The Saudi British Bank: Encouraging Quarterly Results

Global Research - Saudi Arabia
Result Update
Saudi Arabia
The Saudi British Bank

Encouraging Quarterly Results
Reuters Code:
SABB AB (Bloomberg) 1060.SE (Reuters)

Listing:
May, 2008
HOLD
Saudi Stock Exchange

Price:
SR107.0 (As on May 03, 2008)

Key Data CMP#(SR) EPS*(SR) BVPS*(SR) P/E* P / BV* 12M Avg.vol. 52 week Lo / Hi (SR)
Source: Global Research *2008 Projected # As at May 03, 2008
Highlights 107.0 5.4 18.1 19.7 5.9 100,349 54.7 /114.0 The Saudi British Bank (SABB) showed an encouraging 1Q08 results posting YoY net income increase of 23% (from SR616mn in 1Q-07 to SR757mn in 1Q-08), which was in contrast to the net income decline of 14% in FY07. During 1Q-2008, the banks balance sheet continued to grow showing YoY increase of 33.8% and YTD growth of 8.3% (from SR98.2bn in FY07 to SR106.4bn in 1Q08).
The bank recorded (FY07) special commission income increase of 18% and special commission expense rise of 17%, which led to net special commission income growth of 18% (from SR2.6bn in 2006 to SR3.1bn in 2007). The drop in non-interest income (FY07) was mainly due to 48% decline in fees from banking services (from SR1.7bn in 2006 to SR0.9bn in 2007), which was a direct consequence of dampened trading activity at Tadawul and intensifying market competition. A considerable pressure on non-interest income was the major dampener for the banks subdued net income that decreased by 14.3% (from SR3.0bn in 2006 to SR2.6bn in 2007). The declined protability also led to drop in EPS from SR5.07 in 2006 to SR4.34 in 2007, and lower return ratios of ROAA and ROAE. SABB total assets posting CAGR (2004-07) of 19%, showed an annual growth of 27% rising from SR77.2bn in 2006 to SR98.2bn in 2007. A signicant portion (63%) of the banks assets was generated through Net Loans & Advances, which showed a growth of 46% (from SR42.5bn in 2006 to SR62.0bn in 2007).
Omar M. El-Quqa, CFA

Executive Vice President
omar@global.com.kw Phone No:(965) 2400551 Ext.104
Faisal Hasan, CFA

Head of Research
fhasan@global.com.kw Phone No:(965) 2400551 Ext.304
Mohammed Ali Shah

Financial Analyst
mashah@global.com.kw Phone No:(965) 2400551 Ext.507
Naveed Ahmed
Financial Analyst
nahmed@global.com.kw Phone No:(965) 2400551 Ext.741
Global Investment House
The customer deposits (FY07) constituting 73% of SABBs funding sources showed an annual growth of 17% rising from SR59.3bn in 2006 to SR71.8bn in 2007. Although SABB remains an adequately capitalized bank with TIER-1 capital of SR10.4bn, the drop in TIER-1 ratio from 17.9% in 2006 to 13.5% in 2007 signals the rise of riskweighted assets in the portfolio. The increase in NPLs by 19% (from SR165mn in 2006 to SR197mn in 2007), also led to drop in NPL coverage from 301% in 2006 to 290% in 2007. SABB showed an encouraging 1Q-08 performance, posting YoY increase of special commission income by 17% that was successfully translated into YoY net income rise of 23%. The improved results also led to rise in EPS (based on 600mn shares) from SR1.03 in 1Q-07 to SR1.26 in 1Q-08. Based on the combination of two (DDM & GGM) valuation techniques, SABB share reveals an estimated fair value of SR104.7 per share, which represents a discount of 2.2% to the current market price of SR107.0 per share (as on May 03, 2008). Thus, we maintain our earlier recommendation of Hold on the SABB stock with a medium term perspective.
Recent Developments In Apr 08, during the (SABB) EGM, the board approved the distribution of 60% bonus shares to the existing shareholders, raising the outstanding shares from 375mn to 600mn. The amendments to the banks articles of association was also approved during the meeting. In Feb-08, the bank appointed Mr. Saeed Al-Khuraimi as the General Manager. Besides that in the same month the bank also signed an agreement with HSBC Bank Middle East to set up a call center in Riyadh for offering banking services. In Jan-08, the bank announced the appointment of Mr.Richard Groves as Chief Operating Ofcer.
