Saudi Banking Sector Saudi Banking Sector - 1Q-2016 - Aljazira Capital
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
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Saudi Banking Sector - 1Q-2016 The Saudi banking sector’s balance sheet in 1Q-2016 stood at SAR 2,225bn, depicting a jump of 2.8%YoY and 0.7%QoQ. Total loans weighed in at 65.5% of the total assets, whereas deposits accounted for 85% of total liabilities. The banking sector balance sheet has grown at a 10-year CAGR of 11.3%.
Saudi banking Sector Balance Sheet Growth-1Q-2016
Saudi banking Sector Balance Sheet Growth 2,500
30%
10%
2,500
9% 25%
2,000
7%
15% 1,000
In Bn SAR
In Bn SAR
20% 1,500
8%
2,000
6%
1,500
5% 4%
1,000
3%
10% 500
-
5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Saudi Banking Assets-LHS % Growth-RHS
0%
Banking Sector-Assets Breakdown-1Q-2016
2%
500
1% -
Q1-2015
0%
Q1-2016
Saudi Banking Assets-LHS
% Growth (YoY)-RHS
Banking Sector- Liabilities & Capital Breakdown-1Q-2016
2%
1% 4%
3%
9%
7% Cash In Vault 10%
Deposits with SAMA
Deposits
14%
SAMA Bills Foreign Assets 13%
Loans to Private Sector
Foreign Liabilities 3% Capital accounts
Loan to Gov & Quasi-Gov Fixed Assets
Other Liabilities
74%
OtherAssets
60%
Source: SAMA
The Saudi banking sector has a total of 12 listed banks and other non-listed banks. In term of balance sheet size, National Commercial Bank (NCB), with assets of over SAR 453.3bn is the biggest bank in the Kingdom, accounting for 20.6% of the total market, followed by Alrajhi bank with an assets base of SAR 323.3bn (14.7% of market share). Samba and Riyadh Bank both account for more than 10% each of the total banking assets. Out of the total 12 banks, 4 banks namely Bank Alrajhi, Bank Alinma, Bank Albilad and Bank Aljazira are Shariah compliant banks, accounting for 24.3% of the total banking assets. Alrajhi is the biggest Shariah compliant bank in the Kingdom, controlling almost 60.4% of the total market share.
Total Banking Asset Market Share-1Q-2016 4%
NCB
3% 2%
4%
Samba
21%
Riyad
8% 15%
Al Rajhi
Saudi Fransi
Alinma
ANB
SAIB 11%
12%
SAAB
Saudi Hollandi
8%
10%
10%
Al Rajhi
5%
9%
Sharia Compliant Banks Assets Market Share-1Q-2016
Aljazira 17%
61%
Albilad
Alinma Aljazira Albilad Source: Bloomberg
Acting Head of Research
Talha Nazar +966 11 2256115 [email protected]
1
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
Deposits
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Deposits Growth
The Saudi banking deposits have grown steadily along with
1,800
the growth in the money supply. Deposits and Money supply
1,600
showed 10 Year CAGR of 10.5% and 10.4% respectively. Deposit
1,200
in 1Q-2015, depicting a fall of -0.59%YoY. The fall in deposits
20%
1,400 In Bn SAR
in 1Q-2016 stood at SAR 1.61tn, as compared to SAR 1.62tn
25%
15%
1,000
10%
800 600
is primarily due to the drawdown by the government as it has
400
looked to balance its budget deficit. Demand deposits in 1Q-
0
200
-5%
Out of the total deposit, demand deposit account for 61.2% of
Deposits-LHS
the total deposits, whereas time and savings deposit account
Deposit Growth-1Q-2016
for only 25.6% of the total deposits.
Money Supply(M3)-LHS
% Growth in deposits-RHS
1,800
In case of time and Savings deposits nearly 54.4% are held
8.00%
1,200 Bn SAR
individuals whereas the rest 6.9% are held by the government.
10.00%
9.81%
1,400
of the total deposits are held by individuals,21% are held by
93.1% of the demand deposits are held by business and
12.00%
1,600
A further breakdown of the deposits show that almost 77% government entities.
1,000
6.00%
800
4.00%
600
2.00%
400 200
-0.59%
-
Q1-2015
0.00% -2.00%
Q1-2016
by business and individuals, whereas 45.6% are held by
Demand-LHS
Time & Savings-LHS
government entities.
Quasi-Monetary-LHS
% Growth (YoY)-RHS
Demand Deposits Break Down
0%
19 9 19 4 9 19 5 9 19 6 9 19 7 9 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 1 20 0 11 20 1 20 2 13 20 1 2 4 Q1 015 -2 01 6
2016 stood at SAR 985.3bn showing a fall of -6.2%YoY.
5%
Yellow dotted Line Show YoY fall in 1Q-2016 Deposits
Deposits Break Down
7%
13.1%
Business and Individuals Government Entities
Demand 25.6%
Time & Savings 61.2%
Quasi-Monetary
93%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 21%
46%
Business and Individuals
Business and Individuals 54%
Government Entities Others
Government Entities
77%
Source: SAMA
2
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
Deposit-Banks break down
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Bank Deposits Growth
National Commercial bank with a deposit base of SAR 326bn is the largest bank , followed by bank AlRajhi with a deposit base of SAR 265bn.
