Saudi Banking sector Q3 - Al Rajhi Capital
Saudi Banks Sector Banks –Finance Saudi Arabia 19 September 2017 January 18, 2010
Key themes The banking sector’s earnings were surprisingly strong in Q2 2017 as banks earned better than expected yields on assets. For Q3, we believe that the spread is likely to be maintained, while costs of deposits may slip marginally, supporting NIMs. Asset quality is not expected to have improved or deteriorated substantially from the previous quarter, and thus provisions are likely to be in the similar range of SAR2-2.5bn. As a result, overall earnings for the sector is expected to be marginally higher in Q3.
Saudi Banking sector Q3: Expect NIM to improve; NPLs may remain broadly stable After a better than expected performance in the second quarter, we believe earnings are likely to slightly increase in Q3 2017. Q2 profitability was supported by an increase in asset yields despite lower effective SAIBOR levels, resulting in better gross interest income. From a historical perspective, the spread earned over SAIBOR in Q2 was the highest since Q4 2013. However, July profit for Saudi banks at ~SAR4bn (average monthly profit in Q2 at SAR3.6bn) indicates that despite marginal decline in effective SAIBOR levels, asset yields continue to hold up. We believe this is because banks are moving to longer term lending contracts and hence are capitalizing on higher SAIBOR levels. With regard to provisions, we have not seen any material change in asset quality and hence level of provisions may be similar or slightly more than the last quarter. On the whole, liquidity is healthy with LDR at 81.15%, helped by improving Govt deposits in the past few months. Banking sector capital structure continues to remain healthy even after some of the banks increased dividends which reflect confidence in their ability to continue such dividends. Net interest income likely to slightly increase q-o-q: Net interest income (NII) surprised last quarter as asset yields increased despite the decline in effective SAIBOR, resulting in higher spread. The spread earned by the sector as a whole over our calculated effective SAIBOR reached the highest level since Q4 2013. Based on our understanding, the increase in spread and thereby asset yield is mainly as banks are trying to renew financing with companies at longer duration. This may also indicate that the banks feel SAIBOR may have already peaked in the near term. On the other hand, cost of deposits continued to slip, following the trend in SAIBOR, boosting NIMs. For Q3, the effective SAIBOR has been mostly flat as compared to the previous quarter, while credit growth (credit to private sector + claims on public sector) has seen a marginal ~1% m-om increase in July. Thus, even if spread remains stable at the elevated level, GII is expected to be mostly flat in Q3. Cost of deposits may slip marginally due to the decline witnessed in SAIBOR. This should lead to a slight increase in NIIs for the sector and higher NIMs. Figure 1 Effective SAIBOR and spread earned by the banking sector 3.00% 2.50% 2.00% 1.50%
Mazen Al-Sudairi, Head of Research, Tel +966 11 2119449, [email protected]
1.00% 0.50%
Note: We do not cover Banks. Please read special disclaimers at the end of the report.
Ef f ective Saibor
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
0.00%
Pritish Devassy, CFA, Tel +966 11 2119370, [email protected]
Spread earned
Source: Bloomberg, Company data, Al Rajhi Capital
Please see penultimate page for additional important disclosures. Al Rajhi Capital (Al Rajhi) is a foreign broker-dealer unregistered in the USA. Al Rajhi research is prepared by research analysts who are not registered in the USA. Al Rajhi research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer.
Saudi Banks Sector Banks –Finance 13 September 2017
Commission & Fee income to remain subdued: Non-interest income is expected to be weak on a m-o-m basis, as - 1) Credit to the private sector slipped marginally (-0.1% m-o-m in July 2017), 2) lesser loan restructuring as SAIBOR has remained largely flat ( Effective SAIBOR Q2: 1.6189%, Q3: 1.623%), and 3) Trading volumes on the Tadawul has been subdued due to the Eid holidays, and likely to be stable compared to the low base of Q2 (Q2 monthly average SAR61.6bn, Q3 monthly average till now: SAR60.3bn). Operating costs and provisions: Provisions have been the main factor impacting earnings over the last few quarters as asset quality deteriorated with the slowdown in the economy, cut in government expenditure and delayed payments on government contracts. Given the current economic scenario, we don’t see any meaningful improvement in asset quality compared to the last quarter and thus expect provisions to be in the similar range as seen in the first couple of quarters (SAR2-2.5bn). Operating costs remained mostly stable and are likely to continue to maintain this trend. Thus, with a modest increase in NII, stable noninterest income and provisions, we believe the overall earnings of the banking sector may rise marginally in Q3 2017. Liquidity comfortable after the second domestic bond issue: The government resumed domestic bond issues in July 2017 after suspending them in September 2016. Post the recent two domestic bond issues liquidity situation remains comfortable, as indicated by the flattish SAIBOR. Moreover, given that the bonds are Islamic, it has participation of all the banks unlike the case before. The loan-to-deposit ratio is at a relatively comfortable 81.15% and notably “other deposits” with SAMA accounted for 4% (~SAR91bn) of the bank’s consolidated total assets at the end of July 2017, compared to only 1.2% in April 2016. Valuation and risks: The banking sector has been mostly flat in Q3 QTD, rising a mere 3%. However, more recently the index has been increasing since August, rising from 5,201 by July-end to 5,638 currently (+8%). Valuations are mostly fair at current levels given that growth prospects also look weak and ROEs are not expected to reach earlier levels in the near term. The sector index is currently trading at ~1.47x current book value and 1.43x 2017E book value, skewed by the higher multiples of the Islamic banks as compared to the nonIslamic banks. We believe any improvement in asset quality will act as a catalyst for the sector, as rising provisioning have been hurting earnings over the last few quarters. Figure 2 Performance of Bank sector vs. TASI
Figure 3 ROE (avg. last 4 quarters) vs. P/B (12m forward) 18.0%
115
Title: Source:
Al Rajhi
NCB
16.0%
Please fill in the values above to have them entered in your report
110
14.0% 105
Albilad ANB SABB
12.0%
Samba
100
10.0% SIB
95
BSF
Al Jazira
Alinma Riyad
8.0% 90 Jan-17
Feb-17 Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
6.0% TASI
Banking
Source: Bloomberg, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
Source: Bloomberg, Company data, Al Rajhi Capital
2
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 4 Movement of asset yield, cost of deposit, net interest margin and interest rates 4.5%
4.2%
4.0% 4.0%
3.6% 3.5% 3.6% 3.6% 3.5% 3.4% 3.4%3.5%
3.5% 3.0% 2.5%
3.3% 3.3% 3.2% 3.3% 3.2% 3.2% 3.2%
3.4%
3.6%
4.1% 4.1%
3.7%
3.2% 3.1% 3.1% 3.1% 3.1% 3.1% 3.0% 3.0% 2.9% 2.9% 2.9% 2.9% 2.8% 2.9% 2.8% 2.8% 2.8% 2.8% 2.8%
2.0%
1.7%
1.5%
1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 1.0% 1.0% 0.9% 0.9% 0.8% 0.9% 0.8% 0.8% 0.8%
1.0%
3.0%
2.1% 2.3% 2.2%
3.2%
3.3%
1.9% 1.9%
1.1%
0.5% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 Asset yield
Cost of deposits
NIM
3m SAIBOR
3m LIBOR
Source: Company data, Al Rajhi Capital (* NIM is calculated as Non-interest income divided by interest earning assets)
Figure 5 Non-performing loan ratio vs. coverage ratio
Figure 6 Net interest income for the sector 2.4%
SAR mn Title: 16,000
180%
2.2%
15,000
170%
2.0%
190%
16%
Source: 14,000
14%
12%
Please fill in the values above to have them entered in your report
10% 8%
13,000 160%
1.8%
150%
1.6%
6%
12,000
2%
10,000
0% -2% -4% -6%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
8,000
Q3 2013
1.0%
Q2 2013
120%
Q1 2013
9,000
Q4 2012
1.2%
Q3 2012
130%
Q2 2012
1.4%
Q1 2012
140%
coverage ratio
4%
11,000
Non-perf orming loan to gross loans (RHS)
Net interest income
y-o-y (RHS)
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 7 Banking sector provisions trend
Figure 8 Banking sector non-interest income
SAR mn 4,500
120%
4,000
100%
3,500
80%
3,000
60%
q-o-q (RHS)
SAR mn Title: 8,000
40%
Source: 7,500 7,000
30%
Please fill in the values above to have them entered in your report 20%
6,500 2,500
10%
40% 6,000
Provisions
y-o-y
q-o-q
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
0% 5,500 -10%
5,000 4,500
-20%
4,000
-30%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
-60%
Q4 2013
0
Q3 2013
-40%
Q2 2013
500 Q1 2013
-20%
Q4 2012
1,000
Q3 2012
0%
Q2 2012
20%
1,500
Q1 2012
2,000
Non-interest income (SARmn)
y-o-y (RHS)
q-o-q (RHS)
Source: Company data, Al Rajhi Capital
3
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 9 Banking sector operating income trend
Figure 10 Banking sector net profit
SAR mn 25,000
SAR mn Title: 12,000
15%
50%
Source: 40%
11,000 20,000
10%
Please fill in the values above to have them entered in your report
30%
10,000 15,000
5%
10,000
0%
20% 9,000 10%
8,000 0% 7,000
5,000
-10%
-5%
5,000
-30%
Operating income
y-o-y (RHS)
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
-10%
-20%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
0
6,000
q-o-q (RHS)
net income
Source: Company data, Al Rajhi Capital
y-o-y (RHS)
q-o-q (RHS)
Source: Company data, Al Rajhi Capital
Figure 11 Banking sector cost to income ratio (cost excluding provisions/income) 42%
Figure 12 Loan-to-deposit ratio vs. y-o-y change in loans and deposits Title: Source:
92.0% 90.0%
40%
20% 15%
88.0%
Please fill in the values above to have them entered in your report
86.0% 38%
10%
84.0% 82.0%
5%
36% 80.0% 0%
78.0%
34%
76.0%
-5%
74.0%
32%
LDR
Loans (RHS)
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
-10%
Q1 2012
72.0%
30%
deposits (RHS)
Source: Company data, Al Rajhi Capital (* Our calculation methodology is different from SAMA’s which calculates the loan to deposit ratio as net loans (loans minus provisions and commissions) divided by deposits with banks plus long term debt (syndicated loans, bonds and sukuks)
Source: Company data, Al Rajhi Capital
Figure 13 Real Estate and Consumer Loans
Figure 14 Loans breakup by economic activity
deposit %SAR bn 400
45%
100%
350
40%
90%
17.7%
18.8%
20.4%
18.1%
17.9%
35%
80% 70%
4.3% 5.5%
4.2% 4.5%
3.9% 5.8%
3.5% 5.7%
30%
4.6% 6.7%
250
25%
60%
29.8%
30.8%
32.2%
20%
50%
31.3%
31.1%
200 150
15%
40%
10%
30%
14.0%
13.7%
13.1%
13.1%
13.1%
5%
20%
18.9%
18.8%
17.8%
18.9%
18.5%
0%
10%
-5%
0%
8.3%
8.1%
8.7%
9.1%
9.0%
2012
2013
2014
2015
2016
300
100 50
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
0
Construction & Building
Commerce
Industrial/manufact.
Real Estate loans
Consumer loans
Personal
Services
Transport. and comm.
y-o-y change in real estate (RHS)
y-o-y change in consumer (RHS)
Others
Source: SAMA, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
4
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 15 Demand deposits % of total deposits
Figure 16 Loans breakup by maturity (%)
66.00
100% 90%
65.00
25%
24%
80% 64.00
25%
28%
Title: Source: 30% 29%
32%
28%
31%
30%
29%
31% 32%
29%
26%
28%values 29% 32%them Please27% fill in the to have entered 31%above 31% 31%in your report
70% 17% 18% 19% 18% 18% 19% 17% 20% 18% 19% 19% 18% 60% 20% 19% 19% 17% 18% 19% 20% 19% 18% 19% 50%
63.00 62.00
40% 58%
61.00
20%
60.00
58%
53%
54%
30%
57%
53%
53%
54%
53%
50%
52%
50% 50% 50%
52%
52%
52%
52%
52%
50%
52%
50%
10% 59.00
Short Term
Medium Term
Source: Company data, Al Rajhi Capital
Figure 17 Consolidated assets of commercial bank assets
Figure 18 Consolidated liabilities of commercial banks 100%
90%
90%
80%
80%
Please fill in the values above to have them entered in your report
50% 40%
Time & savings deposit Capital account (total)
Source: SAMA, Al Rajhi Capital
Figure 19 Break up of bank's aggregate assets
Figure 20 Break up of bank's aggregate liabilities
Net f inancing
Property & Equipment
Other assets
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
60%
Q2 2017
Q1 2017
25% to26% 28% entered in the values have them in your report 28% above 30% 27% 35% Please 36% fill28% 24% 27% 29% 28% 29% 27% 29% 35% 35%
37%
37%
37%
50%
Q4 2016
Q2 2017
48%
47%
Q3 2016
Q2 2016
Q1 2016
Q4 2015
48%
45%
46%
Q1 2017
48%
48%
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Due to banks & other f in. institutions Other deposits Shareholder's equity
52%
54%
50%
Q3 2014
Q2 2014
Q1 2014
53%
50%
50%
43%
Q4 2013
Q2 2013
Q4 2012
50%
42%
43%
40%
Q3 2012
Q2 2012
42%
Q3 2013
39%
39%
Q1 2013
40%
20%
Q1 2012
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
0%
Q4 2014
0%
Q3 2014
10%
Q2 2014
10%
Q1 2014
30%
Q4 2013
24% 23% 21% 23% 23% 25% 23% 21% 18% 18% 17% 24% 21% 23% 22% 24% 20% 18% 17% 24% 24% 21% 19%
Q3 2013
40%
30%
Q2 2013
40%
Q1 2013
70% 36%
Q4 2012
80%
70% 57% 59% 60% 61% 60% 61% 61% 60% 65% 65% 63% 60% 65% 61% 60% 63% 59% 59% 61% 60% 61% 63% 63% 50%
Q3 2012
80%
Q2 2012
90%
Q1 2012
100%
90%
Due f rom other f inancial institutions
Q4 2016
Title: Source:
100%
Investments
Q3 2016
Other deposits Inter-bank Liabilities
Source: SAMA, Al Rajhi Capital
Cash with SAMA
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q2 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Q1 2017
Demand deposit Foreign Liabilities Other Liabilities
SAMA Bills Claims on Private Sector Other
Q4 2014
0%
0%
Q3 2014
10%
10%
43%
42%
Q2 2014
20%
45% 48% 46% 48% 45% 44% 45% 42% 44% 49% 46% 46% 46% 45% 44% 43% 43% 43%
42%
42%
Q1 2014
20%
Q4 2013
30%
30%
Q1 2012
40%
Bank reserves Foreign Assets Claims on Govt.& Quasi-govt.
18% 18% 19% 19% 17% 21% 18% 18% 20% 19% 18% 19% 17% 18% 20% 18% 18% 19% 20% 22% 21% 19%
Q3 2013
62% 62%
Q2 2013
64%
60%
62%
64%
Q1 2013
61%
64%
62%
Q4 2012
59%
60%
60%
59%
Q3 2012
58%
59%
50% 56%
59%
60%
59%
60%
Q2 2012
58%
58%
60%
60%
Q2 2017
Title: Source:
70%
70%
Q1 2017
Long Term
Source: Company data, Al Rajhi Capital
100%
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Q2 2012
Q1 2012
0%
58.00
Demand deposits Other Liabilities
Source: Company data, Al Rajhi Capital
5
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 21 Bank wise breakdown of loans by economic activity
17.0% 23% 40%
32%
27%
14%
17%
15.5% 15.0%
19%
14.0%
7%
13.5%
13.0%
Others
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Q2 2017
Industrial/manuf act.
