Running Head: Bank Albilad 1

Bank Management

Bank Albilad

By:

Date
Bank Albilad 2

Asset quality

Assets *2016 2017 2018

Cash and balances 4,528,825 5,688,931 6,438,201
with SAMA
Due from banks as 7,950,844 7,706,382 8,334,284
well as other
financial institutions
and net
Net Investment 3,080,945 5,140,017 6,465,710
Net Financing 36,178,387 43,447,429 50,593,033
Net property and 802,424 875,424 1,146,484
equipment
Investment property 1,000,000
Other Assets 207,245 349,493 658,050
Total assets 53,748,670 63,207,676 73,636,126
*SAR’000

Source: Annual reports of Bank Albilad (2016-2018)

Total assets
80,000,000 73,636,126
70,000,000 63,207,676
Total Assets SAR'000

60,000,000 53,748,670
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
Years

Source: Annual reports of Bank Albilad (2016-2018)

From above-mentioned table and figures, it can be seen that Bank Albilad has outstanding
performance because total assets from past three years are growing and it indicates strong asset
portfolio of the bank. Under this section, we will analyze the major classification of Bank
Albilad assets containing cash and balance with SAMA, Net investment, financing, and other
assets.
Bank Albilad 3

Cash and balance with SAMA

In this section, the current account, statutory deposits, and cash in hand included. Bank Albilad
holds some deposits with SAMA to make sure that bank is able to provide significant amount of
cash when requested by client. The table indicates that cash and balance with SAMA are
increased from 4,528,825 to 6,438,201 (SAR’000) from 2016 to 2018. It indicates higher growth
in their asset portfolio.

Net total investment

The net total investment of Bank Albilad includes Sukuk, Murahaba, and other investments in
securities. Sukuk is a financial certificate or bond that compliance with sharia. The bank issue
sukuk bonds and uses to purchase an asset whereas investor has partial ownership as well. It also
includes FVIS fair value through income statement. The net investment of Bank Albilad is
increased from 3,080,945 to 6,465,710 (SAR’000) from 2016 to 2018. It shows bank is
prominently growing in their net investments.

Net financing

Financing is the concept of funding where funds are provided for investment, purchase, or
business activities. The financing of Bank Albilad includes real-estate financing, care financing,
visa cards, personal financing and other types of financing. The net financing of Bank Albilad is
increased from past three years as 36,178,387 to 50,593,033 (SAR’000) from 2016 to 2018. The
current situation indicates that bank can offers loans to general public to gain more return on
investment [ CITATION Jas15 \l 1033 ].

Net property and equipment

The property and equipment include building, leasehold improvement, equipment, furniture, and
computer hardware. With the growing business portfolio of Bank Albilad, the net property and
equipment are increased from 2016 to 2018 by 802,424 to 1,146,484 (SAR’000). It indicates that
bank has strong potential to grow its business dominantly.

Liabilities

Liabilities 2016 2017 2018

Due to SAMA 2,006,214 2,012,518 -
Bank Albilad 4

Due to bank and 996,391 1,748,937 3,100791

other financial
institutions
Deposits of 40,234,715 47,782,959 57,175,594
customers
SUKUK 2,007,047 2,006,575 2,008,587
Other liabilities 1,352,419 2,067,894 3,518,205
Total liabilities 46,596,786 55,618,883 65,803,177
*SAR’000

Source: Annual reports of Bank Albilad (2016-2018)

Total liabilities
70,000,000 65,803,177

60,000,000 55,618,883
Total liabilities SAR'000

50,000,000 46,596,786

40,000,000

30,000,000

20,000,000

10,000,000

0
Years

Source: Annual reports of Bank Albilad (2016-2018)

From the above-mentioned table and figure of liabilities, it can be seen that total liabilities of
bank Albilad is increased from past three years. On the other hand, the total assets of bank
Albilad are higher as compared to total liabilities which means bank Albilad is solvent. The
following are the further explanation of liabilities [ CITATION Ban18 \l 1033 ].

Due to banks as well as other financial institutions

This section indicated that funds are currently payable to other banks and financial institutions
which becomes liable for the bank Albilad. This section had been increased from 996,391 to
3,100791 (SAR’000) from 2016 to 2018.

Customer deposits
Bank Albilad 5

The customer deposits include customer accounts that become liable for bank to payable. This
section had been increased from 40,234,715 to 57,175,594 (SAR’000) during 2016 to 2018.

Ratio analysis

Capital/leverage ratio
Bank Albilad% Al-Rajhi Bank%

Year 2010 2012 2014 2016 2018 2010 2012 2014 2016 2018
Debt ratio 0.85 0.85 0.869 0.86 0.89 0.83 0.86 0.86 0.85 0.26
Capital 16.58 13.67 15.59 15.20 12.9 15.23 14.6 19.59 21.98 20.20
adequacy 2 8
Source: Annual reports of Al Rajhi Bank (2016-2018)

Ratio interpretation

The capital/leverage ratio indicates the performance of company while utilizing its capital. This
ratio gives evaluation of company to meet financial obligations in an adequate manner. The debt
indicates amount of available balance on financial statements. The bank albilad had stable debt
ratio from 0.85 to 0.89 from 2010 to 2018 and seems feasible that balance the debt and equity
utilization. On the other hand, the Al Rajhi Bank had increase debt ratio which means company
offers more loans to investors which increases debt of the company. The capital adequate
measure capital of bank and Al Rajhi bank has higher capital adequacy ratio which seems much
safer utilization of capital as compared to Albilad capital adequacy ratios [ CITATION Alr18 \l
1033 ].

