Market Share
2015 to 4.8% 3Q-2016. Alrajhi market share increased from an increase in market share from 2.4% in 3Q2015 to 2.6% in
0%
Source: SAMA
Alinma Bank, whose market share increased from 4.0% in 3Q15.8% in 3Q2015 to15.9% in 3Q2016. Also, Albilad witnessed
3.3%
Real Estate Loans
Bank Wise Market Share in Loans whose market share improved to 18.2% in 3Q-2016 from 17.8%
3.3%
Q3-2015
real estate sector.
The sector’s biggest lender is National Commercial bank (NCB),
9.6%
Vehicles
of the total real estate loans.
in 1H-2016 compared with a 10% YoY rise in the retail loans to
Credit Card Includes Retail Loans, acquired through credit cards
50.0% 40.0%
Corporate sector real estate loans advanced 14% YoY to 83.6bn
81.7%
60.0%
Real Estate Loans
corporate sectors accounted for 56.4% and 43.6% respectively
5%
8.1% 8.5% 8.8% 9.6% 9.0% 9.5% 9.3% 9.3% 10.6% 10.3%
ANB SAAB Samba Saudi Fransi Riyad
15.9% 15.8%
Al Rajhi NCB 0.0%
2.0%
4.0%
6.0%
8.0%
18.2% 17.8%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
4
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Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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Among the 12 banks in the sector, 11 registered a YoY increase Bank Loans Distribution in gross loans. 300 Bank Alinma registered the strongest growth of 29.1%YoY in its loan book in 3Q-2016, which helped it increase market share.
250
30.0%
7.8%
25.0%
200 In Bn SAR
Albilad, with 12.3%YoY growth in gross loans, was the second best performer in terms of gross loans growth. Arab National Bank showed lowest growth of 2.0% YoY.
35.0% 9.0%
29.1%
20.0%
150
10.4%
12.3%
7.6%
2.0%
15.0%
1.8% -2.6%
100
5.8%
5.2%
50
Saudi British Bank’s with a decline of 2.6%YoY, was the only bank to register a YoY decline in gross loans.
-
10.0% 5.0%
2.3%
0.0% Al Rajhi Alinma ANB
Shariah-compliant banks showed cumulative growth of 10.9%YoY in gross loans in Q3-2016.
Albilad Aljazira Saudi Fransi
Q3-2015
NCB
Q3-2016
Riyad Samba SAAB Alawwal SAIB Bank
-5.0%
% growth
Non-Performing Loans
Alinma and Banque Saudi Fransi, with NPL ratios of 0.69% and 0.80%, respectively, were the best in the industry. Alinma and Saudi Fransi’s NPL coverage stood at 172% and 220%, respectively, in 3Q-2016. However, it should be noted Alinma recorded a drop in NPL coverage, which stood at 202% in 3Q-2015.
In Bn SAR
The sector’s non-performing loan ratio in 3Q-2016 stood at Performing Loans to NPLs 300 1.14% compared with 1.11% in 3Q-2015. The NPL coverage ratio 1.47% 250 1.38% improved marginally to 178% in 3Q-2016 from 177% in 3Q-2015.
1.8%
1.6%
1.6% 1.4%
200
NPLs-Industry Average Q3-2016 , 1.1%
150
NPLs-Industry Average Q3-2015, 1.1% 0.80%
1.3%
1.1%
0.83%
0.9% 100
1.2%
1.2%
1.0%
0.83% 0.81%
0.69%
0.8% 0.6% 0.4%
50
0.2% -
NCB has the highest NPL ratio of 1.6% and its NPL coverage ratio stood at 147% in 3Q-2016. ANB registered the greatest improvement in NPL coverage from 218% in 3Q-2015 to 259% in 3Q-2016.
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
NCB
0.0%
Riyad Samba SAAB
Performing Loans-Q3-2016
Non-performing Loans-Q3-2015
NPLs-Industry Average Q3-2016
NPLs-Industry Average Q3-2015
Alawwal SAIB Bank % Share of NPLs-RHS
Alinma posted the biggest drop in NPL coverage ratio from 202% ADR ratio in 3Q-2015 to 172% in 3Q-2016.
Advances to Deposit Ratio
100% 85%
The industry ADR ratio jumped to 90.0% in Q3-2016 from 88.1% in 3Q-2015. This was partly led by a 3.3%YoY decline in deposits and 6.8%YoY increase in loans. Riyadh Bank posted the highest ADR of 96.3%, whereas Samba recorded the lowest ADR of 75.7% in 3Q-2016 compared with 74.0% in 3Q-2015. Notably, Saudi Arabian Monetary Agency (SAMA) increased the regulatory ADR limit from 85% to 90%.
