VOICES FROM THE SECTOR: FINANCE
How do you envision sukuk as a constant factor in your funding?
In 2018, we launched our Series One sukuk program for SAR500 million (USD133 million), and in 2019 we launched our Series Two issuance of SAR1 billion. We have another avenue, our Residential Mobile Bank Security (RMBS) program, for SAR500 million. We announced both of these at the Financial Sector Conference. A third avenue of financing is through asset sales to the Saudi Real Estate Refinance Company (SRC), with whom we have signed an MoU for SAR500 million. These are the three main funding avenues Bidaya Home Finance Company has used or will use.
How have you advanced on your strategic partnership with SRC, and what is the nature of the new MoU?
The SAR1-billion partnership we previously signed with SRC is for short-term direct financing. The latest SAR500-million asset sale financing is a different type of financing. We will only be doing asset sales to them so we can service those loans, sort of like what has happened with the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) in the US.
The Financial Academy was incepted in March 2019, evolving from the Institute of Finance. Could you tell us more about the launch of this new entity and its target audience?
It entails a clear focus on developing and growing the capabilities of human capital in the entire financial sector. The target audience of our programs are the professionals in the financial sector such as banking, capital market, insurance, and financing companies, as well as other relevant governmental entities. These programs serve both the public and private sectors.
In recent years, SAMA has assumed a leading role regarding the new initiatives, including the launch of a sandbox. How do you prepare professionals for the new areas of finance and technology?
We respond to the changes by developing and delivering specialized programs that raise the awareness and develop the capabilities of practitioners in priority areas to address knowledge and competency gaps and specialized topics related to technology. We have delivered programs and awareness workshops to our target groups, specifically on fintech topics such as cryptocurrencies, blockchain, and machine learning. We intend to expand in this area, collaborate with Saudi Fintech and focus our training on topics of importance and relevance to our main financial sectors.
What is Audi Capital's assessment of the recent developments on the Saudi markets?
At a time where we see a flare up in volatility in global capital markets, we are optimistic about the MENA region in general, expecting it to be more resilient than core emerging markets. We have an overweight recommendation on Saudi Arabian equities, and believe that the Kingdom will be the main regional driver for at least the coming five years in the broader financial services sector in general. This view is supported by the fact that the Saudi financial sector has been growing rapidly to adapt to the transformation guidelines of the National Transformation Plan and Vision 2030, reducing the gap with global markets through a wave of regulatory reforms and increased focus on corporate governance and innovation. This initiative is spearheaded by the Capital Market Authority (CMA), which is establishing a framework to allow the financial sector to develop even further and turn the country from a frontier market to a core emerging market in terms of depth, investment products, sophistication, investor practice, and transparency. After the establishment of the Independent Custody Model for funds in 1H18, and the standardization of government debt issuances, we are starting to see a momentum in the development of derivatives, special-purpose entities, loan funds, and other initiatives that could further develop the Kingdom's capital markets in 2019.
How do you expect the MSCI upgrade to impact the overall capital markets?
The inclusion of Saudi Equities in the MSCI and FTSE EM indexes is expected to have a number of benefits to the Kingdom. Accounting for up to 5% of these indexes in the long term, the inclusion is expected to trigger up to USD16 billion of passive inflows in the short term, and up to USD30 billion more in potential active capital inflows in the medium to long term. The inclusion will put Saudi Arabian investments on the radar of all emerging markets-focused asset managers and investors.
SDB has been a pioneer in the financial empowerment of citizens and driving entrepreneurship in the Kingdom. How has this general mandate translated into practice at SDB?
When SDB was established 49 years ago, all government bodies were under development, so we started to support the community by helping people access a better lifestyle and alleviating their financial needs. Then, the bank started launching business development products, such as its taxi driving loan. Thus far, SDB has financed around 15,000 drivers to buy their taxis and run their businesses. The bank then looked at charity and non-profit organizations and how it could help this sector operate sustainably. Around 10 years ago, the bank also launched SME financing. Since then, SDB has gradually shifted from social funding to helping people be productive. Now, we have a suite of productive loans that target our customers.
Can you elaborate on how SDB is reaching out to its customers through digital technologies?
In 2019-2020, we intend to go into end-to-end online financing services without any manual intervention. By doing this, we can grow exponentially and expand our customer reach. SDB is also starting to explore some fintech ideas. In the case of micro, freelancers, and home-based businesses, we offer a payment solution with our partners; this helps micro businesses protect their transactions.
VOICES FROM THE SECTOR: FINANCE
TABLE OF CONTENTS
Interview
Mohammed A. Al-Mowkley , Deputy Minister of Water Services, Ministry of Environment, Water, and Agriculture & CEO, National Water Company (NWC)
NWC leads the Kingdom's efforts to preserve water as a non-renewable national resource and drastically reduce the average per capita water consumption.
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Majed H. Al Saadi , Managing Director, Priority Projects Office (PPO), Local Content and Government Procurement Authority
PPO and ECA act as an accelerator for the realization of Vision 2030 by bridging the gap between the private and public sectors and helping the government diversify the economy in the long run.
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HRH Princess Hala bint Khaled bin Sultan Al-Saud C, Chairman, Saudi Law Conference (SLC) organizing committee & Founder,, Burhan Almarifa
Burhan Almarifa is focused on maturing the legal sector, encouraging innovation, and enabling research and development in KSA through knowledge transfer and consultancy.
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Sahel N. Abduljauwad, Rector, King Fahd University oF Petroleum & Minerals (KFUPM)
The King Fahd University of Petroleum & Minerals has long been the backbone of Saudi Arabia's formidable drilling expertise. Today, it is working to train the next generation of renewable energy and water management scientists.
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Dr. Abdullah Al-Rubaish, Rector, Imam Abdulrahman bin Faisal University (IAU)
Dr. Abdullah Al-Rubaish was appointed vice president of KFU in 2007 and president in 2010. He combined his executive experience from serving in various deanships at KFU with academic practices to become associate professor of medicine and work as a medical consultant at the Department of Internal Medicine. He graduated from KFU's College of Medicine and completed his medical internship at KFHU, where he also pursued a fellowship program. He became a member of the UK Royal College of Physicians and the Arab Board after he completed his sub-subspecialty in Pulmonary Medicine at the University of Alberta, Canada.
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Rajaa Moumena, Founder & President, Future Institute of Higher Education and Training
Saudi Arabia is allowing women more privileges, including driving and becoming ambassadors. The Future Institute of Higher Education and Training is trying to help by providing courses they need to adapt to this new world.
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