Liquidity Ratios
Bank Albilad% Al-Rajhi Bank%

Year 201 2012 2014 2016 2018 2010 2012 2014 2016 2018
0
Financial 5.20 6.81 7.68 7.4 9.4 6.10 7.33 7.34 6.54 7.52
leverage
Loans to 71.3 75.2 81.1 85.1 85.6 87.6 83.6 85.9 82.5 83.7
deposit
Source: Annual reports of Al Rajhi Bank (2016-2018)

Ratio interpretation

The liquidity ratios determine the ability of company to pay its debt obligations in the desired
manner as well as indicate safety margins. The first ratio is financial leverage which means
Bank Albilad 6

availability of debt to acquire additional assets. In this regard, higher amount of assets may
causes owner’s cash investment and it may amplified. The financial leverage of Albilad is
greater than Al Rajhi bank which means bank have larger gains on owner’s cash and analyzed
that loan interest rate is less as compared to rate of increase in value of asset [ CITATION Sta17 \l
1033 ]. Secondly, loan to deposit measure ability of bank to manage uncertain funds which may
require by its liquid assets. Both banks have aggregate loans to deposit ratio which means both
banks are sustainable to cover any uncertain or unforeseen fund requirements adequately
[ CITATION Fin191 \l 1033 ].

Profitability ratios
Bank Albilad % Al-Rajhi Bank%

Year 2010 2012 2014 2016 2018 2010 2012 2014 2016 2018
Return on 0.89 3.19 2.12 1.54 1.62 3.81 3.23 2.33 2.48 2.91
Asset
Return on 4.33 20.66 15.72 11.77 14.40 22.9 22.76 17.03 16.49 19.74
equity 3
Net Margin 7.38 55.87 42.56 32.86 32.84 55.6 59.32 50.11 53.45 59.62
Source: Annual reports of Al Rajhi Bank (2016-2018)

Ratio interpretation

The profitability ratios indicate the capability of the firm to generate profits in a required manner.
First of all, return of assets indicates the capability of firm to generate returns by using assets.
The Al Rajhi bank has higher return on investment which means company holds higher current
value of investment and ability to generate more profits accordingly. The second measurement is
return on equity which means the determination of equity and its profits. The Al Rajhi bank has
higher return on equity that shows their equity had retained investor’s values. Lastly, net margin
indicates the revenue after deducting all expenses and again Al Rajhi bank has greater net margin
because their revenues are continuously increasing and investor are continuously invetsing in Al
Rajhi bank. On the other hand, the Albilad bank is not performing well as compared Al Rajhi
bank due to less potential of revenues and investment developments [ CITATION Alr18 \l 1033 ].
Bank Albilad 7

Growth ratios
Bank Albilad% Al-Rajhi Bank%

Year 2010 2012 2014 2016 2018 201 2012 2014 2016 2018
0
Revenue 16.8 -42.52 10.33 12.18 18.33 3.69 10.83 -1.13 10.71 8.84
YOY 7
Net income 16.2 19.12 18.5 2.45 17.88 0.05 6.86 -8.09 13.97 12.90
EPS -3.2 -7.92 18.68 2.53 18.59 2.3 6.91 -8.05 13.9 13.01
Source: Annual reports of Al Rajhi Bank (2016-2018)

Ratio interpretation

The growth ratios seek future potential of banks regarding their revenues, incomes, and earning
per share. The revenue of year-on-year is higher of Bank Albilad which is good sign that they are
offerings wide range of service offerings to increase the revenue growth as compared to Al Rajhi
Bank. However, the net income percentage of Al Rajhi is higher which means banks manage
their expenses adequately to increase net incomes. At last, EPS percentage means earning per
share, the Bank Albilad has stable EPS as compare to Al Rajhi which means they have capability
to earn and retain more investors [ CITATION Mor18 \l 1033 ].
Bank Albilad 8

References

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https://www.alrajhibank.com.sa/en/investor-relations/financials/pages/annual-
reports.aspx
Bankalbilad.com. (2018). Annual Reports. Retrieved from
https://www.bankalbilad.com/sites/en/Reports/Pages/AnnualReports.aspx
Finance.yahoo.com. (2019). Al Rajhi Banking and Investment Corporation (1120.SR). Retrieved
from https://finance.yahoo.com/quote/1120.SR/key-statistics/
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deposits-ratio-by-major-commercial-banks/
Turner, J., Broom, K., Elliott, M. B., & Lee, J.-F. (2015). A Comparison of Capital Structure:
The Use of Debt in Investor Owned and Not-For-Profit Hospitals. Journal of health care
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