The board of directors of Al Rajhi Bank, one of the world’s largest Islamic banks, announced a key recommendation to the extraordinary general assembly to increase the bank’s capital by 50%, in a move that reflects the bank’s financial strength and its future direction to support economic growth.
Details of the capital increase and distribution mechanism
According to a statement published on the Saudi Stock Exchange (Tadawul) website, the board of directors, in its meeting held yesterday, Tuesday, recommended capitalizing SAR 20 billion from retained earnings. This recommendation will increase the bank's capital from SAR 40 billion to SAR 60 billion. The mechanism for this increase is a bonus share distribution of one share for every two shares held by shareholders at the time of entitlement, thereby raising the number of issued shares from 4 billion to 6 billion.
Strategic goals and support for the national economy
This strategic move by Al Rajhi Bank aims to enhance its financial solvency and support its capital position, enabling it to keep pace with the economic aspirations of the Kingdom of Saudi Arabia under Vision 2030. The capital increase aims to develop the bank's business and expand its lending and financing capacity, whether for major projects or for the individual and medium and small enterprise sectors, thus enhancing the banking sector's contribution to the gross domestic product.
Al Rajhi's position in the financial market
Al Rajhi Bank is a major component of the Saudi Stock Exchange (TASI) index, and this increase marks a significant milestone in the bank's history, reinforcing its position as one of the largest banks in the Middle East in terms of market capitalization and share capital. Investors typically view the capitalization of profits as a positive indicator of management's confidence in future cash flows and its willingness to reward shareholders without impacting the bank's liquidity.
Date of eligibility and regulatory approvals
The bank clarified that the entitlement date for the bonus shares will be for shareholders who own shares at the close of trading on the day of the Extraordinary General Assembly meeting (which will be determined later) and who are registered in the bank's shareholder register at the Securities Depository Center Company at the end of the second trading day following the meeting. It is worth noting that the bank has already obtained the approval of the Saudi Central Bank (SAMA) for this increase, while the recommendation remains conditional upon approval from other regulatory bodies and the Extraordinary General Assembly.
