Alinma Bank possesses SAR 87 bln worth of financing portfolio in H1, says CEO

Alinma Bank has a financing portfolio of more than SAR 87 billion, or around 6 percent of the Saudi financing market in H1 2019, CNBC Arabia has reported, citing CEO, Abdulmohsen Bin Abdul Aziz Al-Fares.

“The mortgage funding is a key part of the retail financing portfolio, which will likely boost the bank’s credit portfolio through home financing,” Al-Fares added.

Tadawul MSCI inclusion is forecast to lure huge foreign investments, despite potential risks, Al-Fares noted.

“The Saudi market will be able to aggrandize benefits and eliminate risks, given that Alinma’s inclusion was based on the stock’s weight,” he explained.

“The bank’s coverage ratio exceeded 160 percent; the bank is working on more provision allocations, in line with the growth of the financing portfolio,” Al-Fares continued.

Q1 2019 included no Zakat provisions, as they would have been paid at 10 percent of profit as of 2020. However, on March 14, 2019, Saudi General Authority of Zakat and Tax (GAZT) published the rules for computing Zakat by banks and finance companies licensed by the Saudi Arabian Monetary Authority (SAMA), as the provisions would be applied to accounting periods commencing on or after Jan. 1, 2019.

Lower interest rates are expected to have a very limited impact on the Saudi banking segment, due to banks’ strong operations, and the fact that some portfolios have fixed rates.

“However, lower interest rates will likely reduce the cost of funding, and will further boost the economic activities,” Al-Fares noted.

Alinma’s deposits increased by more than SAR 4.5 billion in H1 2019 to more than SAR 91 billion.