Saudi Banking Sector Q1

Quarterly Report 2022

Head of Sell-Side Research

Jassim Al-Jubran
+ 966 11 2256248
j.aljabran@aljaziracapital.com.sa
 June 2022
Saudi Banking Sector
Quarterly Report | Q1-22

Banking sector advances- driven by favorable oil dynamics, rising interest rates, and an economic rebound.

The Saudi banking sector recorded a robust performance in Q1-22, driven by improvement in the macroeconomic
environment. Credit growth surged 14.8% Y/Y to SAR 2.16tn, while deposits expanded 9.4% Y/Y to SAR 2.17tn.

Banks geared to reap benefit of NIM expansions driven by rising interest rates: In Q1-22, the US Federal Reserve increased the interest
rate by 25bps to curb inflation that notched a 40-year high. Subsequently, in Q2-22 (May 2022), the Fed adopted a more aggressive approach
– it raised the interest rate further by 50bps, pushing the benchmark rate above 0.75%. Furthermore, given its hawkish stance to slow inflation
to 2.0% annually, the Fed is expected to implement another 50bps hike in June–July 2022. SAMA mirrored the Fed rate hike and increased
the Repo, and Reverse Repo rates by 50bps to 1.75% and 1.25%, respectively. We believe the rising rate scenario would favor the banking
sector as NIMs of most banks, especially corporate-focused banks, are likely to improve given the faster repricing of loans.

Rise in oil prices, upwardly revised GDP growth, and fast-paced spending on projects to favor sector: Spike in global energy prices
driven by a tight supply, owing to the ban on Russian oil by major consumers including the US and prospective ban by the EU, has favored
Saudi Arabia. The IMF raised its estimate for Saudi Arabia’s growth by three percentage points to 7.6% in FY22, reflecting an improvement
in both oil and non-oil sectors. The Kingdom’s project activity has rebounded, with megaprojects driving fast-paced development. Moreover,
project announcements doubled in Q1-22, and the project market expanded by 9.0% Y/Y. We believe this will play an important role in
boosting credit demand and liquidity. Financing rate (%)
7.0%
Digitization initiatives to support cost efficiencies: In Q1-22, 13 bank
branches and 81 ATMs closed down. A total of 76 bank branches and more 6.0%

than 650 ATM branches were shut down during March 2021–to March 5.0%

2022. In Q1-22, POS transactions via mobile transactions increased by

4.0%

more than 100.0% Y/Y, while e-commerce transactions via Mada cards
Q1-20

Q2-20

Q3-20

Q4-20

Q1-21

Q2-21

Q3-21

Q4-21

Q1-22

FY22

FY23
rose 92.5%. We believe this will enhance banks’ digitization initiatives; Al Rajhi Albilad Alinma

this, in turn, will boost the cost-to-income ratio going forward. Source: Company report, Aljazira Capital Research

Banking sector’s net profit surged 22.4% Y/Y to SAR 14.7bn in Q1-22. SNB was the top contributor (30.6%) to net income, as its net profit
surged 32.1% Y/Y to SAR 4,501.6mn in Q1-22. SAIB’s net profit went up 34.4% Y/Y to SAR 287.0mn in Q1-22, the highest growth rate
among its peers. Except Saudi British Bank (SABB), all banks recorded more than 10.0% rise in net profit. SABB recorded the lowest annual
increase of 3.3% at SAR 1,006.2mn in Q1-22.

Total banking deposits grew 9.4% Y/Y to SAR 2.17tn, while loans surged 14.8% Y/Y to SAR 2.16tn in Q1-22. Al Rajhi was the top performer
in loans, which rose 35.6% Y/Y, and SAIB was the top performer in deposits which rose 21.8% Y/Y. All banks in the sector recorded a rise in
deposits and loans in Q1-22. However, SABB recorded subdued growth in deposits (5.6% Y/Y), while SAIB registered the lowest rise of 8.2%
in loans among its peers. Total banking sector provisions declined 13.9% Y/Y to SAR 2.13bn in Q1-22. Al Rajhi posted the highest provision
of SAR 578mn in Q1-22, while SAIB recorded the lowest provision (SAR 38.0mn).

