1. SAUDI ECONOMIC FORUM March 2 2011 Banking in KSA and Challenges Ahead

2. © 2008 Alinma Bank TABLE OF CONTENTS 2

3. © 2008 Alinma Bank Highlights of the Saudi Economy Largest budget announced for 2011 Government spending and oil revenue key to economic growth Sound fiscal position provides ample scope for sustained growth 3

4. © 2008 Alinma Bank 4 Government has been consciously reducing debt from around 80% of GDP to 10% Foreign assets are currently US$440 billion Source: SAMA Highlights of the Saudi Economy

5. © 2008 Alinma Bank Overview of the Saudi Banking Sector 5 Continued Growth in Financing despite the financial crisis. Increasing trend in deposits – pre and post financial crisis. Source: SAMA

6. © 2008 Alinma Bank Overview of the Saudi Banking Sector 6 Total assets increased – pre and post financial crisis. Net Income declined pre crisis but was constant post financial crisis. Source: SAMA

7. © 2008 Alinma Bank Overview of the Saudi Banking Sector 7 Total equity shows a rising trend in both pre and post financial crisis. CAR showed an increasing trend. (SAR in million) Source: SAMA, Al Inma

8. © 2008 Alinma Bank Overview of the Saudi Banking Sector Role of banks critical in contributing to corporate growth Shareholder equity not always the most efficient way to fund growth (cost of equity greater than cost of financing) Low relative corporate leverage in Saudi compared to international benchmarks provides scope for growth through bank financing and capital market issuance 8 2.28 10.06 Source: Bloomberg

9. © 2008 Alinma Bank Effect of the crisis on Saudi banks was very limited General Implementation of more robust controls Improved credit assessment and corporate due diligence Saudi Banks – Post Financial Crisis 9

10. © 2008 Alinma Bank Potential Growth Drivers Infrastructure (power, water, transportation) Housing (affordable low cost units) SME (potential for growth but with government support through awareness / grants / guarantee) Innovation and Product Development (alternative investment products to optimize returns) Development of capital market activity (secondary market for bonds / Sukuks and securitization) Financial planning solutions such as education financing schemes, retirement plans etc. 10

11. © 2008 Alinma Bank Challenges Ahead Geopolitical situation Continuing low interest rate environment Limited capacity to grow under current traditional banking 11

12. © 2008 Alinma Bank