Ratings Update In Nov-07, Moodys Investors Service Agency announced the ratings for the bank. The bank was assigned Aa3 /P-1 with a stable outlook for its global local currency deposits, whereas the nancial strength /baseline credit assessment was placed at C /A3 ratings with a positive outlook.
Analysis of Financial Performance -FY07 Income Statement SABB FY07 net income posted a decline of 14.3% (from SR3.0bn in 2006 to SR2.6bn in 2007). The subdued performance was somewhat in tandem with the rest of the Saudi banking sector that broadly experienced a protability drop of 14.6%, mainly because of lower fee-based income (linked to dampened trading activity at Tadawul).
Table 1: Income Statement Highlights (SR mn) Special Commission Income Net Special commission Income after PLLs Total Non-interest Income Total Operating Income Net Income
Source: SABB Financial Reports & Global Research
2004 2,200.3 1,643.3 851.2 2,494.5 1,635.8
2005 3,170.5 1,865.8 1,846.8 3,712.6 2,504.3
2006 4,436.7 2,359.3 2,085.1 4,444.3 3,040.3
2007 5,220.0 2,662.4 1,373.2 4,035.6 2,606.9
Growth (2006-07) 17.7% 12.9% -34.1% -9.2% -14.3%
The banks special commission income showed an increase of 18% (from SR4.4bn in 2006 to SR5.2bn in 2007). It was mainly generated by income from loans & advances contributing 72% to the top-line. The rise in special commission expense by 17% was led by the higher amount of interest paid on customer deposits. At large, SABBs net special commission income increased by 18% (from SR2.6bn in 2006 to SR3.1bn in 2007). SABBs banking spreads were well maintained between FY06: 3.8% to FY07: 4.2% for the last couple of years. During FY07 the yield on earning assets of 7.1% along with the cost of commission bearing liabilities of 2.9%, resulted in SABBs banking spreads of 4.2% (as compared to FY06: 3.8%). Although the bank has shown improving spreads in 2007, going forward we expect the reduction in banking spreads across the industry (as the government in consonance with US Fed rate cut, continues to follow a similar stance in the Kingdom).
Chart 1: Banking Spreads
7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2004 2005 2006 Yield on avg. earning assets Cost on avg. commission bearing liabilities Spread 2007
The banks encouraging performance was considerably depressed by the drop in (noninterest income) fees from banking services. The banking fees showed a signicant drop by 48% (from SR1,650mn in 2006 to SR862mn in 2007) that was largely because of reduction in share trading income. The bank also recorded a decrease in the income from fair value of nancial instruments from SR133mn in 2006 to SR64mn in 2007.
A considerable decrease of 34% in non-interest income led to the decrease of 9% in total operating income (from SR4,444mn in 2006 to SR4,036mn in 2007). The operating expenses posted an increase of 2%, whereas the reduced operating income led to a rise in expense to income ratio from 31.6% to 35.4%. SABBs subdued performance in FY07 had a considerable impact on the banks protability ratios. The growth in assets and equity base (at times of decreasing prots) led to ROAA decline from 4.2% in 2006 to 3.0% in 2007, and ROAE drop from 38.7% in 2006 to 28.9% in 2007. The bank posted an EPS (based on 600mn shares) of SR4.34 in 2007 as compared SR5.07 in 2006.
Balance sheet SABB has a market weight of around 3% of Tadawul listings. The bank with an asset base of SR98.2bn was able to capture 9.5% of the Saudi banking assets (FY07: SR1.0trn), and ranked 6th amongst the Saudi banks. The banks balance sheet footing strengthened over the years, posting three years (2004-07) CAGR of 19%. The total assets posted an annual growth of 27% rising from SR77.2bn in 2006 to SR98.2bn in 2007.
