Saudi Banking Sector Saudi Banking Sector â 3Q2017 - Aljazira Capital
Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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Saudi Banking Sector – 3Q2017 In 3Q2017, the balance sheet of Saudi Arabia’s banking sector increased 1.5% YoY and decreased 0.4% QoQ to SAR 2,283bn. Total loans accounted for 74.3% of the total assets, whereas deposits formed 70.2% of the total liabilities. The banking sector’s balance sheet advanced at a 10-year CAGR of 8.6%.
Saudi banking Sector Balance Sheet Growth
2,000
30%
2,500
25%
2,000
20% In Bn SAR
1,500 15%
1.6%
1.5%
1.4% 1.2% 1.1%
1,500
1.0%
In Bn SAR
2,500
Saudi Banking Sector Balance Sheet Growth – 3Q-2017
0.8%
1,000
1,000
0.6%
10%
-
0.4%
500
500
0.2%
5%
2005
2006
2007
2008
2009
2010
2011
2012
Saudi Banking Assets-LHS
2013
2014
2015
2016 3Q 2017
0%
3Q-2016
0.0%
3Q-2017
Saudi Banking Assets-LHS
% Growth-RHS
Banking Sector – Assets Breakdown – 3Q-2017 1%
-
% Growth (YoY)-RHS
Banking Sector – Liabilities & Capital Breakdown – 3Q-2017
1% 5%
12%
5%
1%
11%
Cash In Vault Deposits with SAMA
11%
SAMA Bills
Deposits 15% Foreign Liabilities
Foreign Assets Loans to Private Sector
4%
Capital accounts
Loan to Gov & Quasi- Gov 70%
Fixed Assets 62%
Other Liabilities
OtherAssets Source: SAMA
The Saudi banking sector has 12 listed and other non-listed banks. In terms of balance sheet size, National Commercial Bank (NCB) (assets of more than SAR 444.7bn) is the largest in the Kingdom, accounting for 20.1% of the total market, followed by Al Rajhi Bank (asset base of SAR 338.0bn and 15.3% market share). Samba (asset base of SAR 228.9bn) and Riyadh Bank (total assets worth SAR 218.2bn) account for 10.3% and 9.8% of the total banking assets, respectively. Of the 12 banks, Al Rajhi Bank, Alinma Bank, Bank Albilad, and Bank AlJazira are Shariah-compliant and account for 26.2% of the total banking assets. Al Rajhi Bank is the largest Shariah-compliant bank in the Kingdom, accounting for 58.3% of the total market share in 3Q2017 (down from 59.2% in 2Q2017).
Market Share of Total Banking Assets – 3Q-2017 5%
NCB
3% 3%
11%
Al Rajhi
20%
5%
Asset Market Share of Shariah-compliant Banks – 3Q-2017
Samba Riyad
5%
Al Rajhi
12%
SAAB
Alinma
Saudi Fransi
7% 15% 9%
ANB 58%
Alawwal Bank SAIB
Albilad
Alinma 8%
10% 10%
Aljazira
19%
Aljazira Albilad Source: Bloomberg
Head of Research
Talha Nazar +966 11 2256250 [email protected]
1
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Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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Deposits Growth 1,600
at a 10-year CAGR of 9.0% and 9.1%, respectively. Total
1,400
deposits edged up 1.3% YoY to SAR 1.602tn in 3Q2017 from
1,200
20% 15%
1,000
In Bn SAR
SAR 1.582tn in 3Q2016.
25%
1,800
Saudi banking deposits and money supply rose steadily
Demand deposits advanced 3.8% YoY to SAR 977.8bn in
10%
800
5%
600 400
0%
200
3Q2017 compared with SAR 942.5bn in 3Q2016.
0
Of the total deposits, demand deposits account for 61.0% (up from 60.1% in 2Q2017), whereas time and savings deposits make up only 29.4%.
-5%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q 2017
Deposits
Deposits-LHS
Money Supply(M3)-LHS
% Growth in deposits-RHS
Deposit Growth – 3Q-2017
The breakdown of deposits shows 77.1% of the total deposits
1,800
are held by individuals and 21.3% by government entities.
1,600
Bn SAR
(down from 9.9% in 2Q2017).
1.0%
1,400
Businesses and individuals hold 91.0% of the demand deposits, while the government holds the remaining 9.0%
2.0%
1.3%
0.0%
1,200 1,000
-1.0%
800
-2.0%
600
With regard to time and savings deposits, businesses and
400
individuals hold nearly 52.9%, while government entities
200
hold 47.1% (down from 48.9% in 2Q2017).
-3.0% -4.0% -4.3%
-
3Q2016 Demand-LHS Quasi-Monetary-LHS
Demand Deposits Break Down
-5.0%
3Q2017 Time & Savings-LHS % Growth (YoY)-RHS
Deposits Break Down
9.9%
9.6%
Business and Individuals
Demand
29.4%
Time & Savings
Government Entities 60.1%
Quasi-Monetary
90.1%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 21.3%
47.1%
Business and Individuals Government Entities Others
Business and Individuals 52.9%
Government Entities 77.1%
Source: SAMA
2
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Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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Bank Deposits Growth
Deposits – Breakdown by Bank National Commercial Bank (deposit base of SAR 303bn) is the largest bank in Saudi Arabia, followed by Al Rajhi Bank
15.0%
350 300
-2.8% 12.8%
-0.9%
12.5%
10.0%
250
(deposit base of SAR 270bn).
