Capital markets need to step in to secure Vision 2030 goals: S&P Global

Capital markets need to step in to secure Vision 2030 goals: S&P Global
S&P Global says Saudi Arabia’s investment needs are “significant” (Shutterstock)
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Updated 30 November 2022

Capital markets need to step in to secure Vision 2030 goals: S&P Global

Capital markets need to step in to secure Vision 2030 goals: S&P Global

RIYADH: Saudi Arabia’s banking sector will not be able to fund all of the Kingdom’s Vision 2030 projects, according to a report which said more private investment is needed.

The analysis by S&P Global says Saudi Arabia’s investment needs are “significant”, and capital markets will play a “key role” in funding not just private sector investments but also giga-projects such as NEOM, the IPO for which is expected in 2024.

Quantifying the exact funding amount needed for Saudi Arabia’s ambitious growth plans is “not easy” according to the report, with the Kingdom aiming to raise the private sector’s contribution to gross domestic product from 40 percent to 65 percent, and increase non-oil exports share of GDP from 16 percent to 50 percent.

Taken alongside the boom in oil prices, S&P Global says Saudi Arabia is set to become one of the world's fastest-growing large economies in 2022, real GDP growth in excess of 7.0 percent this year, and a return to fiscal surpluses at 6.3 percent of GDP in 2022 and 3.5 percent in 2023.

The report said: “Saudi banks have contributed significantly to a key Vision 2030 objective — increasing home ownership to 70 percent by 2030 (60 percent in 2020). 

“Mortgage lending has been the main engine of growth for Saudi banks over the last few years, with total mortgages hitting SR503.2 billion ($133.85 billion) as of June 30, 2022, compared with SR140.3 billion at Dec. 31, 2018.

“ As the market matures and interest rates continue to rise, origination will likely lose momentum in the next 12-24 months. 

“However, as contracts for Vision 2030 projects are awarded, corporate credit lending should start to contribute more meaningfully to banks' lending growth.”

S&P Ratings said that even as Saudi firms set out ambitious capital spending goals in the next five years, the firm would not necessarily reassess its ratings of these businesses “given their healthy balance sheets and strong liquidity.”

“Over time, however, we will reassess our ratings as projects are executed because any rating upside would hinge on business trends improving, sustainable EBITDA (Earnings before interest, taxes, depreciation, and amortization) growth, or stronger leverage metrics,” said the report.

The report went on to state that Saudi Arabia had fared better against the wave of inflation sweeping the globe than other countries, with the riyal being pegged to the dollar helping to play down unpredictability.

“We forecast inflation at 2.5 percent in 2022, before rising to 2.7 percent in 2023 and averaging 1.9 percent in 2024-2025,” said the report, adding: “We expect interest rate hikes to affect the private and general household sectors more than government-related activities given expected high but tapering oil prices.”


UAE’s Pure Harvest inks food partnership with Saudi Arabia’s Nadec 

UAE’s Pure Harvest inks food partnership with Saudi Arabia’s Nadec 
Updated 11 sec ago

UAE’s Pure Harvest inks food partnership with Saudi Arabia’s Nadec 

UAE’s Pure Harvest inks food partnership with Saudi Arabia’s Nadec 

CAIRO: UAE-based agriculture technology startup Pure Harvest has signed a strategic partnership with Saudi Arabia’s National Agricultural Development Co. to deliver a large-scale national food security project. 

Pure Harvest will increase production capacity over the next five years by farming a wide range of crops, while the Saudi company, also known as Nadec, will market these products to its consumer base, hotels, restaurants, and catering partners. 

The partnership will enable the production of locally and sustainably grown fresh produce on more than 27 hectares on Nadec's farms. 

“Nadec is a formidable incumbent food supplier with a sterling reputation and brand, sizeable landholdings and enabling infrastructure, and an experienced leadership team,” Sky Kurtz, Founder and CEO of Pure Harvest Smart Farms, said. 

Nadec is the first listed agricultural company in the Saudi exchange market and produces over 1.5 million liters of dairy and juice per day, serving over 40,000 stories in the region as well as employing over 7,000 people. 