400
20.0%
350
which during 1Q-2016 posted growth of 16.0% YoY, improving
10.0%
11.5%
250
The highest growth in deposits was witnessed by Bank Albilad,
9.7%
200
100 50
grew its deposit base by 11.5%YoY, resulting in an improved
-
1.5% 0.0%
1.7%
0.1%
-5.0%
-5.6% -4.9% Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
1Q-2015
NCB
Riyad Samba SAAB
1Q-2016
Saudi SAIB Hollandi
-10.0%
% Growth
Deposits Market Share Comparison
losing market share form 20.5% to 19.4% in the same time period.
2.6% 2.3% 3.0% 3.0% 4.1% 3.7% 4.2% 4.2% 5.1% 4.7%
Albilad Aljazira
Bank Alrajhi the 2nd biggest bank and the largest shariah
Saudi Hollandi
compliant bank showed a decline of 1.4%YoY,in 1Q-2016, in its
Alinma SAIB
deposit base, whereas its market share stood at 15.8%. Saudi Hollandi Bank with a growth in deposit of 9.7%YoY in 1Q-
1.8%
0.6%
-1.4%
market share of 4.1%
deposit base, as it fell from SAR 343bn to SAR 326bn in 1Q-2016,
5.0%
6.1%
150
its market share from 2.3% to 2.6%. Followed by Alinma which
National Commercial bank showed a decline of 4.9%YoY in its
15.0%
16.0%
300
1Q-2016 1Q-2015 7.9% 7.8% 8.4% 9.0% 9.0% 8.9% 9.8% 9.9% 10.6% 10.1%
ANB Saudi Fransi SAAB Riyad
2016, improved its market share from 4.7% to 5.1%
Samba
15.8% 16.1%
Al Rajhi
Saudi Fransi showed the biggest drop of 5.6%YoY in deposits
19.4% 20.5%
NCB
standing at SAR 142bn, Fransi’s market share dropped to 8.4%
0.0%
5.0%
10.0%
15.0%
in 1Q-2016 from 9.0% in 1Q-2015
20.0%
25.0%
Source: Company Financials, Bloomberg
Loans
Loans Growth
The Saudi banking sector total loan book towards the end of
1,600
1Q-2016, stood at SAR 1.41tn, depicting a jump of 9.8%YoY. Till
1,400
2015, the sector loans book registered a 10 year CAGR of 11.6%.
1,200
1 year. However, loans with maturity of between 1 to 3 years
35% 30% 25%
1,000
In Bn SAR
Almost 56% of the loans extended have a maturity of less than
40% Dotted Lines show 1Q-2016 growth As compared to 1Q-2015
20%
800
15%
600
10%
posted a strong growth of 18.9%, increasing its share from
400
18.6% in 1Q-2015 to 21.5% in 1Q-2016.
5%
200
0%
0
The high concentration of short term loans in a rising interest rate
2005
2006
2007
2008
environment make it easier for the bank to re price its new loans.
Loans Maturity- Growth
Loans
2011
2012
2013
2014
2015 Q1-2016
-5%
% Growth-RHS
100%
1,400
90%
1,200 382
1,000 In Bn SAR
2010
Loans Share According to Maturity Profile
1,600
800
400
th Grow 2.2%
390
80%
30%
30%
70%
239
th Grow % 18.9
284
661
th Grow % 11.0
734
600
60%
22%
18.6%
50% 40% 30%
56%
52%
20% 10%
200 -
2009
0% Q1-2015 Less than 1 Year
Q1-2016 1 to 3 Years
Over 3 Years
Q1-2015 Less than 1 Year
Q1-2016 1 to 3 Years
Over 3 Years Source: SAMA
3
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Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
Loans Break Up
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Sector wise Loans Distribution
The sector’s largest borrower is the commerce sector. In 1Q-
12.1%
2016 lending to commerce sector accounted for 21.4% of the total loans. Followed by the manufacturing sector which
Manufacturing
8%
Construction
accounted for 12.1% of the total loans.
Commerce
Retail Loans
Services
50% 21.4%
Gov & Quasi Gov
The sectors retail loans (does not include Real estate financing,
Miscellaneous
Finance leasing and Financing against shares (Margin lending)) 5%
in 1Q-2016 stood at SAR 334bn, depicting a jump of 6.4% YoY, 2.2% QoQ. Home renovation is the biggest constituent of retail loans, accounting for almost 11.0% in 1Q-2016. Loans for vehicle financing accounted for 9.4% of the total retail loans. Out of the total retail loans, loans acquired through credit cards accounted for 3.1% of the total retail loans in 1Q-2016, a jump from 3.0% in 1Q-2015.
Real Estate Loans Real estate loans since 2009, has showed a 6 Year CAGR of
3%
Retail Loans-Break down 90.0%
83.4%
80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 8.2%
10.0% 0.0%
11.0%
8.5% 9.4%
Home Renovation
corporate sector accounted for 45.2% of the real estate loans.
Q1-2015
Q1-2016
80%
180
70%
witnessed a jump of 8.5%.
