Saudi’s largest bank eyes overseas expansion

Saudi Arabia’s largest lender by assets, National Commercial Bank (NCB), plans to expand overseas, growing its Turkey franchise while exploring new markets including Malaysia, Indonesia and Egypt, its chairman told Reuters.

The move could break the mould of the kingdom’s banking sector, which hosts a range of large and well-capitalised financial institutions but which have traditionally focused on serving the domestic market.

NCB derives 8 per cent of its revenues from overseas, mostly from its majority stake in Turkiye Finans, but it hopes to enter a new market as early as next year, chairman Mansour al-Maiman said on the sidelines of an industry conference in Jakarta.

Expanding its Turkey franchise could prove easier, but with $120bn in assets it is also considering acquisitions and greenfield operations to leverage on its product know-how, al-Maiman said.

A specific timeframe and mode of entry would depend on local investment climate and regulatory framework, he added.

The plans from NCB, majority-owned by sovereign fund the Public Investment Fund, follow the release last month of a package of reforms and initiatives by the government known as “Saudi Vision 2030”.

The government wants to end the kingdom’s reliance on oil and transform it into a global investment power, plans which include widening the geographical footprint of established local brands.

NCB is also on track to become a full-fledged Islamic bank over the next five years, with a target of having 90 per cent of its assets and revenues as sharia-compliant by 2018.

The bank currently classifies around 75 per cent of its assets and 81 per cent of its revenues as sharia-compliant.

All of NCB’s branch network and retail business now follow Islamic principles, with some remaining conventional contracts linked to legacy transactions held by its treasury.