• Demand deposits drives growth in total deposits: Banking deposits went up 9.4% Y/Y to SAR 2.17tn in Q1-22. Growth is mainly
attributed to a 5.0% rise in demand deposits.

• Loan growth boosted by the miscellaneous sectors: Growth in loans remained robust (up 14.8% Y/Y to SAR 2.16tn in Q1-22), led
by 21.3% Y/Y increase in loans to the miscellaneous sectors.

• Average quarterly lending rate declines: The average quarterly lending rate dropped to 1.10% in Q1-22 from 1.16% in Q1-21. SNB
had the highest lending rate of 1.32%, while SABB posted the lowest lending rate of 0.87%.

• Average quarterly deposit rate remains stable: The average deposit rate edged up slightly at 0.40% in Q1-22 compared with 0.39%
in Q1-21. SNB had the highest quarterly deposit rate of 0.76%, while ANB posted the lowest deposit rate of 0.24%.

• NPL ratio improves: The average NPL ratio declined to 1.84% in Q1-22 from 2.18% in Q1-21. Al Rajhi had the lowest NPL ratio of
0.62%, while SABB posted the highest NPL ratio of 4.63%.

2 © All rights reserved

 June 2022
Saudi Banking Sector
Quarterly Report | Q1-22

Saudi Banking Sector – Q4-21

Balance Sheet

Saudi Banking Sector Asset Growth – Q1-22 Saudi Banking Sector Asset Growth – Q1-22
3,500 11.5%
4,000 30% 11.4%
11.0% Y/Y in Q1-22 3,000 11.4%
3,500
25%
2,500 11.3%
3,000
20% 2,000 11.2%

In Bn SAR
2,500
In Bn SAR

2,000 15% 1,500 11.1%

1,500 1,000 11.0%

10% 11.0%
1,000 500 10.9%
5%
500
- 10.8%
- 0% Q1-21 Q1-22
2007 2009
2011 2013 2015 2017 2019 2021
Amt (SAR bn) Growth Y/Y (%) Saudi Banking Assets-LHS % Growth (YoY)-RHS
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

KSA’s banking sector’s assets registered a CAGR of 7.5% In Q1-22, banking sector’s assets rose 11.0% Y/Y (+2.8% Q/Q)
between Q1-12 and Q1-22. to SAR 3,370bn.

Saudi Banking Sector Liabilities Composition – Q1-22 Banking Sector Assets Breakdown – Q1-22
1% 0% 1% Loans to Private Sector
7%
5%
Loan to Gov & Quasi-Gov
5%
18% Foreign Assets
Deposits 8%

Deposits with SAMA

Other Liabilities
Other Assets
17%
Foreign Liabilities Fixed Assets
75% 63%

Cash In Vault

SAMA Bills

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

Share of deposits (as a percentage of BS liabilities) remained Loans to the private sector increased to 63.3% in Q1-22
constant at c.75.0% in Q1-22 compared to the last quarter. compared to 62.1% in Q4-21.

Market Share of Total Banking Assets – Q1-22 Asset Market Share of Shariah-Compliant Banks – Q1-22

3% 4% SNB 10%
3%
Al Rajhi
6%
29% RIBL Al Rajhi
11%
7% SABB
Arab National Alinma
7% BSFR
Alinma 17% Albilad
62%
Saudi Investment
9%
BJAZ
21% BJAZ
Albilad
11%

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

SNB (with assets of SAR 922bn) led the market with a share of Al Rajhi is the largest Shariah-compliant bank in KSA, holding
29.3% in Q1-22, followed by Al Rajhi at 20.9%. 62.2% of the total market share in Q1-22, up 0.5% compared
to the previous quarter.

