Alinma’s business sectors saw robust growth in 2018: CEO

Alinma Bank’s business sectors recorded robust growth for 2018, chief executive officer, Abdul Mohsen Al Fares told Argaam in an exclusive interview.

“Alinma’s non-performing loans (NPLs) accounted for less than 1.5 percent of its credit portfolio,” Al Fares said, adding that “the NPLs’ coverage ratio stood at 196 percent by the end of 2018.”

When asked about merger deals among the Saudi banks, Al Fares said these mergers will likely create new synergies that will help boost the Saudi financial sector, in line with Saudi Vision 2030.

“These mergers will not impact Alinma’s market share; they will rather create more investment opportunities,” he added.

Excerpts from the interview:-

What are the positive factors behind the growth of the bank’s net income in 2018?

The bank’s results were backed by its high-quality and diversified banking products, the growth of credit as well as investment portfolios and the introduction of new client-tailored products, such as the Traveller Card, which was introduced in 2018. It is a low-limit, multi-currency card that allows its holders to make point-of-sale and internet purchases, and to make cash withdrawals, without currency exchange hassles.

Additionally, the bank managed to grow its saving as well as investment accounts, expand branch network, and provide clients with top-notch digitalized services.

Did the bank’s retail, corporate and treasury segments record growth last year?

Yes, all the bank’s business sectors recorded robust performance, boosted by a set of distinguished products and services.

What about NPLs, debt provisions and the NPLs’ coverage ratio in 2018?

Banks all over the world should set aside provisions to hedge against the credit risks. That’s why, the asset quality is a key factor that should be considered. Alinma’s non-performing loans (NPLs) accounted for less than 1.5 percent of its credit portfolio. We allocated provisions to hedge against this at around 3 percent of the bank’s credit portfolio. The NPLs’ coverage ratio stood at 196 percent by 2018-end.

Do you think the potential mergers may impact Alinma’s market share?

Business expansion is a strategic goal; it is mostly carried out either through internal growth or value-added mergers & acquisitions (M&As), and hence, the bank can simultaneously cut its operating expenses and boost revenue.

Merging businesses will help bolster the Saudi economy, inject more cash and maintain sustainable development, in line with Saudi Vision 2030.

Such consolidation deals may not impact Alinma’s market share; they will rather enhance business growth.

Does the bank have any merger plans with local or global peers?

No, there are no talks in this regard.

What about Alinma’s settlement with the General Authority of Zakat and Tax?

Alinma agreed with the General Authority of Zakat and Tax to settle Zakat claims for the previous financial years and until the end of the fiscal year 2017. The bank will utilize these settlement amounts in paying any future liabilities.

What is the bank’s plan for 2019 in terms of lending and investment?

The lender will continue pursuing its ambitious expansionary plans. Alinma is expected to introduce new Sharia-compliant products, expand its branch network, provide mortgage loans, arrange financing for small-and-medium enterprises (SMEs) and also help funding infrastructure projects.