Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/27038" target="_blank" data-smartkarma-citation="entities:27038:1">Al Rajhi Bank (RJHI AB)</a> commands a dominant regional Islamic franchise and domestic retail market positioning. Al Rajhi accounts for half of the KSA auto loan market, 30% of system consumer lending revenues, a quarter of both mortgages (44% of new home loans) and system demand deposits, a fifth of system net profit, and some 18% of credit card loans. The bank is number one by remittances regionally.The bank is retail-centric with &gt;70% of the loan book dedicated to consumer loans and &gt;70% of Revenues derived from retail banking. The population is youthful with purchasing power while more women are participating in the workforce and society, creating opportunity for specialised targeted bank products and services.Sheer presence and scale is complemented by positive qualitative trends of late in profitability, operating efficiency, liquidity, asset quality and provisioning. Capital adequacy is rock solid with one of the highest Equity/Asset ratios in KSA. The bank is highly liquid, benefiting greatly from source of funding (lowest cost in system) which is virtually totally interest-free. The bank stands out in terms of demand deposits/SH Funds. Widening NIM (best in system) can continue with higher rates, in lockstep with the Fed.  Profitability and efficiency can improve from currently benign levels.  In addition, Al Rajhi has the best asset quality (just 9% of system NPLs) and the highest LLR/Loans and NPL coverage, respectively.We highlight the latest value-quality signals from Al Rajhi’s quintile 1 PH Score™. KSA banks are scoring well at present, following on from FY17 rankings, in what is a promising constituent of the emerging market universe, undergoing gradual but long overdue change with a commodity tailwind.<div class="content-highlight">The PH Score™ is a fundamental momentum-quantamental model that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage. Scores lie between 0 and 10, with higher rankings representing more positive signs.</div>

Al Rajhi Bank (RJHI AB) commands a dominant regional Islamic franchise and domestic retail market positioning. Al Rajhi accounts for half of the KSA auto loan market, 30% of system consumer lending revenues, a quarter of both mortgages (44% of new home loans) and system demand deposits, a fifth of system net profit, and some 18% of credit card loans. The bank is number one by remittances regionally.The bank is retail-centric with &gt;70% of the loan book dedicated to consumer loans and &gt;70% of Revenues derived from retail banking. The population is youthful with purchasing power while more women are participating in the workforce and society, creating opportunity for specialised targeted bank products and services.Sheer presence and scale is complemented by positive qualitative trends of late in profitability, operating efficiency, liquidity, asset quality and provisioning. Capital adequacy is rock solid with one of the highest Equity/Asset ratios in KSA. The bank is highly liquid, benefiting greatly from source of funding (lowest cost in system) which is virtually totally interest-free. The bank stands out in terms of demand deposits/SH Funds. Widening NIM (best in system) can continue with higher rates, in lockstep with the Fed.  Profitability and efficiency can improve from currently benign levels.  In addition, Al Rajhi has the best asset quality (just 9% of system NPLs) and the highest LLR/Loans and NPL coverage, respectively.We highlight the latest value-quality signals from Al Rajhi’s quintile 1 PH Score™. KSA banks are scoring well at present, following on from FY17 rankings, in what is a promising constituent of the emerging market universe, undergoing gradual but long overdue change with a commodity tailwind.The PH Score™ is a fundamental momentum-quantamental model that scores banks according to changes in value-quality. The Score encompasses Profitability, Operating Efficiency, Liquidity, Capital, Asset Quality, and Coverage. Scores lie between 0 and 10, with higher rankings representing more positive signs.

Saudi Arabia

Al Rajhi Bank provides banking services. The Bank offers services such as credit cards, insurance, car finance, loans, online and phone banking, and current accounts. Al Rajhi Bank serves customers in Saudi Arabia.

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Al Rajhi Bank (RJHI AB)

Al Rajhi: A Proxy for Change

Al Rajhi Bank (RJHI AB) commands a dominant regional Islamic franchise and domestic retail market positioning. Al Rajhi accounts for half of the...

Paul Hollingworth

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