Saudi banks likely to benefit from Aramco’s IPO in short term: Al Rajhi Cap

Saudi Arabia’s banks are expected to generate up to SAR 369 million profit from Saudi Aramco’s initial public offering (IPO) in the short term, Al Rajhi Capital said in a recent report.

The banks are expected to see a negative profit of SAR 333 million one year later, the investment bank said, noting that negative earnings account for a marginal 1% of total profit, forecast to reach SAR 48 billion.

In addition, the giant oil producer’s share sale will also contribute to changing the Saudi banks’ deposit base, it noted.

The state-owned oil firm has estimated QFIs investments at SAR 6 billion out of SAR 96 billion - the maximum limit.

Al Rajhi Capital added that 60% of the institutional tranche will be covered by these funds, while the remaining 40% will be covered by investors bids.

Accordingly, up to SAR 90 billion funds will be redistributed from bank balances in the form of term deposits through the Kingdom’s Public Investment Funds (PIF).

For more details about Saudi Aramco IPO