140 In Bn SAR
160
60%
120
50%
100
40%
80
30%
The sector biggest lender is National Commercial bank (NCB),
60
with a market share of 18.7% in 1Q-2016,this is an improvement
20
its loans market share
20%
40
10%
0
2010
2011
% Growth-Retail
2012
% Growth-Corporate
2013
2015. Alrajhi was the biggest loser in terms of its loans market share. Saudi Fransi accounted for 8.8% in 1Q-2016, a drop from 9.3% in 1Q-2015. Market share for Shariah compliant banks stood at 25.3% in 1Q2016, as compared to 25.6% in 1Q-2015. The drop was primarily
4
2.6% 2.3% 3.0% 3.2%
Albilad Aljazira
4.2% 4.2% 4.3% 4.3%
Alinma SAIB
8.2% 8.4% 8.8% 9.3% 9.1% 9.3% 9.4% 9.8% 10.7% 10.6%
ANB Saudi Fransi SAAB Samba
drop in its market share in 1Q-2016. Bank Albilad was the only
NCB 0.0%
Q1-2016 Q1-2015
5.5% 5.2%
Saudi Hollandi
Riyad
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Retail
Corporate
Bank Market Share
Al Rajhi
2.3% in 1Q-2015 to 2.6% in 1Q-2016.
0%
2015
Source: SAMA
due to bank Alrajhi, which as mentioned earlier showed a shariah compliant bank, which improved its market share from
2014
% Growth-Total
Followed by Alrajhi, with a market share of 15.3% in Q1-2016, Alrajhi has shown a drop in its market share from 15.9% in 1Q-
Credit Cards/ Total Retail Loans
200
2015, stood at 54.1% YoY, as compared to retails sector, which
from 17.5% in 1Q-2015. NCB was also biggest gainer in terms of
Others
Real Estate Loans
However, corporate sector real estate loans growth in 4Q-
Bank Market Share in Loans
3.0% 3.1%
Vehicles
21.3%, standing at SAR 171.1bn in 2015. In 4Q-2015, retail sector accounted for 54.8% of total real estate loans, whereas
Credit Card Includes Retail Loans, acquired through credit cards
79.6%
2.0%
4.0%
6.0%
15.3% 15.9%
18.7% 17.5%
8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
NCB with a growth of 16.7%YoY in its gross loans was the second best performer. Saudi Fransi showed the lowest growth of 3.5%YoY in its gross loans, followed by Bank Aljazira with witnessed a growth of 4.9% YoY .
Bank Loans Distribution 300
30%
27.8%
25%
250 200 In Bn SAR
Bank Albilad showed the strongest growth in its loan book as it registered an increase of 27.8%YoY in 1Q-2016, which as mentioned earlier helped it in gaining more market share.
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16.7%
20%
16.5%
15%
150 10%
9%
100
5%
50 -
Shariah compliant banks showed a cumulative growth of 8.1%YoY, in Q1-2016, in its gross loans.
Al Rajhi Alinma ANB
9%
8%
7%
6%
3.5%
Albilad Aljazira Saudi Fransi
Q1-2015
4.9%
Q1-2016
NCB
10% 5%
Riyad Samba SAAB
Saudi SAIB Hollandi
0%
% growth
Non-Performing Loans
Alinma and SAIB with 0.7% NPL ratio, are best in the industry, Alinma and SAIB has NPL coverage of 178% and 211% respectively in 1Q-2016. However, its should be noted that Alinma showed a drop in its NPL coverage which in 1Q-2015 stood at 205% Bank Albilad has the highest NPL ratio of 1.6%, however its NPL coverage ratio stood at 176% in 1Q-2016.
Performing Loans to NPLs 300 250
1.6%
1.6% 1.37%
150
1.0%
-
1.0% 0.8%
0.8%
0.72% 0.6% 0.2%
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
NCB
Riyad Samba SAAB
Performing Loans-Q1-2016
Non-performing Loans-Q1-2015
NPLs-Industry Average Q1-2016
NPLs-Industry Average Q1-2015
100%
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0.9%
0.4%
Advances to Deposit Ratio
It should be noted that SAMA ( Saudi Arabian Monetary Agency) increased the regulatory ADR limit from 85% to 90%.
1.2% 1.1% 1.1%
50
ADR ratio
Riyadh bank had the highest ADR of 93.6% in 1Q-2016, whereas Samba has the lowest ADR of 76% in 1Q-2016 as compared to 77% in 1Q-2015.
1.4%
0.70%
Alrajhi showed the biggest drop in its NPL coverage ratio, as it went down from 205% in 1Q-2015 to 163% in 1Q-2016.
The industry ADR ratio showed an improvement in Q1-2016 as it stood at 86.3% as compared to 79.2% in 1Q-2015. The jump in ADR is partially due to flattish growth of 0.5%YoY in deposits and 9.4%YoY increase in loans
NPLs-Industry Average Q1-2016 , 1.1% NPLs-Industry Average Q1-2015, 1.1%
1.5%
0.9% 0.9%
100
Arab Nationa Bank showed the greatest improvement in its NPL coverage as it improved from 225% in 1Q-2015 to 234% in 1Q-2016.
5
1.8%
200 In Bn SAR
The sector non-performing loans ratio in 1Q-2016 stood at 1.15% as compared to 1.12% in 1Q-2015. Whereas NPL coverage ratio improved to 181% in Q1-2016 from 170% in Q1-2015.
