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Banking and FinancialsLeveraging the GCC growth storySaudi banks strongest in theGCC and have a stable outlookStrong macroeconomic conditions in KSA have fuelled the robust growth in the Saudi bankingsector in recent years. However, the Saudi economy witnessed dramatic changes in 2008.Negative global developments in 2H-08 affected the Saudi economy which had enjoyedbuoyant liquidity in 1H-08. In response, the Government which had earlier focused on curbinginflationary pressures directed its efforts to ensure adequate liquidity by relaxing monetarypolicy and announcing an expansionary budget for 2009. This coupled with healthy capitaladequacy ratios and well-provisioned balance sheets has ensured that even in the currentglobal credit crisis, the Saudi banking sector remains the strongest in the GCC and has a stableoutlook (Please refer to our Saudi Arabia Banking Quarterly report). Going forward, lowpenetration of banking services coupled with the anticipated growth in population and expectedintroduction of a mortgage law are the potential catalysts for long-term credit growth in KSA.The Saudi banking sector comprises 20 banks—12 domestic and 8 foreign—that together havea network of 1,410 branches and 8,993 ATMs across KSA as on 31 December 2008. AlinmaBank, listed in June 2008, is expected to launch commercial operations by the end of 2Q-09.Also, J.P. Morgan N.A. Chase Bank opened a branch in the Kingdom in November 2008.Moreover, two foreign banks—State Bank of India and National Bank of Pakistan—haveobtained licenses to commence business in KSA, but are yet to start operations.Exhibit 41: Key financials of Saudi banks (2008) – SRmn; network of branches and ATMsDomestic BanksForeign BanksEstablished as SaudiBanksJV withForeignPartnersGCC BanksNon- GCCBanks Branches ATMs AssetsLoans &advancesCustomerdeposits Net profitsNational Commercial Bank 275 1,484 221,802 107,909 171,822 2,031Samba Financial Group 65 476 178,891 98,147 134,228 4,454Al Rajhi Bank 425 2,266 164,930 144,758** 120,298 6,525Riyad Bank 201 2,027 159,653 96,430 105,056 2,639The Saudi Investment Bank 33 247 53,250 29,566 40,702 513Bank AlJazira 24 314 27,520 15,133 20,900 222Bank Albilad 61 420 16,052 10,157** 10,971 125SABB 68 452 131,661 80,237 98,522 2,920Banque Saudi Fransi 75 274 125,865 80,866 92,791 2,806Arab National Bank 131 842 121,307 74,662 92,743 2,486Saudi Hollandi Bank 43 169 61,436 38,017 43,012 1,224Emirate Bank 1 5Bank Muscat 1 3National Bank of Kuwait 1 2National Bank of Bahrain 1Gulf International Bank 2 12*Deutsche Bank 1BNP ParibasJ.P. Morgan Chase N.A. Bank 1Total 1,410 8,993 1,302,271 775,872 931,045 25,837Source: SAMA, Tadawul, Company data, NCBC ResearchNote: Financial statements of the banks are consolidated and include financial statements of its subsidiaries, including those located outside KSA. Total assets of NCB include assets ofnewly acquired bank -Turkiye Finans Katlim Bankasi A.S.* Four international banks namely, National Bank of Bahrain, Gulf International Bank, Deutsche Bank and BNP Paribas, operate 12ATMs across KSA. # Alinma Bank has not been included in the above table as it is yet to commence operations. The bank reported total assets of SR15,556.4mn as of December 2008. **Islamic banks – Al Rajhi and Albilad’s – loans and advances amount include credit disbursed as well as investment in securities, as the banks’ financial statement provide a combinedamount under the heading net investments.JUNE 2009SAUDI ARABIA FACTBOOK40