Services
Q1 2017
Commercial
Personal
Q4 2016
Construction + Building
Q3 2016
4%
Q2 2016
21%
Q1 2016
23%
Q4 2015
ANB
10%
Q3 2015
SABB
22%
14%
Q2 2015
7%
15%
Q1 2015
9%
Q4 2014
10%
14.5%
12%
Q3 2014
10%
19%
Q2 2014
13%
16%
22%
Q1 2014
23%
12%
Q4 2013
21%
13%
Q3 2013
24%
10%
Q2 2013
18%
BSF
Al Rajhi
4%
35% 12%
Riyad
12%
16.0%
Q1 2013
18%
Samba
10%
35%
Q4 2012
17%
22% 12%
5%
20%
27%
30%
20%
42%
16.5%
7%
3%
3%
9%
18%
6%
Q3 2012
15%
22%
3%
19%
Q2 2012
40%
15%
10%
SIB
70%
27%
15%
7%
Alinma
2%
50%
0%
5%
16%
Q1 2012
34% 5%
70% 60%
4%
21%
Albilad
36%
80%
16%
NCB
17%
AlJazira
1% 7%
90%
Al Awwal
100%
Figure 22 Government deposits as a % of total liabilities
Source: Company data, Al Rajhi Capital
6
Saudi Banks Sector Banks –Finance 13 September 2017
Company-wise information Figure 23 Net special Income
Figure 24 Fees and Commission Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
-2.8%
19.3%
17.3%
Al Rajhi
2,781
2,886
2,954
6.3%
2.4%
19.1%
18.6%
Al Rajhi
847
661
642
-24.2%
Samba
1,339
1,359
1,386
3.5%
2.0%
9.2%
8.7%
Samba
392
438
335
-14.4% -23.4%
8.9%
9.0%
Riyad
1,360
1,425
1,473
8.3%
3.4%
9.3%
9.3%
Riyad
419
401
348
-17.0% -13.2%
9.6%
9.4%
BSF
1,054
1,112
1,167
10.7%
5.0%
7.2%
7.4%
BSF
361
338
256
-29.1% -24.2%
8.2%
6.9%
SABB
1,182
1,251
1,284
8.7%
2.7%
8.1%
8.1%
SABB
350
345
322
-8.0%
-6.5%
8.0%
8.7%
ANB
1,086
1,069
1,215
11.9%
13.7%
7.5%
7.7%
ANB
265
272
254
-4.4%
-6.7%
6.1%
6.8%
Al Awwal
609
646
701
15.0%
8.4%
4.2%
4.4%
Al Awwal
214
182
167
-22.2%
-8.4%
4.9%
4.5%
SIB
421
463
486
15.6%
5.1%
2.9%
3.1%
SIB
110
110
109
-0.5%
-1.0%
2.5%
2.9%
Alinma
627
814
834
33.1%
2.4%
4.3%
5.3%
Alinma
148
143
127
-13.7% -11.0%
3.4%
3.4%
AlJazira
385
434
453
17.9%
4.5%
2.6%
2.9%
AlJazira
163
165
169
3.8%
2.1%
3.7%
4.5%
Albilad
349
392
431
23.6%
9.8%
2.4%
2.7%
Albilad
206
201
199
-3.2%
-1.0%
4.7%
5.4%
3,381
3,360
3,473
2.7%
3.4%
23.2%
21.9%
NCB
910
802
790
-13.3%
-1.6%
20.8%
21.2%
14,573
15,211
15,860
8.8%
4.3%
100.0%
100.0%
Total
4,386
4,059
3,719
-15.2%
-8.4%
100.0%
100.0%
NCB Market
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 25 Total operating income (SAR mn)
Figure 26 All operating costs (SAR mn) Market share
Bank
Market share
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q Q2 2016 Q2 2017
Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Q2 2016
Al Rajhi
3,924
3,853
3,877
-1.2%
0.6%
18.6%
18.2%
Q2 2017
Al Rajhi
1,872
1,632
1,695
-9.4%
3.9%
19.6%
Samba
1,970
1,979
1,988
0.9%
0.4%
9.3%
16.9%
9.3%
Samba
656
748
717
9.4%
-4.1%
6.9%
Riyad
2,027
1,993
1,984
-2.1%
-0.5%
7.1%
9.6%
9.3%
Riyad
891
947
1,142
28.1%
20.5%
9.4%
11.4%
BSF
1,613
1,697
1,630
1.1%
SABB
1,761
1,824
1,801
2.2%
-3.9%
7.7%
7.6%
BSF
566
594
628
10.9%
5.7%
5.9%
6.3%
-1.3%
8.4%
8.4%
SABB
620
795
685
10.4% -13.9%
6.5%
ANB
1,518
1,481
1,636
6.8%
7.8%
10.5%
7.2%
7.7%
ANB
708
718
794
12.3%
10.6%
7.4%
Al Awwal
948
920
7.9%
927
-2.2%
0.8%
4.5%
4.3%
Al Awwal
409
600
607
48.4%
1.2%
4.3%
SIB
612
6.1%
625
656
7.1%
4.9%
2.9%
3.1%
SIB
319
308
333
4.3%
8.1%
3.3%
Alinma
3.3%
820
1,005
1,007
22.8%
0.2%
3.9%
4.7%
Alinma
407
580
518
4.3%
5.2%
AlJazira
580
630
659
13.6%
4.6%
2.8%
3.1%
AlJazira
404
416
441
9.1%
5.9%
4.2%
4.4%
Albilad
642
694
718
11.9%
3.4%
3.0%
3.4%
Albilad
458
468
480
4.9%
2.6%
4.8%
4.8%
NCB
4,660
4,860
4,478
-3.9%
-7.8%
22.1%
21.0%
NCB
2,215
2,111
1,996
-9.9%
-5.5%
23.3%
19.9%
Total:
21,074
21,560
21,360
1.4%
-0.9%
100.0%
100.0%
Total
9,526
9,918
10,036
5.4%
1.2%
100.0%
100.0%
y-o-y
q-o-q
Q2 2016
Q2 2017
Source: Company data, Al Rajhi Capital
27.3% -10.8%
Source: Company data, Al Rajhi Capital
Figure 27 NIM (as a % of interest earning assets)
Figure 28 Net income Change (bps)
Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Market share Bank
Q2 2016 Q1 2017 Q2 2017
Al Rajhi
3.9%
4.1%
4.1%
4.1%
4.2%
27.8
9.2
Al Rajhi
2,052
2,221
2,182
6.3%
-1.8%
17.7%
19.3%
Samba
2.6%
2.9%
2.8%
2.9%
2.9%
33.8
1.5
Samba
1,314
1,231
1,271
-3.3%
3.2%
11.3%
11.2%
Riyad
2.6%
2.6%
2.7%
3.0%
3.0%
38.0
6.7
Riyad
1,146
1,047
848
-26.0%
-19.0%
9.9%
7.5%
BSF
2.4%
2.5%
2.2%
2.5%
2.6%
13.5
10.1
BSF
1,048
1,104
1,005
-4.1%
-9.0%
9.0%
8.9%
SABB
2.7%
2.9%
3.1%
3.2%
3.3%
60.3
13.7
SABB
1,152
1,036
1,129
-2.0%
9.0%
9.9%
10.0%
ANB
2.9%
2.9%
2.8%
2.9%
3.3%
36.8
38.4
ANB
818
768
849
3.8%
10.5%
7.1%
7.5%
Al Awwal
2.4%
2.7%
2.6%
2.8%
3.1%
71.2
34.7
Al Awwal
540
324
322
-40.3%
-0.6%
4.7%
2.8%
SIB
1.9%
2.1%
1.8%
2.2%
2.3%
40.0
9.9
SIB
321
345
356
10.7%
3.1%
2.8%
3.1%
Alinma
3.0%
2.9%
2.8%
3.4%
3.5%
49.5
1.2
Alinma
409
421
488
19.3%
15.9%
3.5%
4.3%
AlJazira
2.5%
2.6%
2.7%
2.9%
3.0%
54.1
13.7
AlJazira
178
216
220
24.0%
1.9%
1.5%
1.9%
Albilad
2.8%
3.0%
3.0%
3.2%
3.3%
47.5
12.8
Albilad
184
224
239
29.8%
6.6%
1.6%
2.1%
NCB
3.3%
3.5%
3.4%
3.5%
3.6%
26.9
9.1
NCB
2,438
2,703
2,417
-0.8%
-10.6%
21.0%
21.3%
Total:
2.9%
3.1%
3.0%
3.2%
3.3%
36.7
11.9
Total
11,599
11,640
11,325
-2.4%
-2.7%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
7
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 29 Net loans (SAR bn)
Figure 30 Interest earning assets (SAR bn) Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017 14.8%
Al Rajhi
224.5
229.4
232.8
3.7%
1.5%
15.6%
16.6%
Al Rajhi
285.3
278.7
286.3
0.3%
2.7%
14.3%
Samba
130.8
124.3
120.5
-7.9%
-3.0%
9.1%
8.6%
Samba
206.0
186.7
191.7
-6.9%
2.7%
10.4%
9.9%
Riyad
154.7
140.9
141.2
-8.7%
0.2%
10.7%
10.1%
Riyad
206.4
192.4
196.7
-4.7%
2.2%
10.4%
10.2%
BSF
129.6
129.1
129.4
-0.2%
0.2%
9.0%
9.2%
BSF
178.7
182.3
182.0
1.9%
-0.1%
9.0%
9.4%
SABB
131.1
119.5
117.9
-10.1% -1.3%
9.1%
8.4%
SABB
173.9
156.3
153.5
-11.7% -1.8%
8.7%
8.0%
ANB
117.9
116.0
114.9
-2.5%
-1.0%
8.2%
8.2%
ANB
148.9
146.6
146.6
0.0%
7.5%
7.6%
Al Awwal
77.9
70.5
70.7
-9.2%
0.4%
5.4%
5.0%
Al Awwal
100.0
90.3
88.5
-11.6% -2.1%
5.0%
4.6%
SIB
61.3
60.3
61.6
0.6%
2.2%
4.3%
4.4%
SIB
87.4
83.2
85.0
-2.8%
2.1%
4.4%
4.4%
Alinma
66.5
73.5
77.0
15.8%
4.6%
4.6%
5.5%
Alinma
87.8
94.9
98.0
11.7%
3.3%
4.4%
5.1%
AlJazira
44.2
41.3
41.0
-7.3%
-0.9%
3.1%
2.9%
AlJazira
62.4
59.6
59.5
-4.7%
-0.3%
3.1%
3.1%
Albilad
36.9
38.7
40.7
10.1%
5.1%
2.6%
2.9%
Albilad
49.0
51.2
52.7
7.5%
2.8%
2.5%
2.7%
NCB
264.8
254.2
256.9
-3.0%
1.1%
18.4%
18.3%
NCB
404.2
382.4
390.0
-3.5%
2.0%
20.3%
20.2%
Total
1,440.2
1,397.8
1,404.5
-2.5%
0.5%
100%
100%
Total
1,990.1
1,904.6
1,930.5
-3.0%
1.4%
100%
100%
Source: Company data, Al Rajhi Capital
-1.6%
Source: Company data, Al Rajhi Capital
Figure 31 Provisions (SAR mn)
Figure 32 Asset yield (Gross special income/interest earning assets) Market share
Banks
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Change (bps) Bank
Q2 2016
Q3 2016 Q4 2016 Q1 2017
Q2 2017
y-o-y
q-o-q
Al Rajhi
555
372
405
-27.0%
8.8%
33.1%
16.7%
Al Rajhi
4.1%
4.4%
4.4%
4.3%
4.4%
32.5
9.7
Samba
38
107
60
58.5%
-43.9%
2.3%
2.5%
Samba
3.1%
3.6%
3.8%
3.7%
3.5%
39.5
(13.7)
Riyad
135
203
371
174.9%
82.9%
8.1%
15.3%
Riyad
3.5%
3.7%
3.9%
3.8%
3.7%
23.4
(7.4)
BSF
27
29
62
129.8%
113.7%
1.6%
2.6%
BSF
3.3%
3.5%
3.5%
3.6%
3.7%
37.8
8.3
SABB
103
276
165
60.4%
-40.3%
6.1%
6.8%
SABB
3.5%
3.8%
3.9%
3.9%
3.9%
41.3
1.5
ANB
149
177
267
78.5%
50.7%
8.9%
11.0%
ANB
3.9%
4.0%
4.2%
4.1%
4.2%
30.6
5.0
Al Awwal
101
291
285
181.8%
-1.9%
6.0%
11.7%
Al Awwal
3.9%
4.4%
4.6%
4.3%
4.4%
44.5
6.5
SIB
58
45
78
34.5%
73.3%
3.5%
3.2%
SIB
3.5%
4.0%
4.0%
4.2%
4.0%
50.9
(17.0)
Alinma
28
124
124
340.9%
-0.2%
1.7%
5.1%
Alinma
3.8%
4.0%
4.1%
4.3%
4.2%
38.8
(3.0)
AlJazira
31
47
62
101.9%
32.3%
1.8%
2.5%
AlJazira
3.8%
4.0%
6.2%
4.1%
4.1%
35.1
0.3
Albilad
57
50
77
35.2%
52.1%
3.4%
3.2%
Albilad
3.5%
3.8%
4.0%
3.9%
4.0%
45.4
5.7
NCB
393
423
475
20.7%
12.3%
23.5%
19.5%
NCB
4.3%
4.4%
4.6%
4.4%
4.4%
16.4
1.5
Total
1,676
2,145
2,431
45.1%
13.3%
100.0%
100.0%
Market
3.8%
4.0%
4.2%
4.1%
4.1%
32.4
0.4
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Q2 2017
y-o-y
q-o-q 6,017
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 33 Gross NPAs
Figure 34 NPL coverage ratio Change (bps)
Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Change (bps)
Q2 2017
y-o-y
q-o-q
Bank
(67.2)
(25.7)
Al Rajhi
195%
201%
231%
256%
317%
12,171
Al Rajhi
1.4%
1.4%
1.2%
1.0%
0.8%
Samba
0.9%
0.8%
0.8%
0.9%
0.9%
(5.0)
3.1
Samba
165%
170%
174%
181%
182%
1,685
90
Riyad
0.9%
0.8%
0.8%
0.8%
1.1%
17.9
26.3
Riyad
152%
170%
223%
251%
211%
5,948
(3,955)
BSF
0.8%
0.8%
1.3%
1.4%
1.5%
62.7
6.3
BSF
216%
220%
176%
163%
157%
(5,814)
(540)
SABB
1.2%
1.3%
1.3%
1.3%
1.3%
15.7
(0.1)
SABB
166%
158%
175%
187%
197%
3,073
927
ANB
0.8%
0.9%
0.9%
1.4%
1.1%
33.5
(26.7)
ANB
288%
259%
270%
176%
226%
(6,114)
5,024
Al Awwal
1.1%
1.2%
2.2%
2.4%
2.7%
154.0
28.3
Al Awwal
168%
156%
130%
135%
132%
(3,618)
(319)
SIB
0.8%
0.8%
1.7%
1.8%
1.8%
100.2
(1.9)
SIB
212%
196%
93%
94%
99%
(11,319)
474
Alinma
0.7%
0.7%
0.8%
0.9%
0.8%
17.6
(6.2)
Alinma
175%
172%
173%
158%
180%
499
2,193
AlJazira
0.8%
1.1%
1.1%
1.2%
1.3%
43.2
9.9
AlJazira
168%
151%
156%
165%
140%
(2,717)
(2,473)
Albilad
1.4%
1.5%
1.4%
1.0%
0.9%
(46.8)
(5.1)
Albilad
187%
185%
198%
245%
267%
7,982
2,120
NCB
1.4%
1.6%
1.5%
1.6%
1.6%
22.6
7.1
NCB
145%
147%
151%
150%
150%
489
(23)
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
8
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 35 Investments (SAR bn)
Figure 36 Total assets (SAR bn) Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Al Rajhi
35.9
25.8
31.6
-12.1%
22.2%
9.1%
8.2%
Al Rajhi
331.4
337.2
345.6
4.3%
2.5%
14.9%
15.4%
Samba
58.7
54.3
56.5
-3.6%
4.2%
14.9%
14.8%
Samba
234.0
231.9
231.1
-1.2%
-0.4%
10.5%
10.3%
Riyad
42.8
43.3
43.1
0.7%
-0.5%
10.9%
11.2%
Riyad
227.8
216.3
219.0
-3.9%
1.2%
10.2%
9.8%
BSF
23.9
23.7
25.4
6.5%
7.5%
6.1%
6.6%
BSF
193.9
204.4
205.3
5.9%
0.5%
8.7%
9.2%
SABB
28.1
23.8
21.3
7.1%
5.6%
SABB
191.9
185.3
182.5
-4.9%
-1.5%
8.6%
8.1%
ANB
23.0
25.1
24.9
8.0%
-0.7%
5.9%
6.5%
ANB
166.6
168.4
171.0
2.7%
1.5%
7.5%
7.6%
Al Awwal
20.8
15.7
15.0
-28.0%
-4.6%
5.3%
3.9%
Al Awwal
108.6
100.4
101.6
-6.4%
