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BANKING AND FINANCIALSExhibit 50: Average daily trading volume of stocks (‘000s) , Jan 2007 – Dec 20082,5002,4012,0001,5001,4731,6271,00050036697542157 194336900Al Rajhi SAMBA SABB RIBL SaudiFransiArabNationalSIBCSaudiHollandiBJAZAlbiladSource: Reuters, NCBC ResearchAs the Saudi riyal is pegged to the US dollar, interest rates in KSA moved in line with the USFederal Reserve (US Fed) rate. Consequently, while interest rates reached their peak in 2H-08,they have steadily declined in response to the steps undertaken by SAMA to mitigate the impactof the global financial crisis on the Saudi Banking sector. This is reflected in KSA’s reverse rateswhich have declined by 450bp from 5.0% (November 2007) to 0.50% (April 2009).Interest rates started increasing from June 08 owing to increasing demand for credit in theKingdom. Furthermore, as the global financial system experienced liquidity crisis, interbankinterest rates peaked in 2008—the SAIBOR rate increased to 4.67% (on 12 October, 2008) andLibor rate to 4.75% (13 October, 2008). The global liquidity squeeze, coupled with nonavailabilityof finance from foreign banks, increased the demand for Saudi riyal loans.Consequently, Saudi banks became conservative / selective in financing the developmentprojects. This caused the cost of debt (in SAIBOR) over the Libor rate to increase to 194bp as of12 November 2008 (average spread in 2008 was 50bp).Steps taken by SAMA to boostliquidity has helped reduced thecost of debt from 194bp inNovember 2008 to 5bp in May2009In light of the worsening global economic scenario, SAMA started taking aggressive measures,such as frequent rate cuts and relaxing reserve requirements (beginning in October 2008) toensure adequate liquidity to meet domestic credit demand. As a result, the Repo rate declinedto 2.0% in January 2009 from 5.5% in November 2007 and the statutory reserve requirementlimit declined to 7% in October 2008 from 13% in May 2008 of demand deposits, which releasedSR20.4bn for banks to lend. In addition, SAMA guaranteed bank deposits and deposited fundsworth USD2.5bn and an equivalent amount in Saudi Riyal to ensure liquidity in both thecurrencies. The steps by SAMA are expected to help stabilize the financial sector while boostingliquidity and reducing loan costs. These steps have resulted in a decline in interbank interestrates from their 2008 peaks—the SAIBOR rate is at 0.88% and LIBOR at 0.83% as of 18 May2009 (Exhibit 51). Consequently, the cost of debt (in SAIBOR) over the LIBOR rate has comedown to 5bp as of 18 May 2009 (average spread of 19bp year-to-date).JUNE 2009SAUDI ARABIA FACTBOOK44