The seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index fell to 56.4 in May 2024, from 57.0 in April, and was the second lowest reading in 22 months, higher only than January’s low. A reading above 50 marks indicates an expansion in activity.

Growth in sales was also the least marked in just over two years. Demand expanded at a slower pace as some companies reported a slowing of market conditions and difficulties gaining new customers due to high competition.

However, the surge in demand has also led to price pressures impacting input prices and staff costs, although the increase in output prices has been observed at a slower pace, said Naif Al-Ghaith, Riyad Bank’s chief economist.

“This balancing act reflects the challenges faced by businesses in managing costs while trying to capitalise on the expanding market,” Al-Ghaith said, as reported by Zawya.

Inventory growth continued after reaching its highest on record in April 2024. However, higher stock levels led to some pullback on purchasing growth which slipped to the weakest since September 2021.

The slowdown also coincided with a drop in business confidence towards the 12-month activity outlook, bringing sentiment to its lowest level since January 2024.

“Employment levels increased in May 2024, offsetting the first decline in over two years in April. Staffing growth was mostly linked to higher workloads and efforts to reduce outstanding orders, which duly fell slightly,” the report said.

“Cost pressures eased from the beginning of the year despite a solid increase in supplier prices and a much quicker rise in employee wages,” the Riyad Bank study noted. However, selling prices rose only marginally as firms reacted to growing competitive pressures.

Talking about the Kingdom’s non-oil sector, the revenues generated from it hit 50% of the Kingdom’s GDP in 2023, the highest level ever. The non-oil economy was valued at 1.7 trillion Saudi Riyals (approximately USD 453 billion) at constant prices, driven by steady growth in exports, investment and consumer spending.

In 2023, as per the data available with the Saudi Arabia Ministry of Economy and Planning, the Kingdom’s private-sector investments expanded by a brisk 57%, reaching a record high of 959 billion Saudi Riyals (USD 254 billion) while arts and entertainment, along with real service exports grew in triple-digits to the tune of 106% and 319%, respectively.

The food sector also recorded 77% growth; transport and storage services grew 29%, health and education recorded growth of 10.8%, trade, restaurants and hotels at 7% while transport and communications increased 3.7%.

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The seven major banks that the Saudi Electricity Company signed an agreement with include the National Commercial Bank, Bank Albilad, Al-Rajhi Bank, Riyad Bank, Samba Financial Group, Banque Saudi Fransi and the Saudi British Bank.

The financing is a 7-year medium-term facility and is unsecured syndicated borrowing.
Fahad Al Sudairi, president and chief executive of SEC told the media, “SEC is a national utility, delivering electric services to a growing customer base of almost 9.8 million subscribers in Saudi Arabia. Our vigorous focus is to continue demonstrating operational efficiency improvement, achieve a quantum leap in promoting automation and digitization across our business and further enhance the customer service.”

“This successful financing comes as part of SEC’s plans to finance its general corporate purposes as well as finance its capital projects such as smart meters, grid reliability improvement and new interconnection projects. The financing will also lengthen the average maturity of our financing mix and is expected to reflect positively on reducing our weighted average cost of funding.”

Recent media reports revealed that the Saudi Electricity Company is implementing eight projects in Saudi Arabia’s Hail region with contracts worth more than $159 million.
The projects are in line to increase the electricity generating capacity of the kingdom and meet the growing demand.

Last month, the company announced a net loss of SR869 million for the second quarter of 2020, compared to a profit of SR789 million during the same period last year.

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Riyad Bank has received regulatory approval for its sukuk redemption. It is reported that Riyadh bank will transfer the redemption amount in addition to any periodic distribution amount to sukukholders’ account on the stipulated date. This will be based on their sukukholdings as of 15 June, 2020.

In February, the bank sold $1.5 billion in 10-year dollar sukuk at at 180 basis points. With that, the bank received more than $7.8 billion in sukuk orders. JPMorgan, Riyad Capital and Standard Chartered were hired by Riyad Bank to lead the deal. Even First Abu Dhabi Bank and HSBC were part of the deal sale, media reports said.

Last December, Riyad Bank and National Commercial Bank had terminated merger talks. Both banks said in an exchange filing, “The boards of both banks have decided to end preliminary merger talks and not to continue with the merger study.” The proposed merger was expected to establish a bank with $183 billion in assets, media reports said.

Riyad Bank is one of the Kingdom’s largest financial institutions and ranks fourth by assets. Last month, the bank donated SAR 17 million to support health endowment fund dedicated to fight agains the Cover-19 pandemic. According to the bank’s statement, it is also the largest supporter of SMEs on the back of its vision to empower entrepreneurs and business owners.

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