1.3%
4.9%
4.5%
SIB
20.5
21.3
21.6
5.7%
1.5%
5.2%
5.6%
SIB
95.9
97.5
96.8
0.9%
-0.7%
4.3%
4.3%
Alinma
5.7
6.3
7.3
27.3%
14.7%
1.5%
1.9%
Alinma
98.2
105.3
111.4
13.4%
5.8%
4.4%
5.0%
AlJazira
16.4
16.3
17.3
5.5%
6.7%
4.2%
4.5%
AlJazira
68.3
65.1
67.0
-1.9%
2.9%
3.1%
3.0%
Albilad
3.0
3.7
4.5
50.1%
20.0%
0.8%
1.2%
Albilad
54.3
57.3
59.7
9.9%
4.3%
2.4%
2.7%
NCB
114.7
108.0
114.6
-0.1%
6.2%
29.2%
29.9%
NCB
452.7
448.7
449.8
-0.6%
0.2%
20.4%
20.1%
Total
393.6
367.3
383.2
-2.6%
4.3%
100%
100%
Total
2,224
2,218
2,241
0.8%
1.0%
100%
100%
-24.2% -10.6%
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 37 Total deposits (SAR bn)
Figure 38 Demand deposit % of total deposits Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Change (bps) Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Q2 2017
y-o-y
q-o-q
Al Rajhi
272.7
271.3
285.4
4.7%
5.2%
16.4%
16.9%
Al Rajhi
91%
90%
90%
92%
88%
(339)
(370)
Samba
172.1
170.4
171.3
-0.5%
0.5%
10.3%
10.1%
Samba
61%
59%
60%
63%
62%
78
(136)
Riyad
164.0
154.2
157.0
-4.3%
1.8%
9.9%
9.3%
Riyad
44%
43%
50%
53%
49%
436
(444)
BSF
138.8
158.5
163.9
18.1%
3.4%
8.3%
9.7%
BSF
62%
56%
56%
54%
55%
(715)
65
SABB
150.3
141.6
138.3
-8.0%
-2.3%
9.0%
8.2%
SABB
55%
55%
59%
59%
59%
404
8
ANB
129.2
131.8
130.7
1.2%
-0.8%
7.8%
7.7%
ANB
51%
50%
48%
49%
51%
(2)
116
Al Awwal
86.4
80.3
81.8
-5.4%
1.8%
5.2%
4.8%
Al Awwal
58%
58%
60%
57%
57%
(134)
(35)
SIB
68.1
64.4
66.6
-2.2%
3.3%
4.1%
3.9%
SIB
32%
32%
36%
37%
37%
422
(64)
Alinma
74.2
81.4
85.8
15.7%
5.3%
4.5%
5.1%
Alinma
53%
51%
54%
56%
56%
322
(34)
AlJazira
50.7
49.8
49.2
-3.1%
-1.3%
3.0%
2.9%
AlJazira
49%
47%
49%
52%
53%
399
53
Albilad
42.1
43.5
45.0
6.8%
3.3%
2.5%
2.7%
Albilad
63%
65%
67%
63%
60%
(311)
(267)
NCB
314.7
313.6
314.7
0.0%
0.3%
18.9%
18.6%
NCB
70%
70%
71%
75%
79%
890
349
Total
1,663.3
1,660.9
1,689.5
1.6%
1.7%
100%
100%
Total:
63%
62%
63%
65%
65%
182
(34)
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 39 Cost of deposits
Figure 40 Loan to deposit ratio (net loans by customer deposits) Change (bps)
Bank
Q2 2016 Q3 2016 Q4 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Change (bps) Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Al Rajhi
0.16%
0.24%
0.28%
0.20%
0.20%
4
0
Al Rajhi
82.3%
82.9%
82.5%
84.6%
81.6%
(78)
(300)
Samba
0.64%
0.73%
1.09%
0.82%
0.66%
2
(15)
Samba
76.0%
74.6%
72.8%
72.9%
70.4%
(564)
(255)
Riyad
1.07%
1.40%
1.50%
1.06%
0.89%
(18)
(17)
Riyad
94.3%
94.9%
91.2%
91.4%
89.9%
(435)
(146)
BSF
1.04%
1.22%
1.60%
1.29%
1.26%
22
(3)
BSF
93.4%
90.9%
81.7%
81.5%
78.9%
(1,445)
(252)
SABB
0.88%
1.01%
1.01%
0.78%
0.64%
(24)
(14)
SABB
87.2%
87.4%
86.0%
84.4%
85.2%
(202)
83
ANB
1.04%
1.31%
1.55%
1.30%
0.96%
(8)
(34)
ANB
91.3%
90.2%
85.0%
88.0%
87.9%
(340)
(15)
Al Awwal
1.74%
2.00%
2.25%
1.68%
1.35%
(39)
(33)
SHB
90.1%
91.8%
85.2%
87.8%
86.5%
(364)
(127)
SIB
2.03%
2.38%
2.86%
2.54%
2.20%
17
(35)
SIB
90.0%
92.2%
91.8%
93.6%
92.6%
263
(97)
Alinma
1.04%
1.21%
1.51%
0.95%
0.89%
(15)
(6)
Alinma
89.6%
89.6%
87.2%
90.3%
89.7%
7
(58)
AlJazira
1.52%
1.71%
4.20%
1.41%
1.28%
(24)
(13)
AlJazira
87.2%
85.8%
81.6%
83.0%
83.3%
(383)
36
Albilad
0.78%
0.93%
1.17%
0.86%
0.78%
(0)
(8)
Albilad
87.7%
87.9%
89.9%
88.9%
90.4%
274
154
NCB
1.22%
1.16%
1.43%
1.09%
1.01%
(21)
(8)
NCB
84.1%
83.5%
80.3%
81.0%
81.6%
(249)
59
Total
0.97%
1.10%
1.38%
1.01%
0.88%
(9)
(13)
Total:
87.8%
87.6%
84.6%
85.6%
84.8%
(293)
(77)
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital (* Our calculation methodology is different from SAMA’s which calculates the loan to deposit ratio as net loans (loans minus provisions and commissions) divided by deposits with banks plus long term debt (syndicated loans, bonds and sukuks) subordinated debt and others.
9
Saudi Banks Sector Banks –Finance 13 September 2017
Segmental breakup Figure 41 Net income breakup
Figure 42 Total assets breakup
Retail
Corporate
Treasury
Investment services & brokerage
Retail
Corporate
Treasury
Investment services & brokerage
Al Rajhi
63%
18%
17%
3%
0%
Al Rajhi
53%
19%
27%
0.7%
Samba
19%
47%
31%
3%
0%
Samba
15%
45%
40%
0.1%
0%
Riyad
47%
40%
44%
5%
-36%
Riyad
21%
46%
27%
0.4%
5.4%
BSF
9%
54%
35%
2%
0%
BSF
9%
56%
35%
0.6%
0%
SABB
22%
52%
25%
0%
1%
SABB
16%
51%
33%
0.0%
0%
ANB
24%
37%
29%
2%
8%
ANB
21%
48%
28%
1.0%
1.2%
Al Awwal
45%
23%
32%
0%
0%
Al Awwal
20%
49%
30%
0.7%
0%
SIB
67%
96%
-16%
0%
-46%
SIB
30%
37%
30%
0.4%
3%
Alinma
35%
35%
24%
7%
0%
Alinma
16%
58%
26%
0.5%
0%
AlJazira
33%
15%
68%
3%
-18%
AlJazira
30%
31%
36%
2.1%
0.3%
Albilad
23%
48%
14%
2%
13%
Albilad
29%
43%
26%
0.6%
1.8%
NCB
38%
26%
30%
2%
4%
NCB
24%
32%
35%
0.3%
8.8%
Bank
Others
Source: Company data, Al Rajhi Capital
Bank
Figure 44 Retail net operating income Market share
Q2 2016 Q1 2017 Q2 2017
0%
Source: Company data, Al Rajhi Capital
Figure 43 Retail operating income Bank
Others
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Al Rajhi
2,917
2,748
2,857
-2.1%
4.0%
32.5%
28.9%
Al Rajhi
1,512
1,189
1,366
-9.6%
14.9%
38.4%
33.3%
Samba
422
713
687
62.8%
-3.7%
4.7%
7.0%
Samba
237
250
237
-0.1%
-5.1%
6.0%
5.8%
Riyad
646
642
663
2.7%
3.3%
7.2%
6.7%
Riyad
338
414
402
18.7%
-2.9%
8.6%
9.8%
BSF
377
382
394
4.6%
3.2%
4.2%
4.0%
BSF
82
57
89
7.4%
54.8%
2.1%
2.2%
SABB
597
629
651
9.2%
3.5%
6.6%
6.6%
SABB
231
216
243
5.3%
12.4%
5.9%
5.9%
ANB
604
586
616
1.9%
5.0%
6.7%
6.2%
ANB
243
160
202
-16.9%
26.3%
6.2%
4.9%
Al Awwal
365
377
388
6.2%
2.8%
4.1%
3.9%
Al Awwal
126
112
145
14.6%
28.9%
3.2%
3.5%
SIB
167
85
543
224%
536%
1.9%
5.5%
SIB
122
85
186
52.4%
NA
3.1%
4.5%
Alinma
279
381
389
39.3%
2.0%
3.1%
3.9%
Alinma
66
125
169
155.8%
35.0%
1.7%
4.1%
AlJazira
246
266
284
15.3%
6.5%
2.7%
2.9%
AlJazira
46
47
72
56.4%
51.7%
1.2%
1.8%
Albilad
326
376
386
18.7%
2.9%
3.6%
3.9%
Albilad
21
54
55
163.8%
1.2%
0.5%
1.3%
NCB
2,031
1,938
2,019
-0.6%
4.1%
22.6%
20.4%
NCB
912
894
933
2.3%
4.4%
23.2%
22.8%
Total
8,976
9,125
9,876
10.0%
8.2%
100.0%
100.0%
Total
3,938
3,605
4,099
4.1%
13.7%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 45 Total retail segment assets
Figure 46 Retail segment yield (net operating income/assets) Market share Q2 2016
Q2 2017
Change bps
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Bank
Q2 2016 Q3 2016 Q4 2016
Q1 2017
Q2 2017
Al Rajhi
176,911
179,090
184,109
4.1%
2.8%
31.0%
32.7%
Al Rajhi
3.5%
3.0%
y-o-y
q-o-q
2.4%
2.7%
3.0%
(47.5)
Samba
38,910
35,686
34,730
-10.7% -2.7%
6.8%
6.2%
Samba
2.4%
33.9
3.2%
3.3%
2.8%
2.7%
25.2
Riyad
44,651
39,681
46,282
(9.5)
53.3
(44.6)
BSF
17,187
16,801
17,707
SABB
34,346
30,698
29,959
ANB
41,456
37,310
36,665
Al Awwal 20,964
20,947
SIB
28,559
Alinma AlJazira
3.7%
16.6%
7.8%
8.2%
Riyad
3.2%
2.5%
2.2%
4.2%
3.7%
3.0%
5.4%
3.0%
3.1%
BSF
2.0%
1.7%
1.0%
1.4%
2.1%
8.9
67.9
-12.8% -2.4%
6.0%
5.3%
SABB
2.7%
2.7%
1.1%
2.8%
3.2%
50.8
43.4
-11.6% -1.7%
7.3%
6.5%
ANB
2.3%
-1.2%
3.0%
1.7%
2.2%
(16.4)
49.9
20,559
-1.9%
-1.9%
3.7%
3.7%
Al Awwal
2.5%
2.1%
0.7%
2.1%
2.8%
28.6
67.3
28,490
29,061
1.8%
2.0%
5.0%
5.2%
SIB
1.7%
1.4%
-0.1%
1.2%
2.6%
85.6
139.0
18,138
17,273
17,324
-4.5%
0.3%
3.2%
3.1%
Alinma
1.5%
1.5%
1.1%
2.9%
3.9%
238.0
103.8
20,616
19,206
20,116
-2.4%
4.7%
3.6%
3.6%
AlJazira
0.9%
0.4%
0.4%
1.0%
1.5%
57.6
49.9
Albilad
17,932
16,356
17,303
-3.5%
5.8%
3.1%
3.1%
Albilad
0.5%
0.8%
0.5%
1.3%
1.3%
83.0
5.4
NCB
110,448
105,446
109,354
-1.0%
3.7%
19.4%
19.4%
NCB
3.8%
2.2%
2.5%
3.4%
3.5%
(27.8)
6.8
Total
570,118
546,982
563,169
-1.2%
3.0%
100.0%
100.0%
Total
2.6%
2.9%
2.1%
2.0%
2.6%
3.8
59.7
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
10
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 47 Corporate operating income
Figure 48 Corporate net operating income Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Al Rajhi
410
587
541
32.2%
-7.7%
6.6%
7.6%
Al Rajhi
16
568
390
2328%
-31.4%
0.4%
12.6%
Samba
721
731
784
8.7%
7.2%
11.7%
11.0%
Samba
547
526
596
8.9%
13.3%
12.9%
11.7%
Riyad
689
895
807
17.1%
-9.8%
11.2%
11.4%
Riyad
529
557
340
-35.8%
-39.1%
12.5%
12.4%
BSF
778
809
744
-4.4%
-8.0%
12.6%
10.5%
BSF
614
654
545
-11.3%
-16.7%
14.5%
14.5%
SABB
816
821
829
1.6%
1.0%
13.2%
11.7%
SABB
600
479
587
-2.3%
22.5%
14.2%
10.6%
ANB
545
574
639
17.2%
11.2%
8.8%
9.0%
ANB
325
342
316
-2.9%
-7.7%
7.7%
7.6%
Al Awwal
506
442
412
-18.4%
-6.7%
8.2%
5.8%
Al Awwal
378
135
75
-80.2%
-44.5%
8.9%
3.0%
41
200
452
1005%
126%
0.7%
6.4%
SIB
226
200
268
18.7%
34.4%
5.3%
4.4%
Alinma
357
425
400
12.0%
-5.8%
5.8%
5.6%
Alinma
240
189
169
-29.6%
-10.5%
5.7%
4.2%
AlJazira
111
143
152
36.9%
6.0%
1.8%
2.1%
AlJazira
21
52
33
NA
-36.9%
0.5%
1.1%
Albilad
196
208
232
18.1%
11.4%
3.2%
3.3%
Albilad
78
96
115
46.5%
19.5%
1.9%
2.1%
NCB
998
1,244
1,100
10.2%
-11.6%
16.2%
15.5%
NCB
658
709
639
-2.9%
-9.9%
15.6%
15.7%
Total
6,168
7,078
7,092
15.0%
0.2%
100.0%
100.0%
Total
4,233
4,506
4,071
-3.8%
-9.7%
100.0%
100.0%
SIB
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 49 Total corporate segment assets
Figure 50 Corporate segment yield (operating income/assets) Market share
Change (bps)
Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q Q2 2016 Q2 2017
Bank
Q1 2017
Q2 2017
Al Rajhi
64,377
64,600
66,197
2.8%
2.5%
7.0%
7.3%
Al Rajhi
0.1%
2.1%
y-o-y
q-o-q
2.2%
3.6%
2.4%
228.1
(121.2)
Samba
107,788
105,925
104,020
-3.5%
-1.8%
11.6%
11.5%
Samba
2.0%
Riyad
115,124
101,460
101,078
-12.2% -0.4%
12.4%
11.2%
Riyad
1.9%
2.2%
1.7%
2.0%
2.3%
25.4
28.1
1.6%
-0.3%
2.2%
1.3%
(51.3)
(83.0)
BSF
116,629
116,665
115,133
-1.3%
-1.3%
12.6%
12.8%
BSF
SABB
101,567
92,694
92,194
-9.2%
-0.5%
11.0%
10.2%
SABB
2.1%
2.1%
-0.1%
2.2%
1.9%
(26.4)
(36.3)
2.4%
2.0%
1.0%
2.1%
2.5%
16.5
ANB
82,133
82,745
82,820
0.8%
0.1%
8.9%
9.2%
ANB
1.6%
1.5%
1.0%
1.7%
1.5%
(7.4)
(13.9)
Al Awwal
56,936
49,534
50,180
-11.9%
1.3%
6.2%
SIB
36,914
35,753
36,231
-1.9%
1.3%
4.0%
5.6%
Al Awwal
2.6%
1.7%
-2.1%
1.1%
0.6%
(200.8)
(46.9)
4.0%
SIB
2.4%
2.4%
2.5%
2.2%
3.0%
57.3
Alinma
53,868
61,019
