Chief Executive Officer’s review

2021 was a landmark year for the Saudi Tadawul Group and the wider Saudi capital market. We are proud to have recorded a strong financial performance during 2021, continued our growth trajectory, and delivered a successful IPO, all underpinned by our ambitious transformation into a holding group structure with four subsidiaries, including our dedicated stock exchange company, the Saudi Exchange, as well as the Securities Clearing Center (Muqassa), the Securities Depository Center Company (Edaa), and Tadawul Advanced Solutions Company (WAMID), a newly created subsidiary focused on solutions and pioneering technologies.

At the beginning of 2021, we set out a clear road map to grow our business and attract a wider pool of investors, while continuing to provide a diverse range of best-in-class products and services to all market participants. Each of the Group’s subsidiaries played key roles in innovating and advancing technologies to improve the efficiency, stability, and transparency of the Saudi capital market’s infrastructure.

Our transformed integrated and scalable business model allowed us to harness the power of synergies and leverage the new opportunities. It strengthened and reinforced the Group’s position as an attractive investment destination and the issuers’ exchange of choice, which is evident in the increased appetite from local and foreign investors for Saudi instruments, as well as the Group’s robust performance leading to higher liquidity and strengthened governance.

The transformation into a holding group marked a new chapter in the Group’s history and laid the groundwork for our own listing on the Saudi Exchange.

Our transformed integrated and scalable business model allowed us to leverage new opportunities, diversify our revenue profile, and created vast opportunities to further expand the Group’s service offering, reinforcing the position of the Group as an attractive investment destination.

A momentous IPO

Saudi Tadawul Group’s IPO was met with significant demand from retail and institutional investors and was 121x and 4.4x oversubscribed, generating SAR 458 Bn and SAR 5.02 Bn respectively. The offering shares were priced at SAR 105 per share at the top of the Company’s initial price range, implying a market capitalization of SAR 12.6 Bn at the time of listing.

The IPO’s success indicates strong growth prospects for the Saudi Tadawul Group and is reflective of how highly the Saudi capital market is regarded and how well it is perceived locally, regionally, and further afield. As one of the largest exchanges in the world and the leading exchange in the MENA region based on market capitalization and liquidity, Saudi Tadawul Group is well-positioned to act as a bridge between global foreign investors and the region's economies.

As we continue our journey into 2022, we will actively pursue a strategy of growth and diversification through the development and implementation of new asset classes, products, and services, while strengthening inter-connectivity with other financial markets in the region and around the world to facilitate capital formation through our subsidiaries.

A robust performance

Saudi Tadawul Group has a long track record of strong operational and financial performance, combining steady growth with strict financial discipline and a robust balance sheet.

Over the past year, the Group and its subsidiaries marked several achievements to advance the development of the Saudi capital market. These include enhancements to the regulations of securities borrowing and lending (SBL) and short selling, as well as partnerships between Edaa and international depository centers to increase international access to the Saudi capital market. At the Saudi Exchange, we launched ESG disclosure guidelines for issuers, among other ESG initiatives underway across the Group.

Underpinning these market enhancements was a continued focus on our own performance and on delivering for our shareholders. I’m pleased to note that this focus bore fruit as we ended the year with a robust balance sheet, an impressive increase of 17.42% YoY in net income after zakat, and recorded a 8.01% YoY increase in operating revenues, mainly driven by solid growth in trading services, post trade services, and listing fees on the back of strong Saudi capital market performance in 2021. We also maintained a strong EBITDA, increasing by 13.10% YoY to reach SAR 668.85 Mn in 2021 compared to SAR 591.37 Mn in 2020, on the back of the growth in the Group’s operating revenue against moderate growth in the Group’s operating expenditures.

2022 Ambitions

Saudi Tadawul Group is a central and integral player to the Saudi economy. With that in mind, our focus will always be twofold: delivering in the immediate term for our issuers and investors, while supporting the long-term growth and diversification of Saudi Arabia’s capital market.

Responsible financial practices are key to this effort. We are currently focused on several initiatives to help build a financial ecosystem that rewards companies that recognize proposition value beyond balance sheets. A core component of this is our focus on supporting ESG in our market and across the region, and leading by example.

We strive to create an environment that empowers, supports, and encourages women to reach their full potential, and are committed to becoming a leading advocate for women in the MENA region. We are also focused on driving forward financial literacy and welcoming new generations of investors to explore all the capital markets have to offer through education projects, including our Invest Wisely platform.

These initiatives will play an important role in achieving the Group’s strategy of developing a technologically advanced, diverse, and integrated capital market, and becoming a key investment destination on the world stage, enabling diversified investment opportunities and strengthened market infrastructure to all market participants.

Looking ahead

A key objective of the Group is to develop an advanced capital market in line with a core pillar of Saudi Arabia’s Financial Sector Development Program (FSDP), as it seeks to create a vibrant financial sector to enable and support Saudi Arabia’s Vision 2030.

Looking ahead to the coming year and beyond, our chief goal is to build on the powerful momentum of the past few years. Saudi Tadawul Group’s achievements have been central to the Kingdom’s development and ambitions, and could not have been accomplished without the guidance and support from our Chairperson, the Board of Directors, and the unwavering commitment of our employees.

 

Eng. Khalid Al-Hussan
Chief Executive Officer and Member of the Board of Directors