Treasury group
The Treasury Group of the Bank contributed effectively towards the overall Bank, introducing new products like derivatives, structures and REPO with customers, successfully cross selling among all business groups, thereby achieving all cross-sell KPIs related to the Bank Strategy 2025. Working towards the strategic goal of being the Most Innovative Treasury Partner in the Kingdom, the Group introduced 12 primary initiatives to achieve this strategic goal, and has reached its 2022 targets in a timely manner.
As a Primary Dealer, Alinma Bank continued working with the National Debt Management Center (NDMC) to market the SAR Government Monthly Issuances, and also bid SAR 6.9 Bn. in Government Sukuk year-to-date (YTD) with Alinma Bank and its clients being allocated 4.7B SAR. The Bank also participated in NDMC-facilitated Sukuk switch deals, as part of its continuous optimizing process of the “reserve eligible Sukuks” portfolio, to maintain sound high-quality liquid assets (HQLA) that coincides with balance sheet growth, thereby maintaining healthy regulatory ratios.
In 2022 the Treasury has:
- Launched a new Treasury dealing system – capable of catering to various new products
- Developed new yield enhancement products
- Established a new Senior Unsecured Sukuk Program
- Created a Funds Transfer Pricing (FTP) calculation enhancement project
- Introduced new Risk Participation arrangements with international banks.
Over the last five years, Alinma’s investment portfolio had registered 117% growth with an 80% increase in performance and a net exchange income increase of 71%.
| 2022 | 2021 | |
| Total assets growth | 15% | 2% |
| Income from investments | 41% | -5% |
| Exchange income increase | 38% | -1% |
The Treasury division worked on several forward-looking initiatives during 2022. These included
- Redesigned FI coverage
- Introduction of profit rate hedging
- Enhanced offering of structured deposit products
- Upgraded systems support for new Treasury processes
- Growing long term funding to improve and stabilize liquidity along with Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)
- Diversifying investments to improve yield on investment portfolio
- Introduction of Shariah-compliant products in alignment with international banks.
In keeping with its fundamental responsibilities, the division developed a funding strategy document and monitored it regularly through the Assets and Liabilities Committee, to track funding and liquidity levels, maturity and risk profiles, and capital management of the Bank. The Group also worked towards automating the Fundamental Review of the Trading Book (FRTB) by Q1 2023 and parallelly developed a manual module to generate the Basel requirement as per Basel 4.
Managing liquidity and funding was a major challenge during the year. Super-sized rate hikes to combat inflation delivered by the Fed during the year 2022 led to most GCC economies increasing rates in order to protect the currency peg regime, translating to higher cost of funding and liquidity stress. Alinma Bank was prudent in managing the cost of funding and through adequate balance sheet management was able to cater to the growth in the asset side, especially in investments, which grew by more than 17% YTD. This growth was mainly directed toward enhancing the overall portfolio yield, in addition to improving the diversification of the book.
The timely and generous support received from the Central Bank, the high-quality liquid assets and the large partner base of the Bank helped in effectively managing liquidity, thereby safeguarding stakeholder value.
2022 has seen a focused drive towards e-learning, with an emphasis on Technical and Leadership related training and development during the year.