FINANCIAL RESULTS
Riyad Bank achieved SAR 4,715 Mn. in net profits for the twelve-month period ended on 31 December 2020, with a decrease of 15.8% from the previous year, which amounted to SAR 5,602 Mn. In the light of the current economic changes and challenges, Riyad Bank continued to focus on the main banking activities and maintain its financial position, with investments amounting to SAR 56,450 Mn. compared to SAR 53,361 Mn., an increase of 5.8%. On the other hand, net loans and advances recorded an increase of 10% reaching SAR 191,347 Mn., compared to SAR 173,982 Mn. in the previous year, and reached customer deposits of SAR 203,039 Mn. compared to SAR 194,518 Mn. in the previous year, an increase of 4.4%. While assets amounted to SAR 310,088 Mn. compared to SAR 789,265 Mn. for the previous year, an increase of 16.7%. Total operating income reached SAR 11,205 Mn. during the year 2020 compared SAR 10,717 Mn. in 2019, an increase of 4.6%.
Reflecting the strength of Riyad Bank’s assets and the diversity of its financing and investment products, it was able to achieve an increase in net special commission income, which amounted SAR 8,214 Mn. during the twelve months ended 31 December 2020, compared SAR 7,837 Mn. from the previous year, an increase of 4.8%. As the earnings per share during the same period was SAR 1.57, compared to SAR 1.87 for the previous year. The decrease in Riyad Bank's net profit for the twelve months ended 31 December 2020 is attributed to the increase in total operating expenses by 23.8%, which was partially offset by the increase in total operating income by 4.6%.
The increase in total operating expenses is due to the increase in the net provision for impairment for credit losses and other financial assets and the provision for impairment in the value of investments. The increase in total operating income is mainly due to the increase in net special commission income, net trading income, net foreign exchange income, net income from other operations and net gains from investments acquired for non-trading purposes, partly offset by a decrease in net fees and commissions.
The material differences in the operating results compared to the results of the previous year
| Performance Indicator (SAR Mn.) | 2020 | 2019 | Change | Change % |
| Net income after Zakat | 4,715 | 5,602 | (887) | %-15.8 |
| Total operating income | 11,205 | 10,717 | 488 | %4.6 |
| Net special commission income | 8,214 | 7,837 | 377 | %4.8 |
| Earnings per share (SAR) | 1.57 | 1.87 | (0.30) | %-16.0 |
| Total assets | 310,088 | 265,789 | 44,299 | %16.7 |
| Net investments | 56,450 | 53,361 | 3,089 | %5.8 |
| Net loans and advances | 191,347 | 173,982 | 17,365 | %10.0 |
| Customer deposits | 203,039 | 194,518 | 8,521 | %4.4 |
A summary of Riyad Bank’s financial results over the past five years
A . The following is an analysis of the most important items of the consolidated balance sheet*:
| Statement (SAR Mn.) | 2020 | 2019 | 2018 | 2017 | 2016 |
| Assets | |||||
| Cash and balances with banks and the Saudi Central Bank | 55,579 | 33,924 | 27,352 | 27,876 | 25,829 |
| Loans and Advances, Net | 191,347 | 173,982 | 151,025 | 138,838 | 142,909 |
| Investments, net | 56,450 | 53,361 | 47,993 | 46,370 | 45,157 |
| Other property, equipment and real estate | 2,752 | 2,435 | 1,927 | 1,987 | 2,107 |
| Other assets | 3,961 | 2,086 | 1,603 | 1,211 | 1,617 |
| Total assets | 310,088 | 265,789 | 229,900 | 216,282 | 217,619 |
| Liabilities | |||||
| Balances with banks and other financial institutions | 41,789 | 13,124 | 8,581 | 7,056 | 8,837 |
| Customers’ deposits | 203,039 | 194,518 | 169,822 | 154,366 | 156,684 |
| Other liabilities | 20,905 | 17,575 | 14,723 | 16,237 | 15,126 |
| Shareholders’ equity | 44,355 | 40,571 | 36,774 | 38,623 | 36,973 |
* Certain comparative figures have been reclassified to conform to the current period classifications.
