Al Rajhi Bank’s and Saudi British Bank’s Services

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Bank Name: Al Rajhi Bank	Competitor Name: Saudi British Bank (SABB)
Services offered: Personal finance; Car finance; Home finance; Takaful; Credit cards; Everyday banking.	Services offered: Wealth management; Payments and transfers; Personal finance; Home finance; Everyday banking.
Comparison of services There are several similarities in the services that are provided by the two financial institutions. For instance, the two institutions offer everyday banking, personal finance, and home finance. Further, the two institutions make use of online banking, phone, mobile, ATM, and branches as a way of banking. The two financial institutions differ in some of the services that they make available to their clients. For instance, Al Rajhi Bank offers insurance services that are not provided by SABB. Also, SABB offers services such as wealth management, payments, and transfers that are not provided by Al Rajhi Bank. The differences discussed above partly explain why one financial institution is a bank and the other is not a bank.
Research Report in Brief
Bank’s organizational type: This is a branch banking organization because Al Rajhi Bank has over 500 branches and ATMs that are located within the kingdom. Besides, the bank has branches in other countries such as Kuwait, Malaysia, and Jordan. Therefore, the Bank has a presence both in the local and international markets.
Balance Sheet Accounts (Amount in SR 000’)		Income Statement Accounts (Amount in SR 000’)
Cash Assets (C) Cash and balances with Saudi Arabian Monetary Authority (SAMA) and other central banks = 42,149,905 Amount due from banks and other financial institutions = 26,578,525 Total = 68,728,430 Security Holdings (S) Investment, net = 34,032,879. Financing, net = 224,994,124. Total = 259,027,003 Loan (L) – Miscellaneous assets (MA) Property and equipment, net = 6,485,162. Investment properties, net = 1,330,868. Other assets, net = 4,140,354. Total = 11,956,384 Deposit Accounts (D) Due to banks and other financial institutions = 8,916,970. Customers’ deposits = 272,593,136. Total = 281,510,106 Nondeposit borrowing (NDB) Other liabilities = 6,254,839. Equity capital (EC) Share capital = 16,250,000. Statutory reserve = 16,250,000. Other reserves = 3,873,362. Retained earnings = 12,236,010. Proposed gross dividends and Zakat = 3,337,500. Total = 51,946,872		Interest Income Net financing and investment income = 11,165,318. Interest Expenses Impairment charge for financing, net = 2,142,242. Net interest income = interest income – interest expense = 11,165,318 – 2,142,242 = 9,023,076 Noninterest income Fee earned from banking services, net = 2,949,963. Exchange income, net = 925,286. Other operating income, net = 243,044. Total = 4,118,293 Noninterest expenses Salaries and employees’ related benefits = 2,949,886. Rent and premises related expenses = 277,179. Depreciation = 415,595. Other general and administrative expenses = 1,306,826. Impairment charge for available-for-sale investments = 65,923. Total = 5,015,409 Net noninterest expense = Noninterest income – Noninterest expenses = 4,118,293 – 5,015,409 = (897,116) Net income for the year= Net interest income + Net noninterest expense = 9,023,076 + (897,116) = 8,125,960

Discussion on the balance sheet and income statement

The table above gives an overview of the balance sheet and income statement of the banks. The balance sheet section shows a summary of the assets and liabilities. The classification is based on the equation cash asset (C) + security holdings (S) + loans (L) + miscellaneous assets (MA) = deposit account (D) + non-deposit borrowing (NDB) + equity capital (EC). The cash asset is made up of cash and balances with the Saudi Arabian Monetary Authority (SAMA) and other central banks and amounts due from banks and other financial institutions. These two items yield a sum of SR68,728,430. The bank does not have loan balances in its books.

Further, miscellaneous assets that are made up of property and equipment, investment properties, and other assets amount to SR11,956,384. The total amount of the equations on the left-hand side is SR339,711,817. On the right-hand side of the equation, the deposit account is made up of the amount that the bank owes other financial institutions and customers’ deposits. The two items sums to SR281,510,106. Other liabilities make up non-deposit borrowing (SR6,254,839). Finally, equity capital is made up of share capital, reserves, and retained earnings. The total amount of equity capital is SR51,946,872. The sum of the components on the right-hand side is SR339,711,817.

In the income statement, the net interest income amounts to SR9,023,076 while the sum of net noninterest income is (SR897,116). It can be observed that the noninterest expenses exceed the noninterest income. This created a loss from the noninterest activities. This can be interpreted that the income generated from noninterest activities cannot cover the corresponding expenses. Further, the bank generated a higher amount of revenue from interest generating activities than from noninterest activities. The sum of net interest income and net non-interest income is SR8,125,960. This total is equivalent to the net income for the year.

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Al Rajhi Bank’s and Saudi British Bank’s Services

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Discussion on the balance sheet and income statement

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