Table 2: Balance Sheet Highlights (SR mn) Cash & balances with SAMA % total % increase Non-trading Investments % total % increase Net Loans and Advances % total % increase Total Assets Customers Deposits % total % increase Total Shareholders Equity % total % increase Total Liabilities & Equity
2004 2,242.7 3.9% 14,663.4 25.3% 31,627.1 54.6% 57,925.2
2005 2006 2007 3,029.3 7,795.0 16,643.7 4.6% 10.1% 16.9% 35.1% 157.3% 113.5% 16,372.6 21,774.6 14,969.2 24.8% 28.2% 15.2% 11.7% 33.0% -31.3% 40,846.6 42,450.2 62,000.9 62.0% 55.0% 63.1% 29.2% 3.9% 46.1% 65,927.9 77,189.4 98,212.9
44,665.8 48,534.1 59,257.6 71,847.9 77.1% 73.6% 76.8% 73.2% 8.7% 22.1% 21.2% 5,385.3 7,206.2 8,514.0 9,534.3 9.3% 10.9% 11.0% 9.7% 33.8% 18.1% 12.0% 57,925.2 65,927.9 77,189.4 98,212.9
A signicant portion (63%) of the banks assets was comprised of Net Loans & Advances that posted a growth of 46% (from SR42.5bn in 2006 to SR62.0bn in 2007). The loan portfolio analysis shows that the bank has an increased focus with 26% lending to the commerce segment, followed by (20%) to consumer & credit card segment .
Table 3: Loan Portfolio by Economic Sector Government and quasi Government Banks and other nancial institutions Agriculture and shing Manufacturing Minning and quarrying Electricity, water, gas and health services Building and construction Commerce Transportation and communication Services Consumer loans and credit cards Others Total
2004 2.8% 0.4% 1.8% 13.5% 0.2% 0.2% 3.9% 17.4% 1.3% 8.3% 24.5% 25.6% 100.0%
2005 2.8% 0.3% 2.2% 13.1% 0.1% 0.2% 2.9% 16.6% 1.6% 5.3% 25.2% 29.6% 100.0%
2006 3.7% 0.3% 2.0% 12.7% 0.1% 0.1% 3.0% 22.4% 2.3% 5.3% 31.3% 16.7% 100.0%
2007 3.4% 0.1% 1.5% 11.3% 0.0% 0.2% 4.4% 25.6% 2.0% 6.2% 20.1% 25.3% 100.0%
SABBs lending portfolio was dominated by commercial and consumer loan facilities having a contribution of 79% and 18%, respectively. The banks increase in NPLs by 19% (from SR165mn in 2006 to SR197mn in 2007) was mainly generated from commercial loans and overdraft facilities. The provisioning was raised by 15%, but the larger rise in non-performing loans led to a drop in NPL coverage from 301% in 2006 to 290% in 2007.
Chart 2: Credit Quality

(SR mn) 600 500 400 300 200 100 0 2004 NPLs (LHS) 2005 2006 2007 NPL Coverage (RHS) 350.0% 300.0% 250.0% 200.0% 150.0% 100.0% 50.0% 0.0%
Provisions for Loan Losses (LHS)
Source: SABB Financial Reports & Global Rsearch
The customer deposits (FY07) constitute 73% of SABBs funding sources, and showed CAGR (2004-07) of 17% . With a reasonable sized branch network of 63 sites, the bank adequately covers all the major areas of the Kingdom. The banks deposit base posted an annual growth of 17% (from SR59.3bn in 2006 to SR71.8bn in 2007), as compared to the industry deposit growth of 21%. The Time deposits with 58% share of the total deposits dominated the deposit base, which was followed by 38% share of the demand deposits.
Chart 3: Cutstomer Deposit Composition

1.1% 100% 90% 80% 70% 58.4% 60% 50% 3.5% 40% 30% 20% 37.0% 10% 0% 2004 1.2% 0.9% 0.9%
56.9% 3.8% 38.1% 2005 Demand Saving
60.0% 4.0% 35.1% 2006 Time Other 3.9%
57.5%
37.8% 2007
The shareholders equity contribution to the total assets stood at 10%. The shareholders equity continues to strengthen over the years posting CAGR of 21% (from SR5.4bn in 2004 to SR9.5bn in 2007). The increase in equity overtaken by the growth in Gross Loans led to decline in Equity to Gross Loans ratio from 20% in 2006 to 15% in 2007, implying the need to further boost the equity for covering any unexpected future losses.
Chart 4: Capital Adquacy

18.0% 17.0% Tier-1 Ratio 16.0% 15.0% 14.0% 13.0% 11.0% Equity /Total Assets 10.0% 9.0% 8.0% 7.0%
2004
2005
2006
2007
Equity/ Total Assets (Equity capital ratio)

Tier 1 capital ratio
Although SABB remains an adequately capitalized bank with TIER-1 capital SR10.4bn, the drop in TIER-1 ratio from 17.9% in 2006 to 13.5% in 2007 signals the rise of riskweighted assets in the banks portfolio.
