Al Rajhi Banking & Investment Corp 1999 Financial & Business Analysis "Another year of growth, with increased net income and assets, and additions to the branch network and international capabilities"

Financial Trends

Ownership and Legal Status
Al Rajhi Banking and Investment Corporation, Saudi Joint Stock Company was formed pursuant to Royal Decree dated 3.11.1407H with the objectives to carry out banking and investment activities inside and outside Saudi Arabia on its own account and behalf of others. The Company has paid up share capital of SR2,250 million.

The Year in Brief
Net income after zakat for the year 1999 increased by 6.4% to SR1,501 million (1998: SR1,411 million), making the Corporation the most profitable financial institution in Saudi Arabia for the fifth year. Total assets increased by 12.7% to SR42,880 million (1998: SR 38,055 million). Customer current accounts increased by 10.4% to SR30,183 million (1998: SR27,339 million), while the investment portfolio increased by 9.16% to SR35,299 million (1998: SR32,335 million). Return to shareholders was 26.4% (1998: 26%), and the capital adequacy ratio was 31%. Expenses increased by 11.11% to SR1,281 million (1998: SR1,153 million), giving a ratio of expenses to total income of 44.45% (1998: 44.27%)

Business Highlights
Treasury: Return on investment increased by 8.5% in line with the strategy of investing in a balanced portfolio. This helped to increase the average return on the investment portfolio despite difficult market conditions. Long term returns were not encouraging, so a high level of liquidity was maintained.

International Banking Relations: International relationships continued to be developed, particularly in new markets. The Corporation now has a very extensive network of international banking correspondents, and has established quality standards in the development and operation of such services.

Domestic Investments: These increased to SR10.8 billion, including instalment sales, istisnaa and deferred sale transactions. During the year, the construction of 400 schools with a total value of SR5.9 billion was completed throughout the Kingdom. The Al Shuaibaa electricity project in the Western Region was financed for a total of SR5.8 billion. Car instalment sale products were reintroduced, and 1000 residential real estate transactions were completed.

Banking and Electronic Services: High quality banking services were offered through a network of 362 branches, including the introduction of further high technology including intranet and phone banking services and the improvement of 243 branches. The total number of ATMs reached 451, with 61 of these added during the year. The number of POS machines was increased by 53 to a total of 2283. The ladies banking sector also prospered, with 14 new ladies sections opened, for a total of 59 ladies branches and sections.

Investment Services: The International Brokerage Service was launched, providing investors with the opportunity to diversify their portfolios by trading in international shares. The International Brokerage department provides share-trading services in major stock exchanges around the world, including New York, Paris, Frankfurt and Tokyo. Services include investment and dividend collection, together with periodic evaluation of portfolios.

Private Banking: The Corporation launched two new uniquely designed Private Banking Centers in Riyadh and Jeddah. With the growth of investment funds, various new funds were launched, including the Small Capitalisation Fund