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 June 2022
Saudi Banking Sector
Quarterly Report | Q1-22

Deposits Growth (Historical; 1997–Q1-22) Deposits Breakdown and Growth – Q1-22

2,400 25.0% 2,400 9.4% 9.4%
9.4%
2,000 2,000
20.0%
9.4%
1,600 1,600 9.4%
15.0%
9.4%
In Bn SAR

1,200 1,200
10.0% 9.4%

Bn SAR
800 800 9.4%
9.4%
400
5.0% 9.4%
400
9.4%
0 0.0%
- 9.4%
1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021
Q1-21 Q1-22

Demand-LHS Time & Savings-LHS

Deposits-LHS Money Supply(M3)-LHS Y/Y Growth in deposits-RHS Quasi-Monetary-LHS % Growth (Y/Y)-RHS
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

During Q1-12 to Q1-22, deposits and money supply in KSA Total deposits increased 9.4% Y/Y to SAR 2.17tn in Q1-22 from
rose steadily at a CAGR of 6.4% and 6.3%, respectively. SAR 1.98tn, following a similar annual increase to SAR 2.10tn
in Q4-21.

Demand Deposits Breakdown – Q1-22 Deposits Breakdown – Q1-22

11% 13.1%

Business and Individuals Demand

23.3%
Government Entities Time & Savings
Quasi-Monetary
63.6%

89%

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

Businesses and individuals accounted for 88.9% of demand Of the total deposits, demand deposits accounted for 63.6% in
deposits in Q1-22, up from 87.7% in Q4-21. Q1-22 compared to 64.6% in Q4-21

Times & Savings Deposit Breakdown – Q1-22 Sector-Wise Deposits –Q1-22

3%

23.4%

47% Business and Individuals

Business and Individuals
Government Entities
53% Government Entities Others

74.1%

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

Businesses and individuals represented 53.1% of time and Business and individuals represented 74.1% of the total deposits
savings deposits in Q1-22, up from 52.4% in Q4-21. in Q1-22, an increase of 0.7% compared to 73.4% in Q4-21.

4 © All rights reserved

 June 2022
Saudi Banking Sector
Quarterly Report | Q1-22

Bank-Wise Deposits Growth (Q1-21 vs. Q1-22) Deposits Market Share Comparison (Q1-22 vs. Q1-21)
700 44.2% 50.0% 27.5%
SNB
45.0% %23.2
600 Alinma 5.8%
40.0% %6.7
500 Saudi Investment 3.1% Q1-22
35.0% %3.1
30.0% BSFR 6.9% Q1-21
400 %7.4
21.8%
In Bn SAR

20.6% 25.0% 8.8%

18.4% 17.0% SABB
300 20.0% %10.2
11.8% 12.2% 13.4% 10.6%
15.0% RIBL
200 %11.0
5.6% 6.1% BJAZ 3.6%
10.0%
100 %3.9
5.0% Arab National 6.7%
%6.9
0 0.0% 3.9%
Al Rajhi Albilad Arab BJAZ RIBL SABB BSFR Saudi Alinma SNB Albilad
%4.3
National Investment
Al Rajhi 23.1%
%23.3
Q1-21 Q1-22 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

SAIB and Al Rajhi posted strong Y/Y deposit growths of 21.8% SNB is the largest bank in Saudi Arabia, with a deposit base of
and 20.6%, respectively. SAR 605bn, followed by Al Rajhi (SAR 508bn).

Loan Growth (Historical; 2008–21) Sector-Wise Loan Distribution Q1-22

2,500 30%
4.5%
25% 4.5% Miscellaneous
2,000 4.7%
20%
Commerce
1,500 7.2%
15%
In Bn SAR

Manufacturing
1,000 10%

5% 17.2% Construction
500 61.9%
0% Services
0 -5%
2008 2010 2012 2014 2016 2018 2020 Gov & Quasi Gov

Loans (SAR mn) % Growth-RHS

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

The banking sector’s total loan book rose 14.8% Y/Y to SAR The commerce sector accounted for 17.2% of total loans, up
2.16tn in Q1-22, registering a 10-year CAGR of 9.1% 0.4% from the previous quarter.