84%
89%
90%
87%
87%
Saudi SAIB Hollandi
% Share of NPLs-RHS
93.6%
90%
87%
83%
80%
0.0%
93%
89%
76%
60% 40% 20% 0%
Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
Q1-2016 ADR
NCB
Riyad
Samba
SAAB
Saudi SAIB Hollandi
Q1-2015 ADR Source: Company Financials
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
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NIMs Under Pressure
NIMS
The sector as a whole saw a drop in its net interest margins.
1.00% 0.90%
Saudi Fransi’s NIMs at 0.43% were the lowest in the sector in Q12016, followed by Alrajhi as NIMs declined to 0.50%.The lowest fall was witnessed by Samba as its NIMs declined from 0.77% in 1Q-2015 to 0.7% in 1Q-2016. Overall the sector showed an increase of 81% on return on savings and time deposits.
0.80%
NCB reported the highest cost of SAR 802mn on savings deposit, as compared to SAR 656mn, depicting a jump of 22.3%. NCB recorded the highest return on time and savings deposit with 0.84%.
0.10%
SAAB return on time and saving deposit, of 0.38% was lowest in the market, closely followed by Bank Alinma and Bank Albilad with returns of 0.39%.
Operating Income Breakdown The sector in 1Q-2016 posted operating income of SAR 20.8bn against SAR 20.2bn in 1Q-2015, depicting a jump of 3.2% YoY.
0.60% 0.50% 0.40% 0.30% 0.20% 0.00%
Treasury and Investment income showed a decline of -8.7%YoY and -13.9%YoY. Other income showed an increase of 63.0%YoY.
ANB
Albilad Aljazira Saudi Fransi
NCB
Riyad
Samba
SAAB
Saudi SAIB Hollandi
Q1-2016
Absolute Cost on Saving and Time Deposits 700
400%
374%
350%
600
300%
500
250%
400
200% 300
165%
200 100 -
Retail, in 1Q-2016, accounted for 42.1% of the total operating income, as compared to 39.3% in 1Q-2015. Retail income showed a jump of 10.6%YoY. Corporate, with a fall of -2.1% YoY, declined in contribution from 35.2% to 30.9%. Earnings from corporate sector stood at SAR 6.57bn.
Al Rajhi Alinma
Q1-2015
IN Mn SAR
The highest jump in return on deposit was seen by Bank Albilad standing at 374%YoY.
0.70%
160% 120%
101%
97%
105%
128%
65%
43%
50% 22%
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
Q1-2015
150% 100% 95%
NCB
Riyad Samba SAAB Saudi SAIB Hollandi
Q1-2016
0%
% Change Source: Company Financials, Bloomberg
Lending rates 1.80% 1.53%
1.60% 1.40% 1.20%
1.21%
1.15%
1.08% 1.04%
1.17%
1.15% 1.08% 1.10% 1.03% 1.12%
1.07%
1.00% 0.80%
NCB with an operating income of SAR 4.7bn, contributed 22.5% to the total 1Q-2016 sectors earnings, followed by Alrajhi with earnings of SAR 3.7bn, contributing 17.7% to the sectors earnings.
0.60% 0.40% 0.20% 0.00%
1.21% 1.09% 0.99% 0.95% 1.12% 0.94% 1.59% 1.03% 0.95% 0.94% 0.97% 1.02% Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
Q1-2015
Company-wise Operating Income
NCB
Riyad
Samba
SAAB
Saudi SAIB Hollandi
Q1-2016
Operating Income Breakdown
5,000 4.8%
In MN SAR
4,000
3.3%
3,000
20.0% 17.7%
Retail 39.3% 42.1%
2,000 Q1-2016 1,000 -
Q1-2015
5.3% 4.0%
Corporate Treasurey Investment Services and Brokerage
Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
NCB
Riyad
Samba SAAB
Saudi SAIB Hollandi
(1,000) Retail
Corporate
Treasurey
Investment Services and Brokerage Others
30.9%
Others
32.5%
Source: Company Financials
6
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RESEARCH DIVISION
Acting Head of Research
Talha Nazar +966 11 2256115 [email protected]
+966 11 2256374 [email protected]
Analyst
Jassim Al-Jubran +966 11 2256248 [email protected]
Waleed Al-jubayr +966 11 2256146 [email protected]
BROKERAGE AND INVESTMENT CENTERS DIVISION RESEARCH DIVISION
Sultan Al Kadi
Analyst
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment Centers & ADC
sales
brokerage
Brokerage
Alaa Al-Yousef
Luay Jawad Al-Motawa
Abdullah Q. Al-Misbani
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
+966 12 6618400 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
Central Region
Abdullah Al-Rahit
Sultan Ibrahim AL-Mutawa
+966 16 3617547 [email protected]
+966 11 2256364 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
2. 3. 4.
Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Asset Management | Brokerage | Corporate Finance | Custody | Advisory Head Office: King Fahad Road, P.O. Box: 20438, Riyadh 11455, Saudi Arabia، Tel: 011 2256000 - Fax: 011 2256068
Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
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Saudi Banking Sector - 1Q-2016 The Saudi banking sector’s balance sheet in 1Q-2016 stood at SAR 2,225bn, depicting a jump of 2.8%YoY and 0.7%QoQ. Total loans weighed in at 65.5% of the total assets, whereas deposits accounted for 85% of total liabilities. The banking sector balance sheet has grown at a 10-year CAGR of 11.3%.
