Saudi market: Banking sector extends gains over 8 months .. 3 ‎banks achieve gains, one of which exceeded 55%, second 44%‎

The shares of banks listed on the Saudi Stock Exchange “Tadawul” recorded a collective increase at the end of August 2022, compared to the closing levels of the sector’s shares at the end of last year.

“Al-Rajhi Bank” share achieved the lowest gains among the sector’s shares since the beginning of this year, as it recorded a growth of 0.28% at a price of 88.90 riyals, compared to its closing at the end of last year at the level of 88.65 riyals, a gain of 0.25 riyals.

The banking sector index has gained 1416.16 points since the beginning of this year, after it ended the last August sessions at 13,637.55 points, compared to last year’s closing at 12,221.39 points, so the sector’s index surged during the period by 11.59%.

It is worth noting that the general index of the Saudi market “TASI” has risen since the beginning of this year by 7.63%, or the equivalent of 860.94 points, by closing at the end of August at 12142.65 points, compared to 11281.71 points at the end of 2021.

A Negative performance at the monthly level..Al-Bilad share is the only gainer

On the monthly level, the performance of the banking sector was negative, as the sector’s index recorded losses of 1.94% at the end of the month, compared to the sector’s index closing at the end of last July at 13,906.92 points.

The decline of the banking sector index in August was higher than the monthly decline of the general index of the Saudi market “TASI”, as the general index of the market decreased by the end of August by 0.46%, losing 56.43 points, compared to its closing at the end of last July at the level of 12199.08 points.

The performance of banks’ shares at the monthly level differed at the level of the arrangement, as most of the sector’s shares became red, with “Al-Jazeera” shares topping the list of declines, with a decrease of 11.69%, followed by “SABB” down by 6.49%, then “Investment” thirdly, with a decrease of 11.69%. 5.77%, while “Al-Ahly” had the lowest monthly losses, with a decrease of 1.87%.

On the other hand, Al-Bilad share was the only gainer at the end of last August, where the share recorded a monthly growth of 0.40% at a price of 50.20 riyals, compared to its closing at the end of July at a price of 50 riyals, bringing the monthly earnings per share to 0.20 riyals.

As for the “Al-Rajhi” share, its performance was stable at the end of last month, at a price of 88.90 riyals, which is the same level as the share closed at the end of July 2022.

The profits of banks listed on the Saudi stock market witnessed a significant improvement in the first half of this year, jumping by the end of the period to 29.795 billion riyals, compared to the profits of the same period last year of 23.257 billion riyals, an increase of 6.538 billion riyals, with a growth rate of 28.1%

The ten banks listed in the sector, eight of which made cash dividends for the first half of this year, with a total value of about 10.731 billion riyals, led by “Al-Ahly” with distributions of 4.93 billion riyals, followed by “Riyadh” with an amount of 1.5 billion riyals, then “SABB” by 1.13 billion riyals.

The cash dividends did not exceed the one billion riyals barrier for five banks: Saudi Fransi, Alinma, Arab National, Al Jazeera, and the Saudi Investment Bank. While both Al Rajhi Bank and Bank Albilad did not make any cash distributions to shareholders for the first half of this year ending on June 30, 2022.

It is worth noting that the banking sector is one of the sectors that have benefited the most from the issue of raising interest rates, whether at the global or local level. The majority of central banks around the world linked the decision to raise interest rates to what the US Federal Bank takes in this regard. So that the currencies of countries linked directly or indirectly to the dollar are not affected.

Although the rise in interest rates negatively affects global stock markets, there are sectors that directly benefit from this measure, especially the banking sector.

On July 27, 2022, the Saudi Central Bank conducted a new interest rate hike in conjunction with the US Federal Reserve’s decision to raise rates by 75 basis points for the second time in a row. SAMA raised the rate of “repo” agreements by 75 basis points from 2.25% to 3%, as well as raising the rate of “reverse repo” agreements by 75 basis points from 1.75% to 2.50 %.

SAMA had previously carried out in mid-June a new rate hike; to keep pace with the US Federal Reserve’s decision It raised the rate of “repo” agreements by 0.5% from 1.75% to 2.25% as well as raising the rate of reverse repurchase agreements by 0.5% from 1.25% to 1.75%.