Nayifat reports Q1 results, unveils strategy for growth

Nayifat Finance Company, Saudi Arabia’s leading non-bank financial institution  (“NBFI”) for consumers and SMEs, has announced its financial results for the three-month period ended 31 March 2019. Revenue of SAR 84.9 million improved by 1.12% year-on-year, while net income held steady at SAR 46.64 million. The Company’s gross asset portfolio stands at SAR 2.23 billion, increasing by 5.8% on Q1 2018 and by 4.7% on the previous quarter. Nayifat’s net income has grown at a CAGR of 11.2% since 2015 (as at 31 December 2018), with a net income margin of 54.9% delivered in Q1 2019. 

Abdulmohsen Al Sowailem, Chief Executive Officer at Nayifat Finance Company,commented:

“Our quarterly performance has held stable as we prepare for a period of expansion. The sector has experienced headwinds during the last two years, driven by macroeconomic pressures. These prompted us to maximize controls on financing in order to minimize risk in the portfolio. As market conditions improve, we have identified a number of opportunities for expansion, which will see significant growth on the loan book between 2019 and 2023.”

During the last 18 months, the Company has maintained a conservative selling approach with higher credit controls to deliver a Non-Performing Loan (“NPL”) ratio of 6.3% as at 31 March 2019. Strict adherence to a high credit quality strategy has ensured the core stability of Nayifat’s portfolio, prioritizing long-term profitability over short-term or high-risk returns. This strategy has allowed the Company to maintain a low Net Credit Loss (“NCL”) in its portfolio, and  Q1 2019 improved collection and NPL management resulted in a Net Credit Gain of SAR 2.8 million.

Operating highlights in the first quarter have included the introduction of Smart Loans for consumers, facilitating instant approval and issuance with no guarantor required; and an official tie-up with Monsha’at (the Saudi SME Authority) to support start-up and small business financing requirements. The top- and bottom-line impact of the former is expected to be realised during 2019. 

“Our aim is to consolidate Nayifat’s place as a pioneer non-bank financial institution in Saudi Arabia. Our strategic growth plans include expansion in the SME-financing space along with the launch of credit card products for existing and prospective customers. An increasingly stable economic environment and robust regulatory framework – both of which are highly supportive of the SME customer segment – will further promote our growth objectives,” Al Sowailemcontinued.

Growth strategy

With Saudi Arabia returning to economic growth, Nayifat believes the initiatives of Saudi Vision 2030 will be drivers for expansion of the local credit market and increasing demand for consumer and SME finance. 

Key pillars for growth during 2019 and beyond include the easing of access to financing by introducing products suited to evolving customer needs; deepening customer segment penetration by expanding the customer base and diversifying into SME lending; maintaining the quality of the credit portfolio to minimize the risk of non-performing assets; the introduction of credit card products for existing and prospective customers; and geographic expansion, with the intention of increasing the branch footprint by at least five new branches by 2022. Nayifat currently operates 24 branches in 13 regions of the Kingdom. 

Headquartered in Riyadh, Nayifat was among the first institutions in Saudi Arabia to be licensed as a Finance Company by the Saudi Arabian Monetary Agency (SAMA). It is the go-to NBFI in Saudi Arabia, providing Shari’a-compliant lending solutions – including Tawarruq, Murabaha and Ijarah – to more than 250,000 customers since inception (as at 31 March 2019). In 2019, Nayifat entered the local credit card market in partnership with Visa, becoming one of the first Saudi Finance Companies to obtain a license from SAMA to finance Credit Cards. Nayifat has more than 40,000 active and creditworthy customers in Saudi Arabia.