Saudi Awwal Bank Launches First Off-Balance-Sheet Digital Islamic Supply Chain Finance Transaction in KSA

9 April 2025

Riyadh, Saudi Arabia, 9 April 2025: Saudi Awwal Bank (SAB), one of the leading banks in the Kingdom of Saudi Arabia, and United Pharmaceuticals, one of the leading retail pharmacy chains in the Kingdom, have successfully executed the first off-balance-sheet end-to-end digital Islamic supply chain finance transaction in the Kingdom. A significant milestone in the realm of Islamic finance, this ground breaking achievement enables automated discounted early payments for ten of United Pharmaceuticals’ strategic suppliers.

Recently, SAB upgraded its Supply Chain platform to accommodate Islamic transactions by incorporating new Sharia-compliant features. This enabled United Pharmaceuticals to successfully upload their payment file and benefit from enhancements, including fully automated processes for recording and approval, and sales contract generation for Shariah compliance.

This leading-edge solution enables straight-through processing, drastically cutting down the manual processing time from hours to minutes. The innovative solution has brought significant advantages to United Pharmaceuticals, including improved efficiency and control in supplier invoice processing and payments, reduced client operational tasks and risks, stronger supplier relationships due to timely Shariah-compliant payments, optimized working capital management with extended payment terms through non-recourse early discounting based on the buyer's creditworthiness, and improved pricing.

Yasser Al-Barrak, Chief Corporate and Institutional Banking Officer at SAB, stated: “We are thrilled to lead the way in providing innovative solutions that meet the needs of our clients while adhering to Islamic principles. This transaction showcases our commitment to enhancing the financial landscape in alignment with Saudi Vision 2030."

He added: "The integration of technology and Islamic finance represents a significant step forward in supporting businesses and fostering economic growth in the Kingdom."

Khaled Yassin, the CEO of United Company, referred to this agreement, stating: “We are proud to sign this agreement, which represents a strategic step in developing our financial operations and strengthening our relationships with our partners. This initiative will significantly contribute to improving our liquidity management, enabling us to achieve higher operational efficiency and support our expansion plans with greater flexibility and effectiveness.”

On his part, Dr. Mohamed Abdelwahab El-Morsi, the CFO of United Company, emphasized the importance of this step, saying: “This agreement will provide innovative financial solutions that help reduce operational complexities and enhance efficiency in payment processes and working capital management. We are extremely pleased with this partnership with SAB, which reflects our commitment to financial innovation and delivering added value to our suppliers and customers.”

This Islamic platform enhancement underscores the importance of digitization and the immense potential of Islamic structured trade solutions in the Kingdom. SAB is dedicated to advancing its supply chain platform to deliver automated discounting solutions that serve both Islamic and conventional transactions effectively.