Loan Maturity-Growth (Q1-22 vs. Q1-21) Loan Share According to Maturity Profile (Q1-22 vs. Q1-21)
2,500

90.0%
2,000
80.0%
47.6% 49.4%
70.0%
Growth
In Bn SAR

1,066
1,500
895 % 60.0%
19.1
50.0%
1,000 Growth 13.9%
278 12.9%
261 40.0%
6.5%
500 30.0%
722 Growth 812
20.0%
12.4% 38.4% 37.6%
- 10.0%
Q1-21 Q1-22
0.0%
Q1-21 Q1-22
Less than 1 Year 1 to 3 Years Over 3 Years
Less than 1 Year 1 to 3 Years Over 3 Years
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

Loans with over a three-year maturity grew by 19.1% Y/Y, while The share of loans with over a three-year maturity rose to
those with less than one-year maturities rose by 12.4%. 49.4% in Q1-22 from 47.6% in Q1-21.

5 © All rights reserved

March 2022
Saudi Banking Sector - Q4-21
Balance Sheet

Real Estate Loan (Historical) Retail Loans Breakdown (Q4-21 vs. Q4-20)
600 70% 100.0%
60% 90.0% 85.2% 88.3% Credit Card
500
80.0% Includes
50% RetailLoans,
400
70.0%
40% acquired
60.0% through credit
In Bn SAR

300 30% 50.0% cards

20% 40.0%
200
30.0%
10%
20.0%
100
0% 10.0% 6.2% 4.3% 3.8% 3.1% 4.8% 4.4%
0 -10% 0.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Home Renovation Vehicles Others Credit Cards

% Growth-Retail % Growth-Corporate % Growth-Total Corporate Retail Q4-20 Q4-21

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

In Q1-22, the retail sector accounted for 78.6% of loans, up Loans for home renovation accounted 4.3% in Q4-21. Credit
0.2% from the previous quarter. card loans constituted 4.4% of the total retail loans acquired in
Q4-21, a decrease of 0.1% from Q3-21.

Debt Provisions (Q1-22 vs. Q1-21) Contract Value and Growth (Quarterly)
1,000
60,000 250%

800 50,000 200%

600 40,000 150%

400 30,000 100%

200 20,000 50%

0 10,000 0%
Al Rajhi

Albilad

Arab National

BJAZ

RIBL

SABB

BSFR

Saudi Investment

Alinma

SNB

- -50%
Q1-17

Q3-17

Q1-18

Q3-18

Q1-19

Q3-19

Q1-20

Q3-20

Q1-21

Q3-21

Q1-22
Q1-21 Q1-22 Total Value Contracts -% growth
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

The sector’s debt provisions fell 13.9% Y/Y to SAR 2.13bn in New contracts in Q1-22 stood at 47.1K with a value of SAR
Q1-22 (down 22.7% Q/Q). Al Rajhi recorded the highest debt 36.2bn, down 28.3% Y/Y.
provisions of SAR 578mn (up 0.2% Y/Y).

Credit Facilities to SME (SAR bn) (Q1-22 vs. Q1-21) Capital Adequacy Ratio (Historical)

240 25.0

20.4 20.3 20.3 20.6 20.3

200 19.5 19.4 18.7 19.9
20.0 18.3 18.5 18.1 18.2 18.4
17.9 17.9 18.1 17.5 18.0
16.5 16.2 16.2
In Bn SAR

160 140
th
Grow 15.0
132 6.4%
120
10.0
80
61
th
Grow 5.0
40 45 35.2%

0 11 17
0.0
Q1-21 Q1-22
2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1-21 Q1-22
Medium Small Micro Tier 1 Tier 2
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

