Alinma Bank’s core operations growth offsets lower cost of finance in Q1 2020, says CEO

The robust growth of Alinma Bank’s finance portfolios and core operations mitigated the impact of a decline in cost of finance by 125 basis points (bps) in Q1 2020, chief executive officer (CEO) Abdulmohsen Al-Fares told Argaam.

“Cost of finance is forecast to hover near its current levels in 2020 and 2021,” Al-Fares added.

Retail and corporate investors now see more investment and borrowing opportunities, thanks to lower cost of financing, Al-Fares said, noting that this further boosted financing portfolios at financial institutions, adding more room for higher return on investment (ROI).

The bank set aside credit provisions to bolster the financing portfolio in line with the accounting standards. It also allocated SAR 3 billion in provisions, with a coverage ratio of non-performing loans (NPLs) at more than 130%.

Alinma’s core operations recorded significant growth year-on-year (YoY) in the first nine months of 2020. Financing and lending portfolio reported a 16% increase, while deposits rose 12%.

Alinma’s investment portfolio and total assets grew by approximately 16% each. The bank’s indicators recorded strong performance by Sept. 30, 2020.