At the moment, there are no entries available for display

business in perspective
business portfolio review

MSME business
The Kingdom’s maturing small and medium enterprise (SME) landscape continued to show promising signs of growth and development in 2024, as per the Small and Medium Enterprise General Authority of Saudi Arabia – Monsha’at. By Q3 2024, the number of commercial registrations of SMEs surpassed 1.5 million to record a remarkable 62% YoY increase, a clear indication that private sector activity continues to power the Kingdom’s non-oil GDP. Apart from taking on the role of catalyst in terms of economic diversification, the SME sector also promotes job creation, technological innovation, and entrepreneurship across the Kingdom. Notably, 46.8% of the total registrations are female-owned companies, with youth-owned company registrations counting for an equally impressive 38%.
Over the past few years, alrajhi bank has contributed to the growth of micro and SME businesses by introducing financial products and services to meet the distinctive needs of this growing market. Now, with the launch of alrajhi bank’s new ‘harmonize the group’ strategy, which brings together and leverages our group-wide capabilities, the MSME business vertical is positioned to offer an unparalleled customer value proposition to support the sustainable growth of micro, small and medium enterprises across the Kingdom.
Our concerted efforts to grow this business vertical during the reporting period saw the bank’s MSME Portfolio – inclusive of medium-sized enterprises – successfully grow 29.6% from SAR 30.2 Bn. in 2023 to reach SAR 39.1 Bn. at the close of the 2024 financial year, with a steadily increasing market share.
Qualitative disclosure of micro, small and medium enterprise for financial services
The approved definition of micro, small and medium enterprises and initiatives adopted by the bank follows the classifications published by Monsha’at:
Micro (Ultrafine)
1-5 full-time employees with annual revenues less than SAR 3 Mn.
Small
6-49 full-time employees with annual revenues between SAR 3 Mn. to SAR 40 Mn.
Medium (Average)
50-249 full-time employees with annual revenues between SAR 40 Mn. to SAR 200 Mn.
Alrajhi bank services businesses classified as “Micro” through structured lending products offered by its dedicated Micro and Small Business (MSB) Unit, and collectively serves businesses classified as “Small” and “Medium” through its SME Unit, both under the Corporate Banking Group with different policies for lending due to their varying financing requirements.
The bank routinely monitors the progress and growth of MSB clients, to better service them in terms of products, and cross sell relevant financing solutions as businesses show the potential to transition through its categorisation as they scale up.
Becoming the MSME Bank of Choice
During the year in review, the MSB and SME Units continued to focus on customer expectations and market sentiment, introducing new and innovative solutions to address emerging sector challenges, while also enhancing existing products and services to meet growing business needs. Improving customer experience remained top priority, with data insights and tailored solutions complementing the delivery of a seamless, streamlined and agile digital experience, resulting in improved turnaround times (TAT) to meet the demanding pace of business. The end-to-end digitalisation and automation of processes gave our customer base greater access to an expanding portfolio of sales and financing products including POS financing, eCommerce financing, Fleet Financing and Business Instalment solutions.
Our leading POS position in the Kingdom with 41.0% market share in 2024 of physical Point-of-Sale (POS) terminals allows us to offer POS financing solutions against cash flows, thereby maintaining good MSME portfolio quality with reduced levels of risk. Letter of Credit (LC) and Letter of Guarantee (LG) issuances were enabled digitally on the alrajhi bank business app, streamlining and greatly simplifying the process to reduce customer documentation for trade solutions.
We leverage collective group capabilities across alrajhi to deliver a unique value proposition of bundled solutions for MSME businesses that go beyond financial support at market entry; a comprehensive suite of non-financial services also accompany alrajhi’s SME bundled solution; from a range of payment options as well as eCommerce and marketplace access, to payroll services and FinTech solutions for financial management. This allows our SME clients to in turn leverage embedded finance solutions across their business, thereby offering their own customers a seamless consumer experience.
The MSME business focused on solutions that secured a steadily increasing inflow of fee-based income as a result of increased product penetration within our growing SME customer base. We improved our yield income by converting non-borrowing clients to borrowing by leveraging superior data capabilities and insights that helped us understand client needs better. The MSME call centre continued to provide unrivalled customer service via the two dedicated toll-free numbers for MSB as well as SME customers.
Aligning with Vision 2030
A number of ambitious metrics have been established under the Financial Sector Development Programme of the Kingdom’s Vision 2030 for SMEs – including microenterprises. We continued to align with Vision 2030 objectives during the year in review, supporting entrepreneurship and enabling job creation by expanding the MSME lending portfolio to empower this target segment.
Beyond our responsibility as a leading financial institution to provide support through tailored products and solutions for SMEs, we also aim to enable small businesses and entrepreneurs to benefit from various support programmes facilitated by government, semi-government as well as private sector entities. We strengthened our partnership with Monsha’at during the year in review, formalising agreements to streamline MSME access to the General Authority’s finance and advisory services, facilitating entrepreneurial support for small business owners. The bank also partnered with Monsha’at to conduct a number of financial guidance and business development sessions, to educate and empower MSME clients.
alrajhi was one of five Saudi Banks to formalise an agreement in August 2024, to finance a new arts fund managed by the Cultural Development Fund of Saudi Arabia. The fund seeks to specifically finance Saudi SMEs across the cultural sphere. This is in addition to the bank’s ongoing agreements with the Real Estate Development Fund and the Tourism Development Fund to facilitate funding for SMEs across non-oil sectors. We continued our partnership with the Small and Medium Enterprises Bank of Saudi Arabia during the reporting period, to provide more inclusive financing for MSME businesses.
The bank facilitated funding for 351 clients during 2024 through the Small and Medium Enterprises Loan Guarantee Programme – referred to as the Kafalah Programme established by the Ministry of Finance. This totalled to a remarkable SAR 1.6 Bn. in funding, a notable growth from a total SAR 332 Mn. funding for 48 clients in 2023.
MSME financing breakdown for 2024
Micro and Small | Medium | Total | ||||
Loans to MSMEs | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
On balance sheet (SAR ‘000) |
17,325,783 | 12,836,605 | 12,859,758 | 39,108,161 | 30,185,541 | |
On balance sheet loans to MSMEs as a % of total on balance sheet loans | 3.8 | 2.9 | 1.9 | 2.2 | 5.6 | 5.1 |
Future outlook
As the MSME Sector continues to remain strongly aligned with Vision 2030 objectives, alrajhi bank will continue to meet its rapidly evolving needs by leveraging the collective strength of our B2B offering. Our customer-centric approach, while ensuring the sustainable and profitable growth of our business vertical, will also continue to bridge identified financing gaps in the MSME market. By introducing innovative new products, increasing Group product penetration through cross-sell, and diversifying lending solutions. We will focus on continued digitalisation and automation to provide customers with a seamless experience across multiple products, channels and solutions to meet demanding market needs. Partnerships will continue to be formalised with both private and public sector entities, enabling more financing for the sector.