Total credit facilities provided to SMEs increased 16.1% Y/Y to Tier 1 capital ratio decreased to 18.0% in Q1-22 compared with
SAR 218.7bn, while those to medium enterprises rose 6.4% 18.4% in Q1-21, while Tier 2 ratio reached to 20.3% in Q1-22
Y/Y to SAR 140.4bn in Q1-22. from 20.6% in Q1-21.
 June 2022
Saudi Banking Sector
Quarterly Report | Q1-22

Bank-Wise Loan Distribution (Q1-22 vs. Q1-21) Bank-Wise Market Share (Q1-22 vs. Q1-21)
600 50.0% 25.1%
43.3% SNB
45.0% 21.9%
35.6% 6.4%
500 Alinma
40.0% 7.2% Q1-22
35.0% 4.3%
400 Albilad 4.7% Q1-21
30.0%
23.6%
300
Al Rajhi 21.8%
25.0%
18.4% 19.0% 6.8%
In Bn SAR

14.2% 14.9% 20.0% Arab National 7.2%

200 11.7% 13.6%
10.1% 15.0% 8.8%
8.2% SABB 9.8%
10.0%
100 7.5%
5.0% BSFR 8.3%
- 0.0% 3.0%
Saudi Investment 3.4%
Al Rajhi

Albilad

Arab National

BJAZ

RIBL

SABB

BSFR

Saudi Investment

Alinma

SNB
3.2%
BJAZ 3.4%
11.5%
RIBL 12.1%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%
Q1-21 Q1-22
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

All banks in the sector registered a Y/Y increase in gross loans. Al Rajhi witnessed a significant jump in loan market share to
Al Rajhi’s loan book grew 35.6% Y/Y in Q1-22, driving further 23.6% in Q1-22 from 21.8% in Q1-21.
expansion in market share.

Bank-Wise ADR Ratio (Q1-22 vs. Q1-21) Performing Loans to NPLs

104.5%
103.6%

600 5.00%
103.0%

103.9%

120.0%
97.3%

95.8%

4.50%
94.4%

90.6%

500 4.63% NPLs- Industry

86.6%

4.00%
83.2%

100.0% Average Q1-22, 1.8%

NPLs- Industry 3.50%
400 Average Q1-21, 2.2%
80.0% 3.00%
2.36%
300 1.85% 2.50%
1.56%
60.0%
102.0%
101.4%

104.3%

2.00%
100.0%

In Bn SAR
95.8%

200 2.16%
89.2%

87.2%
86.5%

2.08% 1.50%
81.3%

2.01%
40.0% 1.60% 0.62%
1.00%
100
101.4%

1.11% 0.50%
20.0%
- 0.00%
RIBL

BJAZ

Saudi Investment

BSFR

SABB

Arab National

Al Rajhi

Albilad

Alinma

SNB
0.0%
Al Rajhi

Albilad

Arab National

BJAZ

RIBL

SABB

BSFR

Saudi Investment

Alinma

SNB

Performing Loans-Q1-22 NPLs-Q1-22-LHS % Share of NPLs-RHS

Q1-21 Q1-22 NPLs-Industry Average Q1-22 NPLs-Industry Average Q1-21
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

The industry gross ADR ratio stood at 95.0% in Q1-22 compared The sector’s NPL ratio decreased to 1.84% in Q1-22 from
to 92.3% in Q1-21. BSFR posted the highest gross ADR ratio 2.18% in Q1-21. The NPL coverage ratio increased to 135% in
of 104.5%, closely followed by Alinma at 103.9% in Q1-22. Q1-22 from 133% in Q1-21.