Both Nadec and Pure Harvest completed and commissioned their first-ever project in December 2021, producing over fifteen varieties of high-quality, hydroponically-grown tomatoes in an approximately six-hectare high-tech, climate-controlled growing system in Nadec City, Haradh. 

Pure Harvest raised $64.5 million in funding last October, and has secured over $280 million in total funding since its inception. 


Egypt fintech firm MNT-Halan securing $400m in new finance

Egypt fintech firm MNT-Halan securing $400m in new finance
Updated 01 February 2023

Egypt fintech firm MNT-Halan securing $400m in new finance

Egypt fintech firm MNT-Halan securing $400m in new finance

CAIRO: Egyptian microfinance lending and payments company MNT-Halan is securing $400 million in new equity and finance, bringing its valuation to more than $1 billion, the company said in a statement on Wednesday.

The investments include an equity stake of at least 20 percent of MNT-Halan worth more than $200 million taken by private equity firm Chimera Abu Dhabi. Another $60 million in primary capital is being secured from international investors, the statement said.

These investors include the International Finance Corporation, according to data on the IFC's website.

MNT-Halan obtained $140 million in financing by securitizing part of its loan book, the statement said.

MNT-Halan provides small- and micro-business lending, payments, consumer finance and e-commerce, the company said. It has more than 5 million customers in Egypt, of which 3.5 million are financial clients and 2 million are borrowers. About 1.3 million of the customers are active monthly.

New legislation and regulatory changes in Egypt, the Arab world's most populous country, have been helping attract a surge in new fintech investments and change the way the country's largely unbanked citizens do business.

"Following the completion of these investments, MNT-Halan’s valuation will exceed $1 billion," the statement added.

Previous investors in MNT-Halan include Cairo-based Lorax Capital Partners, and Middle Eastern venture capitalists Algebra Ventures, DisrupTech, Endeavor Catalyst, Egypt Ventures, MEVP and Wamda.


UAE's DFM net profit up 41.7% to $40m in 2022 

UAE's DFM net profit up 41.7% to $40m in 2022 
Updated 01 February 2023

UAE's DFM net profit up 41.7% to $40m in 2022 

UAE's DFM net profit up 41.7% to $40m in 2022 

RIYADH: Dubai Financial Market Co. reported an increase of 41.7 percent in net profit to 147.1 million dirhams ($40 million) for the fiscal year ending on Dec. 31, 2022, compared to 103.8 million dirhams in 2021. 

The company recorded a total revenue of 351.2 million dirhams, up 19 percent compared to the previous year’s 294.6 million dirhams. 

In the fourth quarter of 2022, DFM posted a net profit of 58.1 million dirhams compared to 65.7 million dirhams in the corresponding period of 2021, according to a press release. 

Its total revenue for the period reached 113.4 million dirhams, compared to 111.5 million dirhams in the fourth quarter of 2021.  

Helal Al Marri, chairman of DFM said: “Our relentless focus on our capital markets development strategy has borne fruit, making DFM one of the most active markets globally for new IPOs and listings with the successful listing of 5 IPOs for leading government-related and private companies.” 

The company’s board of directors also recommended the distribution of a cash dividend of 134.7 million dirhams, equivalent to 1.68 percent of the capital and 100 percent of the total retained earnings available for distribution, it added.  

Moreover, the board also resolved to submit a recommendation to the annual general meeting to adopt a new fixed dividend policy, stipulating that the company annually distributes a minimum of 50 percent of its net profit as opposed to the current practice of cash dividend every two years. 

DFM ended the year on a strong note with trading value increased by 24.5 percent to 90 billion dirhams compared to 2021, and the market capitalization of listed securities increased by 41.4 percent to 582 billion dirhams.  

Over the past year, DFM has attracted 167,332 new investors, registering 23 times jump compared to 2021.  


Saudi National Bank 2022 net profit surges 47% to $4.96bn 

Saudi National Bank 2022 net profit surges 47% to $4.96bn 
Updated 01 February 2023

Saudi National Bank 2022 net profit surges 47% to $4.96bn 

Saudi National Bank 2022 net profit surges 47% to $4.96bn 

RIYADH: Saudi National Bank reported a 46.7 percent increase in net profit in 2022 to SR18.6 billion ($4.96 billion) from SR12.7 billion in 2021, spurred by higher operating income and a decline in provisions for expected credit losses. 