Analysis of Financial Performance 1Q 2008 - SABB posting an encouraging YoY net income increase of 23% (from SR616mn in 1Q07 to SR757mn in 1Q-08), recorded a rise in EPS (based on 600mn shares) from SR1.03 in 1Q-07 to SR1.26 in 1Q-08. An increase in special commission income by 17% (from SR1,180mn in 1Q-07 to SR1,385mn in 1Q-08) was successfully translated into net income. Although the growth of business was accompanied by the rise of 13% in special commission expense, the net special commission income rose by 20% (from SR711mn in 1Q07 to SR854mn in 1Q08). Contrary to the impression that the increased competition from the fee-based activities in the Kingdom may add pressure on the banks earnings, SABB posted a signicant growth of 63% in fees from banking services (from SR205mn in 1Q-07 to SR334mn in 1Q-08). The lower provision for investment losses by 8% (from SR100mn in 1Q-07 to SR92mn in 1Q-08), accompanied by the banks encouraging results from the growth in quality loans and protable investment portfolio resulted in its rising prots.
Table 4: Key Income Statement Data (SR mn) Special Commission Income Special Commission Expense Fees from Banking services Exchange Income Trading Income Provision for Investment Losses Net Income
1Q07 1,180.2 469.0 204.8 38.0 43.1 100.1 616.3
1Q08 1,384.6 530.1 334.4 36.3 43.7 92.1 757.0
YoY growth 17.3% 13.0% 63.3% -4.4% 1.3% -8.0% 22.8%
SABB with YTD asset growth of 8.3% (from SR98.2bn in FY07 to SR106.4bn in 1Q08), showed an encouraging YoY asset base growth of 34%. The loan & advances portfolio with YTD growth of 7.5%, showed 56% increase on YoY basis. The loan & advances continued to dominate the banks assets with 63% share of the total assets. The customer deposits constituting 78% of SABBs funding sources, posted YTD rise of 8.6% (from SR76.0bn in FY07 to SR82.6bn in 1Q08) and YoY increase of 30%. Although the equity base of the bank showed marginal YTD drop of 0.8% (recording 2007 nal dividend payment), it posted YoY rise of 13.8% closing at SR10.3bn in 1Q08.
Table 5: Key Balance Sheet Data (SR mn) Cash & Balances with SAMA Loans & Advances Total Assets Customers Deposits Other Liabilities Total Shareholders Equity Total Liabilities & Shareholders Equity
Source: SABB Financial Reports & Global research
1Q07 13,700.2 42,748.2 79,533.0 63,707.2 3,541.5 9,084.7 79,533.0
FY 07 16,643.7 62,000.9 76,073.7 3,669.2 10,424.9
1Q08 8,611.0 66,621.0 82,579.6 4,973.1 10,341.7
YoY YTD growth growth -37.1% 55.8% 33.8% 29.6% 40.4% 13.8% -48.3% 7.5% 8.3% 8.6% 35.5% -0.8%
98,212.9 106,408.7
98,212.9 106,408.7
Outlook & Valuation - After the relatively dampened market activity at Tadawul in 2007, going forward we expect a rising trend in the Saudi stock market activity. For banks in particular, the optimism is linked to the growth in Saudi economy on the back of all time high oil prices and the boost in public expenditure on mega infrastructure projects (oil and nonoil related). This will lead to both an increased nancing appetite and customer deposit base. SABB is well placed to derive maximum benet by expanding its lending activities as the mega-infrastructure projects activity picks up in the Kingdom. In order to jack up the fee income, the banks increased focus on structured nance deals, advisory, IPO management, loan syndication, insurance, etc. offer attractive growth avenues to pursue. As the bank continues to enhance its deposit base, its planned branch expansion and other alternative delivery channels are likely to assist the bank in further strengthening its deposit franchise. Based on the current market price (as on May 03, 2008) of SR107.0, SABB is trading at (2008E) P/E and P/BV multiples of 19.7x and 5.9x, respectively.
