kalam ksa.mp4

CNBCArabia

5/2/2024

Transcript

00:00Thank you for being with us, Mr. Ibrahim, and thank you for being with us at the beginning

00:14of a new month.

00:15We are opening in the markets of Saudi Arabia, and the exchange may still be in control.

00:21After two months of losses, how are we looking at the movement, or the expected movement,

00:26at least for Tassi?

00:27And is it able to compensate for part of the losses that have passed in the past two months?

00:34Welcome, Ms. Maisa.

00:36In fact, perhaps the Tassi movement is the movement that was expected.

00:40It is that there will be a wide path, looking forward to the results, looking forward to

00:44the future federal meetings.

00:46The results will end in the middle of the month, or approximately on May 19.

00:53After that, the Saudi market will show how the path is clear for it.

00:57But we can see that there is a discrepancy between the performance of the market and

01:02the performance of some companies, especially in certain sectors.

01:06The market may have a wide path, but there are sectors that are achieving results, or

01:11to be more accurate, great heights.

01:13Perhaps, mainly, there is a power that has achieved very high heights, although the

01:20market is not in its best conditions.

01:22This discrepancy is always in the case of waiting for the results.

01:26After that, the position of investors will be re-established in the sectors that had

01:33good results, and the companies after the first quarter's announcements.

01:38As I mentioned, the path is considered the natural and expected path.

01:44Today, the decision will be what we will hear from the Federal Reserve, Mr. Ibrahim.

01:50The markets, it seems, for a while now, have begun to reduce expectations of a

01:54decrease in interest rates.

01:55Today, we are only calculating the possibility of a decrease that may come in September,

02:00and it may be higher than expected, from the rates that the markets were calculating.

02:05In general, today, how do we see the movement of the banking sector in anticipation of

02:11this confirmation that we will hear in May, perhaps, from the Federal Reserve?

02:16Perhaps, Mr. President, the Federal Reserve has become more clear in the next meeting.

02:23The uncertainty is always present in the following meetings.

02:28The next meeting is expected, for the most part, to be the continuation of interest rates

02:33at the current level.

02:35The question now is, when will the interest rates decrease?

02:39Will there be a decrease of 25 points, 50 points, 75 points?

02:45This is always the question posed by many investors, because this sector, or sectors

02:52in general, are really affected by interest rates.

02:57Perhaps, the markets were more accepting or more optimistic about what is necessary,

03:07and this may have affected its performance.

03:10So, it was expected that the meetings in the first quarter would witness a decrease in

03:15interest rates.

03:16It was not like that.

03:17Now, the markets have become more pessimistic.

03:20They are looking for a decrease, at least once a year.

03:25So, they are optimistic and pessimistic.

03:28It is likely that there will be a decrease, at least once or twice a year, in 2024.

03:35Even if the interest rates are increasing at the current level, there are other factors

03:40that should be taken into consideration.

03:43For example, unemployment and other economic effects.

03:47All of this affects the interest rates, not the increase in interest rates.

03:52Yes.

03:53Okay.

03:54We have looked at the development bank today.

03:56If we are talking about 36% of its profits, it is almost similar or very close to what

04:03we have seen since the middle of 2023, Mr. Ibrahim.

04:06What is striking is perhaps the ability of the bank to reduce specializations by more

04:12than 22%

04:14Most of the banks we have seen in the past period may have turned to investment

04:18and securities as a kind of diversification of their interests.

04:22But today, how much can these results give us in the short term?

04:26Can the second quarter be similar to the results of the bank?

04:33In fact, the banking sector has seen a large growth in its results.

04:38In the first quarter, we may achieve approximately 18 billion as the highest net profit

04:45in the banks in the quarter.

04:48The second phase, in our opinion, will be more difficult due to two reasons.

04:55The first reason is the very high positive results.

05:00Have we reached the peak in the results of the banks?

05:05This is an important question.

05:07The comparison with the results of previous periods has become more complicated because

05:12the results were high, which the banks did not show previously.

05:16The other thing is, are the incentives today as they were previously in the banks?

05:22The decrease in real estate financing in the last two years, the increase in interest rates

05:29in an indirect way, and the benefit from the assets may have reached the maximum limit.

05:36You see, the increase in interest rates sometimes or mostly supports the banks

05:41in the event of a high interest rate.

05:44However, it reaches a stage where the incentives have become expensive for investors.

05:50This means that the assets have become more than necessary, so it is difficult to use them in the same way.

05:57The equation has become complicated.

05:59The use of specialties.

06:02Banks always have a strategy in using specialties.

06:08They believe that the current interest rates are at a high level and it is difficult to achieve

06:13a future level.

06:14You always raise specialties in order to benefit from specialties.

06:18By reducing them in the next stage, there will be a balance in their results.

06:24In this equation, it may be difficult for the banks, in my opinion, from the beginning

06:30of the second quarter of the current year.

06:33Did the banks that we have seen, such as Sukuk or Senadat, Mr. Ibrahim, have been able

06:38to compensate for some of the decline in the provision of funds from the banks during this period?

06:44A smart question.

06:46Indeed, the banks were looking for a source to use their money.

06:51They were very lucky to have a large margin of growth in the Kingdom's economy, which

06:57depends on loans in many cases.

07:00As we have heard, Neom has loaned more than 10 billion now.

07:04Yes.

07:05This gives the banks a space to reuse their money.

07:09This is very important.

07:11If the money is not used, it will have a great impact on the existing funds.

07:18This is also one of the obstacles that we always find if the interest rates are high.

07:27If the interest rates are high, there will always be a pressure on the banks again.

07:32If there is always a dependence on dividends, the banks need banks for these assets, which

07:37is what happened now, especially with interest rates and interest rates, there will be a

07:41collapse in financing.

07:43All these equations are, yes, complicated, but I repeat and say, in short, the banks are

07:48at a more complicated stage than they were.

07:52Have we reached high levels?

07:55Yes, we have reached high levels.

07:57Banks need to change their distribution so that they can adapt to the next stage and

08:04continue with the high interest rates.

08:08Therefore, I do not expect that the results of the banks will be large growth.

08:13I don't think there will be a large growth.

08:16There will be a continuity in growth, but with lower levels.

08:19Okay.

08:20Let's go back to insurance.

08:21Because we also see that there has been a turning point a while ago, even before the

08:25announcement of the results and the integrations that occurred in the insurance sector.

08:29Is there a forced optimism in the insurance sector that is calling investors today to

08:33focus on it, Mr. Ibrahim?

08:35Or what is happening?

08:37This is the best thing in the financial markets.

08:39It unites sectors.

08:41If the sectors have reached the stage of maturity or the stage of reaching their goals,

08:48investors always look for sectors that need more time to reach their goals.

08:54One of them may be the insurance sector.

08:56We also saw last year that health care achieved positive results.

09:00The positive results of health care are not always very close to the insurance sector.

09:06Because the two sectors are very close to each other.

09:09Even the insurance results are affected by the state of banks.

09:13Banks, when they have large expenses, not at the level of individuals, but at the level

09:20of cars and housing loans, insurance is always part of this circle.

09:29So insurance is expected in the coming period, with the existence of the institution and the

09:34greater specialization, and the existence of better resources than the insurance companies

09:39and the growth of their capital and their search for greater opportunities in the market.

09:44We will witness a better situation for the insurance sector, which we may see at the beginning

09:50of 2024.

09:51We have seen that many companies have great growth in their profits and their prices in

09:56the market.

09:57We thank you, Mr. Ibrahim Al-Nuwaybet, CEO of Kasab Al-Maliyah.

10:02You were with us from Riyadh.

10:04Thank you.

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