Riyad Bank raises SAR 13.59 billion from sukuk issuance at 6.5% yield

Riyad Bank has raised SAR 13.59 billion from a Tier 1 capital sukuk issuance, offering a fixed annual yield of 6.5% distributed quarterly.

In a statement to Tadawul on Monday, Riyad Bank said the offering was oversubscribed by more than 2.7 times the initial issue size of SAR 5 billion, prompting the bank to increase the issuance to SAR 10 billion.

The subscription covered 10 million sukuk, each with a nominal value of SAR 1,000. The sukuk are perpetual but subject to early redemption starting from the fifth year, according to the terms and conditions.

The yield will be reset on August 13, 2031, and subsequently every five years thereafter, as detailed in the final terms of the sukuk.

Riyad Bank reported a 2% year-on-year increase in net profit for the second quarter to SAR 2.65 billion, driven by growth in total operating income, partially offset by higher total operating expenses. This was supported by an increase in net trading income, net special commission income, and dividend income.

The rise was partially offset by a decline in net fee and commission income, net gains from the sale of non-trading investments, other operating income, and net foreign exchange income.

The increase in total operating expenses was mainly due to higher depreciation of property and equipment, right-of-use assets, net impairment charges on investments, net impairment charges on credit losses and other financial assets, and staff salaries and expenses. This was partially offset by a decrease in other general and administrative expenses, other operating expenses, and rent and building expenses.

Founded in 1957, Riyad Bank provides a full range of banking and investment services through its network of 334 branches inside and outside Saudi Arabia. The bank currently has a market capitalization of SAR 81.5 billion. The Public Investment Fund holds the largest stake at 21.7%, while the General Organization for Social Insurance owns 10.4%.