The Saudi Investment Bank announced record profits of SR 2,006 million for the year ending December 31, 2006.This represents an increase of 88.5% compared to the SR 1,064 million reported in the prior year.Earnings per share for 2006 reached SR 8.34 compared with SR 4.42 in 2005. Total operating profits for the year were SR 2,556 million compared to SR 1,516 million in 2005, an increase of 68.6%. Profits for the Fourth Quarter of 2006 were SR 301.4 million against SR 287.7 million in 2005, an increase of 4.8%.
The above growth is primarily due to increases in most income categories. Net commission income for the current year rose to SR 1,030 million, an increase of 31.1% over the same period last year. Fees from banking services increased to SR 783.9 million, a 19.6% increase, while profits from foreign exchange trading rose by 26.9% to SR 34.8 million, and profits from sale of investments were SR 672.6 million.
On the expense side, the Bank continued to apply a policy of setting aside sufficient provisions for loan losses.The provision for 2006 was SR 96.5 million, bringing the total provision for possible loan losses to SR 777.3 million.This compares to the non-performing loan balance of only SR 217.3 million. The Bank also improved its efficiency ratio to 17.74%.This is among the highest of all the Saudi Banks, and compares with a ratio of 23.21% in the prior year.
The strong results for 2006 are reflected in the Return on Shareholders’ Equity, which rose to 35.48%, and Return on Average Assets, which reached 4.99% compared to 24.14% and 3.12% in the prior year, respectively.
Balance Sheet growth was highlighted by the net loans outstanding, which increased to SR 20,691 million compared with SR 19,794 million for the same period last year. Total assets were SR 40,845 million as of December 31, 2006. On the liability side, customers' deposits remained at last year’s level of SR 27,931 million. Shareholders’ Equity stood at SR 6,001 million compared with SR 5,307 million a year earlier, an increase of 13.1%.
Dr. Abdulaziz O’Hali and members of the Board of Directors expressed their satisfaction with the achievement of these positive results, and by the continued substantial business growth.
The Board of Directors also recommended an increase of the Bank’s capital from SR 2,406 million to SR 3,910 million through the issuance of one bonus share for every 1.6 shares outstanding.
At the same time, Mr. Saud AlSaleh, General Manager of the Bank, said that the Bank was able to achieve these results by making good use of available opportunities and by the concerted efforts of its employees towards rendering the best possible services to customers.
He also added that the Bank opened ten new branches throughout the year: Ghurnatah, Alrayyan, Alsuwaidi, and Alghadeer in Riyadh; Buraidah in Quaseem; Alazziziah in Makkah; and Alrayyan in Dammam. In addition, three Riyadh branches – Prince Salman St., Malaz, and Badiah – were relocated to new offices.
The Bank also launched an Internet share trading service, “Aswaqnet,” to add to the existing internet retail banking services.
In addition, The Bank launched two new close-ended mutual funds, the Global Protected Fund and the Gulf Protected Fund. This brings the number of successful funds managed by the Bank to thirteen.
During the year the Bank launched the new ALASALAH Islamic Banking Program with addition of ten new branches. These Islamic branches work in accordance with Sharia guidelines, and this program will be applied to all new branches. The ALASALAH Islamic Banking services are distinguished by innovation, state-of-the art technology and quality.
The Bank announced its joint venture alliance with Emaar and Amlak, both from the U.A.E., and with Asir joint stock company and Albarakah Investment and Development Co. to establish the first closed Joint Stock Company for real estate financing. The new company will be located in Riyadh and have a capital of SR 1,000 million.
Finally, the Bank also announced it has received approval to establish The Mediterranean & Gulf Insurance & Reinsurance Co. In terms of capital it will be the largest insurance company in Saudi Arabia. The Bank owns 19% of the company, and 25% of the company will be offered to the public in February 2007.
During the year, and for the first time in the Bank’s history, Standard and Poor’s and Fitch – considered to be among the best international rating agencies – both granted the Bank a long term “A-“ ratings.
