Release Date: January 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Saudi National Bank (SAU:1180, Financial) reported a record net income of SAR21.2 billion for 2024, translating to a return on tangible equity of 16.2%.
- The bank's strategic focus on innovation and digital transformation, including the launch of SNB NEO, has enhanced service delivery and customer satisfaction.
- Domestic fee income from banking services increased by 22% year-on-year, contributing to a diversified revenue stream.
- The bank's capital market arm, SNB Capital, strengthened its position as the largest asset manager in the Kingdom, with assets under management reaching SAR240 billion.
- The bank successfully issued SAR6 billion in Saudi riyal-denominated additional Tier 1 sukuks, reinforcing its strong position in debt capital markets.
Negative Points
- Financing growth of 9% in 2024 was slightly below expectations due to elevated pricing competition and higher-than-usual corporate repayments.
- Total deposits decreased by 2%, with a notable 9% drop in Q4, attributed to competitive pricing pressures and public sector deposit movements.
- The cost-to-income ratio for the group was slightly above guidance at 28.3%, due to ongoing international volatility.
- The bank's net interest margin (NIM) contracted by 13 basis points to 3% for the year, impacted by international inflation-related controls.
- International operations contributed negatively to the group net income, affected by hyperinflation adjustments.
Q & A Highlights
Q: Can you provide insights into the loan growth guidance of low double-digit for 2025, and how SNB plans to grow in comparison to the sector?
A: Tareq Al Sadhan, CEO, stated that SNB aims to grow faster than the market and gain market share. The bank is focusing on sectors like green energy, real estate, construction, tourism, and retail mortgages. SNB has adjusted its risk appetite and sector ceilings to accelerate growth in 2025.
Q: What are the expectations for the net interest margin (NIM) given the guidance for loan growth and NSCI growth?
A: Ahmed Ali Aldhabi, CFO, explained that the exit NIM is slightly above 2.9%, and they expect it to remain between 2.9% to 3% domestically. The international impact dilutes the overall picture, but domestically, they anticipate stability or slight improvement, considering potential rate cuts.
Q: How does SNB view the liquidity environment and competitive forces in 2025?
A: Ahmed Ali Aldhabi, CFO, noted that liquidity is available, but pricing competition was intense in Q4. SNB maintains a positive outlook on leveraging and focuses on maintaining a beneficial risk-reward balance. Asad Khan, Chief Economist, added that macro indicators do not suggest major liquidity issues.
Q: What is the outlook for Stage 3 coverage ratios, and how does SNB view the current liquidity environment?
A: Ahmed Ali Aldhabi, CFO, mentioned that the increase in Stage 3 coverage was proactive, and they expect it to moderate over time. Liquidity is available, but pricing competition was noted in Q4. SNB focuses on maintaining a positive risk-reward balance.
Q: How does SNB plan to utilize its foreign currency funding, and is FX lending a significant opportunity?
A: Ahmed Ali Aldhabi, CFO, highlighted that SNB benefits from its global relationships and presence, which helps in optimizing cost of funds. FX lending is a strategic area, and SNB capitalizes on the spread between SOFR and cyber rates.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
