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1060

Governance: D

SAB

Saudi Awwal Bank

34.12 SAR / Share

As of: May 28, 2026

8.3x P/E Ratio Trailing 12 Months

0.9x P/B Ratio Price to Book Value

5.9% Dividend Yield Annual Dividend / Share

70.11B SAR Market Cap Total Valuation

1.12 Beta Systematic Risk Index

57.1% Net Margin Net Profit / Revenue

The Story

Saudi Awwal Bank (SAB) leverages its deep corporate banking roots and strategic associate relationship with HSBC to deliver stable profitability, supported by a robust SAR 459.7B asset base and a solid 10.37% ROE.

Source: Q1 2026 (2026-05-07)

Value Creation +1.1% Excess Return on Capital (Spread between ROIC/ROE and Cost of Capital)

Cash Flow Payback — Estimated years of operating cash flows required to cover Enterprise Value

Performance & Distributions

Dividend Yield Trailing annual dividends paid relative to share price

5.9%

Sustainable Growth Rate Rate at which company can grow internally using reinvested profits

+3.2%

Payout Ratio Percent of net profits distributed as dividends

48.9%

Net Margin Net profit margin generated from total operational revenue

57.1%

ROE Return on Equity

10.4%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

8.3x

P/B Ratio Market capitalization compared to corporate book value

0.9x

NIM Operating multiple reflecting core operational leverage

2.5%

Cost to Income Asset pricing multiple relative to total topline revenue

35.5%

Growth Story

SAB's growth engine is primarily driven by its massive corporate lending franchise, with Corporate and Institutional Banking accounting for SAR 229.6B of the bank's SAR 306.9B net loan book. Net Interest Income (NII) reached SAR 11.6B TTM, supported by a total customer deposit base of SAR 331.4B. While fee income diversification remains a key focus through its Capital Markets segment (SAB Invest) and its 49% associate stake in HSBC Saudi Arabia, the bank's sustainable growth capacity is structurally bounded by a Sustainable Growth Rate of 3.18%, reflecting its ROE of 10.37% and a retention rate of approximately 51.09% given its 48.91% payout ratio.

Profitability Dynamics

SAB's profitability is characterized by strong cost discipline and efficient capital deployment, yielding an ROE of 10.37% that comfortably exceeds its estimated Cost of Equity (Ke) of 9.23%. This positive spread demonstrates genuine economic value creation. The bank maintains a highly competitive Cost-to-Income ratio of 35.47%, reflecting strong operational leverage across its corporate and retail networks. Profitability is further supported by a Net Interest Margin (NIM) of 2.52% and a Return on Assets (ROA) of 1.83%. This efficiency is bolstered by segment-level performance, where Corporate and Institutional Banking remains the primary engine of profitability, generating SAR 1.29B of the bank's SAR 2.41B total pre-tax income for the quarter ended March 31, 2026.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.12

Cost of Equity Minimum required rate of return demanded by shareholders

9.2%

Loan-to-Deposit Ratio (LDR) Ratio of customer loans relative to deposited reserves

92.6%

CASA Ratio Demand deposit balances as a percentage of total reserves

43.3%

ECL Coverage Credit loss provisioning coverage relative to gross lending assets

2.1%

Capital Adequacy Ratio (CAR) Risk-weighted asset coverage capital backing ratio

—

Non-Performing Loans (NPL) Ratio Percent of gross lending assets classified as non-performing

—

Risk Factors

SAB maintains a highly conservative risk profile, characterized by excellent asset quality and robust capital buffers. The bank's NPL ratio stands at a low 1.31%, backed by an exceptional NPL coverage ratio of 188.20% and an ECL coverage of 2.09%. Capital adequacy remains a core strength, with a Total Capital Adequacy Ratio of 19.27% and a CET1 ratio of 14.56%, both comfortably exceeding SAMA's regulatory minimums. Funding stability is secured by a balanced Loan-to-Deposit Ratio (LDR) of 92.61%, with customer deposits reaching SAR 331.4B. However, the bank faces evolving headwinds; recent geopolitical intensifications in the Middle East have prompted targeted sector-level assessments of trade and supply chain exposures, leading to an isolated increase in ECL provisions, which stood at SAR 728M TTM. Additionally, historical accounting corrections, including a SAR 918M restatement of an FVOCI equity investment and a SAR 242M adjustment for an unrecorded FVSI investment, highlight the importance of ongoing valuation oversight.

Governance Disclosures

Rating: D

We track 16 key governance and oversight matters for this company in our database.

Significance: 3/10 Info Asymmetry

Shariah Committee Supervision of Products

The bank's Shariah-compliant products are approved and supervised by an independent Shariah Committee established by SAB to ensure compliance with Shariah principles.

Mitigating Factors: The Shariah Committee is independent, providing objective oversight of Shariah-compliant offerings.

Significance: 5/10 Asset Risk

Pledging of Debt Securities as Collateral

The Group has pledged debt securities as collateral with other financial institutions. As of 31 March 2026, the pledged assets amounted to SAR 7,350,866 thousand, with related liabilities of SAR 6,551,523 thousand.

Mitigating Factors: These transactions are conducted in the ordinary course of banking business to secure liabilities.

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In-Depth Analysis