B . The following is an analysis of the most important items of the consolidated income statement*:
| Statement (SAR Mn.) | 2020 | 2019 | 2018 | 2017 | 2016 |
| Total operating income and Riyad Bank’s net share in the profits of associates | 11,224 | 10,870 | 9,018 | 8,148 | 7,738 |
| Total operating expenses | 5,740 | 4,638 | 4,302 | 4,202 | 4,395 |
| Net income after zakat | 4,715 | 5,602 | 3,092 | 3,446 | 2,542 |
| Earnings per share (SAR) | 1.57 | 1.87 | 1.03 | 1.15 | 0.85 |
* Certain comparative figures have been reclassified to conform to the current period classifications.
** Includes the impact of zakat settlement of claims for previous financial periods.
Geographical analysis of revenues of Riyad Bank and its subsidiaries
Total revenue for the year ended 31 December 2020 from operations inside the Kingdom and from outside the Kingdom amounted to SAR 15,041 Mn. and SAR 2,072 Mn. respectively.
Geographical analysis of the total revenues of Riyad Bank and its subsidiaries from within the Kingdom :
| Year | Within the Kingdom of Saudi Arabia | Total revenue
from within the Kingdom (SAR Mn.) |
||
| Western region |
Central region * |
Eastern region |
||
| 2020 | 2,034 | 11,072 | 1,935 | 15,041 |
* The amount specified for the Central region includes revenues from central investments pertaining to the investment and treasury sector amounted to SAR 6.396 Mn and are not linked to a specific geographical sector within the Kingdom, and it also includes revenues related to other regions that cannot be separated.
Geographical analysis of the total revenues of Riyad Bank and its subsidiaries from outside the Kingdom:
| One million riyals per year |
Outside the Kingdom of Saudi Arabia | Total revenue from outside the Kingdom (SAR Mn.) |
||||
| GCC countries and the Middle East region |
Europe | North and Latin America |
South East Asia |
Other areas |
||
| 2020 | 954 | 249 | 642 | 94 | 131 | 2,072 |
Dividend
Riyad Bank is bound by the relevant applicable regulations, and it follows the following policies when distributing profits to shareholders:
A. 25% of the net profits shall be deducted to form the statutory reserve. The deduction may be stopped when the total reserve reaches the amount of the paid-up capital.
B. Based on the recommendations of the Board of Directors and the approval of the General Assembly, the determined profits shall be distributed to the shareholders out of the net profits, each according to the number of his shares.
The Bank’s credit rating
| Rating Agency |
Long Term |
Short Term |
Futur Outlook |
| Fitch | +BBB | F2 | Negative |
| Capital Intelligence | +A | A1 | Negative |
| Standard & Poor's | +BBB | A-2 | Stable |
Finance and debt securities issued
The Bank through its regular dealings exchange financing and borrowing money with banks and the Saudi Central Bank, according to the commission rate is recognized in the market and are recognized appropriately in the consolidated financial statements of the Bank.
During the month of February 2020, the Bank established a program to issue primary and secondary bonds and sukuk in one or several parts and in several stages through a series of issuances, and they were offered inside or outside the Kingdom of Saudi Arabia in Saudi riyals, US dollars or any other currency.
This program aims to diversify the sources of financing, their maturity periods, and strengthen the capital base of the Bank, thus supporting the expansion of its credit business and supporting the conduct of its banking activities, as the program was established and the issuance started after completing all legal procedures, according to the needs of Riyad Bank and market conditions at the time.
On 25 February 2020 the Bank issued instruments from the second tranche at a fixed price in US dollars’ worth of US $ 1.5 billion (SAR 5.63 Bn.), under the program for issuance of bonds and $ 3 Bn. US dollars maturing in 2030. These instruments are listed on the London Stock Exchange and carry a special commission of 3.174% per annum.
Debt instruments recovered during 2020:
In the year 2020, the Bank redeemed its sukuk issued in the amount of SAR 4 Bn. on 24 June 2020 and due in 2025, at their nominal value 100% of the issue price by the end of the fifth year of their issuance on 24 June 2020.
Riyad Bank also confirms the following :
- There are no debt instruments issued by the subsidiaries.
- There are no term loans owed by the subsidiaries.
- The Bank did not issue or grant any convertible debt instruments, contractual securities, subscription rights memoranda, or similar rights during 2020.
