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Rising to become one of the premier banks in the Kingdom of Saudi Arabia, Alinma Bank elevated its standings across numerous pivotal industry metrics, showcasing substantial strides towards becoming the fastest and most convenient bank in Saudi Arabia. Our performance in 2023 was notably fueled by our expanding presence in both Retail and Micro, Small, and Medium Enterprises (MSMEs) Banking segments, along with robust growth and emphasis in Corporate Banking.

In 2023, the Bank has exceeded the market growth both in Retail and Corporate financing with overall financing growth of 18.5% year on year reaching SAR 173.6 Bn. The bank has become the 6th largest bank in Saudi Arabia with total asset of SAR 236.7 Bn. We also enhanced our Net Promotor Score (NPS), reaching the number 2 ranking in the Kingdom. The Bank also became the 3rd largest bank in terms of number of retail customers.

Our continuous focus on improving the customer experience alongside the cross-sell activities has paid off handsomely, with total operating income increasing 22% from SAR 7,963 Mn. in 2022 to SAR 9,726 Mn. in 2023. Net income came to SAR 4,839 Mn., representing growth of 34% year on year.

The above has improved the key financial indicators where the Bank became the highest among Saudi Banks in term of Return on Assets (ROA) standing at 2.21% at the end of 2023. The Bank has expanded its Return on Equity (ROE) by 353 basis points becoming the second highest among Saudi banks at 17.22%.

The Bank remained financially resilient, meeting capital adequacy requirements with Tier I and Tier II capital adequacy ratio of 17.49% by the end of 2023. Liquidity measures remained healthy with Net Stable Funding and Liquidity Coverage ratios well above the regulatory minimums. Our strong regulatory metrics reaffirmed Alinma Bank’s proactive risk management and monitoring, corporate governance and prudential oversight. Our robust compliance was also a motivating factor behind securing approval and certification to introduce open banking to our Retail and Corporate Banking operations. Our prudent credit and provisioning policies led to healthy assets quality with nonperforming financing coverage ratio reaching 155% by the end of 2023 along with decreasing cost of risk that has decreased to 77 basis point by the end of the year.

Successful pursuit of MSME banking growth

Our commitment to creating value for our Shareholders and to playing a stronger and more prominent role in the Kingdom’s banking sector was demonstrated by our growing emphasis on supporting MSMEs.

This strategy proved extremely successful, with our MSME programbased financing portfolio growing more than 100%. Our growing penetration of the MSME sector was supported by our new financing origination system. The first phase, which was rolled out in 2023, will expedite financing processing times, and improve both the customer journey and experience.

An important development in 2023 was the expansion of our relationship with Monsha‘at to enable us to provide financing services to potential MSME opportunities it refers to us. Monsha’at is a government initiative aimed at increasing the MSMEs’ contribution to the economy

Robust performance within the Bank’s business segments

Our continued focus on the youth segment, to better reflect the Kingdom’s demographic profile in our customer base, was bolstered by our new value proposition and differentiated customer journey for our younger customers.

Customer experience remains at the forefront of all our Strategy 2025 initiatives, and our efforts in 2023 remained dedicated to further improvement, driven by our ongoing digital transformation program.

A key milestone in our digital transformation was the 2023 launch of our new Alinma Bank app, with its suite of sophisticated features to make mobile banking simple, efficient, and accessible. Our average monthly number of smartphone user logins reached 19 million and digital transactions stood at 98.42% for the year.

Complementing our investment in further improving our services was the introduction of a number of well- received products. One of our best new performers in 2023 was our Auto Lease product, which reached SAR 1.4 Bn. in 2023. The product was just introduced in Q4 2022.

During the year, Retail rationalized its bricks and mortar network, with mergers affecting 40 branches and reducing the related operating costs. Our employees impacted by the branch mergers were transferred to locations with staff shortages.

