Nayifat Finance says assets at SAR 1.9 bln in H1 2021, plans to expand product portfolio

Logo of Nayifat Finance

Nayifat Finance Co. stated that it has a strong balance sheet, with total assets of nearly SAR 1.9 billion and shareholders' equity of SAR 1.2 billion in H1 2021.

In an exclusive interview with Argaam, the company said that the business portfolio of small- and medium-sized enterprises (SMEs) showed strong growth, as it leapt 93% from SAR 69.2 million to SAR 133.3 million in H1 2021.

The firm noted that its portfolio includes more than 44,000 clients, adding that it mapped out plans for expanding its finance product portfolio in the financial technology (fintech) area, to cover payments, point-of-sale (POS) financing, and e-wallets.

Here are the details of the interview:

How was the company established?

Nayifat is one of the leading non-bank financial institutions that focus on meeting the financing needs of individuals in the Kingdom. The company is gearing up for seizing the available growth opportunities, based on its comprehensive product portfolio, as well as strong distribution network, robust risk management framework, and pioneering brand. The firm demonstrated a high capacity for growth and flexibility in dealing with the market conditions, as well as adapting its strategies to the evolving needs of the local retail finance market.

The company was established in 2002, with SAR 10 million in capital. Its current capital amounts to SAR 1 billion. Nayifat was the first non-bank financial institution to obtain a license from the Saudi Arabian Monetary Agency (SAMA) in 2014, and it had a leading role in the retail financing market, with a significant market share of 18% in the first quarter of 2021. In addition, the company has a comprehensive portfolio of more than 44,000 customers.

What are the financing solutions and products offered by the company?

The company provides Shariah-compliant products and services, such as retail financing, SMEs financing, credit cards, and fintech business financing. The firm also benefits from competitive profit margins and a wide distribution network covering 23 cities, with 392 employees working across 27 branches in the Kingdom.

Number of clients reached more than 44,000 in the first quarter of 2021, as the company entered the market in partnership with Visa in 2020.

The company focuses on SMEs and retail finance. What is the value of their portfolios?

SME portfolio witnessed strong growth in H1 2021, as it leapt 93% YoY from SAR 69.2 million to SAR 133.3 million.

The SME sector is set to grow rapidly and contribute between 20-30% to Islamic finance receivables in the medium term.

The firm has a strong balance sheet, with total assets of nearly SAR 1.9 billion and shareholders' equity of SAR 1.2 billion in H1 2021.

Islamic finance receivables constitute about 82% of total assets in the first half of 2021, and consist mainly of individual financing loans.

How was the company’s performance during COVID-19? What are the results achieved until H1 2021?

Nayifat showed strong financial performance and robust returns, with net income rising at a compound annual growth rate (CAGR) of approximately 10% YoY from 2018 to 2021, and average non-performing loans (NPLs) of around 7%, which is lower than the sector rates of around 10% for the same period.

Revenue also rose at a CAGR of about 7% YoY from 2018 to 2021, with an increase in revenue by 24%. It also rose at a CAGR of 6% in 2020 despite the COVID-19 pandemic and lower Islamic finance receivables.

The company has a stable financing base, consisting of bank loans and shareholders’ equity. Thus, it has the ability to obtain financing from leading local and regional banks. The total available credit lines secured by the company amounted to SAR 2.2 billion, of which only SAR 0.6 billion was used, with an average repayment period ranging between three and four years. Thus, SAR 1.6 billion was available for use in 2020.

In addition, the firm has a strong shareholder’s equity, with the ratio of receivables to shareholders’ equity reaching 1.3-times in H1 2021, lower than the upper limit of 3.5-times applied by SAMA.

Why did you launch the ULend crowdfunding platform?

The ULend platform was launched to attract SMEs in an innovative way. It is a crowdfunding platform that uses fintech to enable a company to provide peer-to-peer lending services and benefit from existing financing, along with reducing costs and provide flexible investment opportunities.

What are the new products expected to be offered in the coming period?

We have strategic ambition to be the leading provider of retail finance solutions, significant growth opportunities in the SME, as well as credit card and fintech ULend debt crowdfunding platform.

Plans have been also developed to expand the portfolio of financing products in fintech to cover other areas, such as payments, point-of-sale (POS) financing, e-wallets, partnerships and innovation.