5
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91%
92%
90%
87%
96.3%
93%
89%
85%
80%
94%
94%
75.7%
60% 40%
79%
90%
87%
82%
77%
88%
87% 74.0%
66%
85%
90%
88%
20% 0%
Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
Q3-2016 ADR
NCB
Riyad
Samba
SAAB
Alawwal SAIB Bank
Q3-2015 ADR Source: Company Financials
Saudi Banking Sector December 2016 Saudi Arabia | Quarterly Report | Q3-2016
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NIMS
NIMs under Pressure Of the 12 banks, only two posted increase in the net interest margin (NIM).
1.00%
Alawwal Bank recorded the greatest drop in NIM from 0.58% in 3Q-2015 to 0.10% in 3Q-2016. Samba and Saudi Fransi were the two banks to register increase in NIM. Samba registered a rise of 0.08% in 3Q-2016 to 0.86% from 0.78% in 3Q-2015. Saudi Fransi recorded 0.07% growth to 0.43% in 3Q-2016 from 0.35% in 3Q-2015. Overall,
0.70%
0.80% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%
Al Rajhi Alinma ANB Albilad Aljazira
Saudi NCB Fransi
Q3-2015
Riyad Samba SAAB
NCB reported the highest cost of SAR 904mn on savings deposit compared with SAR 613mn, an increase of 47.4% YoY. Alawwal Bank recorded the highest return on time and savings deposit at 1.28%.
Absolute Cost on Saving and Time Deposits
The highest jump in return on deposit was posted by Albilad Bank at 408%YoY. Samba’s return on time and saving deposit of 0.49% was the lowest in the market, closely followed by SAAB and Alinma (0.59% and 0.62%, respectively).
450%
700 408%
600
350%
300
300%
208%
285%
400
255%
230%
250%
234%
200%
178%
188%
159%
139%
118%
200
150% 100%
100
Operating Income Breakdown
50%
47% Al Rajhi Alinma ANB Albilad Aljazira Saudi NCB Fransi
The sector posted operating income of SAR 62.8bn for 9M-2016 against SAR 60.5bn for 9M-2015, depicting a 3.9% YoY jump.
Corporate’s contribution fell -0.7%YoY from 33.2% to 31.8%. Earnings from the corporate sector stood at SAR 19.9bn.
400%
500
-
Retail accounted for 42.8% of the total operating income for 9M-2016 compared with 40.1% for 9M-2015. Retail income increased 11.0%YoY.
Alawwal SAIB Bank
Q3-2016
IN Mn SAR
the sector’s return on savings and time deposits increased 146% YoY.
0.90%
Riyad Samba SAAB Alawwal SAIB Bank
Q3-2016
Q3-2015
0%
% Change
Source: Company Financials, Bloomberg
Lending rates 1.80%
1.64%
1.60% 1.40%
1.32%
1.42% 1.27%
1.26%
1.38% 1.38%
1.35%
1.25%
1.24%
1.22%
1.15%
1.20% 1.00%
Treasury and investment income declined -0.9%YoY and -10.8%YoY, respectively.
0.80%
Other income increased 7.4%YoY.
0.40%
NCB, with operating income of SAR 14.0bn, contributed 22.4% to the total 3Q-2016 sector earnings, followed by Alrajhi contributing 18.3%, with earning of SAR 11.5bn.
0.20%
Company-wise Operating Income
Operating Income Breakdown
0.60%
0.00%
1.19% 1.12% 0.97%
0.94% 1.13%
Al Rajhi Alinma ANB
0.98%
1.59%
Albilad Aljazira Saudi Fransi
1.01%
NCB
1.00%
0.90%
0.99%
1.03%
Riyad Samba SAAB Alawwal SAIB Bank
Q3-2016
Q3-2015
16,000 4.2%
14,000
4.4%
12,000
3.8%
In MN SAR
10,000
18.1%
8,000 6,000
17.3%
Retail 40.1%
9M -2016
4,000
42.8%
Corporate Treasurey Investment Services and Brokerage
2,000 -
9M-2015
4.4%
31.8% Al Rajhi Alinma ANB
(2,000) Retail
Corporate
Albilad Aljazira Saudi Fransi
Treasurey
NCB
Riyad Samba SAAB Alawwal SAIB Bank
Others
33.2%
Investment Services and Brokerage 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
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
Central Region
Abdullah Al-Rahit
Sultan Ibrahim AL-Mutawa
+966 16 3617547 [email protected]
+966 11 2256364 [email protected]
+966 11 2256248 [email protected]
+966 12 6618443 [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