Saudi banking Sector Balance Sheet Growth-1Q-2016
Saudi banking Sector Balance Sheet Growth 2,500
30%
10%
2,500
9% 25%
2,000
7%
15% 1,000
In Bn SAR
In Bn SAR
20% 1,500
8%
2,000
6%
1,500
5% 4%
1,000
3%
10% 500
-
5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Saudi Banking Assets-LHS % Growth-RHS
0%
Banking Sector-Assets Breakdown-1Q-2016
2%
500
1% -
Q1-2015
0%
Q1-2016
Saudi Banking Assets-LHS
% Growth (YoY)-RHS
Banking Sector- Liabilities & Capital Breakdown-1Q-2016
2%
1% 4%
3%
9%
7% Cash In Vault 10%
Deposits with SAMA
Deposits
14%
SAMA Bills Foreign Assets 13%
Loans to Private Sector
Foreign Liabilities 3% Capital accounts
Loan to Gov & Quasi-Gov Fixed Assets
Other Liabilities
74%
OtherAssets
60%
Source: SAMA
The Saudi banking sector has a total of 12 listed banks and other non-listed banks. In term of balance sheet size, National Commercial Bank (NCB), with assets of over SAR 453.3bn is the biggest bank in the Kingdom, accounting for 20.6% of the total market, followed by Alrajhi bank with an assets base of SAR 323.3bn (14.7% of market share). Samba and Riyadh Bank both account for more than 10% each of the total banking assets. Out of the total 12 banks, 4 banks namely Bank Alrajhi, Bank Alinma, Bank Albilad and Bank Aljazira are Shariah compliant banks, accounting for 24.3% of the total banking assets. Alrajhi is the biggest Shariah compliant bank in the Kingdom, controlling almost 60.4% of the total market share.
Total Banking Asset Market Share-1Q-2016 4%
NCB
3% 2%
4%
Samba
21%
Riyad
8% 15%
Al Rajhi
Saudi Fransi
Alinma
ANB
SAIB 11%
12%
SAAB
Saudi Hollandi
8%
10%
10%
Al Rajhi
5%
9%
Sharia Compliant Banks Assets Market Share-1Q-2016
Aljazira 17%
61%
Albilad
Alinma Aljazira Albilad Source: Bloomberg
Acting Head of Research
Talha Nazar +966 11 2256115 [email protected]
1
© All rights reserved
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
Deposits
Please read Disclaimer on the back
Deposits Growth
The Saudi banking deposits have grown steadily along with
1,800
the growth in the money supply. Deposits and Money supply
1,600
showed 10 Year CAGR of 10.5% and 10.4% respectively. Deposit
1,200
in 1Q-2015, depicting a fall of -0.59%YoY. The fall in deposits
20%
1,400 In Bn SAR
in 1Q-2016 stood at SAR 1.61tn, as compared to SAR 1.62tn
25%
15%
1,000
10%
800 600
is primarily due to the drawdown by the government as it has
400
looked to balance its budget deficit. Demand deposits in 1Q-
0
200
-5%
Out of the total deposit, demand deposit account for 61.2% of
Deposits-LHS
the total deposits, whereas time and savings deposit account
Deposit Growth-1Q-2016
for only 25.6% of the total deposits.
Money Supply(M3)-LHS
% Growth in deposits-RHS
1,800
In case of time and Savings deposits nearly 54.4% are held
8.00%
1,200 Bn SAR
individuals whereas the rest 6.9% are held by the government.
10.00%
9.81%
1,400
of the total deposits are held by individuals,21% are held by
93.1% of the demand deposits are held by business and
12.00%
1,600
A further breakdown of the deposits show that almost 77% government entities.
1,000
6.00%
800
4.00%
600
2.00%
400 200
-0.59%
-
Q1-2015
0.00% -2.00%
Q1-2016
by business and individuals, whereas 45.6% are held by
Demand-LHS
Time & Savings-LHS
government entities.
Quasi-Monetary-LHS
% Growth (YoY)-RHS
Demand Deposits Break Down
0%
19 9 19 4 9 19 5 9 19 6 9 19 7 9 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 0 20 4 0 20 5 0 20 6 0 20 7 0 20 8 0 20 9 1 20 0 11 20 1 20 2 13 20 1 2 4 Q1 015 -2 01 6
2016 stood at SAR 985.3bn showing a fall of -6.2%YoY.
5%
Yellow dotted Line Show YoY fall in 1Q-2016 Deposits
Deposits Break Down
7%
13.1%
Business and Individuals Government Entities
Demand 25.6%
Time & Savings 61.2%
Quasi-Monetary
93%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 21%
46%
Business and Individuals
Business and Individuals 54%
Government Entities Others
Government Entities
77%
Source: SAMA
2
© All rights reserved
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
Deposit-Banks break down
Please read Disclaimer on the back
Bank Deposits Growth
National Commercial bank with a deposit base of SAR 326bn is the largest bank , followed by bank AlRajhi with a deposit base of SAR 265bn.
