Saudi Tadawul Group first-quarter net profit dips on lower operating revenue

Net income after zakat for the first three months of the year fell to $37.4m

Tadawul's operating revenue for the first quarter decreased 11.6 per cent year-on-year to 293.9m riyals. Reuters

Saudi Tadawul Group, the holding company that operates the kingdom's stock exchange, posted a 21.7 per cent year-on-year decline in first-quarter net profit, on lower operating revenue and higher expenditure.

Net profit after zakat for the first three months of the year fell to 140.6 million Saudi riyals ($37.4m), from 179.6m riyals in the same quarter last year, the group said in a statement on Sunday.

Operating revenue for the first quarter decreased 11.6 per cent year-on-year to 293.9m riyals.

This was "predominantly due to a decrease in trading services and post-trade services driven by the normalisation of trading volumes which contracted 22.1 per cent", the Saudi Tadawul Group said.

Tadawul is among the top 10 global stock markets and had a market capitalisation of about $2.8 trillion on December 8, 2021, when it listed. It became only the third publicly traded regional stock exchange, after the Dubai Financial Market and Boursa Kuwait.

The bourse's operating expenditure increased 1.8 per cent in the first quarter, compared to the same period the previous year, to reach 140.2m riyals. This was because of an increase in salaries and related benefits, which was the largest cost item, driven by growth in the number of staff.

Its profit before interest, tax, depreciation and amortisation decreased to 166.4m riyals in the first quarter of 2022, compared to 209m riyals in the same quarter last year. This was due to a decrease in operating revenue against moderate growth in its operating expenditure, the group said.

The stock exchange's listing fees revenue increased 25.7 per cent year-on-year to reach 21.6m in the first quarter, mainly due to an increase in the number and size of listings, it said.

Saudi Arabia has witnessed a surge of IPOs since it listed oil giant Saudi Aramco in a record $29.4 billion listing in 2019. There were a record 15 IPOs in 2021, bringing the total issuers on the Saudi Exchange to 210 at the end of December.

The bourse said its net profit after zakat of 140.6m riyals in the first quarter was 27.3 per cent higher, compared to the fourth quarter of 2021, amid higher operating revenue and lower operating expenditure.

"We are in a strong financial position driven by our advanced and differentiated business model, in addition to our ambitious growth plans and disciplined capital allocation strategy," said Khalid Al-Hussan, group chief executive of Saudi Tadawul Group.

"We are committed to pursuing a strategy of growth and diversification through the development and implementation of new asset classes, products and services, while strengthening interconnectivity with other financial markets in the region and around the world to facilitate capital formation."

The bourse's total market capitalisation on the Main Market and on the parallel market Nomu ranked the Saudi Exchange the eighth-largest in the world as of the first quarter of 2022, the World Federation of Exchanges said.

The bourse registered a record 11 IPOs in the first quarter – seven on the Main Market and four on Nomu, with a total offered value of 13.3bn riyals.

The total number of listed companies on the Main Market increased to 215 compared to 204 as of March 31, 2021, it said.

Fixed income and funds markets continue to expand, with 10 new government sukuk and bonds and one ETF added during the first quarter.