Arab News, Mon, Nov 20, 2023 | Jumada Al-Uola 6, 1445
Tadawul Q3 earnings indicate strong growth in non-oil sectors
Tadawul All Share Index earnings data for the third quarter of 2023 revealed
profit growth in non-oil sectors when compared to the corresponding period last
year, according to data compiled by Arab News.
Emphasizing the Kingdom’s drive for economic
diversification, banking, transportation, telecommunication services, and
healthcare and equipment services all reported increased profits over the three
months to the end of September.
The primary stock market index of Saudi Exchange
employs a sophisticated methodology to assign weights to each sector within the
Even though the energy sector claims the highest
market capitalization, primarily influenced by Aramco with a substantial SR8.47
trillion ($2.26 trillion) market cap, it does not command the highest weight.
This is due to the capped indices calculation methodology, with the banks sector
surpassing it in terms of weight.
This methodology is used to prevent any single
security from having a dominating influence on an index, and it is part of the
Financial Sector Development Program’s key initiative under the Kingdom’s Vision
2030 to enhance the exchange’s product offering.
Looking at the net income by sector for the third
quarter, as per data from Bloomberg and analyzed by Arab News, the energy sector
emerged as the leader with SR122.82 billion.
However, this figure indicates a 21 percent
decline compared to the same quarter of the previous year, primarily attributed
to diminished oil prices and a reduction in sales volumes.
Aramco, being the largest entity in this sector,
reported a net profit of SR123.53 billion during the same period, indicating a
21 percent decrease from the previous year.
The decline in growth can be attributed to the
Kingdom’s commitment to reduce oil output by 500,000 barrels per day, initially
announced in April and extended until December 2024.
Additionally, an extra cut of 1 million bpd,
implemented in July and set to persist until December 2023, further contributed
to this decrease.
The banking industry registered the second-highest
net income among the indexed sectors, totaling SR17.65 billion. This represents
an 8.3 percent growth compared to the corresponding period last year.
Considering the inclusion of sukuk and treasury
bonds costs, Al Rajhi Bank recorded the highest net income among all banks at
SR3.9 billion, but faced an 8 percent decline in this period.
Conversely, Alinma Bank showcased the highest
growth, achieving a net income of SR1.33 billion, indicating a 34 percent
increase from the third quarter of 2022.
The telecommunication services sector disclosed
the third-highest net income across all sectors, reaching SR5.75 billion,
reflecting a 43 percent growth in this period. This notable increase can be
largely attributed to the performance of Saudi Telecom Co., which experienced a
38 percent growth, culminating in a total net income of SR4.89 billion in the
third quarter of this year.
Zain KSA, the Mobile Telecommunications Company
Saudi Arabia, experienced growth of 234 percent, reaching SR285 million during
this period. This substantial increase is attributed primarily to the expansion
in business-to-business activities, the uptake of 5G services, digital packages,
and wholesale services.
Additionally, the growth of Tamam, a
Shariah-compliant micro-lending service provider based in Saudi Arabia and a
subsidiary of Zain, played a significant role in this positive financial
The “Vision 2030” initiative recognizes the
pivotal role of the telecom industry in enhancing living standards and driving
economic growth. It aims to promote competition, elevate service standards, and
increase the sector’s contribution to gross domestic product.
The robust performance of this sector is
attributed to increasing subscriptions, the expansion of digital banking in the
Kingdom, and diversification of services.
Significantly, the telecommunications sector
witnessed strong growth during the Hajj season, capitalizing on a notable surge
in its customer base.
During this period, the transportation sector
experienced the highest growth rate, surging by 169 percent to SR223 million in
United International Transportations Co. led this
sector with the highest share, reporting a net income of SR71 million, marking a
12 percent increase from the same quarter last year.
The notable growth in this sector is primarily
attributed to the strong performances of Saudi Public Transport and Saudi Ground
Services Companies, which reported net incomes of SR20.2 million and SR59.9
According to the state media, the Ministry of
Transport and Logistic Services is pivotal to Saudi Vision 2030 through its
National Transport and Logistics Strategy launched in mid-2021.
Aimed at enhancing global logistics standing and
fostering economic diversification, the strategy focuses on initiatives like
global logistical platforms, improved port infrastructure, and increased
The goal is to elevate the transport sector’s GDP
contribution from 6 percent to 10 percent and secure top global rankings in
logistical performance, cross-border trade, and road network connectivity.
The healthcare equipment and services sector
emerged as a promising industry, registering a positive growth of 38 percent
during this period and accumulating a total net income of approximately SR966
Dr. Sulaiman Al Habib Medical Services Group
claimed the highest share in the healthcare equipment and services sector,
reporting a net income of SR544.76 million, reflecting a 30 percent growth
during this timeframe.
According to the International Trade
Administration, Saudi Arabia aims to invest over $65 billion in healthcare
infrastructure as part of Vision 2030, with a focus on increasing the private
sector’s contribution from 40 percent to 65 percent.
The plan includes the privatization of 290
hospitals and 2,300 primary health centers. To enhance accessibility, the Saudi
Ministry of Health plans to establish “health clusters” serving around 1 million
Additionally, the Kingdom is committed to
expanding digital health usage, involving a $1.5 billion investment in health
information technology and increased adoption of telemedicine.