Table 6: Valuation Summary Valuation Methods DDM GGM Estimated Fair Price SABB per Share
Source: Global Research
Price (SR) 105.9 99.9
Weight Weighted Value (SR) 80% 84.7 20% 20.0 104.7
Our fair value for SABB is estimated to be SR104.7 per share, based on DDM (80%) and adaptation of the Gordon Growth Model (20%). According to our fair value the banking scrip is at a discount of 2.2% to the current market price of SR107.0 per share (as on May 03, 2008). Therefore, we maintain our earlier recommendation of Hold on the SABB stock with a medium term perspective.
BALANCE SHEET The Saudi British Bank 2005 3,029,348.0 4,234,290 16,372,562 40,846,592 527,725 917,410 65,927,927 4,049,625 48,534,075 2,246,933 187,500 3,703,642 58,721,775 2,500,000 2,500,000 302,843 1,903,309 7,206,152 65,927,927 8,513,974 77,189,378 943,589 70,385 3,750,000 3,750,000 3,750,000 3,750,000 (16,220) 2,050,528 9,534,308 98,212,910 68,675,404 88,678,602 3,205,233 4,559,836 187,500 187,500 3,853,194 4,038,367 4,038,367 187,500 5,243,811 104,938,905 6,000,000 4,564,963 146,773 126,513 10,838,249 115,777,154 59,257,642 71,847,852 86,217,422 2,171,835 8,045,047 9,251,804 77,189,378 98,212,910 115,777,154 1,490,741 2,323,696 3,485,544 4,008,376 130,964,559 9,714,394 99,150,036 4,038,367 187,500 5,768,193 118,858,490 6,000,000 5,555,448 344,870 205,752 12,106,069 130,964,559 541,235 551,840 611,436 678,183 42,450,243 62,000,858 73,145,883 81,885,157 21,774,629 14,969,194 24,699,170 27,663,071 30,982,639 91,992,720 683,672 4,609,632 144,239,723 10,200,114 113,031,041 1,789,968 187,500 6,056,602 131,265,225 6,000,000 6,000,000 561,977 412,521 12,974,498 144,239,723 3,137,510.0 1,723,576 3,188,615.6 3,348,046 3,515,449 7,795,020 16,643,746 10,646,506 13,381,727 12,455,612 2006 2007 2008F 2009F 2010F 2011F 10,685,586 3,691,221 34,700,556 103,743,519 689,600 5,301,077 158,811,559 10,710,120 127,725,076 0 187,500 6,359,432 144,982,128 6,000,000 6,000,000 1,050,510 778,921 13,829,431 158,811,559
SR000
Cash & balances with SAMA
Due from banks and other FIs
Non-trading investments
Net Loans and advances
Net xed assets
Other assets
Total Assets
Due to banks and other nancial institutions
Customers deposits
Debt Securities in Issue
Borrowings
Other liabilities
Total Liabilities
Share capital
Statutory reserve
Other reserves
Retained Earnings
Total shareholders equity
Total liabilities and shareholders Equity
INCOME STATEMENT
10 303,029 2,504,315 (91,035) (813,000) 1,903,309 1,903,309 3,040,280 (1,250,000) (1,250,000) (1,500,000) 943,589 943,589 2,606,939 (1,500,000) 2,050,528 2,050,528 3,259,854 (2,250,000) (814,963) (162,993) (1,955,912) 126,513 126,513 3,961,937 (990,484) (198,097) (2,694,118) 205,752 205,752 4,342,144 (444,553) (217,107) (3,473,716) 412,521
SR000 Special commission income Special commission expense Net special commission income Provision for loan losses Net special commission income after PLLs Fees from banking services Exchange income & FVIS income Net trading income Dividend income Net gains on investments Other operating income & Income from associates Total non-interest income Total operating income Salaries & employee related expenses Rent & premises related expenses Depreciation and amortization Other G & A expenses Other operating expenses Total operating expenses Net Income
2005 3,170,456 (1,196,861) 1,973,595 (107,765.0) 1,865,830 1,531,549 237,421 34,952 5,583 36,256 1,045 1,846,806 3,712,636 (716,033) (50,532) (121,809) (319,343) (604) (1,208,321) 2,504,315
