Al Rajhi Banking and Investment (1120) Q3 2024 earnings summary

Executive summary

• Net income for the first nine months of 2024 reached SAR 14.2 billion, up 14.1% year-over-year, marking a record high, driven by strategic initiatives, digitalization, and favorable economic conditions.

• Total assets grew to SAR 933 billion, a 13% increase year-on-year, with strong growth in financing and investment portfolios.

• Operating income increased 13.8% year-over-year, supported by higher net yield and non-yield income.

• Strategy execution under the "Harmonize the Group" program and focus on digital transformation and universal banking delivered across all KPIs.

• Comprehensive income for the period was SAR 14.6 billion, reflecting strong operational and investment performance.

Financial highlights

• Net income for Q3 2024 was SAR 5.1 billion, up 23% year-on-year and 9% sequentially.

• Operating income for the nine-month period rose to SAR 23.3 billion, up 14% year-on-year.

• Net yield income and non-yield income both grew by 14% year-on-year for the nine-month period.

• Cost-to-income ratio improved to 25.4%, down 145 bps year-on-year, with OpEx for Q3 at SAR 2 billion, up 11% year-on-year.

• NPL ratio at 0.79% with coverage at 165%; cost of risk increased to 0.33% due to portfolio growth.

Outlook and guidance

• Upgraded guidance: financing book growth in low teens, NIM expansion of 10–20 bps, cost-to-income ratio below 25.5%, ROE above 20%, and cost of risk in the 30–40 bps range.

• Management remains optimistic about NIM widening in a lower-rate environment, with a sensitivity of 6 bps NIM expansion for every 25 bps rate cut.

• CASA ratio expected to be volatile but remains a management focus; asset yield likely near its peak.

• Saudi GDP growth forecast at 1.5% for 2024, 4.6% for 2025; credit demand remains positive.

• Board approved interim and final dividends totaling SAR 9.6 billion for 2023 and H1 2024.