200
Alinma bank recorded the highest growth (12.8% YoY) in
150
deposits and improved its market share to 5.3% in 3Q2017
100
from 4.7% in 3Q2016. Albilad Bank stood second, increasing the deposit base 12.5% YoY and market share to 2.8% in 3Q2017 from 2.5% in 3Q2016.
-4.2% -6.6%
0.0% -3.7%
-1.3%
-5.0%
50 0
Al Rajhi Alinma
ANB Albilad Aljazira Saudi Fransi
3Q2016
NCB
Riyad Samba SAAB
3Q2017
Alawwal SAIB Bank
-10.0%
% Growth
Deposits Market Share Comparison
in 3Q2017. Market share fell from 8.7% to 8.2% in 3Q2017.
Albilad
It was followed by Samba, which saw its deposits fall 4.2%
AlJazira
2.8% 2.5% 3.0% 3.0%
Alinma
in 3Q2017 from 10.5% in the previous corresponding period.
Alawwal Bank
3Q2017 3Q2016
4.3% 4.0% 5.3% 4.7% 4.9% 5.1%
SAIB
YoY to SAR 167bn, causing its market share to fall to 10.1%
7.8% 7.7% 8.2% 8.7% 9.4% 8.9% 9.5% 9.7% 10.1% 10.5%
ANB
Al Rajhi Bank, the largest Shariah-compliant bank, recorded
SAAB
a 0.9% YoY decline in deposit base and its market share
Saudi Fransi Riyad
remained unchanged at 16.4% in 3Q2017. Meanwhile,
Samba
NCB’s market share fell from 18.8% to 18.3% in 3Q2017 as its deposits witnessed a decline of 2.8% YoY.
-3.0%
0.2%
Saudi British Bank registered the biggest decline of 6.6% YoY in deposit base from SAR 144bn in 3Q2016 to SAR 135bn
6.9% 5.0%
5.6%
16.4% 16.4%
Al Rajhi NCB
18.9%
20.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Loans
18.3% 18.8%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials, Bloomberg
The total loan book of Saudi Arabia’s banking sector declined
Loans Growth
1.5% YoY to SAR 1.41tn toward the end of 3Q2017, registering
1,600
40%
a 10-year CAGR of 9.5%.
1,400
35%
a maturity of less than a year. Loans with a maturity of one to three years posted a decline of 5.9% YoY, due to which its share contracted from 19.1% in 3Q2016 to 18.3% in 3Q2017. High concentration of short-term loans in a rising interest rate
30% 25%
1,000 In Bn SAR
About 51.4% (up from 50.4% QoQ) of the loans extended have
1,200
20%
800
15%
600
10%
400
5%
200
environment makes it easy for banks to re-price new loans.
0
0% -5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q-2017
Loans
Loans Maturity- Growth
Loans Share According to Maturity Profile
1,600
100% 90%
1,400 415
In Bn SAR
1,200 1,000
273
800
Growth 3.0%
Declin -5.9% e
428
257
400
741
Decline -2.3%
80%
29.0%
30.4%
19.1%
18.3%
51.8%
51.4%
70% 60% 50% 40%
600 724
200 -
% Growth-RHS
30% 20% 10%
3Q-2017
3Q-2016 Less than 1 Year
1 to 3 Years
Over 3 Years
0%
3Q-2016 Less than 1 Year
3Q-2017 1 to 3 Years
Over 3 Years Source: SAMA
3
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Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
Loan Breakdown
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Sector wise Loans Distribution
The commerce sector is the largest borrower among all
11.9%
sectors, accounting for 22.7% of the total loans, followed
Manufacturing
by the manufacturing sector (11.9% of the total loans). The
7.4%
Construction
construction sector, which ranks third, witnessed a decline in
Commerce
49.6%
borrowing due to which its share fell from 8.0% in 3Q2016 to 7.4% in 3Q2017.
Services
22.7%
Retail Loans
Gov & Quasi Gov
The sector’s retail loans (excluding real estate financing,
3.3%
finance leasing, and financing against shares (margin lending) contracted 0.8% YoY (up 0.5% QoQ) to SAR 340.2bn in 2Q2017. Loans for vehicles are the biggest constituent of retail loans,
Retail Loans-Break down 90.0%
70.0%
renovation financing comprised 7.7% of the total retail loans.
60.0%
in 2Q2017, a jump from 3.0% in 2Q2016.
Real Estate Loans Starting 2Q2010, real estate loans registered a seven-year CAGR
80.7% 82.3%
80.0%
accounting for almost 10.0% in 2Q2017. Loans for home
Retail loans acquired through credit cards accounted for 3.1%
real estate loans, respectively.
40.0% 30.0% 20.0% 9.8%
10.0% 0.0%
9.5% 10.0%
7.7%
3.01% 3.13%
Home Renovation
Vehicles
2Q-2016
The market share of National Commercial bank (NCB), the sector’s biggest lender, marginally increased to 18.3% in
2Q-2017
60% 50%
200
In Bn SAR
to SAR 115.0bn. Loans in the corporate sector witnessed an
Market Share in Loans by Bank
40%
150
30% 100
20%
50 0
10%
2010
2011
% Growth-Retail
2012
2013
% Growth-Corporate
2014
2015
% Growth-Total
3Q2017 from 18.2% in 3Q2016. Al Rajhi Bank, with the second largest market share, advanced to 16.6% in 3Q2017 from 15.9% in 3Q2016. Alinma Bank was the second biggest gainer in terms of market share (after Al Rajhi Bank) in the loan market, while Riyad Bank was the biggest loser. Riyad Bank’s market share dropped to 10.0% in 3Q2017 from 10.6% in 3Q2016.