400
20.0%
350
which during 1Q-2016 posted growth of 16.0% YoY, improving
10.0%
11.5%
250
The highest growth in deposits was witnessed by Bank Albilad,
9.7%
200
100 50
grew its deposit base by 11.5%YoY, resulting in an improved
-
1.5% 0.0%
1.7%
0.1%
-5.0%
-5.6% -4.9% Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
1Q-2015
NCB
Riyad Samba SAAB
1Q-2016
Saudi SAIB Hollandi
-10.0%
% Growth
Deposits Market Share Comparison
losing market share form 20.5% to 19.4% in the same time period.
2.6% 2.3% 3.0% 3.0% 4.1% 3.7% 4.2% 4.2% 5.1% 4.7%
Albilad Aljazira
Bank Alrajhi the 2nd biggest bank and the largest shariah
Saudi Hollandi
compliant bank showed a decline of 1.4%YoY,in 1Q-2016, in its
Alinma SAIB
deposit base, whereas its market share stood at 15.8%. Saudi Hollandi Bank with a growth in deposit of 9.7%YoY in 1Q-
1.8%
0.6%
-1.4%
market share of 4.1%
deposit base, as it fell from SAR 343bn to SAR 326bn in 1Q-2016,
5.0%
6.1%
150
its market share from 2.3% to 2.6%. Followed by Alinma which
National Commercial bank showed a decline of 4.9%YoY in its
15.0%
16.0%
300
1Q-2016 1Q-2015 7.9% 7.8% 8.4% 9.0% 9.0% 8.9% 9.8% 9.9% 10.6% 10.1%
ANB Saudi Fransi SAAB Riyad
2016, improved its market share from 4.7% to 5.1%
Samba
15.8% 16.1%
Al Rajhi
Saudi Fransi showed the biggest drop of 5.6%YoY in deposits
19.4% 20.5%
NCB
standing at SAR 142bn, Fransi’s market share dropped to 8.4%
0.0%
5.0%
10.0%
15.0%
in 1Q-2016 from 9.0% in 1Q-2015
20.0%
25.0%
Source: Company Financials, Bloomberg
Loans
Loans Growth
The Saudi banking sector total loan book towards the end of
1,600
1Q-2016, stood at SAR 1.41tn, depicting a jump of 9.8%YoY. Till
1,400
2015, the sector loans book registered a 10 year CAGR of 11.6%.
1,200
1 year. However, loans with maturity of between 1 to 3 years
35% 30% 25%
1,000
In Bn SAR
Almost 56% of the loans extended have a maturity of less than
40% Dotted Lines show 1Q-2016 growth As compared to 1Q-2015
20%
800
15%
600
10%
posted a strong growth of 18.9%, increasing its share from
400
18.6% in 1Q-2015 to 21.5% in 1Q-2016.
5%
200
0%
0
The high concentration of short term loans in a rising interest rate
2005
2006
2007
2008
environment make it easier for the bank to re price its new loans.
Loans Maturity- Growth
Loans
2011
2012
2013
2014
2015 Q1-2016
-5%
% Growth-RHS
100%
1,400
90%
1,200 382
1,000 In Bn SAR
2010
Loans Share According to Maturity Profile
1,600
800
400
th Grow 2.2%
390
80%
30%
30%
70%
239
th Grow % 18.9
284
661
th Grow % 11.0
734
600
60%
22%
18.6%
50% 40% 30%
56%
52%
20% 10%
200 -
2009
0% Q1-2015 Less than 1 Year
Q1-2016 1 to 3 Years
Over 3 Years
Q1-2015 Less than 1 Year
Q1-2016 1 to 3 Years
Over 3 Years Source: SAMA
3
© All rights reserved
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
Loans Break Up
Please read Disclaimer on the back
Sector wise Loans Distribution
The sector’s largest borrower is the commerce sector. In 1Q-
12.1%
2016 lending to commerce sector accounted for 21.4% of the total loans. Followed by the manufacturing sector which
Manufacturing
8%
Construction
accounted for 12.1% of the total loans.
Commerce
Retail Loans
Services
50% 21.4%
Gov & Quasi Gov
The sectors retail loans (does not include Real estate financing,
Miscellaneous
Finance leasing and Financing against shares (Margin lending)) 5%
in 1Q-2016 stood at SAR 334bn, depicting a jump of 6.4% YoY, 2.2% QoQ. Home renovation is the biggest constituent of retail loans, accounting for almost 11.0% in 1Q-2016. Loans for vehicle financing accounted for 9.4% of the total retail loans. Out of the total retail loans, loans acquired through credit cards accounted for 3.1% of the total retail loans in 1Q-2016, a jump from 3.0% in 1Q-2015.
Real Estate Loans Real estate loans since 2009, has showed a 6 Year CAGR of
3%
Retail Loans-Break down 90.0%
83.4%
80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 8.2%
10.0% 0.0%
11.0%
8.5% 9.4%
Home Renovation
corporate sector accounted for 45.2% of the real estate loans.
Q1-2015
Q1-2016
80%
180
70%
witnessed a jump of 8.5%.