64,686
20.1%
6.0%
75.6
5.8%
7.2%
Alinma
1.9%
1.8%
1.2%
1.3%
1.1%
(80.7)
(19.8)
AlJazira
24,283
21,946
21,058
Albilad
23,339
24,517
25,794
-13.3% -4.0%
2.6%
2.3%
AlJazira
0.4%
0.5%
0.4%
0.9%
0.6%
25.2
(32.0)
10.5%
5.2%
2.5%
2.9%
Albilad
1.3%
1.9%
1.5%
1.6%
1.8%
51.7
NCB
142,694
145,282
19.2
143,320
0.4%
-1.4%
15.4%
15.9%
NCB
1.8%
2.0%
1.5%
2.0%
1.8%
1.3
(19.8)
Total
925,652
902,140
902,710
-2.5%
0.1%
100.0%
100.0%
Total
1.8%
1.9%
0.8%
2.0%
1.8%
(2.6)
(20.1)
Source: Company data, Al Rajhi Capital
Q2 2016 Q3 2016
Q4 2016
Source: Company data, Al Rajhi Capital
Figure 51 Treasury operating income (SAR mn)
Figure 52 Treasury net operating income Market share
Bank
47.6
Q2 2016
Q1 2017
Q2 2017
y-o-y
Al Rajhi
473
396
380
Samba
640
383
430
Riyad
419
289
BSF
386
SABB
Market share
q-o-q
Q2 2016
Q2 2017
-19.6%
-4.1%
12.5%
10.6%
Al Rajhi
413
376
360
-12.8%
-4.2%
13.5%
11.7%
-32.9%
12.2%
16.9%
11.9%
Samba
409
352
397
-2.9%
12.6%
13.3%
12.8%
384
-8.2%
33.2%
11.0%
10.7%
Riyad
358
294
372
4.1%
26.9%
11.7%
12.0%
443
431
11.7%
-2.7%
10.2%
12.0%
BSF
314
374
351
12.0%
-6.0%
10.2%
11.4%
348
374
320
-8.2%
-14.4%
9.2%
8.9%
SABB
309
334
286
-7.5%
-14.2%
10.1%
9.3%
ANB
277
247
264
-4.6%
7.1%
7.3%
7.3%
ANB
196
221
242
23.7%
9.8%
6.4%
7.8%
Al Awwal
62
88
117
88.2%
33.8%
1.6%
3.3%
Al Awwal
31
74
102
235.0%
37.6%
1.0%
3.3%
SIB
(136)
92
14
NM
-85.2%
-3.6%
0.4%
SIB
29
92
(46)
NM
NM
0.9%
-1.5%
Alinma
140
148
170
22.1%
15.4%
3.7%
4.7%
Alinma
77
78
117
50.6%
49.9%
2.5%
3.8%
AlJazira
197
204
219
11.0%
7.4%
5.2%
6.1%
AlJazira
124
137
149
20.0%
8.7%
4.0%
4.8%
Albilad
65
46
50
-23.0%
8.6%
1.7%
1.4%
Albilad
47
27
33
-29.6%
21.0%
1.5%
1.1%
NCB
924
1,126
820
-11.3%
-27.2%
24.3%
22.8%
NCB
762
966
727
-4.7%
-24.8%
24.8%
23.5%
Total
3,795
3,835
3,600
-5.2%
-6.1%
100.0%
100.0%
Total
3,069
3,325
3,091
0.7%
-7.0%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Bank
Q2 2016
Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Source: Company data, Al Rajhi Capital
11
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 53 Treasury total assets
Figure 54 Treasury segment yield (Net operating income/assets) Market share
Change (bps)
Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Q2 2017
Al Rajhi
87,147
91,227
92,899
6.6%
1.8%
13.6%
13.2%
Al Rajhi
1.8%
1.2%
2.3%
y-o-y
1.6%
1.6%
(27.8)
Samba
79,033
90,232
92,202
16.7%
2.2%
12.4%
13.1%
Samba
2.0%
1.6%
(2.0)
1.4%
1.6%
1.7%
(22.9)
17.4
Riyad
55,816
72,060
58,870
5.5%
-18.3%
8.7%
8.3%
Riyad
2.3%
BSF
58,899
69,788
71,273
21.0%
2.1%
9.2%
10.1%
BSF
2.2%
1.0%
1.1%
1.6%
2.3%
1.6
63.4
2.1%
2.1%
2.1%
2.0%
(22.9)
(15.7)
SABB
55,357
61,222
59,759
8.0%
-2.4%
8.7%
8.5%
SABB
2.2%
ANB
39,278
44,661
47,736
21.5%
6.9%
6.1%
6.8%
ANB
2.0%
1.9%
1.8%
2.2%
1.9%
(32.8)
(29.9)
4.5%
-0.2%
2.0%
2.1%
13.5
Al Awwal 30,105
29,147
30,182
0.3%
3.6%
4.7%
4.3%
Al Awwal
14.5
0.4%
-1.1%
-0.1%
1.0%
1.4%
97.0
SIB
28,186
30,368
28,641
1.6%
-5.7%
4.4%
4.1%
40.2
SIB
0.4%
-0.4%
1.5%
1.3%
-0.6%
Alinma
25,799
26,478
28,848
11.8%
9.0%
4.0%
AlJazira
22,703
22,520
24,269
6.9%
7.8%
3.5%
4.1%
Alinma
1.2%
-0.5%
1.8%
1.1%
1.7%
51.0
56.7
3.4%
AlJazira
2.3%
2.4%
2.1%
2.4%
2.5%
26.7
Albilad
11,596
14,965
15,247
31.5%
1.9%
11.3
1.8%
2.2%
Albilad
1.7%
1.6%
1.7%
0.8%
0.9%
(79.0)
NCB
145,916
157,120
156,203
7.1%
4.9
-0.6%
22.8%
22.1%
NCB
2.1%
1.3%
2.6%
2.5%
1.9%
(22.8)
(64.6)
Total
639,836
709,788
706,130
10.4%
-0.5%
100.0%
100.0%
Total
1.9%
1.4%
1.7%
1.9%
1.7%
(13.7)
(12.9)
Source: Company data, Al Rajhi Capital
Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Figure 56 Investment & Brokerage assets
Market share Q2 2016
(103.2) (190.3)
Source: Company data, Al Rajhi Capital
Figure 55 Investment & Brokerage operating income Bank
q-o-q
Q1 2017 Q2 2017
y-o-y
q-o-q Q2 2016 Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Al Rajhi
156
121
98
-37.3% -19.3%
18.0%
14.6%
Al Rajhi
2,945
2,314
2,392
-18.8%
3.4%
25.4%
20.4%
Samba
216
152
88
-59.3% -42.1%
24.9%
13.1%
Samba
199
93
129
-35.2%
39.1%
1.7%
1.1%
Riyad
82
73
74
-8.9%
1.7%
9.4%
11.1%
Riyad
794
86
866
9.1%
907.4%
6.9%
7.4%
BSF
85
63
61
-28.4%
-2.5%
9.8%
9.1%
BSF
1,197
1,104
1,231
2.8%
11.5%
10.3%
10.5%
SABB
0
0
0
NA
NA
NA
NA
ANB
35
38
45
26.1%
16.8%
4.1%
6.6%
ANB
Al Awwal
15
13
10
-37.5% -23.2%
1.8%
1.4%
SIB
19
6
39
100.1% 546.1%
2.2%
5.8%
Alinma
44
51
47
5.1%
AlJazira
51
47
42
-17.6% -10.4%
5.9%
7.6%
-7.6%
600
649
606
1.0%
-6.7%
5.2%
5.2%
1,754
1,719
1,719
-2.0%
0.0%
15.1%
14.7%
Al Awwal
549
741
714
29.9%
-3.7%
4.7%
6.1%
SIB
394
331
374
-5.0%
13.0%
3.4%
3.2%
7.0%
Alinma
381
486
518
35.9%
6.6%
3.3%
4.4%
6.3%
AlJazira
478
1,261
1,379
188.7%
9.3%
4.1%
11.8%
Albilad
Albilad
18
24
23
32.5%
-1.9%
2.0%
3.5%
NCB
147
164
144
-2.2%
-11.9%
16.9%
21.5%
Total
870
752
672
-22.8% -10.7% 100.0%
100.0%
Source: Company data, Al Rajhi Capital
SABB
763
426
330
-56.7%
-22.5%
6.6%
2.8%
NCB
1,528
1,394
1,465
-4.1%
5.1%
13.2%
12.5%
Total
11,582
10,604
11,723
1.2%
10.6%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Figure 57 Efficiency ratio (costs excluding provisions/total operating income) 70%
Figure 58 Capital adequacy (tier I + tier II)
25.00%
Title: Source:
20.00%
Please fill in the values above to have them entered in your report
60% 50%
15.00%
40% 30%
10.00%
20%
5.00% 10% 0%
0.00%
Q2 2016
Q1 2017
Q2 2017
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Q2 2016
Q1 2017
Q2 2017
Source: Company data, Al Rajhi Capital
12
Saudi Banks Sector Banks –Finance 13 September 2017
IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report was prepared by Al Rajhi Capital (Al Rajhi), a company authorized to engage in securities activities in Saudi Arabia. Al Rajhi is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Al Rajhi. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account.
Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication.
Compensation and Investment Banking Activities Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months.
Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither Al Rajhi nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report. Al Rajhi may rely on information barriers, such as “Chinese Walls” to control the flow of information within the areas, units, divisions, groups, or affiliates of Al Rajhi. Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States. The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments. Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by Al Rajhi with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein. No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior consent of Al Rajhi and Al Rajhi accepts no liability whatsoever for the actions of third parties in this respect. This research document has been prepared by Al Rajhi Capital Company (“Al Rajhi Capital”) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital’s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction.
Disclosures Please refer to the important disclosures at the back of this report.
13
Saudi Banks Sector Banks –Finance 13 September 2017
Disclaimer and additional disclosures for Equity Research Disclaimer This research document has been prepared by Al Rajhi Capital Company (“Al Rajhi Capital”) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital’s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction. Special disclaimers for this report: We do not support investing in non-Shariah stocks. This report should not be considered as an investment recommendation report. Out of the12 listed banks in the Saudi banking sector– only 4 are Islamic (Al Rajhi, Al Jazira, Al Inma and Al Bilad) while the remaining 8 are non-Islamic.
Explanation of Al Rajhi Capital’s rating system Al Rajhi Capital uses a three-tier rating system based on absolute upside or downside potential for all stocks under its coverage except financial stocks and those few other companies not compliant with Islamic Shariah law: "Overweight": Our target price is more than 10% above the current share price, and we expect the share price to reach the target on a 12 month time horizon. "Neutral": We expect the share price to settle at a level between 10% below the current share price and 10% above the current share price on a 12 month time horizon. "Underweight": Our target price is more than 10% below the current share price, and we expect the share price to reach the target on a 12 month time horizon. "Target price": We estimate target value per share for every stock we cover. This is normally based on widely accepted methods appropriate to the stock or sector under consideration, e.g. DCF (discounted cash flow) or SoTP (sum of the parts) analysis. Please note that the achievement of any price target may be impeded by general market and economic trends and other external factors, or if a company’s profits or operating performance exceed or fall short of our expectations.
Contact us Mazen Al-Sudairi, Head of Research Tel : +966 1 211 9449 Email: [email protected] Al Rajhi Capital Research Department Head Office, King Fahad Road P.O. Box 5561, Riyadh 11432 Kingdom of Saudi Arabia Email: [email protected] Al Rajhi Capital is licensed by the Saudi Arabian Capital Market Authority, License No. 07068/37.
Disclosures Please refer to the important disclosures at the back of this report.
14
Key themes The banking sector’s earnings were surprisingly strong in Q2 2017 as banks earned better than expected yields on assets. For Q3, we believe that the spread is likely to be maintained, while costs of deposits may slip marginally, supporting NIMs. Asset quality is not expected to have improved or deteriorated substantially from the previous quarter, and thus provisions are likely to be in the similar range of SAR2-2.5bn. As a result, overall earnings for the sector is expected to be marginally higher in Q3.