2.9% 3.0% 3.0% 2.6%
AlJazira Albilad SAIB Alawwal Bank Alinma
Samba
in 3Q2017 from 26.3% in 3Q2016, primarily led by Al Rajhi.
8.3% 8.1% 8.3% 8.8% 8.5% 9.0% 9.2% 9.3% 10.0% 10.6%
4
Riyad
Among other Shariah-compliant banks, Alinma’s market share
Al Rajhi
increased from 4.8% in 3Q2016 to 5.5% in 3Q2017. In addition,
NCB
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Corporate
0% Retail
Q32017 Q32016
4.3% 4.3% 5.0% 5.4% 5.5% 4.8%
ANB
Saudi Fransi
3.0% in 3Q2016 to 2.9% in 3Q2017.
2Q2017
Bank Market Share
The market share of Shariah-compliant banks rose to 28.0%
in 3Q2017. However, Bank AlJazira’s market share declined from
2016
Source: SAMA
SAAB
Bank Albilad’s market share grew from 2.6% in 3Q2016 to 3.0%
Credit Cards/ Total Retail Loans
250
108.3bn in 2Q2017, whereas retail loans advanced 6.3% YoY
2Q2017.
Others
Real Estate Loans
Real estate loans in the corporate sector rose 29.6% YoY to SAR
increase in growth from 14.4% YoY in 2Q2016 to 29.6% YoY in
Credit Card Includes Retail Loans, acquired through credit cards
50.0%
of 22.1% to SAR 223.4bn in 2Q2017. In 2Q2017, the retail and corporate sectors accounted for 51.5% and 48.5% of the total
Miscellaneous
5.1%
0.0%
2.0%
4.0%
6.0%
8.0%
16.6% 15.9%
18.3% 18.2%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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Of the 12 banks in the sector, four registered YoY increase in Bank Loans Distribution gross loans. 300 Albilad Bank’s loan book registered the strongest growth of 15.2% YoY in 3Q2017, helping it increase its market share. In Bn SAR
Alinma, with a 12.8% YoY jump in gross loans, was the second best performer. Alawwal Bank was the worst performer, with gross loans contracting 9.2% YoY in 3Q2017, followed by Riyad Bank (down 7.2% YoY). Arab National Bank posted the slowest growth in loans (0.5% YoY).
250
20.0%
-1.0%
15.2%
2.8%
12.8%
15.0% 10.0%
200 -3.2%
0.5%
150
-7.2%
5.0%
-6.8% -6.8%
-0.2% 0.0% -9.2%
-5.2%
100
-5.0%
50
-10.0%
-
Al Rajhi Alinma ANB
Shariah-compliant banks’ gross loans grew 6.4% YoY on average in 3Q2017.
Albilad Aljazira Saudi Fransi
3Q-2016
3Q-2017
NCB
Riyad Samba SAAB Alawwal SAIB Bank
-15.0%
% growth
Non-Performing Loans The sector’s non-performing loan ratio stood at 1.33% in Performing Loans to NPLs 3Q2017 compared with 1.14% in 3Q2016. The NPL coverage 300 NPLs-Industry Average ratio fell to 169% in 3Q2017 from 178% in 3Q2016. 4Q-2016 , 1.2%
3.00%
250
Alawwal Bank had the highest NPL ratio of 2.84% and its NPL coverage ratio stood at 138% in 3Q2017. Al Rajhi’s NPL coverage improved the most from 201% in 3Q2016 to 326% in 3Q2017, while Saudi Investment Bank posted the biggest drop in NPL coverage ratio from 196% in 3Q2016 to 90% in 3Q2017.
Advances-to-Deposit Ratio The industry ADR ratio fell to 87.1% in 3Q2017 from 88.1% in
200
100
1.00% 0.97%
0.88% 0.50%
ANB
NPLs-Industry Average 3Q-2017
NPLs-Industry Average 3Q-2016
ADR ratio 100.0%
60.0%
increased the regulatory ADR limit to 90% from 85%.
1.50%
0.00% Albilad Aljazira Saudi NCB Riyad Samba SAAB Alawwal SAIB Fransi Bank Performing Loans 3Q-2017 Non-performing Loans-3Q-2017 % Share of NPLs-RHS
Al Rajhi Alinma
Albilad Bank and Arab National posted the highest ADR’s of
Notably, the Saudi Arabian Monetary Agency (SAMA) had
1.4%
1.1%
0.73%
50
1.8%
1.98%
1.2%
1.1%
declined 0.5% YoY.
75.7% in 3Q2016.
1.79%
1.11%
0.99%
80.0%
recorded the lowest ADR of 73.6% in 3Q2017 compared with
2.50% 2.00%
150
3Q2016, as total gross loans declined 1.6% YoY and deposits
92.5% each, followed by Riyad Bank at 92.1% in 3Q2017. Samba
2.8%
NPLs-Industry Average 4Q-2015 , 1.1%
In Bn SAR
Al Rajhi and Samba, with NPL ratios of 0.73% and 0.88%, respectively, are leaders in the industry. The NPL coverage of Al Rajhi and Samba stood at 326% and 186%, respectively, in 3Q2017.
