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MarketScreener Homepage  >  Equities  >  SAUDI ARABIA STOCK EXCHANGE  >  Riyad Bank SJSC    1010   SA0007879048

RIYAD BANK SJSC

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Big Saudi firms to pay bonuses, imitating royal handout

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02/02/2015 | 09:54am EST

RIYADH/KHOBAR, Saudi Arabia (Reuters) - Several of Saudi Arabia’s largest listed companies said on Monday they would pay out hundreds of millions of dollars in bonuses, days after the new king ordered a handout to Saudi state employees to mark his accession.

Saudi Arabia has sold minority stakes in big state firms and listed them on its bourse partly to expose them to market discipline. Monday's announcements illustrated, before the market opens to direct foreign investment later this year, that the firms sometimes still act like government bodies.

“I expect almost all Saudi listed and non-listed companies to make such payments, which will have a short-term impact on their operating profitability,” said Shakeel Sarwar, head of asset management at Securities & Investment Co in Bahrain.

“But the beneficiaries of these payouts will spend the money and that should help consumer stocks plus banks, which might see retail loans increase. Overall, this should benefit the economy.”

Saudi Electricity Co (>> Saudi Electricity Company) will distribute 545 million riyals (99 million pounds) among its Saudi employees, it said in a bourse statement on Monday. Bonuses will not exceed 50,000 riyals per staff member. The government owns 81 percent of the Gulf's largest utility, according to Reuters data.

Saudi Telecom Co (>> Saudi Telecom Company), 70 percent state-owned, will pay an extra 395 million riyals to its Saudi employees, it said in a similar filing, adding that the payout would be recorded in its first-quarter earnings.

Saudi Basic Industries Corp (>> Saudi Basic Industries Corporation) (SABIC), the Gulf’s biggest list company and one of the world’s top petrochemical producers, will pay two months’ basic salary to Saudi employees and has recommended its subsidiaries and affiliates do likewise, according to an internal memorandum seen by Reuters and confirmed by an official source.

SABIC’s units include Saudi Arabia Fertiliser Co (>> Saudi Arabia Fertilizers Co.), Saudi Kayan Petrochemical Co (>> Saudi Kayan Petrochemical Company) and Yanbu National Petrochemical Co (>> Yanbu National Petrochemicals Company).

Southern Province Cement (>> Southern Province Cement Company), majority-owned by state funds, revealed it would pay two months’ salary to Saudi employees, plus half a month’s pay to non-Saudis.

Several of the country's largest banks will also pay two-month bonuses, according to financial news website Argaam. The government owns major stakes in National Commercial Bank (>> National Commercial Bank SJSC), Samba Financial Group (>> Samba Financial Group) and Riyad Bank (>> Riyad Bank), Reuters data shows.

Last week, Saudi Arabia's newly crowned King Salman ordered the immediate payment of two months of bonus salary to all state employees and pension to retired government workers, marking his accession after the death of his brother King Abdullah.

Salman's announcement did not give a monetary figure, but analysts said the payout to state employees could be worth some 70 billion riyals, while additional handouts to pensioners, students and others could make total state spending much larger.

Government handouts are a tradition in Saudi Arabia at times of political transition or tension. After uprisings in some other Arab countries in 2011, Abdullah announced tens of billions of dollars of new welfare spending, and some Saudi companies followed suit with their own handouts.

“Saudi companies don’t pay income tax, so these occasional one-off payments can be construed as indirect taxes for the benefit of the overall society and population,” said Sarwar.

(Additional reporting by Amena Bakr in Doha and Matt Smith in Dubai; Writing by Matt Smith; Editing by Andrew Torchia)

By Marwa Rashad and Reem Shamseddine

Stocks mentioned in the article
ChangeLast1st jan.
COMMERCIAL BANK 0.00% 4.43 End-of-day quote.14.77%
DAMAC PROPERTIES DUBAI CO. PJSC 2.60% 0.79 End-of-day quote.-47.68%
NATIONAL COMMERCIAL BANK SJSC End-of-day quote.
RIYAD BANK SJSC End-of-day quote.
SAMBA FINANCIAL GROUP SJSC End-of-day quote.
SAUDI ARABIA FERTILIZERS CO. End-of-day quote.
SAUDI BASIC INDUSTRIES CORPORATION SJSC End-of-day quote.
SAUDI ELECTRICITY COMPANY SJSC End-of-day quote.
SAUDI KAYAN PETROCHEMICAL COMPANY SJSC End-of-day quote.
SAUDI TELECOM COMPANY SJSC End-of-day quote.
SOUTHERN PROVINCE CEMENT COMPANY SJSC End-of-day quote.
YANBU NATIONAL PETROCHEMICALS CMPNY SJSC End-of-day quote.
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Financials (SAR)
Sales 2019 10 494 M
EBIT 2019 7 053 M
Net income 2019 5 841 M
Debt 2019 -
Yield 2019 4,51%
P/E ratio 2019 11,1x
P/E ratio 2020 11,2x
Capi. / Sales2019 6,45x
Capi. / Sales2020 6,27x
Capitalization 67 740 M
Income Statement Evolution
Consensus
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Mean consensus HOLD
Number of Analysts 11
Average target price 23,81  SAR
Last Close Price 22,58  SAR
Spread / Highest target 29,3%
Spread / Average Target 5,46%
Spread / Lowest Target -22,1%
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NameTitle
Tariq Abdulrahman Saleh Al-Sadhan Chief Executive Officer & Executive Vice President
Abdullah Mohammed bin Ibrahim Al-Issa Chairman
Mohammed Abdullah Al-Yahya Head-Operations, Technology & Support Services
Abdullah Ali Al-Oraini Chief Financial Officer
Talal Ibrahim Abdulrahman Al-Qudaibi Non-Executive Director
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