CFO's Review

By leveraging our resilience and adaptability in the face of an unprecedented interest rate cycle, alinma earned % 5,832 million in net profits after zakat for the year, representing a substantial 21% increase compared to 2023.

Retail and corporate financing drive performance

A key driver of our excellent results this year was the 16% increase in financing to % 206.1 billion, coming in higher than the Saudi banking industry average for 2024. With strong performances being delivered by all our operating segments, alinma once again validated its profile as the fastest growing bank in Saudi Arabia. Although the youngest bank in Saudi Arabia, we have made substantial inroads into the banking sector, with our market share in assets, financing, deposits, and CASA all increasing in 2024.

Higher rates extend margins

Total operating income increased 12% to % 10,940 million in the year to 31 December 2024, driven in large part by a 13% increase in funded income and 11% in non-funded income. As a result, net income after zakat increased 21% to % 5,832 million.

The growth in operating expenses continued to slow in this year , coming in at 11% higher this year compared to 2023. While our cost to income ratio continue to decrease reaching 30.9% with 0.4ppt decrease year-on-year.

Vision 2030 project financing gathers momentum

Our industry-beating credit performance was headlined by a 17% increase in the Retail Banking Group’s gross financing portfolio, which benefited from new products, such as revolving credit cards and auto financing options, and an increase in home financing.

Corporate Bank financing was 15% higher, thanks to the growth in contributions from all corporate segments. Our project financing operation, which is strategically aligned with Vision 2030, delivered a particularly strong performance of 21% growth, while SME financing made considerable progress by 39%, supported by new leadership and strategic initiatives.

As of the end of the year, alinma’s overall gross financing portfolio was divided into 66% large corporate and project finance, 5% mid-corporates, SMEs accounted for 5%, home financing came in at 12%, and personal and other retail financing was 12%.

Strong asset growth

The Bank’s balance sheet continued to strengthen in 2024, with total assets growing 17% to reach % 276,827 million as a result of the 17% increase in financing growth and 12% growth in investments.

The balance sheet was also reinforced by a healthy increase in customer deposits, which were 12% higher at % 210,545 million. Current and savings account (CASA) deposits, which showed strong growth of 20%, comprised 51.6% of all deposits in 2024, while time deposits were 48.4%. Growth in total assets was positively impacted by increases in the value of our investments, growth in SAMA, and interbank balances. Our liabilities were 16% higher, largely due to the 12% increase in customer deposits.

Our total equity grew by 21%, primarily supported by the successful issuance of Tier 1 Sukuk. Our inaugural international issuance was well received, reflecting strong investor confidence and competitive pricing.

Gross funded income increased 22% to % 16,155 million, thanks to the hefty 22% rise in investment income and financing income coming in 22% higher. The net profit margin decreased by 10 bps to 3.70%.

Robust cross-selling activity supported the increase in non-funded income, which rose 11% to % 2,291 million. Fund management fees comprised the largest portion fees from banking services at 35%, while card services fees accounted for 21%, other fees for 20% and trade finance services and brokerage fees 13% and 11% respectively.

Market-leading metrics

alinma’s key profitability metrics remained market leading in 2024, with a return on assets (ROA) of 2.3%, reflecting a 10 basis points improvement, and a return on equity (ROE) of 18.8%, up from 17.2% in 2023. This impressive performance placed alinma second among all Saudi Arabian banks.

After accounting for the 11% increase in operating expenses, which was due in large part to a rise in employee, G&A costs, our positive Jaws (the comparison between total operating income growth and expenses growth) saw the cost-to-income ratio improve to 30.9% (2023: 31.3%), substantially lower than the 36% at the end of 2020. The steady decline in this ratio is once again evidence of our operating efficiency strategy, digitalization, process optimization, and the positive impact of the 2025 strategy on our overall performance.

