RIYADH: Saudi Arabia’s Tadawul All Share Index wrapped up Monday’s trading session at 12,369.46 points, witnessing an increase of 137.92 points, or 1.13 percent.     

The parallel market, Nomu, ended the day at 26,227.72 points, shedding 3.11 points or 0.01 percent.    

Conversely, the MSCI Tadawul Index grew by 24.35 points to close at 1,569.81, a 1.58 percent increase.     

TASI reported a trading volume of SR8.2 billion ($2.19 billion), with 165 stocks making gains and 63 witnessing declines.    

Nomu, on the other hand, saw a trading volume of SR52 million.     

On the announcement front, Al Rajhi Bank reported an increase in profits to SR4.4 billion for the first quarter of 2024, reflecting a 6 percent rise from SR4.1 billion recorded during the corresponding period in 2023. 

The bank primarily attributed this growth to a 10.2 percent increase in net income from financing and investment activities, driven by a rise in total income on financing and investment.  

This was further supported by an increase in total returns on these investments, according to a bourse filing.  

Its operational income also saw a healthy increase, rising by 6.6 percent due to gains in net financing and investment income alongside income from other operations.   

However, these gains were partially offset by a decrease in income from banking service fees and foreign currency exchange activities.  

On the expenditure side, total operating expenses, including provisions for credit losses, rose by 7.2 percent. This increase was largely due to higher depreciation costs and employee salaries and benefits.  

Despite these rising costs, the bank managed to mitigate some financial pressures with a reduction in other general and administrative expenses. Notably, provisions for credit losses escalated significantly, from SR359 million in the previous year to SR421 million in 2024, reflecting a 17.3 percent increase.  

Furthermore, Bank Albilad also saw an increase in profits as it released its first quarter results.   

The bank reported a 15 percent increase in profits, reaching SR643.1 million up from SR559.9 million in the same quarter of the previous year, according to a bourse filing.  

The increase in profits was primarily attributed to a robust performance in its investment and financing assets, which saw a 21 percent increase in income.   

This significant growth in asset income helped offset the 54 percent rise in the return on deposits and financial liabilities, underlining the bank’s effective management of its asset portfolio against rising costs.  

Additionally, Saudi National Bank also managed to secure an increase in profits in the first quarter. The bank reported a marginal rise in its profits to SR5.04 billion from SR5.02 billion during the same period last year.  

This modest increase in profits was underpinned by a significant 21.9 percent rise in special commission income, driven largely by growth in the bank’s financing and investment portfolios, coupled with rising interest rates.   

The bank also experienced a slight 0.4 percent increase in net income attributable to shareholders, buoyed by a 2.4 percent improvement in total operating income and gains from other non-operational financial activities.  

However, petrochemical company Saudi Kayan reported a loss in its first quarter results. Despite the ongoing challenges, the company managed to reduce its losses to SR571.9 million from SR673.3 million in the same quarter the previous year.  

Saudi Kayan attributed the narrowed losses primarily to an increase in revenues, spurred by higher sales volumes, which helped counterbalance the impact of lower average product selling prices.   

In a Tadawul filing, the company noted that while the average selling prices had decreased, the overall financial performance improved compared to the previous year.

RIYADH: The Islamic finance industry is projected to grow globally in 2024-2025 with total assets likely to witness single-digit growth driven by economic diversification efforts, a report said.

It predicted that sukuk issuance globally would hover between $160 billion and $170 billion in 2024, representing a steady momentum from $168.4 billion in 2023 to $179.4 billion in 2022. 

In its latest analysis, credit rating agency S&P Global highlighted that the industry grew by 8 percent and 8.2 percent in 2023 and 2022, respectively, stemming from growth in banking assets and the sukuk industry. 

According to the US-based firm, Islamic banking assets grew 56 percent in 2023 compared to 72 percent in 2022. 

Financial institutions across the Gulf Cooperation Council region accounted for 86 percent of the reserve increase in 2023, with Saudi Arabia becoming the chief contributor, having generated 56.7 percent of the maturation. 

“We expect the implementation of Vision 2030 and growth in corporate and mortgage lending to continue supporting the Islamic finance industry over the next 12-24 months. In addition, the UAE showed a stronger contribution in 2023 thanks to the good performance of the non-oil sector,” the report noted.

It added: “Elsewhere, we observed some growth, particularly in Turkiye and Indonesia. The performance in Malaysia and Turkiye was somewhat tempered by the depreciation of the ringgit and the lira.” 

According to the US-based firm, the issuance of this Shariah-compliant debt product began on a strong footing in 2024, with Saudi Arabia becoming a key contributor to the performance. 

“The drop in issuance volumes in 2023, which mainly resulted from tighter liquidity conditions in Saudi Arabia’s banking system and Indonesia’s lower fiscal deficit, was somewhat compensated by an increase in foreign currency-denominated sukuk issuance,” S&P Global said in the report. 

It added: “The market has started 2024 on a strong footing, with total issuance reaching $46.8 billion at March 31, 2024, compared with $38.2 billion at March 31, 2023.” 

The analysis highlighted that the sukuk market will continue its growth momentum in the near term as financing needs in core Islamic finance countries remain high, given ongoing economic transformation programs, especially in countries like Saudi Arabia. 

“We expect the sukuk market to fill in some of these needs. Specifically, we see some opportunities in the structured finance space with banks tapping the sukuk market to refinance their sizable mortgage books,” said the agency in the report. 

The agency highlighted that the drive for digitalization and sustainability initiatives have yielded mixed results in the Islamic finance industry. 

“While opportunities related to sustainable finance are significant as the industry is concentrated in oil exporting countries, progress has been relatively slow and limited in the global context,” according to S&P Global. 

However, the report noted that digitalization has helped the banking side of the industry. 

S&P Global concluded the study by saying that the future of Islamic finance is sustainable, collaborative, and digital. 

“It is sustainable thanks to the alignment between Shariah principles, overarching pillars of sustainability, and the value proposition of Islamic finance that capture more than just financial objectives,” said the report. 

According to the analysis, the future of Islamic finance is collaborative because stakeholders do not want to disrupt the industry equilibrium and erase the development achieved over the past 50 years. 

The report added that digitalization will also impact Islamic finance in the coming years, as leveraging emerging technologies could help the industry enhance its efficiency and ultimately increase its value proposition for investors and issuers. 

Earlier this month, another report released by Fitch Ratings noted that global outstanding sukuk expanded 10 percent year on year to reach $867 million at the end of the first quarter of 2024. 

The credit rating agency attributed the growth of this Islamic debt product to funding and refinancing needs, and the development of the debt capital market in the GCC region. 

The report, however, added that new Shariah requirements that could alter credit risk, geopolitical uncertainties and high oil prices, could affect the growth of the sukuk market this year.