2006 4,436,721 (1,852,899) 2,583,822 (224,563.0) 2,359,259 1,650,483 224,722 85,807 5,042 64,721 54,302 2,085,077 4,444,336 (778,907) (58,857) (97,604) (466,675) (2,013) (1,404,056) 3,040,280
The Saudi British Bank 2007 2008F 2009F 5,219,955 6,165,121 7,154,089 (2,161,258) (2,527,700) (2,825,865) 3,058,697 3,637,421 4,328,224 (396,264.0) (430,052.5) (399,772.9) 2,662,433 3,207,369 3,928,451 861,924 1,103,263 1,191,524 171,013 174,433 177,922 189,968 191,868 193,786 4,433 4,522 4,612 83,319 58,323 62,989 62,545 73,803 84,874 1,373,202 1,606,212 1,715,707 4,035,635 4,813,580 5,644,157 (760,029) (836,032) (902,915) (64,214) (69,993) (75,593) (102,895) (106,065) (118,792) (500,045) (540,049) (583,253) (1,513) (1,589) (1,668) (1,428,696) (1,553,727) (1,682,220) 2,606,939 3,259,854 3,961,937 2010F 7,859,964 (3,183,286) 4,676,679 (422,170.9) 4,254,508 1,334,507 181,480 195,724 4,704 68,028 97,605 1,882,048 6,136,556 (948,060) (81,640) (133,047) (629,913) (1,752) (1,794,412) 4,342,144 2011F 8,819,778 (3,616,109) 5,203,669 (445,249.6) 4,758,419 1,467,957 185,110 197,682 4,798 73,471 107,365 2,036,383 6,794,802 (995,463) (88,171) (143,691) (680,306) (1,839) (1,909,470) 4,885,332
P&L Appropriation Account: Opening Balance of Retained Earnings Net income Bonus share issue transfer to statutory reserve Transfer to other reserves Gross dividends Closing Balance of Retained Earnings
412,521 4,885,332 (488,533) (4,030,398) 778,921
CASH FLOW 2005 2,504,315.0 129,553.0 (36,256.0) 121,809.0 (17.0) 107,765.0 3,951,917.0 (9,327,299.0) (276,630.0) (1,613,710.0) 3,868,308.0 1,492,837.0 922,592.0 (1,672,885.0) (84,443.0) (1,757,328.0) (813,000.0) 2,246,933.0 187,500.0 1,621,433.0 786,697.0 2,242,651.0 3,029,348.0 The Saudi British Bank 2006 2007 2008F 2009F 2010F 3,040,280.0 2,606,939.0 3,259,853.5 3,961,937.4 4,342,144.4 (232,458.0) (86,605.0) (64,721.0) (83,319.0) (58,323.3) (62,989.2) (68,028.3) 97,604.0 102,895.0 106,064.5 118,792.2 133,047.3 268.0 224,563.0 396,264.0 430,052.5 399,772.9 422,170.9 1,096,780.0 1,413,934.0 (1,465,039.6) (159,430.8) (167,402.3) (1,828,214.0) (19,946,879.0) (11,575,077.3) (9,139,046.8) (10,529,733.8) (573,331.0) (832,955.0) (1,161,848.0) (522,831.6) (601,256.3) (1,877,790.0) 5,873,212.0 1,206,757.1 462,590.2 485,719.7 10,723,567.0 12,590,210.0 14,369,570.4 12,932,613.4 13,881,005.0 (498,409.0) 1,354,603.0 683,975.4 524,381.1 288,409.6 10,108,139.0 3,388,299.0 5,795,985.2 8,515,789.0 8,186,076.2 (5,337,346.0) 6,888,754.0 (9,671,652.8) (2,900,911.2) (3,251,540.2) (111,382.0) (113,500.0) (165,660.4) (185,539.6) (138,536.2) (5,448,728.0) 6,775,254.0 (9,837,313.2) (3,086,450.9) (3,390,076.4) (1,500,000.0) (1,500,000.0) (1,955,912.1) (2,694,117.5) (3,473,715.5) 1,606,261.0 185,173.0 - (2,248,399.0) 106,261.0 (1,314,827.0) (1,955,912.1) (2,694,117.5) (5,722,114.5) 4,765,672.0 8,848,726.0 (5,997,240.1) 2,735,220.7 (926,114.7) 3,029,348.0 7,795,020.0 16,643,746.0 10,646,505.9 13,381,726.6 7,795,020.0 16,643,746.0 10,646,505.9 13,381,726.6 12,455,611.9 2011F 4,885,331.5 (73,470.6) 143,691.1 445,249.6 (175,772.4) (12,196,049.3) (691,444.8) 510,005.7 14,694,035.3 302,830.1 7,844,406.2 (3,644,446.1) (149,619.1) (3,794,065.3) (4,030,398.4) (1,789,968.0) (5,820,366.4) (1,770,025.5) 12,455,611.9 10,685,586.4
