Simah Rating Agency (Tassnief) assigns initial solicited national scale entity ratings to SNB Capital Company

Tassnief has assigned initial long-term entity rating of “AA+” (Double A Plus) to SNB Capital Company (‘SNBC’ or ‘the Company’) with a short-term rating of “T-1”. The outlook on the rating is “Stable”. Tassnief considers the rated issuer to hold very high creditworthiness and thus very low credit risk although the risk profile may vary slightly with changes in economic / sector conditions.

Rating Rationale: The assigned ratings are underpinned by SNB Capital’s strategic significance to its parent, Saudi National Bank (SNB), and resulting advantages in the form of integrated franchise, unified branding, shared clientele, product portfolio synergies enabling cross-selling, and access to parent’s credit facilities for growth financing. SNB Bank is a systemically important Bank in the domestic context and enjoys sound financial profile as evident from healthy profitability profile, robust capitalization indicators, sound asset quality and liquidity metrics.

On a standalone basis, ratings also incorporate dominant market position of SNB Capital in asset management services industry in terms of assets under management, strong franchise value, as well as leading positions in securities brokerage and investment banking businesses. Business risk profile draws support from diversified product portfolio and healthy revenue diversification. Strong operating profitability, a sizeable equity base, along with sound governance and risk management framework are also key rating drivers. Ratings also reflect satisfactory coverages and increase in leverage indicators on account of short-term borrowings undertaken to fund growth in investment portfolio in line with setup of principal investments division. The principal investment division has grown over time and contributes significantly to the Company’s profitability. Going forward, the Company is focused on growing revenue across all core segments, strengthening distribution, collaborating with fintech companies, actively engaging with banks including the parent bank and continued investment in human capital. These initiatives are expected to aid retention of market leadership and facilitate improved financial performance over the rating horizon.

Rating Triggers: Sustained market leadership in assets under management alongside improvement in AUM profile (through further growth in retail AUMs) & business diversification, growth in operating profitability and improvement in financial flexibility are positive rating triggers. Negative rating triggers include a sustained decline in assets under management/market position and operating profitability, weakening in AUM profile and financial flexibility on account of sizeable increase in leverage position vis-à-vis current levels.

About the Company: SNB Capital is a Saudi Closed Joint Stock Company formed in 2005 and registered in Kingdom of Saudi Arabia under commercial registration number 1010231474 dated April 2007. SNB Capital is engaged in provision of asset management, investment banking and securities brokerage services. The Company had over 450 employees as at end-2024. It is the largest asset management company in KSA in terms of assets under management. SNBC is a 100% owned subsidiary of Saudi National Bank.