Saudi Press

Saudi Arabia and the world
Friday, Mar 29, 2024

Al Rajhi’s share jump isn’t just another TASI rally

Al Rajhi’s share jump isn’t just another TASI rally

When the Saudi stock market index sees a rally, usually most shares get an increase in value. However, this isn't the case for Al Rajhi Bank.
Al Rajhi Bank, whose shares on Sunday recorded their highest level since April 2006 at SR135.20 ($36.05), is in a league of its own among all Gulf Cooperation Council Islamic or Shariah-compliant banks.

"Al Rajhi Bank has been showing significant earning growth (double digit) despite the negative impact of economic lockdown last year, and many analysts still see the double digit growth continuing this year which explains the rise of the stock price ahead of the third quarter earnings announcement,” Mohammed Al-Suwayed, CEO of Razeen Capital told Arab News.

Islamic banks and conventional banks usually have almost the same quality of assets in the GCC; non-performing loans (NPL) ratio in Islamic banks was 3.5 percent in 2020 compared to the slightly higher 3.8 percent for conventional ones according to S&P Global. This also applies to the coverage ratio. Thus, differences between the two types of banks as a whole are sometimes brushed off.

However, the Islamic Al Rajhi Bank has been experiencing a solid and steady performance compared to other banks in the Kingdom and the region as a whole. These strong fundamentals probably helped in its share’s jump to the highest price in more than 15 years.

In terms of the value of total assets, It is the largest Islamic bank in the Gulf region. As of June 30 2021, its total assets were valued at more than $146 billion which is also the fifth largest in the region when we include conventional banks in the comparison.

S&P Global Ratings predicts the bank’s NPL ratio to be 0.69 percent by the end of 2021.

The bank’s selective process in providing loans means this is less than half of the other Saudi banks’ readings and the lowest among Saudi and other GCC countries where data were available: Kuwait, Qatar and the UAE.

The bank’s return on assets ratio is similarly strong, forecast to be 2.32 percent for 2021 — higher than all of its competitors in both the Kingdom and the region.

Not all the numbers are as positive, however. Al Rajhi did not have the best cost metric in 2019 and 2020.

But it is still expected to have the lowest ratio in the Kingdom in 2021, with S&P projecting it to be just 0.71 percent by the end of the year. This is marginally lower than other Saudi banks.

Al Rajhi shares traded with price-to-book value of 5, the highest multiple among Saudi bank stocks, analysts at KAMCO Invest pointed out in a report covering the GCC banking sector in Q2 2021.

For example, Saudi National Bank shares traded with price-to-book multiple of 1.8, Riyad Bank 1.8, Saudi British Bank 1.3, Banque Saudi Fransi 1.4, Alinma Bank 1.7.

Al Rajhi stock traded with a dividend yield of 2.3 percent compared to 2.2% for Saudi National Bank.

Its shares strongly outperformed the rest of Saudi banks in terms of growth since the beginning of 2021 till end of June.

The stock grew by 67 percent compared to 40 percent for Alinma, the second best performing banking stock at the time, according to KAMCO invest.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Reports in Gaza: 5 dead from the impact of aid packages dropped by the USA
Apple warns against drying iPhones with rice
China Criticizes US for Vetoing UN Ceasefire Resolution in Gaza
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
The U.S. vetoed a U.N. Security Council resolution calling for a temporary ceasefire in Gaza, instead proposing its own six-week ceasefire plan contingent upon the release of all hostages held by Hamas
Prince William Urges End to Gaza Conflict
Saudi Arabia ranks first in UN index for e-government services in MENA
Israel has gone ‘beyond self-defence’ in Gaza, says Labour’s Streeting
EU Calls for Immediate Ceasefire in Gaza Conflict
Israel Records 20% Drop In GDP, War In Gaza Is The Reason
Saudi Arabia's FDI Inflows Grow with New International Standards
Venture Capitals Power Up Across MENA Region
Saudi Arabia Introduces Terms for 30-Year Income Tax Exemption for Multinational Companies
Saudi FM: Establishing Palestinian state is only pathway for Mideast stability
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
Elon Musk's Starlink Gets License For Israel, Parts Of Gaza
Influencers Exploit X Platform for Profit Amidst Israel-Gaza Conflict
PM Modi Announces Opening Of New CBSE Office In Dubai
International Criminal Court's Chief "Deeply Concerned" By Rafah Bombing
January Funding for MENA Startups Totals $86.5 Million
Saudi Arabia accelerates digital economy growth through Nvidia partnership
Indian female military officers commend Saudi Arabia's progress and women's empowerment
Israel unveils tunnels underneath Gaza City headquarters of UN agency for Palestinian refugees
Israel deploys new military AI in Gaza war
Egypt threatens to suspend key peace treaty if Israel pushes into Gaza border town, officials say
Israel Utilizes AI Military Technology in Gaza Conflict
Saudi Arabia Warns Of A "Humanitarian Catastrophe" If Israel Moves On Rafah
China Warns Iran to Halt Houthi Attacks or Damage Trade Ties
US University To Shut Qatar Campus Due To "Heightened Mideast Instability"
Iran-backed hackers interrupt UAE TV streaming services with deepfake news
Facebook and Instagram Ban Iran's Supreme Leader
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
U.S. Secretary of State Blinken: The Israelis underwent dehumanization on 7.10, this does not give them the right to do this to others.
Defense Technology Showcase Held in Riyadh
Saudi Arabia’s non-oil exports rise 2.5% to $6bn in November 2023: GASTAT
UK Bans Misleading "Zero Emissions" Claims for Electric Cars
Gaza's Teen Inventor Sparks Light in Displacement
Netanyahu Rejects Ceasefire Proposal, Insists On Total Victory Over Hamas
Guterres appoints independent UNRWA review panel
Private Sector Employment Hits Record High with Over 11 Million Employees in January
Rolls-Royce Executive Encourages Saudi Women to Tap into Their Inner 'Superhero' for Success in Defense Industry
Saudi Arabia launches National Academy of Vehicles and Cars
Saudi Tourism Minister Reveals Plan for 250,000 New Hotel Rooms by 2030
SAR to more than double eastern network passenger capacity with new trains deal
Saudi Arabia Enhances National Defense with New Partnerships
Saudi Aramco Maintains Arab Light Crude Pricing to Asia for March
NEOM Establishes New York Office to Support Investors
Saudi Wealth Fund Draws in Over $25 Billion Worth of Investments in Three Years, Al-Rumayyan Reveals
ZATCA Cautions Against Scammer Schemes
INTRA Defense Technologies inaugurates drone factory in Riyadh
×