The year 2020 presented unprecedented challenges, especially those that arose from the COVID-19 pandemic and had an impact on all sectors, businesses and aspects of life. Nevertheless, the Treasury and Investment sector managed to record good performance and achieve profit growth due to the adoption of innovative solutions and the insistence on transforming crises into opportunities.

The sector manages the Bank's liquidity needs by attracting customer deposits at a competitive cost and maintaining high levels of them, with a focus on medium and long-term deposits. The Bank maintained a combination of deposits and murabahah to diversify liquidity sources.

In 2020, this Division contributed to the Bank’s increased profits by achieving growth in investment income, and in-creasing the treasury sector's market share. The Bank hopes to record a robust performance in the future thanks to ambitious initiatives and its commitment to keep up with the latest global technologies and practices, in addition to applying the lessons learned from this challenging year.


The year under review was indeed an unprecedented one. We had to deal with the pandemic and the resulting lockdown and travel restrictions. This also caused extreme turbulence in the markets, liquidity stress and widening of the credit spread. Interest rates also reached a historic low and oil prices plummeted. However, the hardships were alleviated to a great extent by the SAMA Private Sector Financing Support Programme which enabled the financial sector to support the growth of the private sector, and the SME sector in particular. Riyad Bank received a sum of SAR 26 Bn. under this programme.

Treasury and investment sector performance

The Treasury and Investment Division performed extremely well in 2020. The Division’s profits grew in both commission income and investment income. The Fee Income, aided by Derivatives, recorded its best ever performance. The Bank was also able to make significant gains in fees and market share from foreign exchange transactions. Investment income too recorded substantial growth as a result of certain adjustments made to the investment portfolio prior to the outbreak of the pandemic.

The Division also received the benefit of lower funding cost while SAMA support funding stabilized the cost during the year. Further, the Bank has a robust funds transfer pricing methodology, enabling it to determine the profitability at the business unit and product levels.

Countering the adverse effects

The major challenge during the year was of course the COVID-19 pandemic, and the impacts incidental thereto. The pandemic caused market turbulence and disruption, pressure on liquidity, and credit spread widening.

Interest rates hit historically low levels. However, the Treasury and Investment Division was able to benefit from some of the developments and by being innovative and proactive, we were able to turn adversity into opportunity. Treasury was also able to grow market share by adopting innovative solutions, which gave high returns. The early adoption of digital means of communicating with customers also gave the Bank an edge while it also allowed the Bank to liaise with the international partners in develop solutions that will benefit our customers.

Through its investment strategy, the treasury and investment sector was able to capitalize on the opportunity presented by the market stress caused by the pandemic and invest in valuable assets built on solid credit foundations. The Bank has benefited from the investment strategy this year, and will continue to benefit from it in the coming years.

Developments and initiatives

Despite the crisis caused by the pandemic, the Bank was able to maintain strong liquidity rates, partly due to the support it received from the SAMA, which pumped SAR 50 Bn. to the banking system in mid-2020 to support liquidity. The pressure on the liquidity of the US dollar has been relieved by issuing second-level international Sukuk in US dollars’ worth USD 1.5 Bn. within the framework of the Sukuk issuance, Euro Medium Term Note Program (EMTN).

The economic uncertainties caused by the pandemic resulted in widening of bond spreads. This gave the treasury and investment division an opportunity to invest in high-quality assets with very attractive yields - and thus extract opportunity from an adverse situation. The benefits derived from this will continue into the years to come.