Saudi Central Bank - SAMA Head of Sell-Side Research Jassim Al-Jubran +966 11 2256248 Quarterly Summary I Q2-2021 [email protected] August 2021 Saudi Central Bank Quarterly Summary | Q2-21 Strong growth in demand deposits drives 9.1 Y/Y growth in money supply; Assets and Liabilities witness low double-digit growth of 10.0% and 10.4%, respectively Profitability and Money Supply 16 2,300 Banking Sector Profitability: For Q2-21, profitability 12 stood at 12.8bn, depicting an increase of 796.4% Y/Y. 2,100 On a Q/Q basis, profitability increased 4.3%. 8 Money Supply: Increased 9.1% Y/Y to SAR 2,239bn, 1,900 4 driven by 9.6% rise in demand deposits. On Q/Q basis, it rose 2.4%, led by 17.1% increase in other 0 1,700 quasi-money deposits. Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Profitability (SAR bn) Money Supply (SAR bn; RHS) Source: SAMA, Aljazira Capital Research Asset and Liabilities 3,200 Assets: Rose 10.0% Y/Y to SAR 3,114bn, led 2,800 by 15.7% increase in claims on private sector. Increased 2.6% Q/Q, driven by 3.3% rise in claims 2,400 on private sector 2,000 Liabilities: Rose 10.4% Y/Y to SAR 2,691bn, led by 10.2% spike in total deposits. On Q/Q basis, it 1,600 Increased 3.0%, driven by 2.5% rise in total deposits Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Assets (SAR bn) Liablities (ex-Capital accounts) (SAR bn) Source: SAMA, Aljazira Capital Research 2 © All rights reserved August 2021 Saudi Central Bank Quarterly Summary | Q2-21 Deposit growth of 10.2% Y/Y driven by demand deposits, while miscellaneous sector leads loan growth of 16.8% Y/Y; mortgage contracts increased 0.9% Y/Y, while value rose 6.0% Deposits and Loans 2,100 Deposits: Rose 10.2% Y/Y to SAR 2,030bn, led by 9.6% increase in demand deposits. It Increased 2.5% 1,800 Q/Q, driven by 17.1% rise in other quasi-money. Loans: Rose 16.8% Y/Y to SAR 1,953bn, led by 1,500 29.7% surge in loans to miscellaneous sector. Increased 4.0% Q/Q, driven by 6.0% rise in 1,200 miscellaneous sector loans Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Deposits (SAR bn) Loans (SAR bn) Source: SAMA, Aljazira Capital Research Mortgage and Net foreign assets 100,000 160 Mortgage: Contracts increased 0.9% Y/Y to 60.0K, 75,000 while value rose 6.0% to SAR 30.3bn; Contracts 120 declined 33.7% Q/Q, while value fell 35.2%. 50,000 Net Foreign Assets: Decreased 40.8% Y/Y to SAR 80 61.7bn, as foreign assets decreased 10.2%, while 25,000 foreign liabilities rose 8.0%. It declined 17.6% Q/Q, 0 40 as foreign assets rose 0.8%, and foreign liabilities increased 8.7%. Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Mortgage (no. of contracts) Net Foreign Assets (SAR bn; RHS) Source: SAMA, Aljazira Capital Research 3 © All rights reserved August 2021 Saudi Central Bank Quarterly Summary | Q2-21 GWP and NCI post modest growth of 0.4% and 0.7% Y/Y growth in Q1-21; Inflation increases by 5.7% in Q2-21, while POS sales rise 54.1% Y/Y Gross Written Premium and Net Claims Incurred 14 8 Gross Written Premium (Q1-21): GWP stood at 12 7 SAR 12.8bn in Q1-21, depicting an increase of 0.4% Y/Y. On Q/Q basis GWP surged 50.1%. Property and 10 6 fire insurance showed a healthy growth of 11.6% Y/Y, whereas motor showed a fall of 6.8%. 8 5 Net Claims incurred (Q1-21): NCI decreased 0.7% 6 4 Y/Y to SAR 6.5bn, while it declined 0.2% Q/Q. Motor Claims declined 6.7% Y/Y, while increased 0.4% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q/Q; marine claims showed an increase of 135.8% GWP NCI (SAR bn; RHS) Y/Y and 80.7% Q/Q. Source: SAMA, Aljazira Capital Research CPI (Inflation rate) and POS 6% 120 4% Consumer Price Index (CPI)-Inflation: CPI for Q2- 100 21 showed an increase of 5.7% Y/Y, led by 18.9% 2% Y/Y increase in Transport and 13.4% Y/Y increase 80 0% in Communication. 60 -2% Point of Sales (POS): Sales rose 54.1% Y/Y to 118.1bn, while no. of transactions surged 140.2% -4% 40 to 1,206mn. Sales increased 8.2% Q/Q, while no. of transactions rose 13.2% Q/Q. Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 CPI POS (SAR bn; RHS) Source: SAMA, Aljazira Capital Research 4 © All rights reserved Head of Sell-Side Research Analyst Analyst Jassim Al-Jubran Abdulrahman Al-Mashal Faisal Alsuwelimy +966 11 2256248 +966 11 2256374 +966 11 2256115 [email protected] [email protected] DIVISION [email protected] RESEARCH Head of Securities Head of Sales and Distribution Head of International and Institutions Alaa Al-Yousef Sultan Ibrahim AL-Mutawa Ahmad Salman, CFA +966 11 2256060 +966 11 2256364 +966 11 2256201 [email protected] [email protected] [email protected] DIVISION BROKERAGE AND BROKERAGE INVESTMENT CENTERS AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is DIVISION expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. RESEARCH 1. Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. 2. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. 3. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price RATING levels over next twelve months. TERMINOLOGY 4. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company. Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. 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