• Total Assets: Increased by 17% to SAR277 billion.

• Financing Portfolio: Grew by 16.5% to SAR202.3 billion.

• Operating Income: Increased by 12.5% to SAR10.9 billion.

• Net Income: Increased by 20.5% to SAR5.8 billion.

• NPL Ratio: 1.06%.

• NPL Coverage Ratio: 172%.

• Customer Deposits: Increased by over 12% to SAR210.5 billion.

• CASA Growth: 20% year-on-year to SAR109 billion.

• Cost to Income Ratio: Reduced to 30.9%.

• Net Profit Margin (NPM): 3.7%.

• Return on Equity (ROE): 18.8%.

• Interbank Increase: 28%.

• Investment Increase: 12%.

• Net Interest Margin (NIM): 3.7%, a contraction of 10 basis points year-on-year.

• Operating Expenses (OpEx): Grew by 11% year-on-year.

• Impairment Charge for Financing: Decreased by 17% to SAR1.050 billion.

• Cost of Risk: Decreased by 23 basis points to 55 basis points.

• Capital Adequacy Ratio (CAR) Pillar 1: 17.7%.

• Liquidity Coverage Ratio (LCR): 122%.

• Loan-to-Deposit Ratio (LDR): 83.3%.

• Net Stable Funding Ratio (NSFR): 108.2%.

• Warning! GuruFocus has detected 1 Warning Sign with SAU:1150.

Release Date: February 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Alinma Bank (SAU:1150) reported a 20.5% increase in net income, reaching SAR5.8 billion for 2024.

• The bank's total assets grew by 17% year-on-year, reaching almost SAR277 billion.

• Customer deposits increased by over 12%, with a notable 20% growth in CASA deposits, improving the CASA ratio to 51.6%.

• The bank's NPL ratio decreased to 1.06%, with a strong coverage ratio of 172%.

• Alinma Bank (SAU:1150) achieved a return on equity (ROE) of 18.8%, surpassing the previous year's 17.2%.

Negative Points

• The bank experienced intense competition on customer deposits, impacting net interest margins (NIMs), which contracted by 10 basis points year-on-year.

• There was a slowdown in corporate loan growth in Q4 due to significant prepayments and aggressive pricing by competitors.

• Operating expenses grew by 11% year-on-year, driven by a 13% increase in personnel costs.

• The bank's cost of risk, while decreasing, remains relatively high compared to industry peers.

• Alinma Bank (SAU:1150) faces potential challenges from new digital banks entering the Saudi market.

Q & A Highlights

Q: Can you explain the guidance for margins in 2025 and the assumptions behind it, especially in terms of policy rate assumptions and NIM sensitivity? A: The guidance for 2025 assumes a 79 basis point decline in the three-month SAIBOR. The bank expects flat margins due to the shorter-term nature of liabilities, which should drive lower cost of funding. Additionally, the retail portfolio and fixed-rate investments, along with cash flow hedges, are expected to support margins. The sensitivity for every 25 basis point rate cut is around a 1.7 basis point drop in NIM.