Saudi Banking sector Q3: Expect NIM to improve; NPLs may remain broadly stable After a better than expected performance in the second quarter, we believe earnings are likely to slightly increase in Q3 2017. Q2 profitability was supported by an increase in asset yields despite lower effective SAIBOR levels, resulting in better gross interest income. From a historical perspective, the spread earned over SAIBOR in Q2 was the highest since Q4 2013. However, July profit for Saudi banks at ~SAR4bn (average monthly profit in Q2 at SAR3.6bn) indicates that despite marginal decline in effective SAIBOR levels, asset yields continue to hold up. We believe this is because banks are moving to longer term lending contracts and hence are capitalizing on higher SAIBOR levels. With regard to provisions, we have not seen any material change in asset quality and hence level of provisions may be similar or slightly more than the last quarter. On the whole, liquidity is healthy with LDR at 81.15%, helped by improving Govt deposits in the past few months. Banking sector capital structure continues to remain healthy even after some of the banks increased dividends which reflect confidence in their ability to continue such dividends. Net interest income likely to slightly increase q-o-q: Net interest income (NII) surprised last quarter as asset yields increased despite the decline in effective SAIBOR, resulting in higher spread. The spread earned by the sector as a whole over our calculated effective SAIBOR reached the highest level since Q4 2013. Based on our understanding, the increase in spread and thereby asset yield is mainly as banks are trying to renew financing with companies at longer duration. This may also indicate that the banks feel SAIBOR may have already peaked in the near term. On the other hand, cost of deposits continued to slip, following the trend in SAIBOR, boosting NIMs. For Q3, the effective SAIBOR has been mostly flat as compared to the previous quarter, while credit growth (credit to private sector + claims on public sector) has seen a marginal ~1% m-om increase in July. Thus, even if spread remains stable at the elevated level, GII is expected to be mostly flat in Q3. Cost of deposits may slip marginally due to the decline witnessed in SAIBOR. This should lead to a slight increase in NIIs for the sector and higher NIMs. Figure 1 Effective SAIBOR and spread earned by the banking sector 3.00% 2.50% 2.00% 1.50%
Mazen Al-Sudairi, Head of Research, Tel +966 11 2119449, [email protected]
1.00% 0.50%
Note: We do not cover Banks. Please read special disclaimers at the end of the report.
Ef f ective Saibor
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
0.00%
Pritish Devassy, CFA, Tel +966 11 2119370, [email protected]
Spread earned
Source: Bloomberg, Company data, Al Rajhi Capital
Please see penultimate page for additional important disclosures. Al Rajhi Capital (Al Rajhi) is a foreign broker-dealer unregistered in the USA. Al Rajhi research is prepared by research analysts who are not registered in the USA. Al Rajhi research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer.
Saudi Banks Sector Banks –Finance 13 September 2017
Commission & Fee income to remain subdued: Non-interest income is expected to be weak on a m-o-m basis, as - 1) Credit to the private sector slipped marginally (-0.1% m-o-m in July 2017), 2) lesser loan restructuring as SAIBOR has remained largely flat ( Effective SAIBOR Q2: 1.6189%, Q3: 1.623%), and 3) Trading volumes on the Tadawul has been subdued due to the Eid holidays, and likely to be stable compared to the low base of Q2 (Q2 monthly average SAR61.6bn, Q3 monthly average till now: SAR60.3bn). Operating costs and provisions: Provisions have been the main factor impacting earnings over the last few quarters as asset quality deteriorated with the slowdown in the economy, cut in government expenditure and delayed payments on government contracts. Given the current economic scenario, we don’t see any meaningful improvement in asset quality compared to the last quarter and thus expect provisions to be in the similar range as seen in the first couple of quarters (SAR2-2.5bn). Operating costs remained mostly stable and are likely to continue to maintain this trend. Thus, with a modest increase in NII, stable noninterest income and provisions, we believe the overall earnings of the banking sector may rise marginally in Q3 2017. Liquidity comfortable after the second domestic bond issue: The government resumed domestic bond issues in July 2017 after suspending them in September 2016. Post the recent two domestic bond issues liquidity situation remains comfortable, as indicated by the flattish SAIBOR. Moreover, given that the bonds are Islamic, it has participation of all the banks unlike the case before. The loan-to-deposit ratio is at a relatively comfortable 81.15% and notably “other deposits” with SAMA accounted for 4% (~SAR91bn) of the bank’s consolidated total assets at the end of July 2017, compared to only 1.2% in April 2016. Valuation and risks: The banking sector has been mostly flat in Q3 QTD, rising a mere 3%. However, more recently the index has been increasing since August, rising from 5,201 by July-end to 5,638 currently (+8%). Valuations are mostly fair at current levels given that growth prospects also look weak and ROEs are not expected to reach earlier levels in the near term. The sector index is currently trading at ~1.47x current book value and 1.43x 2017E book value, skewed by the higher multiples of the Islamic banks as compared to the nonIslamic banks. We believe any improvement in asset quality will act as a catalyst for the sector, as rising provisioning have been hurting earnings over the last few quarters. Figure 2 Performance of Bank sector vs. TASI
Figure 3 ROE (avg. last 4 quarters) vs. P/B (12m forward) 18.0%
115
Title: Source:
Al Rajhi
NCB
16.0%
Please fill in the values above to have them entered in your report
110
14.0% 105
Albilad ANB SABB
12.0%
Samba
100
10.0% SIB
95
BSF
Al Jazira
Alinma Riyad
8.0% 90 Jan-17
Feb-17 Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
6.0% TASI
Banking
Source: Bloomberg, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
Source: Bloomberg, Company data, Al Rajhi Capital
2
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 4 Movement of asset yield, cost of deposit, net interest margin and interest rates 4.5%
4.2%
4.0% 4.0%
3.6% 3.5% 3.6% 3.6% 3.5% 3.4% 3.4%3.5%
3.5% 3.0% 2.5%
3.3% 3.3% 3.2% 3.3% 3.2% 3.2% 3.2%
3.4%
3.6%
4.1% 4.1%
3.7%
3.2% 3.1% 3.1% 3.1% 3.1% 3.1% 3.0% 3.0% 2.9% 2.9% 2.9% 2.9% 2.8% 2.9% 2.8% 2.8% 2.8% 2.8% 2.8%
2.0%
1.7%
1.5%
1.0% 1.0% 1.0% 1.0% 1.0% 0.9% 1.0% 1.0% 0.9% 0.9% 0.8% 0.9% 0.8% 0.8% 0.8%
1.0%
3.0%
2.1% 2.3% 2.2%
3.2%
3.3%
1.9% 1.9%
1.1%
0.5% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 Asset yield
Cost of deposits
NIM
3m SAIBOR
3m LIBOR
Source: Company data, Al Rajhi Capital (* NIM is calculated as Non-interest income divided by interest earning assets)
Figure 5 Non-performing loan ratio vs. coverage ratio
Figure 6 Net interest income for the sector 2.4%
SAR mn Title: 16,000
180%
2.2%
15,000
170%
2.0%
190%
16%
Source: 14,000
14%
12%
Please fill in the values above to have them entered in your report
10% 8%
13,000 160%
1.8%
150%
1.6%
6%
12,000
2%
10,000
0% -2% -4% -6%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
8,000
Q3 2013
1.0%
Q2 2013
120%
Q1 2013
9,000
Q4 2012
1.2%
Q3 2012
130%
Q2 2012
1.4%
Q1 2012
140%
coverage ratio
4%
11,000
Non-perf orming loan to gross loans (RHS)
Net interest income
y-o-y (RHS)
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 7 Banking sector provisions trend
Figure 8 Banking sector non-interest income
SAR mn 4,500
120%
4,000
100%
3,500
80%
3,000
60%
q-o-q (RHS)
SAR mn Title: 8,000
40%
Source: 7,500 7,000
30%
Please fill in the values above to have them entered in your report 20%
6,500 2,500
10%
40% 6,000
Provisions
y-o-y
q-o-q
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
0% 5,500 -10%
5,000 4,500
-20%
4,000
-30%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
-60%
Q4 2013
0
Q3 2013
-40%
Q2 2013
500 Q1 2013
-20%
Q4 2012
1,000
Q3 2012
0%
Q2 2012
20%
1,500
Q1 2012
2,000
Non-interest income (SARmn)
y-o-y (RHS)
q-o-q (RHS)
Source: Company data, Al Rajhi Capital
3
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 9 Banking sector operating income trend
Figure 10 Banking sector net profit
SAR mn 25,000
SAR mn Title: 12,000
15%
50%
Source: 40%
11,000 20,000
10%
Please fill in the values above to have them entered in your report
30%
10,000 15,000
5%
10,000
0%
20% 9,000 10%
8,000 0% 7,000
5,000
-10%
-5%
5,000
-30%
Operating income
y-o-y (RHS)
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
-10%
-20%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
0
6,000
q-o-q (RHS)
net income
Source: Company data, Al Rajhi Capital
y-o-y (RHS)
q-o-q (RHS)
Source: Company data, Al Rajhi Capital
Figure 11 Banking sector cost to income ratio (cost excluding provisions/income) 42%
Figure 12 Loan-to-deposit ratio vs. y-o-y change in loans and deposits Title: Source:
92.0% 90.0%
40%
20% 15%
88.0%
Please fill in the values above to have them entered in your report
86.0% 38%
10%
84.0% 82.0%
5%
36% 80.0% 0%
78.0%
34%
76.0%
-5%
74.0%
32%
LDR
Loans (RHS)
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
-10%
Q1 2012
72.0%
30%
deposits (RHS)
Source: Company data, Al Rajhi Capital (* Our calculation methodology is different from SAMA’s which calculates the loan to deposit ratio as net loans (loans minus provisions and commissions) divided by deposits with banks plus long term debt (syndicated loans, bonds and sukuks)
Source: Company data, Al Rajhi Capital
Figure 13 Real Estate and Consumer Loans
Figure 14 Loans breakup by economic activity
deposit %SAR bn 400
45%
100%
350
40%
90%
17.7%
18.8%
20.4%
18.1%
17.9%
35%
80% 70%
4.3% 5.5%
4.2% 4.5%
3.9% 5.8%
3.5% 5.7%
30%
4.6% 6.7%
250
25%
60%
29.8%
30.8%
32.2%
20%
50%
31.3%
31.1%
200 150
15%
40%
10%
30%
14.0%
13.7%
13.1%
13.1%
13.1%
5%
20%
18.9%
18.8%
17.8%
18.9%
18.5%
0%
10%
-5%
0%
8.3%
8.1%
8.7%
9.1%
9.0%
2012
2013
2014
2015
2016
300
100 50
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
0
Construction & Building
Commerce
Industrial/manufact.
Real Estate loans
Consumer loans
Personal
Services
Transport. and comm.
y-o-y change in real estate (RHS)
y-o-y change in consumer (RHS)
Others
Source: SAMA, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
4
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 15 Demand deposits % of total deposits
Figure 16 Loans breakup by maturity (%)
66.00
100% 90%
65.00
25%
24%
80% 64.00
25%
28%
Title: Source: 30% 29%
32%
28%
31%
30%
29%
31% 32%
29%
26%
28%values 29% 32%them Please27% fill in the to have entered 31%above 31% 31%in your report
70% 17% 18% 19% 18% 18% 19% 17% 20% 18% 19% 19% 18% 60% 20% 19% 19% 17% 18% 19% 20% 19% 18% 19% 50%
63.00 62.00
40% 58%
61.00
20%
60.00
58%
53%
54%
30%
57%
53%
53%
54%
53%
50%
52%
50% 50% 50%
52%
52%
52%
52%
52%
50%
52%
50%
10% 59.00
Short Term
Medium Term
Source: Company data, Al Rajhi Capital
Figure 17 Consolidated assets of commercial bank assets
Figure 18 Consolidated liabilities of commercial banks 100%
90%
90%
80%
80%
Please fill in the values above to have them entered in your report
50% 40%
Time & savings deposit Capital account (total)
Source: SAMA, Al Rajhi Capital
Figure 19 Break up of bank's aggregate assets
Figure 20 Break up of bank's aggregate liabilities
Net f inancing
Property & Equipment
Other assets
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
60%
Q2 2017
Q1 2017
25% to26% 28% entered in the values have them in your report 28% above 30% 27% 35% Please 36% fill28% 24% 27% 29% 28% 29% 27% 29% 35% 35%
37%
37%
37%
50%
Q4 2016
Q2 2017
48%
47%
Q3 2016
Q2 2016
Q1 2016
Q4 2015
48%
45%
46%
Q1 2017
48%
48%
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Due to banks & other f in. institutions Other deposits Shareholder's equity
52%
54%
50%
Q3 2014
Q2 2014
Q1 2014
53%
50%
50%
43%
Q4 2013
Q2 2013
Q4 2012
50%
42%
43%
40%
Q3 2012
Q2 2012
42%
Q3 2013
39%
39%
Q1 2013
40%
20%
Q1 2012
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
0%
Q4 2014
0%
Q3 2014
10%
Q2 2014
10%
Q1 2014
30%
Q4 2013
24% 23% 21% 23% 23% 25% 23% 21% 18% 18% 17% 24% 21% 23% 22% 24% 20% 18% 17% 24% 24% 21% 19%
Q3 2013
40%
30%
Q2 2013
40%
Q1 2013
70% 36%
Q4 2012
80%
70% 57% 59% 60% 61% 60% 61% 61% 60% 65% 65% 63% 60% 65% 61% 60% 63% 59% 59% 61% 60% 61% 63% 63% 50%
Q3 2012
80%
Q2 2012
90%
Q1 2012
100%
90%
Due f rom other f inancial institutions
Q4 2016
Title: Source:
100%
Investments
Q3 2016
Other deposits Inter-bank Liabilities
Source: SAMA, Al Rajhi Capital
Cash with SAMA
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q2 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Q1 2017
Demand deposit Foreign Liabilities Other Liabilities
SAMA Bills Claims on Private Sector Other
Q4 2014
0%
0%
Q3 2014
10%
10%
43%
42%
Q2 2014
20%
45% 48% 46% 48% 45% 44% 45% 42% 44% 49% 46% 46% 46% 45% 44% 43% 43% 43%
42%
42%
Q1 2014
20%
Q4 2013
30%
30%
Q1 2012
40%
Bank reserves Foreign Assets Claims on Govt.& Quasi-govt.
18% 18% 19% 19% 17% 21% 18% 18% 20% 19% 18% 19% 17% 18% 20% 18% 18% 19% 20% 22% 21% 19%
Q3 2013
62% 62%
Q2 2013
64%
60%
62%
64%
Q1 2013
61%
64%
62%
Q4 2012
59%
60%
60%
59%
Q3 2012
58%
59%
50% 56%
59%
60%
59%
60%
Q2 2012
58%
58%
60%
60%
Q2 2017
Title: Source:
70%
70%
Q1 2017
Long Term
Source: Company data, Al Rajhi Capital
100%
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2017
Q1 2017
Q4 2016
Q3 2016
Q2 2016
Q1 2016
Q4 2015
Q3 2015
Q2 2015
Q1 2015
Q4 2014
Q3 2014
Q2 2014
Q1 2014
Q4 2013
Q3 2013
Q2 2013
Q1 2013
Q4 2012
Q3 2012
Q2 2012
Q1 2012
Q2 2012
Q1 2012
0%
58.00
Demand deposits Other Liabilities
Source: Company data, Al Rajhi Capital
5
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 21 Bank wise breakdown of loans by economic activity
17.0% 23% 40%
32%
27%
14%
17%
15.5% 15.0%
19%
14.0%
7%
13.5%
13.0%
Others
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Q2 2017
Industrial/manuf act.