- The Bank did not issue or grant any transfer or subscription rights under convertible debt instruments, contractual securities, subscription right notes, or any similar rights during 2020.
- The Bank or any of its subsidiaries have not made any redemption, purchase, or cancellation of any redeemable debt instruments.
Disclosure of treasury shares held by the Bank and details of their use
The Bank does not maintain any treasury shares.
Accounting standards used by the Bank
The Riyad Bank prepares its financial statements which are audited by the auditors of the Bank, according to the International Financial Reporting Standards and Interpretations issued by the International Accounting Standards Board and approved in the Kingdom of Saudi Arabia, and publications accredited by the Saudi Organisation for Certified Public Accountants (collectively referred to as “the International Financial Reporting Standards approved in the Kingdom of Saudi Arabia”). In line with the Banking Control Law, the provisions of the Kingdom’s corporate Law and the Bank’s Bylaws, there are no fundamental differences from the accounting standards issued by the Saudi Organization for Certified Public Accountants.
Systemic payments
There are no final statutory payments due on Riyad Bank for the year 2020 except for what is mentioned in the statement below:
| Statement |
2020 | |
| Repaid |
Due (SAR Mn.) |
|
| Islamic Zakat – General Authority for Zakat and Income (regarding the fiscal year 2020)* | – | 769,000 |
| Taxes charged by Riyad Bank on behalf of some non-resident parties (according to the terms of the contract) | 19,701 | 1,166 (Estimated) |
| Taxes owed on the overseas branches of Riyad Bank in favour of the official authorities outside the Kingdom | 21,692 | – |
| The Public Institution for Social Security | 95,151 | – |
| Costs of visas and passports | 3,430 | – |
| Any other regular payments ** | 9,642 | – |
* Zakat will be paid for one year 2020 up to 30 April 2020.
* * Government fees.
Riyad Bank is obligated in the agreement concluded with the General Authority for Zakat and Income on 20 December 2018 to settle zakat claims for the previous fiscal years until the end of the fiscal year 2017 in exchange for payment of an amount of SAR 2,969,722,864 and an advance payment of this settlement was made during 2018 with the obligation to pay the rest on Five equal instalments over five years, beginning on 1 December 2019 and ending on 1 December 2023. The first instalment was paid in 2019 and the second in 2020.
Statutory penalties and sanctions
Riyad Bank, during the conduct of its daily business, applies all banking regulations and regulatory rules issued by the supervisory authorities and Riyad Bank is keen to reduce the occurrence of any violations and to take the necessary corrective measures, if they occur.
Saudi Central Bank criminal decisions:
| Subject of the violation |
2020 | 2019 | ||
| Number of penal decisions |
The total amount of fines in SAR |
Number of penal decisions |
The total amount of fines in SAR |
|
| Central Bank Supervisory Instructions | 22 | 4,604,000 | 15 | 3,496,000 |
| Violating the Central Bank’s instructions regarding due diligence in combating money laundering and terrorist financing | 2 | 300,000 | 1 | 200,000 |
| Violation of the Central Bank’s instructions for protecting customers | 6 | 1,732,500 | 4 | 25,000 |
| Violation of the Central Bank's instructions for due diligence | – | – | 1 | 5,000 |
The statutory penalties and penalties imposed by the supervisory, regulatory or other judicial authorities:
| Authority |
Classification of the violation |
Number Fines |
The total amount of fines finance in SAR |
| Municipalities and other Government agencies | Fines imposed on signs, ATM locations licenses and other fines | 146 | 2,514,000 |
Transactions with related parties
The following statement clarifies the balances resulting from related party transactions as at 31 December 2020 that took place during the regular business cycle of Riyad Bank, according to the definition of related parties in Article 1 of the Corporate Governance Regulations:
| Statement |
Total (SAR ’000) |
| Loans and advances | 4,070,780 |
| Customer deposits | 33,595,695 |
| Derivatives (at fair value) | 172,374 |
| Contingent commitments and obligations (irrevocable) | 6,735,342 |
| Special commission income | 131,412 |
| Special commission expense | 362,682 |
| Fee and commission income, net | 348,925 |
| Miscellaneous operating expenses | 164,203 |