SR000 Net income Accertion of discounts Gains on investments Depreciation and amotization Loss/gain on disposal of xed assets Provision for loan losses Due from banks and other FIs Loans and advances Other assets Due to banks and FIs Customers deposits Other liabilities CF from operations Net sale /purchase of investments Capex CF from investing Dividend and zakat paid Debt securities in Issue Borrowings CF from nancing Change in cash Beginning cash Ending cash
11
FACT SHEET
Protability - Return on average assets - Return on average equity - Net special commission income after PLLs/ Total op. income - Non-commission income/ Total op. income - Non-commission expense/ Total op. income - Fees from banking services/ Total op. income - Dividend Payout ratio Margins - Net (or prot) margin - Special commission expense/ Special commission income - Yield on average earning assets - Cost rate on average commission bearing liabilities - Spread - Commission margin (earning assets) Efciency - Total op. expense/ Total op. income - Staff expenses/ Total op. income - Rent, G&A expenses/ Total op. income - Non-commission expense/ Average total assets Liquidity - Gross performing loans / Commission earning assets - Gross Loans/ Customer Deposits - Customer Deposits/ Equity - Customer Deposits/ Total assets - Due from Banks/ Due to Banks Credit Quality - Provisions /Total op. income - Provisions /Average loans - Non Performing Loans (SR000) - Provision for loan losses (SR000) - NPLs /Gross Loans - NPLs /(Equity+provision for loan losses) - PLLs / Gross Loans - NPL Coverage Capital Adequacy - Equity/ Total Assets (Equity capital ratio) - Equity/ Gross Loans Constitution of Total Operating Income - Net special commission income after PLLs/ Total op. income - Fees from banking services/ Total op. income - Investment Income/ Total op. income - FX Income/ Total op. income - Other Income/ Total op. income - PLLs/ Total op. income Operating Performance - Change in special commission income - Change in Fees from banking services - Change in Investment Income - Change in Fx Income - Change in Other Income RATIOS USED FOR VALUATION - Par value per share (SR) - Shares in issue (000s) - EPS (SR) -Adjusted - DPS (SR) -Adjusted - Book value per share (SR) -Adjusted - Market price year end (SR) - Market Cap. (SR bn) - P/E - P/BV - Dividends yield
market price in the Saudi Stock Exchange as on May 03, 2008.
2005 4.0% 39.8% 50.3% 49.7% 32.5% 41.3% 32.5% 67.5% 37.8% 5.5% 2.3% 3.2% 3.2% 32.5% 19.3% 10.0% 2.0% 67.1% 85.0% 673.5% 73.6% 104.6% 2.9% 0.3% 198,621 385,920 0.5% 2.6% 0.9% 194.3% 10.9% 17.5% 50.3% 41.3% 2.1% 6.4% 0.0% 2.9%
2006 4.2% 38.7% 53.1% 46.9% 31.6% 37.1% 49.3% 68.4% 41.8% 6.9% 3.1% 3.8% 3.7% 31.6% 17.5% 11.8% 2.0%
The Saudi British Bank 2007 2008F 2009F 3.0% 28.9% 66.0% 34.0% 35.4% 21.4% 57.5% 64.6% 41.4% 7.1% 2.9% 4.2% 3.6% 35.4% 18.8% 14.0% 1.6% 3.0% 32.0% 66.6% 33.4% 32.3% 22.9% 60.0% 67.7% 41.0% 6.8% 2.8% 4.1% 3.6% 32.3% 17.4% 12.7% 1.5% 73.0% 86.0% 795.5% 74.5% 34.5% 3.2% 34.5% 69.6% 30.4% 29.8% 21.1% 68.0% 70.2% 39.5% 6.6% 2.7% 4.0% 3.6% 29.8% 16.0% 11.7% 1.4% 73.2% 84.0% 819.0% 75.7% 34.5%
2010F 3.2% 34.6% 69.3% 30.7% 29.2% 21.7% 80.0% 70.8% 40.5% 6.5% 2.7% 3.8% 3.5% 29.2% 15.4% 11.6% 1.3% 73.4% 83.0% 871.2% 78.4% 34.5%
2011F 3.2% 36.5% 70.0% 30.0% 28.1% 21.6% 82.5% 71.9% 41.0% 6.5% 2.7% 3.8% 3.5% 28.1% 14.7% 11.3% 1.3% 73.7% 83.0% 923.6% 80.4% 34.5%
63.6% 79.2% 72.5% 87.1% 696.0% 753.6% 76.8% 73.2% 144.5% 21.4%
