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Musaed Al Mineefi

SAUDI ARABIA - Finance

The Affiliate with Me

CEO, Saudi Investment Bank (SAIB)

Bio

Musaed Al-Mineefi joined the Saudi Investment Bank (SAIB) in 1992 and is its current CEO. Previously, he held the role of Group General Manager in the areas of Finance, Operations, and Administration. Prior to joining SAIB, he was the Finance Director of Al Salam Aircraft Company, Riyadh. He holds a BS degree in Accounting from King Saud University in Riyadh.

"I think the measurement of an institution depends on the size and quality of returns for shareholders."

What strategies have led to your ongoing success in Saudi Arabia, especially over the recent past?

I became CEO of the Saudi Investment Bank (SAIB) in mid-2009, and in January 2010 the bank implemented a new five-year strategy; by 2013 that plan is almost 100% complete. Thankfully, we have already achieved 100% of the strategy in 80% of the time. We will now establish a strategy to focus on growth in all areas of banking: investment, retail, and corporate, in addition to growth through our subsidiaries. We are covering all financing businesses of the bank through our affiliates, and we will capitalize on the cross selling of products between our customers and affiliates. In addition, we are focusing heavily on the retail segment. The bank used to be mostly corporate with a small amount of retail, but in the last five years we have grown our retail market share to a good size in terms of the percentage of our portfolio. If you look at our numbers in the first three quarters of 2013, we have optimized our balance sheet and we will continue to penetrate and gain a larger market share. We expect SAIB to be one of the top-five banks in terms of equity, as well as one of the best banks for both customer retail and corporate banking. We are investing more in technology as we want to reach out to customers in new and innovative ways.

Who are your main shareholders?

We have two major government institutions, GOSI, and the Public Pension Agency. We also have several foreign shareholders such as JP Morgan and Mizuho Bank of Japan. However, they are not represented on the board. This is a completely Saudi company.

“I think the measurement of an institution depends on the size and quality of returns for shareholders.”

How did you select the joint ventures you have brought into Saudi Arabia?

The strategy set before I became CEO was that when the bank made the decision to enter the credit card market, it wanted the best name and the best shareholder. The chosen brand was American Express, even though we started to offer our own Visa and MasterCard credit card options at the bank. In terms of leasing, instead of having it in the bank as a department, it is better to have a partner with a shareholder who has the know-how, the platform, and the name; that is why we went with ORIX. In insurance, instead of offering our own insurance, we have MedGulf, one of the biggest companies for insurance. Alistithmar Capital is a spinoff of our investment and brokerage subsidiary. Instead of doing the leasing or development for the housing or real estate market, we do it with a good shareholder; that is why we work with Amlak International. It is a good strategy, and now it represents more than 15%-16% of the banked income from our affiliates and subsidiaries.

How do you plan to take advantage of your sharia-compliant banking arm?

We are going to continue as we are; we are not going to convert to become an Islamic bank. What we are doing is the right strategy for this stage. We can offer both conventional and sharia products as the customer needs; we are flexible in that way. We offer sharia and conventional banking for both our retail and corporate clients. We will continue to grow in both sectors based on the needs of our customers.

Your ratings have been reaffirmed recently. What does that mean and what do you expect going forward in the next few years?

The rating agencies have indicated that this bank is financially solid, providing good profitability and impressive returns. This was a recent rating, but we have been rated by the agencies for the last six or seven years. Our shareholders have an outside indication that the bank is going in the right direction. The positive points in these reports are good indications. There are 10 banks rated in Saudi Arabia out of the 12 local banks. They have been grouped into three types because the rating also takes into account market share, so the top three banks have been grouped into one, then the three mid€sized ones, then the remaining smaller banks. I do not expect we will be upgraded significantly unless we grow our market share further.

What are your goals for the bank in the next five years?

I think the measurement of an institution depends on the size and quality of returns for shareholders. For the finance industry, it is the return on an average assets (ROAA). We want to maintain one of the highest returns on average equity (ROAE) and ROAA levels. We can achieve that with a good capital adequacy ratio (CAR). We also want to maintain our efficiency ratio to be a good percentage. We want to be an efficient bank. If we achieve these aims, there are many other initiatives that should lead to success. We are always taking the necessary risks to ensure our success.

How do you see the financial market in Saudi Arabia evolving over the medium term?

GDP growth for Saudi Arabia is going to be in the 4.5%-5% range for 2014. This is good for us. Over the last five years, the Saudi banks have experienced double-digit growth in their balance sheets, meaning the banks are growing faster than GDP, which is a good indication. Government spending, GDP growth, and oil prices are going to be in this range, so that is a good indicator that the market will be positive for the banking industry.

© The Business Year – January 2014

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