Saudi Awwal Bank plans to issue Islamic bonds (Sukuk) through a private offering as part of its $5.3 billion program to strengthen its financial base

Saudi Awwal Bank plans to issue Islamic bonds (Sukuk) through a private offering as part of its $5.3 billion program to strengthen its financial base

Saudi Awwal Bank (SAB) plans to issue a Tier 1 sukuk (Islamic bond) in Saudi riyals through private placement. This is part of its $5.3 billion (SAR 20 billion) program to boost its capital and support long-term goals, according to a stock market filing.

Sukuk Issue

• The size of the Sukuk issue and the terms of the offer will be decided later, based on market conditions, according to a filing on the Saudi Exchange on Thursday.
• SAB mentioned that the offer will need approval from the relevant authorities and will follow all applicable laws and regulations.
• HSBC Saudi Arabia has been appointed as the lead manager for the Sukuk offer.
• SAB’s shares dropped by 0.3%, reaching $8.42 (SAR 31.60) at 12:34 pm AST, giving the company a market value of $17.3 billion (SAR 65.1 billion) as of November 21, 2024.

Tangent

Several companies in Saudi Arabia, including Aramco, and banks are raising money by issuing international sukuk (Islamic bonds). Last month, Aramco raised $3 billion through a sukuk issue, which was split into two parts, both in US dollars.

Big number

$105.3 billion (SAR 395.4 billion): This is the total value of assets held by SAB at the end of September 2024, showing an increase of 16.1% compared to the same time last year.

Third-Quarter Performance

In October, SAB reported that its net profit for the third quarter increased by 2.9% compared to last year, reaching $500 million (SAR 1.9 billion). This was mainly due to higher operating income. However, this growth was partly reduced by higher provisions for expected credit losses, Zakat, income tax, and operating expenses.

The provision for expected credit losses from July to September jumped by 114%, mainly because of fewer recoveries.

The bank’s operating profit for the quarter grew by 8.7% to $939.7 million (SAR 3.5 billion), compared to the same time last year. This was due to higher net special commission income, exchange income, and net fee and commission income.

For the first nine months of 2024, the bank’s net profit increased by 15.5% to $5.6 billion (SAR 1.6 billion), mainly due to higher operating income.

Additionally, the bank’s investments rose by 10% to $26 billion (SAR 97.7 billion) compared to the same period last year.

Published: 21th November 2024

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