140 In Bn SAR
160
60%
120
50%
100
40%
80
30%
The sector biggest lender is National Commercial bank (NCB),
60
with a market share of 18.7% in 1Q-2016,this is an improvement
20
its loans market share
20%
40
10%
0
2010
2011
% Growth-Retail
2012
% Growth-Corporate
2013
2015. Alrajhi was the biggest loser in terms of its loans market share. Saudi Fransi accounted for 8.8% in 1Q-2016, a drop from 9.3% in 1Q-2015. Market share for Shariah compliant banks stood at 25.3% in 1Q2016, as compared to 25.6% in 1Q-2015. The drop was primarily
4
2.6% 2.3% 3.0% 3.2%
Albilad Aljazira
4.2% 4.2% 4.3% 4.3%
Alinma SAIB
8.2% 8.4% 8.8% 9.3% 9.1% 9.3% 9.4% 9.8% 10.7% 10.6%
ANB Saudi Fransi SAAB Samba
drop in its market share in 1Q-2016. Bank Albilad was the only
NCB 0.0%
Q1-2016 Q1-2015
5.5% 5.2%
Saudi Hollandi
Riyad
© All rights reserved
Retail
Corporate
Bank Market Share
Al Rajhi
2.3% in 1Q-2015 to 2.6% in 1Q-2016.
0%
2015
Source: SAMA
due to bank Alrajhi, which as mentioned earlier showed a shariah compliant bank, which improved its market share from
2014
% Growth-Total
Followed by Alrajhi, with a market share of 15.3% in Q1-2016, Alrajhi has shown a drop in its market share from 15.9% in 1Q-
Credit Cards/ Total Retail Loans
200
2015, stood at 54.1% YoY, as compared to retails sector, which
from 17.5% in 1Q-2015. NCB was also biggest gainer in terms of
Others
Real Estate Loans
However, corporate sector real estate loans growth in 4Q-
Bank Market Share in Loans
3.0% 3.1%
Vehicles
21.3%, standing at SAR 171.1bn in 2015. In 4Q-2015, retail sector accounted for 54.8% of total real estate loans, whereas
Credit Card Includes Retail Loans, acquired through credit cards
79.6%
2.0%
4.0%
6.0%
15.3% 15.9%
18.7% 17.5%
8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
NCB with a growth of 16.7%YoY in its gross loans was the second best performer. Saudi Fransi showed the lowest growth of 3.5%YoY in its gross loans, followed by Bank Aljazira with witnessed a growth of 4.9% YoY .
Bank Loans Distribution 300
30%
27.8%
25%
250 200 In Bn SAR
Bank Albilad showed the strongest growth in its loan book as it registered an increase of 27.8%YoY in 1Q-2016, which as mentioned earlier helped it in gaining more market share.
Please read Disclaimer on the back
16.7%
20%
16.5%
15%
150 10%
9%
100
5%
50 -
Shariah compliant banks showed a cumulative growth of 8.1%YoY, in Q1-2016, in its gross loans.
Al Rajhi Alinma ANB
9%
8%
7%
6%
3.5%
Albilad Aljazira Saudi Fransi
Q1-2015
4.9%
Q1-2016
NCB
10% 5%
Riyad Samba SAAB
Saudi SAIB Hollandi
0%
% growth
Non-Performing Loans
Alinma and SAIB with 0.7% NPL ratio, are best in the industry, Alinma and SAIB has NPL coverage of 178% and 211% respectively in 1Q-2016. However, its should be noted that Alinma showed a drop in its NPL coverage which in 1Q-2015 stood at 205% Bank Albilad has the highest NPL ratio of 1.6%, however its NPL coverage ratio stood at 176% in 1Q-2016.
Performing Loans to NPLs 300 250
1.6%
1.6% 1.37%
150
1.0%
-
1.0% 0.8%
0.8%
0.72% 0.6% 0.2%
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
NCB
Riyad Samba SAAB
Performing Loans-Q1-2016
Non-performing Loans-Q1-2015
NPLs-Industry Average Q1-2016
NPLs-Industry Average Q1-2015
100%
© All rights reserved
0.9%
0.4%
Advances to Deposit Ratio
It should be noted that SAMA ( Saudi Arabian Monetary Agency) increased the regulatory ADR limit from 85% to 90%.
1.2% 1.1% 1.1%
50
ADR ratio
Riyadh bank had the highest ADR of 93.6% in 1Q-2016, whereas Samba has the lowest ADR of 76% in 1Q-2016 as compared to 77% in 1Q-2015.
1.4%
0.70%
Alrajhi showed the biggest drop in its NPL coverage ratio, as it went down from 205% in 1Q-2015 to 163% in 1Q-2016.
The industry ADR ratio showed an improvement in Q1-2016 as it stood at 86.3% as compared to 79.2% in 1Q-2015. The jump in ADR is partially due to flattish growth of 0.5%YoY in deposits and 9.4%YoY increase in loans
NPLs-Industry Average Q1-2016 , 1.1% NPLs-Industry Average Q1-2015, 1.1%
1.5%
0.9% 0.9%
100
Arab Nationa Bank showed the greatest improvement in its NPL coverage as it improved from 225% in 1Q-2015 to 234% in 1Q-2016.
5
1.8%
200 In Bn SAR
The sector non-performing loans ratio in 1Q-2016 stood at 1.15% as compared to 1.12% in 1Q-2015. Whereas NPL coverage ratio improved to 181% in Q1-2016 from 170% in Q1-2015.