After accounting for the 11% increase in operating expenses, which was due in large part to a rise in employee, G&A costs, our positive Jaws (the comparison between total operating income growth and expenses growth) saw the cost-to-income ratio improve to 30.9% (2023: 31.3%), substantially lower than the 36% at the end of 2020. The steady decline in this ratio is once again evidence of our operating efficiency strategy, digitalization, process optimization, and the positive impact of the 2025 strategy on our overall performance.

Continuous improvement in asset quality

In the year under review, alinma’s non-performing loans (NPL) ratio decreased 55 basis points to 1.06%, reflecting the continued improvement in the quality of our assets and the growth in the financing portfolio. Our non performing loans coverage ratio increased to 172.3%, reflecting our prudent and conservative approach. The impairment charge for financing was 17% lower than 2023 at of % 1,050 million, while our cost of risk declined 22 bps to 0.55%, reflecting the Bank’s excellent due diligence processes in assessing assets and the high quality of its financing portfolio.

Strong capital position

The Bank maintained its healthy capital and liquidity ratios, with the capital adequacy ratio coming in at 17.7% compared to 17.5% in 2023. The net stable funding ratio (NSFR) remained healthy at 108.2% well above regulatory minimum. Our loan to deposit ratio (LDR), increased 2.8ppts to 83.3%, while the liquidity coverage ratio decreased 25 ppts to 13.8%. Our ongoing focus on strong liquidity and efficiency that remain comfortably within regulatory limits provides investors with confidence about the prudential management of the Bank.

Executing our 2025 Strategy

alinma’s 2025 Strategy continued to advance activities aligned with projects identified in Vision 2030. Equally important was alinma’s support of the SME sector by providing financing and banking services to ensure this segment achieves the growth and GDP contribution targeted by the country’s vision.

alinma has been particularly focused on capturing the opportunities that have emerged from the ongoing diversification of the economy, the expansion of the SME sector, and growing demand for project financing of public-private partnerships. This approach has been exceptionally successful, as evident in the growth of our financing in all business segments.

Underpinning this growth were our activities supporting the diverse needs of different corporate segments and the diversification of the portfolio by tapping into new client segments.

Digital transformation gathers momentum

Our digital journey reached new milestones in 2024 with the launch of our youth-focused digital banking app, “iz”. This innovative platform demonstrates our commitment to serving the younger demographic, and reinforced our position as a leader in digital banking solutions. Evidence of our value proposition aligning with the ambitions and needs of young Saudis is the exceptional increase in our youth customer base in 2024.

During the year, our penetration of digital banking in Saudi Arabia strengthened, the Retail Banking Group averaged 23.8 million monthly average users, based on smart phone logins, with 98.6% of all transactions taking place on our digital platforms.

Share capital increase

During the financial year, the Bank’s share capital increased by 25% following the issue of bonus shares. On December 31, 2023, the Board recommended a capital increase to % 25 billion, representing a 25% increase. This was executed during 2024 by issuing bonus shares in a 1:4 ratio, capitalizing % 5 billion from retained earnings.

Significant advances in sustainability

alinma’s ESG score improved significantly from 28 to 68 in 2024, placing alinma among the top 25% of banks worldwide in ESG performance. Environmental and social responsibility metrics went from 14 to 57, while the governance score rose from 53 to 88. These remarkable achievements underscore the Bank’s dedicated and strategic efforts to embed sustainability practices throughout its operations, positioning ESG as a core pillar in our long-term strategy. Additionally, the incorporation of tangible ESG measures has delivered cost-savings to the Bank, notably, our energy costs decreased after installing solar panels.

alinma in 2025

In the coming year, we will focus on completing our 2025 strategic initiatives. We have set ambitious financial and non-financial targets for the year, which we aim to outperform.

A key focus for the coming year will be the development of the 2030 strategy, which will chart our course for the coming years. As ever, our priorities will be to deliver value to our shareholders, provide innovative solutions to our customers, and contribute to the realization of Saudi Vision 2030.