business portfolio review

treasury group

As the Saudi economy continued to grow in 2024 buoyed by a strong performance across non-oil sectors, the Kingdom’s banking industry maintained its role as a key enabler of Saudi Arabia’s ambitious Vision 2030 programme. The Kingdom continued to strengthen its debt market, to diversify financial portfolios and manage risk more effectively as mega and giga construction projects under Vision 2030 continued to roll out. The Kingdom surpassed China in concrete consumption per capita, and also surpassed China as the leading emerging market issuer of fixed-income securities. Saudi financial institutions tapped new markets in trade finance, while also increasing cash management activities.

The alrajhi bank Treasury Group remained strongly positioned to capture business opportunities in this rapidly evolving operating environment during the year in review. In line with the bank’s new ‘harmonize the group’ strategy, Treasury expanded into new markets, strengthened our foreign exchange (FX) business, introduced new products, diversified and optimised funding mix, and strengthened the Investment Portfolio by diversifying into new asset classes, making all products and services accessible to clients through continued investments in digital technologies.

For the reporting period, Treasury recorded:

Diversifying funding sources

The Treasury Group continued to strengthen the bank’s balance sheet structure and support liquidity requirements by diversifying funding sources. During the reporting period, Treasury tapped into both local and international debt capital markets, while continuing to leverage alternative funding tools introduced in 2022. We expanded long-term funding (especially syndication), Certificates of Deposits (CDs), trade loans, term repurchase agreements (term repos), most of which paved way for a number of historic firsts in the Kingdom’s banking sector, including the largest Shariah-compliant syndication loan in the Middle East. As a result of this growing confidence shown by investors, alrajhi bank tapped the international market twice in 2024; a five-year USD 1 Bn. senior unsecured sukuk, and the first sustainable additional capital (AT1) sukuk issuance, also with a size of USD 1 Bn. This was the first AT1 issuance from alrajhi bank in the global debt market in US dollars.

An expanding product portfolio

Treasury expanded its product offerings in structured investment solutions during the reporting year, further strengthening the bank’s balance sheet and market repute to build stable liabilities. The Treasury portfolio remains well diversified in terms of duration, credit rating and geographical distribution, with the bank obtaining Shariah approvals on new investment solutions to expand its range of comprehensive Shariah-compliant asset classes and products to meet the market demand for yield enhancement as well as hedging.

The key objective behind expanding the investment portfolio was ensuring balance sheet management. alrajhi bank recorded a YoY growth of High Quality Liquid Assets (HQLA), while our Investment Desk obtained required approvals to on-board new investment solutions for yield enhancement during the reporting period. Steered by the bank’s new strategy and its objective to leverage our existing customer base, Treasury Group also continued to successfully cross-sell the growing Treasury products portfolio with Corporate, Retail and Private Banking businesses within the bank. Given the balance sheet growth in 2024, the Treasury Group also initiated a Cost of Fund (CoF) control initiative to optimise the bank’s P&L.

Additionally, alrajhi bank remained a Primary Dealer for the National Debt Management Centre (NDMC) in 2024, driven by our commitment to contribute towards achieving the Kingdom’s Vision 2030 goals and ensuring KSA’s continued and strengthened presence in debt markets. During the year in review, alrajhi bank strengthened this leading role in serving the national economy and keeping pace with increasing positive indicators, while maintaining our commitment to providing banking services and achieving the broader goal of sustainable financing.

The forex business

For the reporting period, alrajhi bank strengthened our FX footprint in the market against all competitors, maintaining top rank in providing best FX pricing across the Kingdom in the digital sphere in 2024. The bank’s FX Desk enjoyed wide market coverage in trading and market making over 46 currencies, and laid claim to the largest financial institution (FI) network regionally. Overall, the FX income recorded a 3.7% YoY increase in 2024.

We secured 18.3% of the Kingdom’s FX income market share at the close of the reporting period, and were recognised for our achievements in the forex domain with the bank winning ‘Best Foreign Exchange Provider in Saudi Arabia’ while also being named the regional winner for ‘Best FX Provider in the Middle East’ 2024 by Global Finance. We maintained the bank’s Long-Term Foreign Currency (LT FC) credit rating during the reporting period at ‘A-’ by S&P Global – a leading global provider of credit ratings, benchmarks and analytics.

Strengthening client value proposition

We facilitated direct client engagement through both physical and virtual meetings in 2024. Visits were conducted to gain deeper insight to client sentiment and needs, while virtual sessions were held to ensure our clients were provided with necessary awareness on how alrajhi bank’s new product offerings meet their existing and emerging financial requirements.

To further enhance client satisfaction, the bank continued to enhance capabilities of the Treasury team in line with our overarching business strategy. Treasury Group closely collaborated with HR to facilitate training courses for employees, while also strengthening the team by recruiting top talent from the market. A number of Treasury team members were selected for intensive workshops overseas in 2024, organised by highly-reputed global banks. These investments in capacity building are aimed at not only elevating the level of knowledge and expertise across the team, but also in ensuring the bank navigates through evolving market conditions with a focus on identifying new, unexplored opportunities by a well-equipped team.

We complemented the advancement of our teams by investing in Treasury tech, carrying out a number of significant upgrades and improvements on our core technology infrastructure. Key among these upgrades is the integration of a new module to the Treasury Management System, which enabled the Treasury Group to expand product offerings across several asset classes, namely; the expanding FX derivatives, commodities hedging and investment products, as well as structured products and deposits. Furthermore, a major upgrade to our Electronic Trading Engine went live smoothly during the last quarter of 2024, ensuring business continuity and avoiding any security risks. Segmentation was introduced for digital channels for both retail and corporate customers to enrich and better personalise each interaction.

Gold trading

Gold retained its status as a global safe-haven asset and demonstrated resilience in the market during 2024. As a result, the bank’s gold trading business performed exceptionally well during the reporting period, with our clients able to access the bullion market through both conventional and digital channels. Treasury’s digital gold wallet ‘Paper Gold’ was extended to commercial entities through the bank’s eBusiness Portal during the preceding financial year, while Bank’s physical gold business rapidly expanded to the Saudi wholesale market. This resulted in the bank successfully attracting new gold customers during the year in review, backed by strategic relationship management practices. This proactive engagement not only enriched the customer experience, but also significantly improved gold sales with a 68% increase in income YoY.