Transactions with related parties include a set of business and contracts that are made for the account of Riyad Bank in which the members of the board of directors have a direct or indirect interest and are as follows:
| The nature of the contract |
Related party |
Owner |
End date of the contract |
Annual contract value (SAR) |
| Rent of the headquarters of the branch of 60th Street 286 for exhibitions No. (1,2,3,5) - Riyadh |
|
The Public Institution for Social Security | 2021. 09.10 | 700,000 |
| An agreement to supply data between the General Organization for Social Insurance and Riyad Bank for a useful service for inquiring about the number of employees of the establishments |
|
The Public Institution for Social Security | 2021. 02.12 | 250,000 |
| Rent of the Public Administration Building (Granada Oasis A1) |
|
Granada Investment Centre (Owned by the General Organization for Social Insurance) | 2022. 08.14 | 28,244,040 |
| Rent of 20 parking lots in Granada Business for relationship managers in the corporate banking sector |
|
Granada Investment Centre (Owned by the General Organization for Social Insurance) | 2020 12.31 | 112,000 |
| Rent two ATM automated in the Olaya towers - Riyadh. |
|
Granada Investment Centre (Owned by the General Organization for Social Insurance) | 2020. 12.24 | 50,000 |
| Rent two ATM automated building Saudi Telecom Company - Riyadh. |
|
Saudi Telecom Company | 2022 05.31 | 80,000 |
| Services linking branches and buildings network for data services IPVPN |
|
Saudi Telecom Company | 2022 08.31 | 42,000,000 |
| Renting an ATM location at Umm Al-Qura Hotel, Makarim - Makkah. |
|
Mohammed Ibrahim Al-Issa and Sons Company | 2022 12.31 | 23,710,892 |
| Protection programs to provide technology (DWDM) |
|
Etihad Etisalat Company - Mobily | 2021 02.20 | 18,000 |
| A contract to provide the second service provider's connection service for a network SJN. |
|
Etihad Etisalat Company - Mobily | 2021 05.31 | 1,098,000 |
| A contract to provide the second service provider's connection service for a network SJN. |
|
Etihad Etisalat Company - Mobily | 2022 07.24 | 26,676 |
| A contract to provide 300 express SIM cards SIM |
|
Etihad Etisalat Company - Mobily | 2021 03.31 | 489,600 |
| Submission contract Connectivity Services for the General Administration building - Granada. |
|
Etihad Etisalat Company - Mobily | 2022 02.17 | 480,000 |
| Rent an ATM location in the Marriott Hotel - Riyadh. |
|
Dur Hospitality Company | 2025 11.22 | 30,000 |
Disclosure of the micro, small and medium enterprises data
Qualitative disclosure
The approved definition of MSMEs :
The micro, small and medium enterprises were classified according to the definitions of the Central Bank of Saudi Arabia.
Initiatives taken by Riyad Bank to support these facilities in addition to the number of employees, training initiatives and workshops provided to customers and employees for the year that 2020:
| 2020 | ultrafine | Small | Medium |
| Sector | Personal banking | Corporate banking | Corporate banking |
| Department | Branch network | Emerging business | Commercial banking |
| The number of employees serving the segment | 19 | 97 | 69 |
| The number of employees who have been given training courses | 19 | 97 | 69 |
| The number of training days provided to employees | 50 | 620 | 481 |
| Number of clients who have been given training courses | 11,372 | 1,050 | 188 |
| Number of workshops offered to clients | 10,152 | 670 | 148 |
| The number of training days provided to clients | 1,615 | 392 | 116 |
| The number of centers or branches in which the segment provides services to clients | All Riyad Bank branches in all regions of the Kingdom serve a very small segment. | 25 centers dedicated to serving small enterprises around the Kingdom, in addition to all Riyad Bank branches and electronic channels. |
|
Awards obtained by the Bank in the micro – enterprise sector micro, small and medium during the year 2020
- Award for Best Bank in the financing of small and medium – sized enterprises in the Middle East – Euromoney.
- Award for Best Bank in the financing of small and medium – sized enterprises in the Middle East – AsiaMoney.
- Award for Best Bank in the financing of small and medium enterprises in the Kingdom of Saudi Arabia – AsiaMoney.
- The first supporter for small and medium enterprises through the Monsha'at financing portal.
- The first in financing small and medium enterprises for three consecutive years with a guarantee program.