5.1% 9.8% 8.9% 7.1% 6.9% 6.6% 0.5% 0.8% 0.6% 0.5% 0.5% 0.4% 165,098 197,090 296,588 416,430 515,987 636,071 497,680 571,048 1,001,101 1,400,873 1,823,044 2,268,294 0.4% 0.3% 0.4% 0.5% 0.6% 0.6% 1.8% 2.0% 2.5% 3.1% 3.5% 4.0% 1.2% 0.9% 1.4% 1.7% 1.9% 2.1% 301.4% 289.7% 337.5% 336.4% 353.3% 356.6% 11.0% 19.8% 53.1% 37.1% 3.5% 5.1% 1.2% 5.1% 9.7% 15.2% 66.0% 21.4% 6.9% 4.2% 1.5% 9.8% 9.4% 14.6% 66.6% 22.9% 5.3% 3.6% 1.5% 8.9% 18.1% 28.0% -8.3% 2.0% 18.0% 10.00 600,000 5.4 3.1 18.1 107.0 64.2 19.7 5.9 2.9% 9.2% 14.5% 69.6% 21.1% 4.6% 3.2% 1.5% 7.1% 16.0% 8.0% 2.6% 2.0% 15.0% 10.00 600,000 6.6 4.3 20.2 107.0 64.2 16.2 5.3 4.0% 9.0% 13.8% 69.3% 21.7% 4.4% 3.0% 1.6% 6.9% 9.9% 12.0% 2.7% 2.0% 15.0% 10.00 600,000 7.2 5.6 21.6 107.0 64.2 14.8 4.9 5.2% 8.7% 13.0% 70.0% 21.6% 4.1% 2.7% 1.6% 6.6% 12.2% 10.0% 2.8% 2.0% 10.0% 10.00 600,000 8.1 6.5 23.0 107.0 64.2 13.1 4.6 6.0%
44.1% 39.9% 17.7% 127.1% 7.8% -47.8% 15.1% 102.6% 78.5% 134.7% -5.3% -23.9% -88.4% 5096.4% 15.2% 50.00 50,000 4.2 1.3 12.0 137.5 6.9 32.9 11.4 0.9% 10.00 10.00 375,000 375,000 5.1 4.3 2.4 2.4 14.2 15.9 73.6 89.4 27.6 33.5 14.5 20.6 5.2 5.6 3.3% 2.7%
*Historical P/E & P/BV multiples pertain to respective year-end prices, while those for future years are based on
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The following is a comprehensive list of disclosures which may or may not apply to all our researches. Only the relevant disclosures which apply to this particular research has been mentioned in the table below under the heading of disclosure.
Company
Disclosure Checklist
Recommendation HOLD
Tickers
SABB AB (Bloomberg) 1060.SE (Reuters)
Price
SR107.0
Disclosure 1,10
1. Global Investment House did not receive and will not receive any compensation from the company or anyone else for the preparation of this report. 2. The company being researched holds more than 5% stake in Global Investment House. 3. Global Investment House makes a market in securities issued by this company. 4. Global Investment House acts as a corporate broker or sponsor to this company. 5. The author of or an individual who assisted in the preparation of this report (or a member of his/her household) has a direct ownership position in securities issued by this company. 6. An employee of Global Investment House serves on the board of directors of this company. 7. Within the past year , Global Investment House has managed or co-managed a public offering for this company, for which it received fees. 8. Global Investment House has received compensation from this company for the provision of investment banking or nancial advisory services within the past year. 9. Global Investment House expects to receive or intends to seek compensation for investment banking services from this company in the next three month. 10. Please see special footnote below for other relevant disclosures.
Global rating Denition Buy Hold Reduce Sell
Global Research: Equity Ratings Denitions

Fair value of the stock is >10% from the current market price Fair value of the stock is between +10% and -10% from the current market price Fair value of the stock is between -10% and -20% from the current market price Fair value of the stock is < -20% from the current market price
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The Saudi British Bank: Encouraging Quarterly Results

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Global Research - Saudi Arabia