40.0%
92.5% 92.5% 88.4% 90.7%
87.1% 83.9% 84.9%
92.1%
89.1% 88.2% 87.5% 73.6%
85%
92% 91%
90%
87%
93%
85%
96%
89%
94%
94%
75.7%
20.0%
0.0%
Al Rajhi Alinma ANB
Albilad AlJazira Saudi NCB Riyad Fransi 3Q-2017 ADR 3Q-2016 ADR
Samba
SAAB Alawwal SAIB Bank
Source: Company Financials
5
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NIMS
NIMs
1.80%
Of the 12 banks, the net interest margin (NIM) of three banks decreased (up from two in 2Q2017). NCB recorded the greatest drop in NIM from 0.44% in 3Q2016 to 0.21% in 3Q2017, followed by Al Rajhi (0.60% to 0.45%). Alawwal Bank registered the largest increase in NIM (up 0.31%) to 0.83% in 3Q2017 from 0.52% in 3Q2016. Overall, the sector’s return on savings and time deposits decreased 19% YoY in 3Q2017 compared with 9% YoY decline in 2Q2017. NCB reported the highest cost of SAR 833mn on savings deposits in 3Q2017 compared with SAR 935mn in 3Q2016, a decrease of 11.0% YoY. Banque Saudi Fransi was the only bank to record a growth in return on deposit at 9.4% YoY.
1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00%
NCB
Riyad
Samba SAAB Alawwal SAIB Bank
3Q - 2017
Absolute Cost on Saving and Time Deposits 1,000
20%
900
10%
9%
800
0%
IN Mn SAR
700 600
- 6%
- 9%
500
- 10%
- 11%
- 11%
- 19%
400
- 25%
-30% - 34%
200
- 38%
- 38%
100
The sector’s operating income jumped 4.9% YoY to SAR 21.8bn in 3Q2017 from SAR 20.8bn in 3Q2016. Retail accounted for 45.6% of the total operating income in 3Q2017 compared with 44.4% in 3Q2016. Retail income increased 7.7% YoY. The corporate sector’s contribution declined 1.4% from 32.5% in 3Q2016 to 31.1% in 3Q2017. Earnings from the corporate sector stood at SAR 6.8bn (up 0.5% YoY). Treasury income rose 12.7% YoY and investment income increased 5.7% YoY. Meanwhile, other income declined 27.0% YoY. NCB, with operating income of SAR 4.5bn, contributed 20.6% to the total sector earnings in 3Q2017, followed by Al Rajhi’s contribution of 18.2% (earnings of SAR 4.0bn).
-
Riyad Samba SAAB Alawwal SAIB Bank % Change
Source: Company Financials, Bloomberg
Lending rates 3.00% 2.35%
2.50% 2.00%
1.63% 1.50%
1.33% 1.34%
1.25% 1.28%
1.33%
1.30%
1.41%
1.24%
1.37% 1.40%
1.00% 0.50% 0.00%
1.32% 1.31% 1.26% 1.25% 2.48% 1.15% 1.65% 1.22% 1.35% 1.24% 1.38% 1.38% Al Rajhi Alinma ANB
Albilad AlJazira Saudi Fransi
NCB
Riyad Samba SAAB Alawwal SAIB Bank
3Q-2017
Operating Income Breakdown
5,000
3Q 2016
4,500
3.3%
16.4%
3,500
3.5%
3.2%
4,000
In MN SAR
-40% -50%
Al Rajhi Alinma ANB Albilad AlJazira Saudi NCB Fransi 3Q-2016 3Q-2017
3Q-2016
Company-wise Operating Income
-10% -20%
- 28%
300
Operating Income Breakdown
Albilad AlJazira Saudi Fransi
3Q - 2016
NCB recorded the highest return on time and savings deposits at 1.42%, followed by Al Rajhi at 0.88%. Saudi British Bank’s return on time and saving deposits of 0.43% was the lowest in the market, followed by Samba (0.46%).
Al Rajhi Alinma ANB
Retail
2.5%
Corporate
17.6%
3,000 2,500
3Q 2017
2,000
45.6%
44.4%
Treasury
1,500 1,000 500 -
(500)
31.1% Al Rajhi Alinma
Retail
ANB
Corporate
Albilad AlJazira Saudi Fransi
Treasury
NCB
Riyad Samba
SAAB Alawwal SAIB Bank
Investment Services and Brokerage
Investment Services and Brokerage
32.5%
Others
Others Source: Company Financials
6
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RESEARCH DIVISION
Head of Research
RESEARCH DIVISION
BROKERAGE AND INVESTMENT CENTERS DIVISION
Talha Nazar
Sultan Al Kadi, CAIA
Analyst
Jassim Al-Jubran
+966 11 2256250 [email protected]
+966 11 2256374 [email protected]
Analyst
Analyst
Waleed Al-jubayr
Muhanad Al-Odan
+966 11 2256146 [email protected]
+966 11 2256115 [email protected]
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment
sales
brokerage
Centers
Alaa Al-Yousef
Luay Jawad Al-Motawa
Mansour Hamad Al-shuaibi
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
+966 11 2256248 [email protected]
+966 12 6618443 [email protected]
Central Region
Sultan Ibrahim AL-Mutawa
Abdullah Al-Rahit
+966 11 2256364 [email protected]
+966 16 3617547 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
2. 3. 4.
Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
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Saudi Banking Sector – 3Q2017 In 3Q2017, the balance sheet of Saudi Arabia’s banking sector increased 1.5% YoY and decreased 0.4% QoQ to SAR 2,283bn. Total loans accounted for 74.3% of the total assets, whereas deposits formed 70.2% of the total liabilities. The banking sector’s balance sheet advanced at a 10-year CAGR of 8.6%.
Saudi banking Sector Balance Sheet Growth
2,000
30%
2,500
25%
2,000
20% In Bn SAR
1,500 15%
1.6%
1.5%
1.4% 1.2% 1.1%
1,500
1.0%
In Bn SAR
2,500
Saudi Banking Sector Balance Sheet Growth – 3Q-2017
0.8%
1,000
1,000
0.6%
10%
-
0.4%
500
500
0.2%
5%
2005
2006
2007
2008
2009
2010
2011
2012
Saudi Banking Assets-LHS
2013
2014
2015
2016 3Q 2017
0%
3Q-2016
0.0%
3Q-2017
Saudi Banking Assets-LHS
% Growth-RHS
Banking Sector – Assets Breakdown – 3Q-2017 1%
-
% Growth (YoY)-RHS
Banking Sector – Liabilities & Capital Breakdown – 3Q-2017
1% 5%
12%
5%
1%
11%
Cash In Vault Deposits with SAMA
11%
SAMA Bills
Deposits 15% Foreign Liabilities
Foreign Assets Loans to Private Sector
4%
Capital accounts
Loan to Gov & Quasi- Gov 70%
Fixed Assets 62%
Other Liabilities
OtherAssets Source: SAMA
The Saudi banking sector has 12 listed and other non-listed banks. In terms of balance sheet size, National Commercial Bank (NCB) (assets of more than SAR 444.7bn) is the largest in the Kingdom, accounting for 20.1% of the total market, followed by Al Rajhi Bank (asset base of SAR 338.0bn and 15.3% market share). Samba (asset base of SAR 228.9bn) and Riyadh Bank (total assets worth SAR 218.2bn) account for 10.3% and 9.8% of the total banking assets, respectively. Of the 12 banks, Al Rajhi Bank, Alinma Bank, Bank Albilad, and Bank AlJazira are Shariah-compliant and account for 26.2% of the total banking assets. Al Rajhi Bank is the largest Shariah-compliant bank in the Kingdom, accounting for 58.3% of the total market share in 3Q2017 (down from 59.2% in 2Q2017).
Market Share of Total Banking Assets – 3Q-2017 5%
NCB
3% 3%
11%
Al Rajhi
20%
5%
Asset Market Share of Shariah-compliant Banks – 3Q-2017
Samba Riyad
5%
Al Rajhi
12%
SAAB
Alinma
Saudi Fransi
7% 15% 9%
ANB 58%
Alawwal Bank SAIB
Albilad
Alinma 8%
10% 10%
Aljazira
19%
Aljazira Albilad Source: Bloomberg
Head of Research
Talha Nazar +966 11 2256250 [email protected]
1
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Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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Deposits Growth 1,600
at a 10-year CAGR of 9.0% and 9.1%, respectively. Total
1,400
deposits edged up 1.3% YoY to SAR 1.602tn in 3Q2017 from
1,200
20% 15%
1,000
In Bn SAR
SAR 1.582tn in 3Q2016.
25%
1,800
Saudi banking deposits and money supply rose steadily
Demand deposits advanced 3.8% YoY to SAR 977.8bn in
10%
800
5%
600 400
0%
200
3Q2017 compared with SAR 942.5bn in 3Q2016.
0
Of the total deposits, demand deposits account for 61.0% (up from 60.1% in 2Q2017), whereas time and savings deposits make up only 29.4%.
-5%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q 2017
Deposits
Deposits-LHS
Money Supply(M3)-LHS
% Growth in deposits-RHS
Deposit Growth – 3Q-2017
The breakdown of deposits shows 77.1% of the total deposits
1,800
are held by individuals and 21.3% by government entities.
1,600
Bn SAR
(down from 9.9% in 2Q2017).
1.0%
1,400
Businesses and individuals hold 91.0% of the demand deposits, while the government holds the remaining 9.0%
2.0%
1.3%
0.0%
1,200 1,000
-1.0%
800
-2.0%
600
With regard to time and savings deposits, businesses and
400
individuals hold nearly 52.9%, while government entities
200
hold 47.1% (down from 48.9% in 2Q2017).
-3.0% -4.0% -4.3%
-
3Q2016 Demand-LHS Quasi-Monetary-LHS
Demand Deposits Break Down
-5.0%
3Q2017 Time & Savings-LHS % Growth (YoY)-RHS
Deposits Break Down
9.9%
9.6%
Business and Individuals
Demand
29.4%
Time & Savings
Government Entities 60.1%
Quasi-Monetary
90.1%
Times & Savings Deposit Break Down
Sector-wise Deposits 2% 21.3%
47.1%
Business and Individuals Government Entities Others
Business and Individuals 52.9%
Government Entities 77.1%
Source: SAMA
2
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Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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Bank Deposits Growth
Deposits – Breakdown by Bank National Commercial Bank (deposit base of SAR 303bn) is the largest bank in Saudi Arabia, followed by Al Rajhi Bank
15.0%
350 300
-2.8% 12.8%
-0.9%
12.5%
10.0%
250
(deposit base of SAR 270bn).
200
Alinma bank recorded the highest growth (12.8% YoY) in
150
deposits and improved its market share to 5.3% in 3Q2017
100
from 4.7% in 3Q2016. Albilad Bank stood second, increasing the deposit base 12.5% YoY and market share to 2.8% in 3Q2017 from 2.5% in 3Q2016.
