Saudi Arabia: Tadawul All Share Index earnings data for the third quarter of 2023 revealed profit growth in non-oil sectors when compared to the corresponding period last year, according to data compiled by Arab News.

Emphasizing the Kingdom’s drive for economic diversification, banking, transportation, telecommunication services, and healthcare and equipment services all reported increased profits over the three months to the end of September.

The primary stock market index of Saudi Exchange employs a sophisticated methodology to assign weights to each sector within the index.

Even though the energy sector claims the highest market capitalization, primarily influenced by Aramco with a substantial SR8.47 trillion ($2.26 trillion) market cap, it does not command the highest weight. This is due to the capped indices calculation methodology, with the banks sector surpassing it in terms of weight.

This methodology is used to prevent any single security from having a dominating influence on an index, and it is part of the Financial Sector Development Program’s key initiative under the Kingdom’s Vision 2030 to enhance the exchange’s product offering.

Looking at the net income by sector for the third quarter, as per data from Bloomberg and analyzed by Arab News, the energy sector emerged as the leader with SR122.82 billion.

However, this figure indicates a 21 percent decline compared to the same quarter of the previous year, primarily attributed to diminished oil prices and a reduction in sales volumes.

Aramco, being the largest entity in this sector, reported a net profit of SR123.53 billion during the same period, indicating a 21 percent decrease from the previous year.

The decline in growth can be attributed to the Kingdom’s commitment to reduce oil output by 500,000 barrels per day, initially announced in April and extended until December 2024. 

Additionally, an extra cut of 1 million bpd, implemented in July and set to persist until December 2023, further contributed to this decrease.

The banking industry registered the second-highest net income among the indexed sectors, totaling SR17.65 billion. This represents an 8.3 percent growth compared to the corresponding period last year.

Considering the inclusion of sukuk and treasury bonds costs, Al Rajhi Bank recorded the highest net income among all banks at SR3.9 billion, but faced an 8 percent decline in this period.

Conversely, Alinma Bank showcased the highest growth, achieving a net income of SR1.33 billion, indicating a 34 percent increase from the third quarter of 2022.

The telecommunication services sector disclosed the third-highest net income across all sectors, reaching SR5.75 billion, reflecting a 43 percent growth in this period. This notable increase can be largely attributed to the performance of Saudi Telecom Co., which experienced a 38 percent growth, culminating in a total net income of SR4.89 billion in the third quarter of this year.

Zain KSA, the Mobile Telecommunications Company Saudi Arabia, experienced growth of 234 percent, reaching SR285 million during this period. This substantial increase is attributed primarily to the expansion in business-to-business activities, the uptake of 5G services, digital packages, and wholesale services.

Additionally, the growth of Tamam, a Shariah-compliant micro-lending service provider based in Saudi Arabia and a subsidiary of Zain, played a significant role in this positive financial performance.

The “Vision 2030” initiative recognizes the pivotal role of the telecom industry in enhancing living standards and driving economic growth. It aims to promote competition, elevate service standards, and increase the sector’s contribution to gross domestic product.

The robust performance of this sector is attributed to increasing subscriptions, the expansion of digital banking in the Kingdom, and diversification of services.

Significantly, the telecommunications sector witnessed strong growth during the Hajj season, capitalizing on a notable surge in its customer base.

During this period, the transportation sector experienced the highest growth rate, surging by 169 percent to SR223 million in net income.

United International Transportations Co. led this sector with the highest share, reporting a net income of SR71 million, marking a 12 percent increase from the same quarter last year.

The notable growth in this sector is primarily attributed to the strong performances of Saudi Public Transport and Saudi Ground Services Companies, which reported net incomes of SR20.2 million and SR59.9 million, respectively.

According to the state media, the Ministry of Transport and Logistic Services is pivotal to Saudi Vision 2030 through its National Transport and Logistics Strategy launched in mid-2021.

Aimed at enhancing global logistics standing and fostering economic diversification, the strategy focuses on initiatives like global logistical platforms, improved port infrastructure, and increased cross-border trade. 

The goal is to elevate the transport sector’s GDP contribution from 6 percent to 10 percent and secure top global rankings in logistical performance, cross-border trade, and road network connectivity.

The healthcare equipment and services sector emerged as a promising industry, registering a positive growth of 38 percent during this period and accumulating a total net income of approximately SR966 million.

Dr. Sulaiman Al Habib Medical Services Group claimed the highest share in the healthcare equipment and services sector, reporting a net income of SR544.76 million, reflecting a 30 percent growth during this timeframe.

According to the International Trade Administration, Saudi Arabia aims to invest over $65 billion in healthcare infrastructure as part of Vision 2030, with a focus on increasing the private sector’s contribution from 40 percent to 65 percent.

The plan includes the privatization of 290 hospitals and 2,300 primary health centers. To enhance accessibility, the Saudi Ministry of Health plans to establish “health clusters” serving around 1 million people each.