The Kingdom’s biggest bank, which last year acquired a 9.88 percent stake in the troubled Swiss investment institution Credit Suisse, also booked a 61 percent surge in net profit in the fourth quarter of 2022 to SR4.8 billion from SR2.96 billion during the same period in 2021. 

The results beat the average analyst estimate of SR18.2 billion, according to Refinitiv data. 

The bank said in a statement to the Saudi Stock Exchange that total operating income grew 16.9 percent to SR33 billion in 2022 from SR28.23 billion in 2021.  

Its net special commission income jumped 18.4 percent to SR26.29 billion between January and December 2022 from SR22.21 billion in 2021. 

“Total operating income increased mainly due to higher net special commission income by 18.4 percent, fee income from banking services by 21.1 percent, and lower other operating expenses by 12.4 percent,” the bank said in a statement to Tadawul. 

Moreover, total operating expenses, including impairments, were lower by 15.2 percent, mainly due to a 13.5 percent decline in other general and administrative expenses and a 57.4 percent fall in a net impairment charge for expected credit losses. 

Earnings per share clocked an impressive 46.7 percent increase to SR4.15 in 2022 from SR2.83 in 2021. 

SNB’s total assets also increased 3.43 percent to SR945.46 billion in 2022 from SR914.15 billion in 2021, even as loans and advances gained 9.6 percent to SR543.31 billion to SR497.57 billion during the period under review. 

Customer deposits, however, dropped 3.45 percent to SR568 billion in 2022 compared to SR588.57 in 2021. 

Last month, SNB announced its intention to raise its paid-up capital by SR15.22 billion to boost its financial position. Its board recommended that shareholders approve the increase in capital by about 34 percent, from SR44.78 billion to SR60 billion riyals, through the issuance of bonus shares. 

“The recommendation is aimed to strengthen the bank’s financial position, which contributes to achieving its strategic objectives,” the bank said in a statement to Tadawul. 

The bank will issue about one bonus share for every three owned by shareholders, it said. 

“The eligibility of the bonus shares shall be for shareholders owning shares by the end of the trading day of the bank’s extraordinary general assembly meeting, which will be announced at a later date,” the bank said.


UAE’s national digital economy to touch $140bn by 2031: report

UAE’s national digital economy to touch $140bn by 2031: report
Updated 01 February 2023

UAE’s national digital economy to touch $140bn by 2031: report

UAE’s national digital economy to touch $140bn by 2031: report

RIYADH: The UAE’s national digital economy is expected to surge from $38 billion today to $140 billion by 2031, as the Emirate successfully pursues its digital transformation journey, according to a new report. 

The forecast, released by the Dubai Chamber of Digital Economy – one of three chambers operating under Dubai Chambers – noted that it plans to attract over 300 digital startups and 100 tech experts to Dubai by 2024. 

Dubai Chambers is also eyeing implementing new laws and policies, organizing a conference, promoting digital transformation, and enhancing the business environment to attract global digital firms to the Emirate, state news agency WAM reported. 

The UAE’s Minister of State for Artificial Intelligence, Digital Economy, and Remote Work Applications and Chairman of the Dubai Chamber of Digital Economy, Omar Sultan Al Olama, said that Dubai aims to become a key technological hub in the region. 

He added that the goal is to double the contribution of the digital economy to the UAE’s gross domestic product from 9.7 percent now to over 20 percent by 2031. 

Al Olama also emphasized the vitality of developing world-class digital infrastructure and supporting the dynamic startup ecosystem to drive digital transformation and sustainable business growth in the UAE. 

He further stressed the importance of raising awareness about challenges and future trends in the technological space, and also highlighted the necessity of embracing digital technology for sustainable business growth.

In April 2022 the UAE Cabinet approved a new Digital Economy Strategy, which includes more than 30 initiatives and programs targeting six sectors and five new areas of growth.