National Commercial Bank (NCB), Saudi Arabia’s biggest bank by assets, plans to boost its capital by SR5 billion ($1.3 billion) through conversion of its retained earnings into capital, it said in a statement on Tuesday.
The announcement comes one month after the Saudi government said it planned to float 15 percent of the state-owned bank on the stock exchange later this year in an initial public offering, the Kingdom’s first bank to have IPO since 2008.
Mansour Al-Maiman, secretary-general of Saudi Arabia’s Public Investment Fund and chairman of NCB’s board, said shareholders had approved the plan to increase the bank’s capital to SR20 billion through the issuance of 500 million new shares.
In a statement on the occasion, Al-Maiman said the capital hike would enable the bank to expand its financial activities. He also commended the bank’s good financial performance in 2013.
“We expect better performance in 2014 in light of the Kingdom’s strong economy and better business environment,” the chairman said.
NCB achieved a record profit of SR7.85 billion in 2013, against SR6.45 billion in the previous year, with an increase of SR1.4 billion or 21.7 percent.
In addition, one new bonus share will be issued for every three existing NCB shares. Shareholders also approved a dividend distribution of SR1.90 per share for 2013.
The move will increase the bank’s shares from 1.5 billion to 2 billion with a nominal value of SR10 per share. Shareholders who have registered on the day of the bank’s extraordinary general assembly will have the right to get extra shares.
The general assembly also agreed to sell 15 percent of the bank’s shares in an IPO. The board of directors has been given the go ahead to request the Capital Market Authority to list and exchange its shares on the Saudi bourse.
The general assembly endorsed the bank’s final accounts for 2013 and reports of auditors.