Services
Q1 2017
Commercial
Personal
Q4 2016
Construction + Building
Q3 2016
4%
Q2 2016
21%
Q1 2016
23%
Q4 2015
ANB
10%
Q3 2015
SABB
22%
14%
Q2 2015
7%
15%
Q1 2015
9%
Q4 2014
10%
14.5%
12%
Q3 2014
10%
19%
Q2 2014
13%
16%
22%
Q1 2014
23%
12%
Q4 2013
21%
13%
Q3 2013
24%
10%
Q2 2013
18%
BSF
Al Rajhi
4%
35% 12%
Riyad
12%
16.0%
Q1 2013
18%
Samba
10%
35%
Q4 2012
17%
22% 12%
5%
20%
27%
30%
20%
42%
16.5%
7%
3%
3%
9%
18%
6%
Q3 2012
15%
22%
3%
19%
Q2 2012
40%
15%
10%
SIB
70%
27%
15%
7%
Alinma
2%
50%
0%
5%
16%
Q1 2012
34% 5%
70% 60%
4%
21%
Albilad
36%
80%
16%
NCB
17%
AlJazira
1% 7%
90%
Al Awwal
100%
Figure 22 Government deposits as a % of total liabilities
Source: Company data, Al Rajhi Capital
6
Saudi Banks Sector Banks –Finance 13 September 2017
Company-wise information Figure 23 Net special Income
Figure 24 Fees and Commission Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
-2.8%
19.3%
17.3%
Al Rajhi
2,781
2,886
2,954
6.3%
2.4%
19.1%
18.6%
Al Rajhi
847
661
642
-24.2%
Samba
1,339
1,359
1,386
3.5%
2.0%
9.2%
8.7%
Samba
392
438
335
-14.4% -23.4%
8.9%
9.0%
Riyad
1,360
1,425
1,473
8.3%
3.4%
9.3%
9.3%
Riyad
419
401
348
-17.0% -13.2%
9.6%
9.4%
BSF
1,054
1,112
1,167
10.7%
5.0%
7.2%
7.4%
BSF
361
338
256
-29.1% -24.2%
8.2%
6.9%
SABB
1,182
1,251
1,284
8.7%
2.7%
8.1%
8.1%
SABB
350
345
322
-8.0%
-6.5%
8.0%
8.7%
ANB
1,086
1,069
1,215
11.9%
13.7%
7.5%
7.7%
ANB
265
272
254
-4.4%
-6.7%
6.1%
6.8%
Al Awwal
609
646
701
15.0%
8.4%
4.2%
4.4%
Al Awwal
214
182
167
-22.2%
-8.4%
4.9%
4.5%
SIB
421
463
486
15.6%
5.1%
2.9%
3.1%
SIB
110
110
109
-0.5%
-1.0%
2.5%
2.9%
Alinma
627
814
834
33.1%
2.4%
4.3%
5.3%
Alinma
148
143
127
-13.7% -11.0%
3.4%
3.4%
AlJazira
385
434
453
17.9%
4.5%
2.6%
2.9%
AlJazira
163
165
169
3.8%
2.1%
3.7%
4.5%
Albilad
349
392
431
23.6%
9.8%
2.4%
2.7%
Albilad
206
201
199
-3.2%
-1.0%
4.7%
5.4%
3,381
3,360
3,473
2.7%
3.4%
23.2%
21.9%
NCB
910
802
790
-13.3%
-1.6%
20.8%
21.2%
14,573
15,211
15,860
8.8%
4.3%
100.0%
100.0%
Total
4,386
4,059
3,719
-15.2%
-8.4%
100.0%
100.0%
NCB Market
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 25 Total operating income (SAR mn)
Figure 26 All operating costs (SAR mn) Market share
Bank
Market share
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q Q2 2016 Q2 2017
Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Q2 2016
Al Rajhi
3,924
3,853
3,877
-1.2%
0.6%
18.6%
18.2%
Q2 2017
Al Rajhi
1,872
1,632
1,695
-9.4%
3.9%
19.6%
Samba
1,970
1,979
1,988
0.9%
0.4%
9.3%
16.9%
9.3%
Samba
656
748
717
9.4%
-4.1%
6.9%
Riyad
2,027
1,993
1,984
-2.1%
-0.5%
7.1%
9.6%
9.3%
Riyad
891
947
1,142
28.1%
20.5%
9.4%
11.4%
BSF
1,613
1,697
1,630
1.1%
SABB
1,761
1,824
1,801
2.2%
-3.9%
7.7%
7.6%
BSF
566
594
628
10.9%
5.7%
5.9%
6.3%
-1.3%
8.4%
8.4%
SABB
620
795
685
10.4% -13.9%
6.5%
ANB
1,518
1,481
1,636
6.8%
7.8%
10.5%
7.2%
7.7%
ANB
708
718
794
12.3%
10.6%
7.4%
Al Awwal
948
920
7.9%
927
-2.2%
0.8%
4.5%
4.3%
Al Awwal
409
600
607
48.4%
1.2%
4.3%
SIB
612
6.1%
625
656
7.1%
4.9%
2.9%
3.1%
SIB
319
308
333
4.3%
8.1%
3.3%
Alinma
3.3%
820
1,005
1,007
22.8%
0.2%
3.9%
4.7%
Alinma
407
580
518
4.3%
5.2%
AlJazira
580
630
659
13.6%
4.6%
2.8%
3.1%
AlJazira
404
416
441
9.1%
5.9%
4.2%
4.4%
Albilad
642
694
718
11.9%
3.4%
3.0%
3.4%
Albilad
458
468
480
4.9%
2.6%
4.8%
4.8%
NCB
4,660
4,860
4,478
-3.9%
-7.8%
22.1%
21.0%
NCB
2,215
2,111
1,996
-9.9%
-5.5%
23.3%
19.9%
Total:
21,074
21,560
21,360
1.4%
-0.9%
100.0%
100.0%
Total
9,526
9,918
10,036
5.4%
1.2%
100.0%
100.0%
y-o-y
q-o-q
Q2 2016
Q2 2017
Source: Company data, Al Rajhi Capital
27.3% -10.8%
Source: Company data, Al Rajhi Capital
Figure 27 NIM (as a % of interest earning assets)
Figure 28 Net income Change (bps)
Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Market share Bank
Q2 2016 Q1 2017 Q2 2017
Al Rajhi
3.9%
4.1%
4.1%
4.1%
4.2%
27.8
9.2
Al Rajhi
2,052
2,221
2,182
6.3%
-1.8%
17.7%
19.3%
Samba
2.6%
2.9%
2.8%
2.9%
2.9%
33.8
1.5
Samba
1,314
1,231
1,271
-3.3%
3.2%
11.3%
11.2%
Riyad
2.6%
2.6%
2.7%
3.0%
3.0%
38.0
6.7
Riyad
1,146
1,047
848
-26.0%
-19.0%
9.9%
7.5%
BSF
2.4%
2.5%
2.2%
2.5%
2.6%
13.5
10.1
BSF
1,048
1,104
1,005
-4.1%
-9.0%
9.0%
8.9%
SABB
2.7%
2.9%
3.1%
3.2%
3.3%
60.3
13.7
SABB
1,152
1,036
1,129
-2.0%
9.0%
9.9%
10.0%
ANB
2.9%
2.9%
2.8%
2.9%
3.3%
36.8
38.4
ANB
818
768
849
3.8%
10.5%
7.1%
7.5%
Al Awwal
2.4%
2.7%
2.6%
2.8%
3.1%
71.2
34.7
Al Awwal
540
324
322
-40.3%
-0.6%
4.7%
2.8%
SIB
1.9%
2.1%
1.8%
2.2%
2.3%
40.0
9.9
SIB
321
345
356
10.7%
3.1%
2.8%
3.1%
Alinma
3.0%
2.9%
2.8%
3.4%
3.5%
49.5
1.2
Alinma
409
421
488
19.3%
15.9%
3.5%
4.3%
AlJazira
2.5%
2.6%
2.7%
2.9%
3.0%
54.1
13.7
AlJazira
178
216
220
24.0%
1.9%
1.5%
1.9%
Albilad
2.8%
3.0%
3.0%
3.2%
3.3%
47.5
12.8
Albilad
184
224
239
29.8%
6.6%
1.6%
2.1%
NCB
3.3%
3.5%
3.4%
3.5%
3.6%
26.9
9.1
NCB
2,438
2,703
2,417
-0.8%
-10.6%
21.0%
21.3%
Total:
2.9%
3.1%
3.0%
3.2%
3.3%
36.7
11.9
Total
11,599
11,640
11,325
-2.4%
-2.7%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
7
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 29 Net loans (SAR bn)
Figure 30 Interest earning assets (SAR bn) Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017 14.8%
Al Rajhi
224.5
229.4
232.8
3.7%
1.5%
15.6%
16.6%
Al Rajhi
285.3
278.7
286.3
0.3%
2.7%
14.3%
Samba
130.8
124.3
120.5
-7.9%
-3.0%
9.1%
8.6%
Samba
206.0
186.7
191.7
-6.9%
2.7%
10.4%
9.9%
Riyad
154.7
140.9
141.2
-8.7%
0.2%
10.7%
10.1%
Riyad
206.4
192.4
196.7
-4.7%
2.2%
10.4%
10.2%
BSF
129.6
129.1
129.4
-0.2%
0.2%
9.0%
9.2%
BSF
178.7
182.3
182.0
1.9%
-0.1%
9.0%
9.4%
SABB
131.1
119.5
117.9
-10.1% -1.3%
9.1%
8.4%
SABB
173.9
156.3
153.5
-11.7% -1.8%
8.7%
8.0%
ANB
117.9
116.0
114.9
-2.5%
-1.0%
8.2%
8.2%
ANB
148.9
146.6
146.6
0.0%
7.5%
7.6%
Al Awwal
77.9
70.5
70.7
-9.2%
0.4%
5.4%
5.0%
Al Awwal
100.0
90.3
88.5
-11.6% -2.1%
5.0%
4.6%
SIB
61.3
60.3
61.6
0.6%
2.2%
4.3%
4.4%
SIB
87.4
83.2
85.0
-2.8%
2.1%
4.4%
4.4%
Alinma
66.5
73.5
77.0
15.8%
4.6%
4.6%
5.5%
Alinma
87.8
94.9
98.0
11.7%
3.3%
4.4%
5.1%
AlJazira
44.2
41.3
41.0
-7.3%
-0.9%
3.1%
2.9%
AlJazira
62.4
59.6
59.5
-4.7%
-0.3%
3.1%
3.1%
Albilad
36.9
38.7
40.7
10.1%
5.1%
2.6%
2.9%
Albilad
49.0
51.2
52.7
7.5%
2.8%
2.5%
2.7%
NCB
264.8
254.2
256.9
-3.0%
1.1%
18.4%
18.3%
NCB
404.2
382.4
390.0
-3.5%
2.0%
20.3%
20.2%
Total
1,440.2
1,397.8
1,404.5
-2.5%
0.5%
100%
100%
Total
1,990.1
1,904.6
1,930.5
-3.0%
1.4%
100%
100%
Source: Company data, Al Rajhi Capital
-1.6%
Source: Company data, Al Rajhi Capital
Figure 31 Provisions (SAR mn)
Figure 32 Asset yield (Gross special income/interest earning assets) Market share
Banks
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Change (bps) Bank
Q2 2016
Q3 2016 Q4 2016 Q1 2017
Q2 2017
y-o-y
q-o-q
Al Rajhi
555
372
405
-27.0%
8.8%
33.1%
16.7%
Al Rajhi
4.1%
4.4%
4.4%
4.3%
4.4%
32.5
9.7
Samba
38
107
60
58.5%
-43.9%
2.3%
2.5%
Samba
3.1%
3.6%
3.8%
3.7%
3.5%
39.5
(13.7)
Riyad
135
203
371
174.9%
82.9%
8.1%
15.3%
Riyad
3.5%
3.7%
3.9%
3.8%
3.7%
23.4
(7.4)
BSF
27
29
62
129.8%
113.7%
1.6%
2.6%
BSF
3.3%
3.5%
3.5%
3.6%
3.7%
37.8
8.3
SABB
103
276
165
60.4%
-40.3%
6.1%
6.8%
SABB
3.5%
3.8%
3.9%
3.9%
3.9%
41.3
1.5
ANB
149
177
267
78.5%
50.7%
8.9%
11.0%
ANB
3.9%
4.0%
4.2%
4.1%
4.2%
30.6
5.0
Al Awwal
101
291
285
181.8%
-1.9%
6.0%
11.7%
Al Awwal
3.9%
4.4%
4.6%
4.3%
4.4%
44.5
6.5
SIB
58
45
78
34.5%
73.3%
3.5%
3.2%
SIB
3.5%
4.0%
4.0%
4.2%
4.0%
50.9
(17.0)
Alinma
28
124
124
340.9%
-0.2%
1.7%
5.1%
Alinma
3.8%
4.0%
4.1%
4.3%
4.2%
38.8
(3.0)
AlJazira
31
47
62
101.9%
32.3%
1.8%
2.5%
AlJazira
3.8%
4.0%
6.2%
4.1%
4.1%
35.1
0.3
Albilad
57
50
77
35.2%
52.1%
3.4%
3.2%
Albilad
3.5%
3.8%
4.0%
3.9%
4.0%
45.4
5.7
NCB
393
423
475
20.7%
12.3%
23.5%
19.5%
NCB
4.3%
4.4%
4.6%
4.4%
4.4%
16.4
1.5
Total
1,676
2,145
2,431
45.1%
13.3%
100.0%
100.0%
Market
3.8%
4.0%
4.2%
4.1%
4.1%
32.4
0.4
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Q2 2017
y-o-y
q-o-q 6,017
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 33 Gross NPAs
Figure 34 NPL coverage ratio Change (bps)
Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Change (bps)
Q2 2017
y-o-y
q-o-q
Bank
(67.2)
(25.7)
Al Rajhi
195%
201%
231%
256%
317%
12,171
Al Rajhi
1.4%
1.4%
1.2%
1.0%
0.8%
Samba
0.9%
0.8%
0.8%
0.9%
0.9%
(5.0)
3.1
Samba
165%
170%
174%
181%
182%
1,685
90
Riyad
0.9%
0.8%
0.8%
0.8%
1.1%
17.9
26.3
Riyad
152%
170%
223%
251%
211%
5,948
(3,955)
BSF
0.8%
0.8%
1.3%
1.4%
1.5%
62.7
6.3
BSF
216%
220%
176%
163%
157%
(5,814)
(540)
SABB
1.2%
1.3%
1.3%
1.3%
1.3%
15.7
(0.1)
SABB
166%
158%
175%
187%
197%
3,073
927
ANB
0.8%
0.9%
0.9%
1.4%
1.1%
33.5
(26.7)
ANB
288%
259%
270%
176%
226%
(6,114)
5,024
Al Awwal
1.1%
1.2%
2.2%
2.4%
2.7%
154.0
28.3
Al Awwal
168%
156%
130%
135%
132%
(3,618)
(319)
SIB
0.8%
0.8%
1.7%
1.8%
1.8%
100.2
(1.9)
SIB
212%
196%
93%
94%
99%
(11,319)
474
Alinma
0.7%
0.7%
0.8%
0.9%
0.8%
17.6
(6.2)
Alinma
175%
172%
173%
158%
180%
499
2,193
AlJazira
0.8%
1.1%
1.1%
1.2%
1.3%
43.2
9.9
AlJazira
168%
151%
156%
165%
140%
(2,717)
(2,473)
Albilad
1.4%
1.5%
1.4%
1.0%
0.9%
(46.8)
(5.1)
Albilad
187%
185%
198%
245%
267%
7,982
2,120
NCB
1.4%
1.6%
1.5%
1.6%
1.6%
22.6
7.1
NCB
145%
147%
151%
150%
150%
489
(23)
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
8
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 35 Investments (SAR bn)
Figure 36 Total assets (SAR bn) Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Al Rajhi
35.9
25.8
31.6
-12.1%
22.2%
9.1%
8.2%
Al Rajhi
331.4
337.2
345.6
4.3%
2.5%
14.9%
15.4%
Samba
58.7
54.3
56.5
-3.6%
4.2%
14.9%
14.8%
Samba
234.0
231.9
231.1
-1.2%
-0.4%
10.5%
10.3%
Riyad
42.8
43.3
43.1
0.7%
-0.5%
10.9%
11.2%
Riyad
227.8
216.3
219.0
-3.9%
1.2%
10.2%
9.8%
BSF
23.9
23.7
25.4
6.5%
7.5%
6.1%
6.6%
BSF
193.9
204.4
205.3
5.9%
0.5%
8.7%
9.2%
SABB
28.1
23.8
21.3
7.1%
5.6%
SABB
191.9
185.3
182.5
-4.9%
-1.5%
8.6%
8.1%
ANB
23.0
25.1
24.9
8.0%
-0.7%
5.9%
6.5%
ANB
166.6
168.4
171.0
2.7%
1.5%
7.5%
7.6%
Al Awwal
20.8
15.7
15.0
-28.0%
-4.6%
5.3%