-4.2% -6.6%
0.0% -3.7%
-1.3%
-5.0%
50 0
Al Rajhi Alinma
ANB Albilad Aljazira Saudi Fransi
3Q2016
NCB
Riyad Samba SAAB
3Q2017
Alawwal SAIB Bank
-10.0%
% Growth
Deposits Market Share Comparison
in 3Q2017. Market share fell from 8.7% to 8.2% in 3Q2017.
Albilad
It was followed by Samba, which saw its deposits fall 4.2%
AlJazira
2.8% 2.5% 3.0% 3.0%
Alinma
in 3Q2017 from 10.5% in the previous corresponding period.
Alawwal Bank
3Q2017 3Q2016
4.3% 4.0% 5.3% 4.7% 4.9% 5.1%
SAIB
YoY to SAR 167bn, causing its market share to fall to 10.1%
7.8% 7.7% 8.2% 8.7% 9.4% 8.9% 9.5% 9.7% 10.1% 10.5%
ANB
Al Rajhi Bank, the largest Shariah-compliant bank, recorded
SAAB
a 0.9% YoY decline in deposit base and its market share
Saudi Fransi Riyad
remained unchanged at 16.4% in 3Q2017. Meanwhile,
Samba
NCB’s market share fell from 18.8% to 18.3% in 3Q2017 as its deposits witnessed a decline of 2.8% YoY.
-3.0%
0.2%
Saudi British Bank registered the biggest decline of 6.6% YoY in deposit base from SAR 144bn in 3Q2016 to SAR 135bn
6.9% 5.0%
5.6%
16.4% 16.4%
Al Rajhi NCB
18.9%
20.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Loans
18.3% 18.8%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials, Bloomberg
The total loan book of Saudi Arabia’s banking sector declined
Loans Growth
1.5% YoY to SAR 1.41tn toward the end of 3Q2017, registering
1,600
40%
a 10-year CAGR of 9.5%.
1,400
35%
a maturity of less than a year. Loans with a maturity of one to three years posted a decline of 5.9% YoY, due to which its share contracted from 19.1% in 3Q2016 to 18.3% in 3Q2017. High concentration of short-term loans in a rising interest rate
30% 25%
1,000 In Bn SAR
About 51.4% (up from 50.4% QoQ) of the loans extended have
1,200
20%
800
15%
600
10%
400
5%
200
environment makes it easy for banks to re-price new loans.
0
0% -5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 3Q-2017
Loans
Loans Maturity- Growth
Loans Share According to Maturity Profile
1,600
100% 90%
1,400 415
In Bn SAR
1,200 1,000
273
800
Growth 3.0%
Declin -5.9% e
428
257
400
741
Decline -2.3%
80%
29.0%
30.4%
19.1%
18.3%
51.8%
51.4%
70% 60% 50% 40%
600 724
200 -
% Growth-RHS
30% 20% 10%
3Q-2017
3Q-2016 Less than 1 Year
1 to 3 Years
Over 3 Years
0%
3Q-2016 Less than 1 Year
3Q-2017 1 to 3 Years
Over 3 Years Source: SAMA
3
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Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
Loan Breakdown
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Sector wise Loans Distribution
The commerce sector is the largest borrower among all
11.9%
sectors, accounting for 22.7% of the total loans, followed
Manufacturing
by the manufacturing sector (11.9% of the total loans). The
7.4%
Construction
construction sector, which ranks third, witnessed a decline in
Commerce
49.6%
borrowing due to which its share fell from 8.0% in 3Q2016 to 7.4% in 3Q2017.
Services
22.7%
Retail Loans
Gov & Quasi Gov
The sector’s retail loans (excluding real estate financing,
3.3%
finance leasing, and financing against shares (margin lending) contracted 0.8% YoY (up 0.5% QoQ) to SAR 340.2bn in 2Q2017. Loans for vehicles are the biggest constituent of retail loans,
Retail Loans-Break down 90.0%
70.0%
renovation financing comprised 7.7% of the total retail loans.
60.0%
in 2Q2017, a jump from 3.0% in 2Q2016.
Real Estate Loans Starting 2Q2010, real estate loans registered a seven-year CAGR
80.7% 82.3%
80.0%
accounting for almost 10.0% in 2Q2017. Loans for home
Retail loans acquired through credit cards accounted for 3.1%
real estate loans, respectively.
40.0% 30.0% 20.0% 9.8%
10.0% 0.0%
9.5% 10.0%
7.7%
3.01% 3.13%
Home Renovation
Vehicles
2Q-2016
The market share of National Commercial bank (NCB), the sector’s biggest lender, marginally increased to 18.3% in
2Q-2017
60% 50%
200
In Bn SAR
to SAR 115.0bn. Loans in the corporate sector witnessed an
Market Share in Loans by Bank
40%
150
30% 100
20%
50 0
10%
2010
2011
% Growth-Retail
2012
2013
% Growth-Corporate
2014
2015
% Growth-Total
3Q2017 from 18.2% in 3Q2016. Al Rajhi Bank, with the second largest market share, advanced to 16.6% in 3Q2017 from 15.9% in 3Q2016. Alinma Bank was the second biggest gainer in terms of market share (after Al Rajhi Bank) in the loan market, while Riyad Bank was the biggest loser. Riyad Bank’s market share dropped to 10.0% in 3Q2017 from 10.6% in 3Q2016.
