JEDDAH, 10 January 2007 — The board of directors of National Commercial Bank (NCB) has decided to increase the bank’s paid-in capital from SR9 billion to SR15 billion by capitalizing SR6 billion from general reserves, it was announced yesterday.

Abdullah Bahamdan, chairman of NCB, said the bank would raise the capital by issuing two bonus shares for every three shares. “This will increase the total number of outstanding shares from 900 million to 1.5 billion shares, each with a nominal value of SR10,” he explained.

Bahamdan said the recommendations made by the board were subject to the statutory approvals from concerned authorities and the final approval of shareholders during their general assembly meeting scheduled for the first quarter of this year.

The move comes ahead of a plan to sell part of NCB’s shares in an initial public offering. In a previous statement, Bahamdan said that NCB was ready for public subscription but had not yet fixed a date for the IPO. “The final decision on this matter must be taken by the main shareholders, most importantly the Public Investment Fund (PIF),” he said in comments published in October. Sources are unsure how many shares NCB will sell in the IPO but they estimate that some 30 to 40 percent of state-owned PIF shares will be offered for sale. Some 69.3 percent of NCB shares are owned by PIF.

NCB posted a net income of SR4.80 billion in the first 9 months of 2006, registering an increase of SR1.07 billion or 28.6 percent over the same period in 2005. The bank’s total operating income also grew to SR7.07 billion during same period of 2006.

Total assets grew by 10.8 percent to SR155.68 billion on Sept. 30, 2006 compared to the same period in 2005, net loans and advances increased to SR77.16 billion, an increase of 4.4 percent and customer deposits reached to SR113.91 billion, an increase of 10.9 percent.

NCB’s total shareholders’ equity grew by 21.5 percent to SR23.73 billion and the ratio of equity to assets stood at a robust 15.2 percent, thus reinforcing its strong capital adequacy ratio and supported by maintaining continuous improvement in profitability.

The bank continued to maintain its high profitability ratios as return on average assets (ROA) increased to 4.3 percent and the return on average equity (ROE) was 28.2 percent while earnings per share (EPS) improved from SR4.2 to SR5.3.

NCB achieved a new milestone in Islamic banking when it was awarded the “IREF ME 2006 Best Islamic Finance House in Saudi Arabia” by the Islamic Convention Group (ICG) at the Fourth Convention on Islamic Finance in Real Estate Sector held in Dubai. The award was based on the decision made by a group of experts led by policy makers from various Gulf nations.

Abdulkareem Abu AlNasr, the NCB’s chief executive officer, considered the award as new confirmation of the bank’s capabilities and its distinguished position in managing and offering financial programs that comply with Islamic law and principles.