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Saudi Arabia’s NCB in Preliminary Merger Talks with Riyad Bank

Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)
Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)
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Saudi Arabia’s NCB in Preliminary Merger Talks with Riyad Bank

Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)
Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger. (AFP)

Saudi Arabia’s National Commercial Bank (NCB) and Riyad Bank have begun preliminary discussions to study the possibility of a merger, an important step in the financial sector in the country.

The NCB said in a press statement on Saudi Tadawul website Monday that entering into these discussions does not necessarily mean that the merger will take place between the two parties.

It further added that any agreement would be subject to regulatory and shareholder approvals of both banks, and there would be no forced job losses.

The National Bank pointed out that coordination with the Saudi Arabian Monetary Agency (SAMA) regarding the merger requirements was initiated before the start of these talks. However, it explained in the press statement that "formal approvals are still required before the merger is completed."

NCB indicated that any future developments will be announced in a timely manner, confirming that shareholders will be informed of any upcoming developments in this regard.

Riyad Bank also announced its board of directors’ approval to start preliminary discussions with NCB regarding the merger of the two banks.

If completed, the merger will lead to a very strong capital structure with each bank’s capital reaching about $8 billion.

The announcement of merger discussions follows the signing of a binding merger agreement in October by Saudi British Bank (SABB) and al-Awwal Banks.

The Financial Sector Development Program 2020, recently announced by Saudi Arabia, is a new global model for exploring development and overcoming challenges, thus creating a very strong financial sector in all its details in line with Vision 2030.

The Program, is one of the 12 executive programs launched by the Council of Economic and Development Affairs (CEDA) to achieve the objectives of Vision 2030. It seeks to develop the financial sector as a diversified and effective financial services sector to support the development of the national economy by stimulating savings, finance and investment.

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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.