Overall, the successful implementation of the Retail Banking’s various initiatives resulted in a strong 2023 financial result, with Retail performing financing reached SAR 42 Bn. with a growth of 16% year on year.

Our Corporate Banking business had an outstanding year. During the year Corporate Banking was further strengthened by a new Corporate Customer Support middle office mandated to drive improvements in approval time frames, efficiency, and client service. At the front end, our Retail branches set up Corporate desks to offer clients the option of face-toface engagement, broadening channel choices as a further step in enhancing our corporate clients’ banking experience. Corporate performing financing reached SAR 131 Bn. with a growth of 19% year on year. Cash management services alongside trade have shown a strong improvement year on year as this remained a strategic focus within corporate banking.

Our Bank-wide efficiency drive achieved improvements in the corporate banking. The activation of the first phase of our new corporate financing origination system to track client applications, expedited processing, reduced paper use, and contributed towards our sustainability objectives.

We also launched a new ATM card for corporate clients to deposit cash at our ATMs 24/7, and we re-launched an updated dividends distribution service for listed corporates to improve their payment experience. These and many other improvements streamlined our corporate clients’ banking activities and provided them with greater visibility over transactions.

Alinma Bank’s Treasury operation continued to support the Bank’s strategic objectives in 2023, growing the product portfolio to provide a holistic value proposition for clients. In addition, it succeeded in achieving a record high in derivatives hedging products.

Treasury contributed to the Bank’s improved net profit margin with its healthy portfolio mix that benefited from the higher benchmark profit rate and value-added deals that contributed to revenues

Aligned with our financial successes, Alinma Bank remains committed to Environmental, Social, and Governance (ESG) principles. We integrate sustainability into our operations, focusing on environmental stewardship, social responsibility, and ethical governance. Our initiatives include energy efficiency, sustainable procurement, community development, financial inclusion, and upholding high standards of corporate governance. Through our ESG commitments, we aim to create long-term value for shareholders, society, and the environment, ensuring sustainable growth for future generations.

Looking ahead to 2024

With substantial progress made on completing the initiatives under Strategy 2025, our attention in the coming year will turn to planning for our next strategy, which will launch a new era of growth for the Bank.

Operationally, we intend to maintain the excellent growth trajectory achieved in the past 3 years by reaching new heights in key financial and other metrics across the entire Bank. We will remain unrelentingly disciplined in our customer acquisition activities. Accordingly, we will continue to explore every avenue to sustainably build our customer base. Additionally, we will robustly defend our high Net Promotor Score by continued investment in building and strengthening our brand and engaging with our target segments via physical and digital channels.

Our digital transformation program will continue apace, emphasizing customer experience while reducing operating costs. This will be accompanied by further rationalization of our branches as part of our efficiency drive and the evolution of our business model from operations to advisory and sales.

Our Corporate Bank internet banking platform will be enhanced, and our penetration of the MSME segment will be advanced.

Acknowledgements

On behalf of the executive team and all the employees of Alinma Bank, I extend my most sincere gratitude to the Custodian of the Two Holy Mosques, King Salman Bin Abdulaziz Al Saud, and the Crown Prince and Prime Minister, HRH Mohammed Bin Salman Bin Abdulaziz Al Saud.

The unwavering commitment of our Leaders and our Government to the prosperity of the Kingdom and its entire people continues to shape an enabling environment in which Saudi businesses can flourish.

Our regulators, Saudi Central Bank (SAMA), Capital Market Authority (CMA), and all other relevant parties, offered exceptional oversight of our rapidly evolving industry. We are grateful for their guidance and prudent management.

Alinma Bank’s Board of Directors once again played an invaluable role, sharing wise counsel and insights that steered us in the direction of sustainable growth.

Finally, my deep appreciation goes to my executive team and all Alinma Bank employees for their unstinting efforts in delivering for our customers and our Shareholders, and for taking us further in our journey to becoming one of the Kingdom of Saudi Arabia’s best banks.