Saudi's largest lender plans public share offering

02 March 2014

Government wants to sell 15 per cent of National Commercial Bank

Saudi Arabia’s government plans to sell 15 per cent of National Commercial Bank’s (NCB’s) capital through an initial public offering, according to state-run Saudi Press Agency.

The sale will be arranged by the government-run Public Investment Fund (PIF). The IPO will be submitted to the regulator in the third quarter of 2014, said Finance Minister Ebrahim al-Assaf.

“NCB’s board of directors has implemented a comprehensive reform plan, which included restructuring, reduction of expenditures, increasing operational efficiency and strengthening the bank’s financial position,” he said.

Another 10 per cent of Saudi Arabia’s largest lender by assets will also be allocated to the PIF by the government, and is to be held by the pension fund instead of sold on to the public.

NCB was estimated to have over SR360bn ($96bn) in assets in 2013.

NCB’s net income in 2013 is estimated at SR6.16bn, representing a 19 per cent year-on-year growth, according to a September 2013 report by Riyadh-based Albilad Capital. That is the equivalent of just over a fifth of Saudi’s aggregate banking sector income.

It mainly profited from strong results in its corporate banking activities, which over the first nine months of 2013 totalled SR1.88bn, compared to SR520.73m during the same period in 2012. Retail banking activities dropped 22 per cent to SR1.4bn in the first three quarters of 2013.

At SR184.41bn NCB has one of the biggest loan books in the country, with high concentrations to corporate borrowers. As a result it also has one of the highest impaired loan ratios – 3.2 per cent in the third quarter of 2013, according to Albilad, equal to SR615.52m in credit loss impairments.

 

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