NIM and Operating income

Bank-Wise NIM (Q1-22 vs. Q1-21) Absolute Return on Time & Saving Deposits
4.50%
1,000 400%
4.00%
282% 15%
3.50% 800 300%
3.00%
600 200%
2.50%
80% 82%
2.00% 42% 100%
IN Mn SAR

400 29% 14% 24% 13%

1.50% 8%
-
200 0%
1.00%
0.50% - -100%
RIBL

BJAZ

SNB
BSFR

SABB

Al Rajhi

Albilad

Alinma
Arab National
Saudi Investment

0.00%
Al Rajhi

Albilad

Arab National

BJAZ

RIBL

SABB

BSFR

Saudi Investment

Alinma

SNB

Q1-21 Q1-22 Q1-21 Q1-22

Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

The sector’s average quarterly NIMs decreased to 2.9% in Q1- The sector’s quarterly return on time and savings deposits
22 vs. 3.1% in Q1-21. Al Rajhi registered the highest quarterly increased 42.1% Y/Y in Q1-22. SNB recorded the highest
NIM of 3.6% in Q1-22, a decrease of 0.6% from Q1-21. return on time and savings deposit at 0.76%.

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 June 2022
Saudi Banking Sector
Quarterly Report | Q1-22

Bank-Wise Lending Rates (Q1-22 vs. Q1-21) Company-Wise Operating Income – Q1-22
1.60% 10,000

1.32%
1.24%
1.19%

1.18%
1.17%

1.11%
8,000

1.01%
1.20%
0.94%

0.95%
0.87%
6,000

0.80%
4,000

In MN SAR
2,000
0.40%
Arab National 1.05%

RIBL 1.14%

SNB 1.34%
Al Rajhi 1.35%

SABB 0.99%

BSFR 1.01%

Saudi Investment 1.16%

Alinma 1.12%
Albilad 1.17%

BJAZ 1.28%

Al Rajhi

Albilad

Arab National

BJAZ

RIBL

SABB

BSFR

Saudi Investment

Alinma

SNB
0.00%

Others Investment Banking and Brokerage

Q1-21 Q1-22 Global markets and Treasury Corporate
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

The average quarterly lending rate stood at 1.10% in Q1-22 SNB, with an operating income of SAR 8.07bn, was the top
compared to 1.16% in Q1-21. SNB recorded the highest lending contributor to the sector’s total operating income in Q1-22 at
rate of 1.32%, followed by BJAZ at 1.24%. 28.5%, followed by Al Rajhi at 24.6%, with an operating income
of SAR 6.96bn.

Operating Income Breakdown (Q1-22 vs. Q1-21) Company-Wise Cost of Risk (Q1-22 vs. Q1-21)
0.40%
-0.3% -0.2%
Q1-22
5.6% Retail 0.30%

5.9%
21.4% Corporate
22.5% 0.20%

19.0% 41.5%
Treasury
Q1-21 44.7% 0.10%

Investment Services and

Brokerage 0.00%
Alinma

Albilad

BSFR

BJAZ

Al Rajhi

Arab National

SNB

RIBL

Saudi Investment

SABB
30.6% Others

30.8%

Q1-22 Q1-21
Source: SAMA, Argaam, Aljazira Research Source: SAMA, Argaam, Aljazira Research

The sector’s operating income surged 17.1% Y/Y to SAR The average cost of risk decreased to 0.11% in Q1-22 vs.
28.3bn in Q1-22, with the retail sector accounting for 41.5%. 0.17% in Q1-21. Both Alinma and Albilad posted the highest
On a Q/Q basis, operating income increased 6.1%. cost of risk of 0.18% in Q1-22.

8 © All rights reserved

 RESEARCH DIVISION

Head of Sell-Side Research

Jassim Al-Jubran
+966 11 2256248
j.aljabran@aljaziracapital.com.sa

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,
RESEARCH
DIVISION

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. 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.
TERMINOLOGY

2. 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
RATING

months.
3. 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.
4. 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 Al-
Jazira Capital from sources believed to be reliable, but Al-Jazira 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. Al-Jazira 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 Al-Jazira 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 Al-Jazira 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 Al-Jazira Capital. Funds managed by Al-Jazira Capital
and its subsidiaries for third parties may own the securities that are the subject of this document. Al-Jazira 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 Al-Jazira
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 Al-Jazira 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 Al-Jazira 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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