Sabb reports an increase in profitability, assets and operating income for H1 2019

August 2019

Lubna Sulaiman Olayan, Chairman, said:

“The first half of 2019 witnessed the historic merger of SABB and Alawwal bank, uniting the legacies and resources of two of the oldest banks in the Kingdom, with legal effect on 16th June 2019. The greater scale, enhanced market leadership and efficient operating platform will reinforce our unique positioning as a leading financial institution in the Kingdom, enabling us not only to support Vision 2030, but to also take advantage of the many opportunities arising from its ambitious national economic growth agenda.

The integration of the two banks is progressing well, and the board and management team are focused on delivering a successful integration and continuing to create value through our businesses by helping our customers achieve their financial goals. Our balance sheet and capital base remain strong and will continue to underpin our lending growth capacity as we seek to support our customers. I look forward to keeping our shareholders, staff, customers and regulators updated on the steps we take to unlock our full potential as we continue this exciting journey.

For the six month period ending 30th June 2019, the merged bank generated a profitable return even after taking into account extraordinary costs and one-off credit losses related to the merger, all of which were in line with our expectations. We are certainly pleased to have been in a position to announce an interim dividend distribution, further evidence of the strength of our position. That position enhances the confidence in our ability to generate increasingly competitive returns as the benefits of the merger are more fully realized.

Many people worked long and hard to make this successful merger a reality. I would like to thank our customers, shareholders and management team for their support and commitment, but we are especially grateful for the ongoing support of our longstanding global partner, HSBC, and for the vision and continued guidance of our regulators and government agencies in approving and supporting the merger.”

Key financial highlights

• Following our merger with Alawwal bank, SABB’s customer deposits, customer loans and total assets grew to SAR196 billion, SAR158 billion and SAR270 billion respectively, creating the Kingdom’s third largest bank, second largest corporate lender, and fourth largest retail lender.
• Operating income less costs, but excluding provision for expected credit losses was SAR2,622 million. This was 2% higher than the first half of 2018, supported by a growth in Operating income of 9% to SAR3,953 million as our businesses continued to support customers and generate returns in a challenging economic environment. In accordance with prevailing accounting standards, profits generated from the business acquired 2 weeks before the end of the second quarter of 2019 will be reported subsequent to the merger date and will be reflected materially in future reporting periods.
• Net income after zakat and taxes of SAR851million was SAR954million lower than the first half of 2018 due to certain one-off credit losses related to the merger together with expenses incurred relating to our activities in integrating the two banks, and other one-off operating expenses.
• The Board of Directors approved an interim dividend of SAR1,185 million net of zakat and income tax compared to SAR1,266 million for interim 2018, or SAR0.60 per share net of zakat for Saudi shareholders (2018: SAR0.96 per share) following an increase in the number of shares in issue upon completion of the merger.

Lubna Olayan.