3.9%
Al Awwal
108.6
100.4
101.6
-6.4%
1.3%
4.9%
4.5%
SIB
20.5
21.3
21.6
5.7%
1.5%
5.2%
5.6%
SIB
95.9
97.5
96.8
0.9%
-0.7%
4.3%
4.3%
Alinma
5.7
6.3
7.3
27.3%
14.7%
1.5%
1.9%
Alinma
98.2
105.3
111.4
13.4%
5.8%
4.4%
5.0%
AlJazira
16.4
16.3
17.3
5.5%
6.7%
4.2%
4.5%
AlJazira
68.3
65.1
67.0
-1.9%
2.9%
3.1%
3.0%
Albilad
3.0
3.7
4.5
50.1%
20.0%
0.8%
1.2%
Albilad
54.3
57.3
59.7
9.9%
4.3%
2.4%
2.7%
NCB
114.7
108.0
114.6
-0.1%
6.2%
29.2%
29.9%
NCB
452.7
448.7
449.8
-0.6%
0.2%
20.4%
20.1%
Total
393.6
367.3
383.2
-2.6%
4.3%
100%
100%
Total
2,224
2,218
2,241
0.8%
1.0%
100%
100%
-24.2% -10.6%
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 37 Total deposits (SAR bn)
Figure 38 Demand deposit % of total deposits Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Change (bps) Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Q2 2017
y-o-y
q-o-q
Al Rajhi
272.7
271.3
285.4
4.7%
5.2%
16.4%
16.9%
Al Rajhi
91%
90%
90%
92%
88%
(339)
(370)
Samba
172.1
170.4
171.3
-0.5%
0.5%
10.3%
10.1%
Samba
61%
59%
60%
63%
62%
78
(136)
Riyad
164.0
154.2
157.0
-4.3%
1.8%
9.9%
9.3%
Riyad
44%
43%
50%
53%
49%
436
(444)
BSF
138.8
158.5
163.9
18.1%
3.4%
8.3%
9.7%
BSF
62%
56%
56%
54%
55%
(715)
65
SABB
150.3
141.6
138.3
-8.0%
-2.3%
9.0%
8.2%
SABB
55%
55%
59%
59%
59%
404
8
ANB
129.2
131.8
130.7
1.2%
-0.8%
7.8%
7.7%
ANB
51%
50%
48%
49%
51%
(2)
116
Al Awwal
86.4
80.3
81.8
-5.4%
1.8%
5.2%
4.8%
Al Awwal
58%
58%
60%
57%
57%
(134)
(35)
SIB
68.1
64.4
66.6
-2.2%
3.3%
4.1%
3.9%
SIB
32%
32%
36%
37%
37%
422
(64)
Alinma
74.2
81.4
85.8
15.7%
5.3%
4.5%
5.1%
Alinma
53%
51%
54%
56%
56%
322
(34)
AlJazira
50.7
49.8
49.2
-3.1%
-1.3%
3.0%
2.9%
AlJazira
49%
47%
49%
52%
53%
399
53
Albilad
42.1
43.5
45.0
6.8%
3.3%
2.5%
2.7%
Albilad
63%
65%
67%
63%
60%
(311)
(267)
NCB
314.7
313.6
314.7
0.0%
0.3%
18.9%
18.6%
NCB
70%
70%
71%
75%
79%
890
349
Total
1,663.3
1,660.9
1,689.5
1.6%
1.7%
100%
100%
Total:
63%
62%
63%
65%
65%
182
(34)
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 39 Cost of deposits
Figure 40 Loan to deposit ratio (net loans by customer deposits) Change (bps)
Bank
Q2 2016 Q3 2016 Q4 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Change (bps) Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Al Rajhi
0.16%
0.24%
0.28%
0.20%
0.20%
4
0
Al Rajhi
82.3%
82.9%
82.5%
84.6%
81.6%
(78)
(300)
Samba
0.64%
0.73%
1.09%
0.82%
0.66%
2
(15)
Samba
76.0%
74.6%
72.8%
72.9%
70.4%
(564)
(255)
Riyad
1.07%
1.40%
1.50%
1.06%
0.89%
(18)
(17)
Riyad
94.3%
94.9%
91.2%
91.4%
89.9%
(435)
(146)
BSF
1.04%
1.22%
1.60%
1.29%
1.26%
22
(3)
BSF
93.4%
90.9%
81.7%
81.5%
78.9%
(1,445)
(252)
SABB
0.88%
1.01%
1.01%
0.78%
0.64%
(24)
(14)
SABB
87.2%
87.4%
86.0%
84.4%
85.2%
(202)
83
ANB
1.04%
1.31%
1.55%
1.30%
0.96%
(8)
(34)
ANB
91.3%
90.2%
85.0%
88.0%
87.9%
(340)
(15)
Al Awwal
1.74%
2.00%
2.25%
1.68%
1.35%
(39)
(33)
SHB
90.1%
91.8%
85.2%
87.8%
86.5%
(364)
(127)
SIB
2.03%
2.38%
2.86%
2.54%
2.20%
17
(35)
SIB
90.0%
92.2%
91.8%
93.6%
92.6%
263
(97)
Alinma
1.04%
1.21%
1.51%
0.95%
0.89%
(15)
(6)
Alinma
89.6%
89.6%
87.2%
90.3%
89.7%
7
(58)
AlJazira
1.52%
1.71%
4.20%
1.41%
1.28%
(24)
(13)
AlJazira
87.2%
85.8%
81.6%
83.0%
83.3%
(383)
36
Albilad
0.78%
0.93%
1.17%
0.86%
0.78%
(0)
(8)
Albilad
87.7%
87.9%
89.9%
88.9%
90.4%
274
154
NCB
1.22%
1.16%
1.43%
1.09%
1.01%
(21)
(8)
NCB
84.1%
83.5%
80.3%
81.0%
81.6%
(249)
59
Total
0.97%
1.10%
1.38%
1.01%
0.88%
(9)
(13)
Total:
87.8%
87.6%
84.6%
85.6%
84.8%
(293)
(77)
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital (* Our calculation methodology is different from SAMA’s which calculates the loan to deposit ratio as net loans (loans minus provisions and commissions) divided by deposits with banks plus long term debt (syndicated loans, bonds and sukuks) subordinated debt and others.
9
Saudi Banks Sector Banks –Finance 13 September 2017
Segmental breakup Figure 41 Net income breakup
Figure 42 Total assets breakup
Retail
Corporate
Treasury
Investment services & brokerage
Retail
Corporate
Treasury
Investment services & brokerage
Al Rajhi
63%
18%
17%
3%
0%
Al Rajhi
53%
19%
27%
0.7%
Samba
19%
47%
31%
3%
0%
Samba
15%
45%
40%
0.1%
0%
Riyad
47%
40%
44%
5%
-36%
Riyad
21%
46%
27%
0.4%
5.4%
BSF
9%
54%
35%
2%
0%
BSF
9%
56%
35%
0.6%
0%
SABB
22%
52%
25%
0%
1%
SABB
16%
51%
33%
0.0%
0%
ANB
24%
37%
29%
2%
8%
ANB
21%
48%
28%
1.0%
1.2%
Al Awwal
45%
23%
32%
0%
0%
Al Awwal
20%
49%
30%
0.7%
0%
SIB
67%
96%
-16%
0%
-46%
SIB
30%
37%
30%
0.4%
3%
Alinma
35%
35%
24%
7%
0%
Alinma
16%
58%
26%
0.5%
0%
AlJazira
33%
15%
68%
3%
-18%
AlJazira
30%
31%
36%
2.1%
0.3%
Albilad
23%
48%
14%
2%
13%
Albilad
29%
43%
26%
0.6%
1.8%
NCB
38%
26%
30%
2%
4%
NCB
24%
32%
35%
0.3%
8.8%
Bank
Others
Source: Company data, Al Rajhi Capital
Bank
Figure 44 Retail net operating income Market share
Q2 2016 Q1 2017 Q2 2017
0%
Source: Company data, Al Rajhi Capital
Figure 43 Retail operating income Bank
Others
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Al Rajhi
2,917
2,748
2,857
-2.1%
4.0%
32.5%
28.9%
Al Rajhi
1,512
1,189
1,366
-9.6%
14.9%
38.4%
33.3%
Samba
422
713
687
62.8%
-3.7%
4.7%
7.0%
Samba
237
250
237
-0.1%
-5.1%
6.0%
5.8%
Riyad
646
642
663
2.7%
3.3%
7.2%
6.7%
Riyad
338
414
402
18.7%
-2.9%
8.6%
9.8%
BSF
377
382
394
4.6%
3.2%
4.2%
4.0%
BSF
82
57
89
7.4%
54.8%
2.1%
2.2%
SABB
597
629
651
9.2%
3.5%
6.6%
6.6%
SABB
231
216
243
5.3%
12.4%
5.9%
5.9%
ANB
604
586
616
1.9%
5.0%
6.7%
6.2%
ANB
243
160
202
-16.9%
26.3%
6.2%
4.9%
Al Awwal
365
377
388
6.2%
2.8%
4.1%
3.9%
Al Awwal
126
112
145
14.6%
28.9%
3.2%
3.5%
SIB
167
85
543
224%
536%
1.9%
5.5%
SIB
122
85
186
52.4%
NA
3.1%
4.5%
Alinma
279
381
389
39.3%
2.0%
3.1%
3.9%
Alinma
66
125
169
155.8%
35.0%
1.7%
4.1%
AlJazira
246
266
284
15.3%
6.5%
2.7%
2.9%
AlJazira
46
47
72
56.4%
51.7%
1.2%
1.8%
Albilad
326
376
386
18.7%
2.9%
3.6%
3.9%
Albilad
21
54
55
163.8%
1.2%
0.5%
1.3%
NCB
2,031
1,938
2,019
-0.6%
4.1%
22.6%
20.4%
NCB
912
894
933
2.3%
4.4%
23.2%
22.8%
Total
8,976
9,125
9,876
10.0%
8.2%
100.0%
100.0%
Total
3,938
3,605
4,099
4.1%
13.7%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 45 Total retail segment assets
Figure 46 Retail segment yield (net operating income/assets) Market share Q2 2016
Q2 2017
Change bps
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Bank
Q2 2016 Q3 2016 Q4 2016
Q1 2017
Q2 2017
Al Rajhi
176,911
179,090
184,109
4.1%
2.8%
31.0%
32.7%
Al Rajhi
3.5%
3.0%
y-o-y
q-o-q
2.4%
2.7%
3.0%
(47.5)
Samba
38,910
35,686
34,730
-10.7% -2.7%
6.8%
6.2%
Samba
2.4%
33.9
3.2%
3.3%
2.8%
2.7%
25.2
Riyad
44,651
39,681
46,282
(9.5)
53.3
(44.6)
BSF
17,187
16,801
17,707
SABB
34,346
30,698
29,959
ANB
41,456
37,310
36,665
Al Awwal 20,964
20,947
SIB
28,559
Alinma AlJazira
3.7%
16.6%
7.8%
8.2%
Riyad
3.2%
2.5%
2.2%
4.2%
3.7%
3.0%
5.4%
3.0%
3.1%
BSF
2.0%
1.7%
1.0%
1.4%
2.1%
8.9
67.9
-12.8% -2.4%
6.0%
5.3%
SABB
2.7%
2.7%
1.1%
2.8%
3.2%
50.8
43.4
-11.6% -1.7%
7.3%
6.5%
ANB
2.3%
-1.2%
3.0%
1.7%
2.2%
(16.4)
49.9
20,559
-1.9%
-1.9%
3.7%
3.7%
Al Awwal
2.5%
2.1%
0.7%
2.1%
2.8%
28.6
67.3
28,490
29,061
1.8%
2.0%
5.0%
5.2%
SIB
1.7%
1.4%
-0.1%
1.2%
2.6%
85.6
139.0
18,138
17,273
17,324
-4.5%
0.3%
3.2%
3.1%
Alinma
1.5%
1.5%
1.1%
2.9%
3.9%
238.0
103.8
20,616
19,206
20,116
-2.4%
4.7%
3.6%
3.6%
AlJazira
0.9%
0.4%
0.4%
1.0%
1.5%
57.6
49.9
Albilad
17,932
16,356
17,303
-3.5%
5.8%
3.1%
3.1%
Albilad
0.5%
0.8%
0.5%
1.3%
1.3%
83.0
5.4
NCB
110,448
105,446
109,354
-1.0%
3.7%
19.4%
19.4%
NCB
3.8%
2.2%
2.5%
3.4%
3.5%
(27.8)
6.8
Total
570,118
546,982
563,169
-1.2%
3.0%
100.0%
100.0%
Total
2.6%
2.9%
2.1%
2.0%
2.6%
3.8
59.7
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Source: Company data, Al Rajhi Capital
10
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 47 Corporate operating income
Figure 48 Corporate net operating income Market share
Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Al Rajhi
410
587
541
32.2%
-7.7%
6.6%
7.6%
Al Rajhi
16
568
390
2328%
-31.4%
0.4%
12.6%
Samba
721
731
784
8.7%
7.2%
11.7%
11.0%
Samba
547
526
596
8.9%
13.3%
12.9%
11.7%
Riyad
689
895
807
17.1%
-9.8%
11.2%
11.4%
Riyad
529
557
340
-35.8%
-39.1%
12.5%
12.4%
BSF
778
809
744
-4.4%
-8.0%
12.6%
10.5%
BSF
614
654
545
-11.3%
-16.7%
14.5%
14.5%
SABB
816
821
829
1.6%
1.0%
13.2%
11.7%
SABB
600
479
587
-2.3%
22.5%
14.2%
10.6%
ANB
545
574
639
17.2%
11.2%
8.8%
9.0%
ANB
325
342
316
-2.9%
-7.7%
7.7%
7.6%
Al Awwal
506
442
412
-18.4%
-6.7%
8.2%
5.8%
Al Awwal
378
135
75
-80.2%
-44.5%
8.9%
3.0%
41
200
452
1005%
126%
0.7%
6.4%
SIB
226
200
268
18.7%
34.4%
5.3%
4.4%
Alinma
357
425
400
12.0%
-5.8%
5.8%
5.6%
Alinma
240
189
169
-29.6%
-10.5%
5.7%
4.2%
AlJazira
111
143
152
36.9%
6.0%
1.8%
2.1%
AlJazira
21
52
33
NA
-36.9%
0.5%
1.1%
Albilad
196
208
232
18.1%
11.4%
3.2%
3.3%
Albilad
78
96
115
46.5%
19.5%
1.9%
2.1%
NCB
998
1,244
1,100
10.2%
-11.6%
16.2%
15.5%
NCB
658
709
639
-2.9%
-9.9%
15.6%
15.7%
Total
6,168
7,078
7,092
15.0%
0.2%
100.0%
100.0%
Total
4,233
4,506
4,071
-3.8%
-9.7%
100.0%
100.0%
SIB
Source: Company data, Al Rajhi Capital
Source: Company data, Al Rajhi Capital
Figure 49 Total corporate segment assets
Figure 50 Corporate segment yield (operating income/assets) Market share
Change (bps)
Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q Q2 2016 Q2 2017
Bank
Q1 2017
Q2 2017
Al Rajhi
64,377
64,600
66,197
2.8%
2.5%
7.0%
7.3%
Al Rajhi
0.1%
2.1%
y-o-y
q-o-q
2.2%
3.6%
2.4%
228.1
(121.2)
Samba
107,788
105,925
104,020
-3.5%
-1.8%
11.6%
11.5%
Samba
2.0%
Riyad
115,124
101,460
101,078
-12.2% -0.4%
12.4%
11.2%
Riyad
1.9%
2.2%
1.7%
2.0%
2.3%
25.4
28.1
1.6%
-0.3%
2.2%
1.3%
(51.3)
(83.0)
BSF
116,629
116,665
115,133
-1.3%
-1.3%
12.6%
12.8%
BSF
SABB
101,567
92,694
92,194
-9.2%
-0.5%
11.0%
10.2%
SABB
2.1%
2.1%
-0.1%
2.2%
1.9%
(26.4)
(36.3)
2.4%
2.0%
1.0%
2.1%
2.5%
16.5
ANB
82,133
82,745
82,820
0.8%
0.1%
8.9%
9.2%
ANB
1.6%
1.5%
1.0%
1.7%
1.5%
(7.4)
(13.9)
Al Awwal
56,936
49,534
50,180
-11.9%
1.3%
6.2%