2.9% 3.0% 3.0% 2.6%
AlJazira Albilad SAIB Alawwal Bank Alinma
Samba
in 3Q2017 from 26.3% in 3Q2016, primarily led by Al Rajhi.
8.3% 8.1% 8.3% 8.8% 8.5% 9.0% 9.2% 9.3% 10.0% 10.6%
4
Riyad
Among other Shariah-compliant banks, Alinma’s market share
Al Rajhi
increased from 4.8% in 3Q2016 to 5.5% in 3Q2017. In addition,
NCB
© All rights reserved
Corporate
0% Retail
Q32017 Q32016
4.3% 4.3% 5.0% 5.4% 5.5% 4.8%
ANB
Saudi Fransi
3.0% in 3Q2016 to 2.9% in 3Q2017.
2Q2017
Bank Market Share
The market share of Shariah-compliant banks rose to 28.0%
in 3Q2017. However, Bank AlJazira’s market share declined from
2016
Source: SAMA
SAAB
Bank Albilad’s market share grew from 2.6% in 3Q2016 to 3.0%
Credit Cards/ Total Retail Loans
250
108.3bn in 2Q2017, whereas retail loans advanced 6.3% YoY
2Q2017.
Others
Real Estate Loans
Real estate loans in the corporate sector rose 29.6% YoY to SAR
increase in growth from 14.4% YoY in 2Q2016 to 29.6% YoY in
Credit Card Includes Retail Loans, acquired through credit cards
50.0%
of 22.1% to SAR 223.4bn in 2Q2017. In 2Q2017, the retail and corporate sectors accounted for 51.5% and 48.5% of the total
Miscellaneous
5.1%
0.0%
2.0%
4.0%
6.0%
8.0%
16.6% 15.9%
18.3% 18.2%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Source: Company Financials
Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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Of the 12 banks in the sector, four registered YoY increase in Bank Loans Distribution gross loans. 300 Albilad Bank’s loan book registered the strongest growth of 15.2% YoY in 3Q2017, helping it increase its market share. In Bn SAR
Alinma, with a 12.8% YoY jump in gross loans, was the second best performer. Alawwal Bank was the worst performer, with gross loans contracting 9.2% YoY in 3Q2017, followed by Riyad Bank (down 7.2% YoY). Arab National Bank posted the slowest growth in loans (0.5% YoY).
250
20.0%
-1.0%
15.2%
2.8%
12.8%
15.0% 10.0%
200 -3.2%
0.5%
150
-7.2%
5.0%
-6.8% -6.8%
-0.2% 0.0% -9.2%
-5.2%
100
-5.0%
50
-10.0%
-
Al Rajhi Alinma ANB
Shariah-compliant banks’ gross loans grew 6.4% YoY on average in 3Q2017.
Albilad Aljazira Saudi Fransi
3Q-2016
3Q-2017
NCB
Riyad Samba SAAB Alawwal SAIB Bank
-15.0%
% growth
Non-Performing Loans The sector’s non-performing loan ratio stood at 1.33% in Performing Loans to NPLs 3Q2017 compared with 1.14% in 3Q2016. The NPL coverage 300 NPLs-Industry Average ratio fell to 169% in 3Q2017 from 178% in 3Q2016. 4Q-2016 , 1.2%
3.00%
250
Alawwal Bank had the highest NPL ratio of 2.84% and its NPL coverage ratio stood at 138% in 3Q2017. Al Rajhi’s NPL coverage improved the most from 201% in 3Q2016 to 326% in 3Q2017, while Saudi Investment Bank posted the biggest drop in NPL coverage ratio from 196% in 3Q2016 to 90% in 3Q2017.
Advances-to-Deposit Ratio The industry ADR ratio fell to 87.1% in 3Q2017 from 88.1% in
200
100
1.00% 0.97%
0.88% 0.50%
ANB
NPLs-Industry Average 3Q-2017
NPLs-Industry Average 3Q-2016
ADR ratio 100.0%
60.0%
increased the regulatory ADR limit to 90% from 85%.
1.50%
0.00% Albilad Aljazira Saudi NCB Riyad Samba SAAB Alawwal SAIB Fransi Bank Performing Loans 3Q-2017 Non-performing Loans-3Q-2017 % Share of NPLs-RHS
Al Rajhi Alinma
Albilad Bank and Arab National posted the highest ADR’s of
Notably, the Saudi Arabian Monetary Agency (SAMA) had
1.4%
1.1%
0.73%
50
1.8%
1.98%
1.2%
1.1%
declined 0.5% YoY.
75.7% in 3Q2016.
1.79%
1.11%
0.99%
80.0%
recorded the lowest ADR of 73.6% in 3Q2017 compared with
2.50% 2.00%
150
3Q2016, as total gross loans declined 1.6% YoY and deposits
92.5% each, followed by Riyad Bank at 92.1% in 3Q2017. Samba
2.8%
NPLs-Industry Average 4Q-2015 , 1.1%
In Bn SAR
Al Rajhi and Samba, with NPL ratios of 0.73% and 0.88%, respectively, are leaders in the industry. The NPL coverage of Al Rajhi and Samba stood at 326% and 186%, respectively, in 3Q2017.