Initiatives taken by Riyad Bank to support these facilities
Product offering and development :
- Launching salary financing programs for small and medium enterprises, amounting to SAR 10 Mn.
- Launch your credit card product financing incidental expenses for small and medium enterprises with a credit of up to SAR 250,000.
- The initiative to postpone payments on small and medium enterprises that are not included in the Saudi Central Bank initiative (Payments Deferment Program).
- Continuing to provide all financing services and products through centres dedicated to serving the small and medium-sized enterprises sector without interruption while adhering to all health standards and cancelling the requirement for a field visit for activity during the pandemic period, with a only a virtual visit.
- Initiated the implementation of the Saudi Central Bank initiative with all its supportive programs for the sector, related to mitigating the negative financial and economic impact on the small and medium enterprises sector.
- Launching the initiative of the Guaranteed Financing Program for People Affected by the Coronavirus Pandemic, from the Central Bank of Saudi Arabia, in cooperation with the 95% Guarantee Program.
- The financing product was launched against the proceeds of the point of sale for the micro-enterprises.
Programs and agreements
Micro-enterprises:
- An agreement with Qoyod Accounting Company to provide micro, small and medium enterprises with an accounting program to facilitate accounting operations for Riyad Bank customers with an exclusive discount of 50% on all monthly and annual packages.
Small and Medium Enterprises:
- An agreement to launch 5 financing programs with the General Authority for Small and Medium Enterprises.
- Financial Awareness Agreement with the General Authority for Small and Medium Enterprises.
Participation in seminars and conferences
Small establishments:
- Five awareness seminars in cooperation with the General Authority for Small and Medium Enterprises and Chambers of Commerce.
Medium establishments:
- An awareness seminar in cooperation with the General Authority for Small and Medium Enterprises.
- Holding meetings with customers to educate them about how to mitigate the effects of the Corona pandemic on business.
- Holding workshops with clients to learn about the problems they faced during the Corona pandemic.
- Holding educational seminars with customers to explain the Saudi Central Bank's initiative to mitigate the effects of the Corona pandemic on facilities.
Quantitative disclosure
| 2020 (SAR Mn.) |
Micro |
Small |
Medium |
Total |
| Loans to MSMEs – onbalance sheet items (B/S) | 1,633,439 | 6,509,912 | 17,443,342 | 25,586,693 |
| Loans to MSMEs – off-balance sheet items (nominal value) | 912,900 | 3,355,352 | 8,480,346 | 12,748,597 |
| On B/S MSMEs loans as a % of total on B/S loans | 0.8% | 3.3% | 8.9% | 13.1% |
| Off B/S MSMEs loans as a % of total off B/S loans | 1.1% | 3.9% | 9.8% | 14.7% |
| Number of loans (on and off B/S) | 4,109 | 13,518 | 15,390 | 33,017 |
| Number of loan customers (on and off B/S) | 2,884 | 3,082 | 1,151 | 7,117 |
| Number of loans secured from Kafalah Program (on & off B/S) | 151 | 6,895 | 3,151 | 10,197 |
| Total amount of loans secured from Kafalah Program (on & off B/S) | 33,806 | 2,418,472 | 3,412,385 | 5,864,663 |
| 2019 (SAR Mn.) |
Micro |
Small |
Medium |
Total |
| Loans to MSMEs – onbalance sheet items (B/S) | 640,422 | 1,947,213 | 9,122,526 | 11,710,161 |
| Loans to MSMEs – off-balance sheet items (nominal value) | 741,316 | 1,795,588 | 6,754,409 | 9,291,313 |
| On B/S MSMEs loans as a % of total on B/S loans | 0.36% | 1.10% | 5.16% | 6.62% |
| Off B/S MSMEs loans as a % of total off B/S loans | 0.87% | 2.10% | 7.90% | 10.87% |
| Number of loans (on and off B/S) | 4,059 | 11,001 | 13,093 | 28,153 |
| Number of loan customers (on and off B/S) | 2,663 | 2,439 | 1,065 | 6,167 |
| Number of loans secured from Kafalah Program (on & off B/S) | 21 | 4,993 | 1,079 | 6,093 |
| Total amount of loans secured from Kafalah Program (on & off B/S) | 1,809 | 1,373,124 | 783,128 | 2,158,061 |