SIB
36,914
35,753
36,231
-1.9%
1.3%
4.0%
5.6%
Al Awwal
2.6%
1.7%
-2.1%
1.1%
0.6%
(200.8)
(46.9)
4.0%
SIB
2.4%
2.4%
2.5%
2.2%
3.0%
57.3
Alinma
53,868
61,019
64,686
20.1%
6.0%
75.6
5.8%
7.2%
Alinma
1.9%
1.8%
1.2%
1.3%
1.1%
(80.7)
(19.8)
AlJazira
24,283
21,946
21,058
Albilad
23,339
24,517
25,794
-13.3% -4.0%
2.6%
2.3%
AlJazira
0.4%
0.5%
0.4%
0.9%
0.6%
25.2
(32.0)
10.5%
5.2%
2.5%
2.9%
Albilad
1.3%
1.9%
1.5%
1.6%
1.8%
51.7
NCB
142,694
145,282
19.2
143,320
0.4%
-1.4%
15.4%
15.9%
NCB
1.8%
2.0%
1.5%
2.0%
1.8%
1.3
(19.8)
Total
925,652
902,140
902,710
-2.5%
0.1%
100.0%
100.0%
Total
1.8%
1.9%
0.8%
2.0%
1.8%
(2.6)
(20.1)
Source: Company data, Al Rajhi Capital
Q2 2016 Q3 2016
Q4 2016
Source: Company data, Al Rajhi Capital
Figure 51 Treasury operating income (SAR mn)
Figure 52 Treasury net operating income Market share
Bank
47.6
Q2 2016
Q1 2017
Q2 2017
y-o-y
Al Rajhi
473
396
380
Samba
640
383
430
Riyad
419
289
BSF
386
SABB
Market share
q-o-q
Q2 2016
Q2 2017
-19.6%
-4.1%
12.5%
10.6%
Al Rajhi
413
376
360
-12.8%
-4.2%
13.5%
11.7%
-32.9%
12.2%
16.9%
11.9%
Samba
409
352
397
-2.9%
12.6%
13.3%
12.8%
384
-8.2%
33.2%
11.0%
10.7%
Riyad
358
294
372
4.1%
26.9%
11.7%
12.0%
443
431
11.7%
-2.7%
10.2%
12.0%
BSF
314
374
351
12.0%
-6.0%
10.2%
11.4%
348
374
320
-8.2%
-14.4%
9.2%
8.9%
SABB
309
334
286
-7.5%
-14.2%
10.1%
9.3%
ANB
277
247
264
-4.6%
7.1%
7.3%
7.3%
ANB
196
221
242
23.7%
9.8%
6.4%
7.8%
Al Awwal
62
88
117
88.2%
33.8%
1.6%
3.3%
Al Awwal
31
74
102
235.0%
37.6%
1.0%
3.3%
SIB
(136)
92
14
NM
-85.2%
-3.6%
0.4%
SIB
29
92
(46)
NM
NM
0.9%
-1.5%
Alinma
140
148
170
22.1%
15.4%
3.7%
4.7%
Alinma
77
78
117
50.6%
49.9%
2.5%
3.8%
AlJazira
197
204
219
11.0%
7.4%
5.2%
6.1%
AlJazira
124
137
149
20.0%
8.7%
4.0%
4.8%
Albilad
65
46
50
-23.0%
8.6%
1.7%
1.4%
Albilad
47
27
33
-29.6%
21.0%
1.5%
1.1%
NCB
924
1,126
820
-11.3%
-27.2%
24.3%
22.8%
NCB
762
966
727
-4.7%
-24.8%
24.8%
23.5%
Total
3,795
3,835
3,600
-5.2%
-6.1%
100.0%
100.0%
Total
3,069
3,325
3,091
0.7%
-7.0%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Bank
Q2 2016
Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Source: Company data, Al Rajhi Capital
11
Saudi Banks Sector Banks –Finance 13 September 2017
Figure 53 Treasury total assets
Figure 54 Treasury segment yield (Net operating income/assets) Market share
Change (bps)
Bank
Q2 2016
Q1 2017
Q2 2017
y-o-y
q-o-q
Q2 2016
Q2 2017
Q2 2017
Al Rajhi
87,147
91,227
92,899
6.6%
1.8%
13.6%
13.2%
Al Rajhi
1.8%
1.2%
2.3%
y-o-y
1.6%
1.6%
(27.8)
Samba
79,033
90,232
92,202
16.7%
2.2%
12.4%
13.1%
Samba
2.0%
1.6%
(2.0)
1.4%
1.6%
1.7%
(22.9)
17.4
Riyad
55,816
72,060
58,870
5.5%
-18.3%
8.7%
8.3%
Riyad
2.3%
BSF
58,899
69,788
71,273
21.0%
2.1%
9.2%
10.1%
BSF
2.2%
1.0%
1.1%
1.6%
2.3%
1.6
63.4
2.1%
2.1%
2.1%
2.0%
(22.9)
(15.7)
SABB
55,357
61,222
59,759
8.0%
-2.4%
8.7%
8.5%
SABB
2.2%
ANB
39,278
44,661
47,736
21.5%
6.9%
6.1%
6.8%
ANB
2.0%
1.9%
1.8%
2.2%
1.9%
(32.8)
(29.9)
4.5%
-0.2%
2.0%
2.1%
13.5
Al Awwal 30,105
29,147
30,182
0.3%
3.6%
4.7%
4.3%
Al Awwal
14.5
0.4%
-1.1%
-0.1%
1.0%
1.4%
97.0
SIB
28,186
30,368
28,641
1.6%
-5.7%
4.4%
4.1%
40.2
SIB
0.4%
-0.4%
1.5%
1.3%
-0.6%
Alinma
25,799
26,478
28,848
11.8%
9.0%
4.0%
AlJazira
22,703
22,520
24,269
6.9%
7.8%
3.5%
4.1%
Alinma
1.2%
-0.5%
1.8%
1.1%
1.7%
51.0
56.7
3.4%
AlJazira
2.3%
2.4%
2.1%
2.4%
2.5%
26.7
Albilad
11,596
14,965
15,247
31.5%
1.9%
11.3
1.8%
2.2%
Albilad
1.7%
1.6%
1.7%
0.8%
0.9%
(79.0)
NCB
145,916
157,120
156,203
7.1%
4.9
-0.6%
22.8%
22.1%
NCB
2.1%
1.3%
2.6%
2.5%
1.9%
(22.8)
(64.6)
Total
639,836
709,788
706,130
10.4%
-0.5%
100.0%
100.0%
Total
1.9%
1.4%
1.7%
1.9%
1.7%
(13.7)
(12.9)
Source: Company data, Al Rajhi Capital
Bank
Q2 2016 Q3 2016 Q4 2016 Q1 2017
Figure 56 Investment & Brokerage assets
Market share Q2 2016
(103.2) (190.3)
Source: Company data, Al Rajhi Capital
Figure 55 Investment & Brokerage operating income Bank
q-o-q
Q1 2017 Q2 2017
y-o-y
q-o-q Q2 2016 Q2 2017
Market share Bank
Q2 2016 Q1 2017 Q2 2017
y-o-y
q-o-q
Q2 2016 Q2 2017
Al Rajhi
156
121
98
-37.3% -19.3%
18.0%
14.6%
Al Rajhi
2,945
2,314
2,392
-18.8%
3.4%
25.4%
20.4%
Samba
216
152
88
-59.3% -42.1%
24.9%
13.1%
Samba
199
93
129
-35.2%
39.1%
1.7%
1.1%
Riyad
82
73
74
-8.9%
1.7%
9.4%
11.1%
Riyad
794
86
866
9.1%
907.4%
6.9%
7.4%
BSF
85
63
61
-28.4%
-2.5%
9.8%
9.1%
BSF
1,197
1,104
1,231
2.8%
11.5%
10.3%
10.5%
SABB
0
0
0
NA
NA
NA
NA
ANB
35
38
45
26.1%
16.8%
4.1%
6.6%
ANB
Al Awwal
15
13
10
-37.5% -23.2%
1.8%
1.4%
SIB
19
6
39
100.1% 546.1%
2.2%
5.8%
Alinma
44
51
47
5.1%
AlJazira
51
47
42
-17.6% -10.4%
5.9%
7.6%
-7.6%
600
649
606
1.0%
-6.7%
5.2%
5.2%
1,754
1,719
1,719
-2.0%
0.0%
15.1%
14.7%
Al Awwal
549
741
714
29.9%
-3.7%
4.7%
6.1%
SIB
394
331
374
-5.0%
13.0%
3.4%
3.2%
7.0%
Alinma
381
486
518
35.9%
6.6%
3.3%
4.4%
6.3%
AlJazira
478
1,261
1,379
188.7%
9.3%
4.1%
11.8%
Albilad
Albilad
18
24
23
32.5%
-1.9%
2.0%
3.5%
NCB
147
164
144
-2.2%
-11.9%
16.9%
21.5%
Total
870
752
672
-22.8% -10.7% 100.0%
100.0%
Source: Company data, Al Rajhi Capital
SABB
763
426
330
-56.7%
-22.5%
6.6%
2.8%
NCB
1,528
1,394
1,465
-4.1%
5.1%
13.2%
12.5%
Total
11,582
10,604
11,723
1.2%
10.6%
100.0%
100.0%
Source: Company data, Al Rajhi Capital
Figure 57 Efficiency ratio (costs excluding provisions/total operating income) 70%
Figure 58 Capital adequacy (tier I + tier II)
25.00%
Title: Source:
20.00%
Please fill in the values above to have them entered in your report
60% 50%
15.00%
40% 30%
10.00%
20%
5.00% 10% 0%
0.00%
Q2 2016
Q1 2017
Q2 2017
Source: Company data, Al Rajhi Capital
Disclosures Please refer to the important disclosures at the back of this report.
Q2 2016
Q1 2017
Q2 2017
Source: Company data, Al Rajhi Capital
12
Saudi Banks Sector Banks –Finance 13 September 2017
IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report was prepared by Al Rajhi Capital (Al Rajhi), a company authorized to engage in securities activities in Saudi Arabia. Al Rajhi is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 40 Wall Street 59th Floor, New York NY 10005, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Al Rajhi. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority (“FINRA”) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account.
Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not ‘beneficially own,’ as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication.
Compensation and Investment Banking Activities Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months.
Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither Al Rajhi nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report. Al Rajhi may rely on information barriers, such as “Chinese Walls” to control the flow of information within the areas, units, divisions, groups, or affiliates of Al Rajhi. Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States. The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments. Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by Al Rajhi with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein. No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior consent of Al Rajhi and Al Rajhi accepts no liability whatsoever for the actions of third parties in this respect. This research document has been prepared by Al Rajhi Capital Company (“Al Rajhi Capital”) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital’s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction.
Disclosures Please refer to the important disclosures at the back of this report.
13
Saudi Banks Sector Banks –Finance 13 September 2017
Disclaimer and additional disclosures for Equity Research Disclaimer This research document has been prepared by Al Rajhi Capital Company (“Al Rajhi Capital”) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital’s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction. Special disclaimers for this report: We do not support investing in non-Shariah stocks. This report should not be considered as an investment recommendation report. Out of the12 listed banks in the Saudi banking sector– only 4 are Islamic (Al Rajhi, Al Jazira, Al Inma and Al Bilad) while the remaining 8 are non-Islamic.
Explanation of Al Rajhi Capital’s rating system Al Rajhi Capital uses a three-tier rating system based on absolute upside or downside potential for all stocks under its coverage except financial stocks and those few other companies not compliant with Islamic Shariah law: "Overweight": Our target price is more than 10% above the current share price, and we expect the share price to reach the target on a 12 month time horizon. "Neutral": We expect the share price to settle at a level between 10% below the current share price and 10% above the current share price on a 12 month time horizon. "Underweight": Our target price is more than 10% below the current share price, and we expect the share price to reach the target on a 12 month time horizon. "Target price": We estimate target value per share for every stock we cover. This is normally based on widely accepted methods appropriate to the stock or sector under consideration, e.g. DCF (discounted cash flow) or SoTP (sum of the parts) analysis. Please note that the achievement of any price target may be impeded by general market and economic trends and other external factors, or if a company’s profits or operating performance exceed or fall short of our expectations.
Contact us Mazen Al-Sudairi, Head of Research Tel : +966 1 211 9449 Email: [email protected] Al Rajhi Capital Research Department Head Office, King Fahad Road P.O. Box 5561, Riyadh 11432 Kingdom of Saudi Arabia Email: [email protected] Al Rajhi Capital is licensed by the Saudi Arabian Capital Market Authority, License No. 07068/37.
Disclosures Please refer to the important disclosures at the back of this report.
14