84%
89%
90%
87%
87%
Saudi SAIB Hollandi
% Share of NPLs-RHS
93.6%
90%
87%
83%
80%
0.0%
93%
89%
76%
60% 40% 20% 0%
Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
Q1-2016 ADR
NCB
Riyad
Samba
SAAB
Saudi SAIB Hollandi
Q1-2015 ADR Source: Company Financials
Saudi Banking Sector June 2016 Saudi Arabia | Quarterly Report | Q1-2016
Please read Disclaimer on the back
NIMs Under Pressure
NIMS
The sector as a whole saw a drop in its net interest margins.
1.00% 0.90%
Saudi Fransi’s NIMs at 0.43% were the lowest in the sector in Q12016, followed by Alrajhi as NIMs declined to 0.50%.The lowest fall was witnessed by Samba as its NIMs declined from 0.77% in 1Q-2015 to 0.7% in 1Q-2016. Overall the sector showed an increase of 81% on return on savings and time deposits.
0.80%
NCB reported the highest cost of SAR 802mn on savings deposit, as compared to SAR 656mn, depicting a jump of 22.3%. NCB recorded the highest return on time and savings deposit with 0.84%.
0.10%
SAAB return on time and saving deposit, of 0.38% was lowest in the market, closely followed by Bank Alinma and Bank Albilad with returns of 0.39%.
Operating Income Breakdown The sector in 1Q-2016 posted operating income of SAR 20.8bn against SAR 20.2bn in 1Q-2015, depicting a jump of 3.2% YoY.
0.60% 0.50% 0.40% 0.30% 0.20% 0.00%
Treasury and Investment income showed a decline of -8.7%YoY and -13.9%YoY. Other income showed an increase of 63.0%YoY.
ANB
Albilad Aljazira Saudi Fransi
NCB
Riyad
Samba
SAAB
Saudi SAIB Hollandi
Q1-2016
Absolute Cost on Saving and Time Deposits 700
400%
374%
350%
600
300%
500
250%
400
200% 300
165%
200 100 -
Retail, in 1Q-2016, accounted for 42.1% of the total operating income, as compared to 39.3% in 1Q-2015. Retail income showed a jump of 10.6%YoY. Corporate, with a fall of -2.1% YoY, declined in contribution from 35.2% to 30.9%. Earnings from corporate sector stood at SAR 6.57bn.
Al Rajhi Alinma
Q1-2015
IN Mn SAR
The highest jump in return on deposit was seen by Bank Albilad standing at 374%YoY.
0.70%
160% 120%
101%
97%
105%
128%
65%
43%
50% 22%
Al Rajhi Alinma ANB
Albilad Aljazira Saudi Fransi
Q1-2015
150% 100% 95%
NCB
Riyad Samba SAAB Saudi SAIB Hollandi
Q1-2016
0%
% Change Source: Company Financials, Bloomberg
Lending rates 1.80% 1.53%
1.60% 1.40% 1.20%
1.21%
1.15%
1.08% 1.04%
1.17%
1.15% 1.08% 1.10% 1.03% 1.12%
1.07%
1.00% 0.80%
NCB with an operating income of SAR 4.7bn, contributed 22.5% to the total 1Q-2016 sectors earnings, followed by Alrajhi with earnings of SAR 3.7bn, contributing 17.7% to the sectors earnings.
0.60% 0.40% 0.20% 0.00%
1.21% 1.09% 0.99% 0.95% 1.12% 0.94% 1.59% 1.03% 0.95% 0.94% 0.97% 1.02% Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
Q1-2015
Company-wise Operating Income
NCB
Riyad
Samba
SAAB
Saudi SAIB Hollandi
Q1-2016
Operating Income Breakdown
5,000 4.8%
In MN SAR
4,000
3.3%
3,000
20.0% 17.7%
Retail 39.3% 42.1%
2,000 Q1-2016 1,000 -
Q1-2015
5.3% 4.0%
Corporate Treasurey Investment Services and Brokerage
Al Rajhi Alinma
ANB
Albilad Aljazira Saudi Fransi
NCB
Riyad
Samba SAAB
Saudi SAIB Hollandi
(1,000) Retail
Corporate
Treasurey
Investment Services and Brokerage Others
30.9%
Others
32.5%
Source: Company Financials
6
© All rights reserved
RESEARCH DIVISION
Acting Head of Research
Talha Nazar +966 11 2256115 [email protected]
+966 11 2256374 [email protected]
Analyst
Jassim Al-Jubran +966 11 2256248 [email protected]
Waleed Al-jubayr +966 11 2256146 [email protected]
BROKERAGE AND INVESTMENT CENTERS DIVISION RESEARCH DIVISION
Sultan Al Kadi
Analyst
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment Centers & ADC
sales
brokerage
Brokerage
Alaa Al-Yousef
Luay Jawad Al-Motawa
Abdullah Q. Al-Misbani
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
+966 12 6618400 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
Central Region
Abdullah Al-Rahit
Sultan Ibrahim AL-Mutawa
+966 16 3617547 [email protected]
+966 11 2256364 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
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Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Asset Management | Brokerage | Corporate Finance | Custody | Advisory Head Office: King Fahad Road, P.O. Box: 20438, Riyadh 11455, Saudi Arabia، Tel: 011 2256000 - Fax: 011 2256068
Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