40.0%
92.5% 92.5% 88.4% 90.7%
87.1% 83.9% 84.9%
92.1%
89.1% 88.2% 87.5% 73.6%
85%
92% 91%
90%
87%
93%
85%
96%
89%
94%
94%
75.7%
20.0%
0.0%
Al Rajhi Alinma ANB
Albilad AlJazira Saudi NCB Riyad Fransi 3Q-2017 ADR 3Q-2016 ADR
Samba
SAAB Alawwal SAIB Bank
Source: Company Financials
5
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Saudi Banking Sector November 2017 Saudi Arabia | Quarterly Report | Q3-2017
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NIMS
NIMs
1.80%
Of the 12 banks, the net interest margin (NIM) of three banks decreased (up from two in 2Q2017). NCB recorded the greatest drop in NIM from 0.44% in 3Q2016 to 0.21% in 3Q2017, followed by Al Rajhi (0.60% to 0.45%). Alawwal Bank registered the largest increase in NIM (up 0.31%) to 0.83% in 3Q2017 from 0.52% in 3Q2016. Overall, the sector’s return on savings and time deposits decreased 19% YoY in 3Q2017 compared with 9% YoY decline in 2Q2017. NCB reported the highest cost of SAR 833mn on savings deposits in 3Q2017 compared with SAR 935mn in 3Q2016, a decrease of 11.0% YoY. Banque Saudi Fransi was the only bank to record a growth in return on deposit at 9.4% YoY.
1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00%
NCB
Riyad
Samba SAAB Alawwal SAIB Bank
3Q - 2017
Absolute Cost on Saving and Time Deposits 1,000
20%
900
10%
9%
800
0%
IN Mn SAR
700 600
- 6%
- 9%
500
- 10%
- 11%
- 11%
- 19%
400
- 25%
-30% - 34%
200
- 38%
- 38%
100
The sector’s operating income jumped 4.9% YoY to SAR 21.8bn in 3Q2017 from SAR 20.8bn in 3Q2016. Retail accounted for 45.6% of the total operating income in 3Q2017 compared with 44.4% in 3Q2016. Retail income increased 7.7% YoY. The corporate sector’s contribution declined 1.4% from 32.5% in 3Q2016 to 31.1% in 3Q2017. Earnings from the corporate sector stood at SAR 6.8bn (up 0.5% YoY). Treasury income rose 12.7% YoY and investment income increased 5.7% YoY. Meanwhile, other income declined 27.0% YoY. NCB, with operating income of SAR 4.5bn, contributed 20.6% to the total sector earnings in 3Q2017, followed by Al Rajhi’s contribution of 18.2% (earnings of SAR 4.0bn).
-
Riyad Samba SAAB Alawwal SAIB Bank % Change
Source: Company Financials, Bloomberg
Lending rates 3.00% 2.35%
2.50% 2.00%
1.63% 1.50%
1.33% 1.34%
1.25% 1.28%
1.33%
1.30%
1.41%
1.24%
1.37% 1.40%
1.00% 0.50% 0.00%
1.32% 1.31% 1.26% 1.25% 2.48% 1.15% 1.65% 1.22% 1.35% 1.24% 1.38% 1.38% Al Rajhi Alinma ANB
Albilad AlJazira Saudi Fransi
NCB
Riyad Samba SAAB Alawwal SAIB Bank
3Q-2017
Operating Income Breakdown
5,000
3Q 2016
4,500
3.3%
16.4%
3,500
3.5%
3.2%
4,000
In MN SAR
-40% -50%
Al Rajhi Alinma ANB Albilad AlJazira Saudi NCB Fransi 3Q-2016 3Q-2017
3Q-2016
Company-wise Operating Income
-10% -20%
- 28%
300
Operating Income Breakdown
Albilad AlJazira Saudi Fransi
3Q - 2016
NCB recorded the highest return on time and savings deposits at 1.42%, followed by Al Rajhi at 0.88%. Saudi British Bank’s return on time and saving deposits of 0.43% was the lowest in the market, followed by Samba (0.46%).
Al Rajhi Alinma ANB
Retail
2.5%
Corporate
17.6%
3,000 2,500
3Q 2017
2,000
45.6%
44.4%
Treasury
1,500 1,000 500 -
(500)
31.1% Al Rajhi Alinma
Retail
ANB
Corporate
Albilad AlJazira Saudi Fransi
Treasury
NCB
Riyad Samba
SAAB Alawwal SAIB Bank
Investment Services and Brokerage
Investment Services and Brokerage
32.5%
Others
Others Source: Company Financials
6
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RESEARCH DIVISION
Head of Research
RESEARCH DIVISION
BROKERAGE AND INVESTMENT CENTERS DIVISION
Talha Nazar
Sultan Al Kadi, CAIA
Analyst
Jassim Al-Jubran
+966 11 2256250 [email protected]
+966 11 2256374 [email protected]
Analyst
Analyst
Waleed Al-jubayr
Muhanad Al-Odan
+966 11 2256146 [email protected]
+966 11 2256115 [email protected]
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment
sales
brokerage
Centers
Alaa Al-Yousef
Luay Jawad Al-Motawa
Mansour Hamad Al-shuaibi
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
+966 11 2256248 [email protected]
+966 12 6618443 [email protected]
Central Region
Sultan Ibrahim AL-Mutawa
Abdullah Al-Rahit
+966 11 2256364 [email protected]
+966 16 3617547 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
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Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
Asset Management | Brokerage | Corporate Finance | Custody | Advisory Head Office: King Fahad Road, P.O. Box: 20438, Riyadh 11455, Saudi Arabia، Tel: 011 2256000 - Fax: 011 2256068
Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
