Saudi CMA Approves Al Rajhi Bank Capital Increase to SAR 60 Billion Through Bonus Shares Funded by Retained Earnings

Riyadh | EcoPulse24

The Saudi Capital Market Authority (CMA) has approved Al Rajhi Bank's proposal to increase its capital by 50%, raising it from SAR 40 billion to SAR 60 billion, by issuing bonus shares to shareholders. This step enhances the bank's capital base without requiring any new cash infusion.

According to the CMA statement, shareholders registered at the Securities Depository Center at the close of the second trading day after the eligibility date will receive one bonus share for every two existing shares. The board of directors will determine the record date later.

Funding Mechanism and Share Count

The capital increase will be funded by transferring SAR 20 billion from retained earnings to the capital, raising the number of shares from 4 billion to 6 billion, with no change in total shareholders' equity.

The CMA stated that the extraordinary general assembly must convene within six months of approval, after fulfilling all related regulatory requirements.

What Does the Increase Mean for Shareholders?

• No direct cash impact on shareholders (no call for new funds).
• A theoretical decrease in share price post-adjustment due to the increased number of shares.
• Strengthening of the capital base and support for capital adequacy ratios.
• Signals the strength of accumulated profits and the bank's ability to recapitalize internally.

Financial Context

This move comes as Al Rajhi Bank continues to solidify its position as the largest Islamic bank in Saudi Arabia by market value and reach, with ongoing growth in lending activities and digital banking services.

The bank has previously strengthened its capital structure through additional Tier 1 sukuk issuances, reflecting a balanced strategy between operational growth and capital management.

EcoPulse24 Analysis

This capital increase via retained earnings highlights the bank's robust financial standing and provides greater flexibility for expansion in lending and investment without impacting liquidity. While the move may result in a short-term technical decline in share price due to the increased share count, the structural impact is positive in the medium term, especially given the strong ongoing demand for bank financing in the Saudi market.

The key message: The bank is strengthening its capital base internally, not from the market - a sign of sustainable profitability and sound financial management.