Discounted Cash Flow Calculation for SASE:1060 using Excess Returns Model Model
The calculations below outline how an intrinsic value for Saudi British Bank is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
The current share price of
Saudi British Bank
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
Saudi British Bank's
is considered below, and whether this is a fair price.
Price based on past earnings
Saudi British Bank's earnings available for a low price, and how does
this compare to other companies in the same industry?
Saudi British Bank's earnings are expected to grow significantly at over 20% yearly.
Saudi British Bank's revenue is expected to grow by 18.6% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Saudi British Bank's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
Saudi British Bank
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Fundamentally a bank's business is based upon borrowing and lending money, for
this reason they typically have high levels of debt and we analyse them
This treemap shows a more detailed breakdown of
Saudi British Bank's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. David Robert Dew has been the Managing Director at The Saudi British Bank (SABB) since May 26, 2010. He is Director at Alawwal Bank since June 2019. Mr. Dew has been a Deputy Chief Executive Officer at HSBC Bank Middle East Limited in Dubai since 2008. He has been an Executive Director at The Saudi British Bank since 2010. He has been an employee of HSBC since 1977. He has over 30 years of experience in the areas of banking and finance. He served as the Chief Operating Officer of The Saudi British Bank, Riyadh, Saudi Arabia from March 2001 to November 2004. He served as Senior Executive Vice President and Chief Operating Officer of HSBC USA Inc. from March 2007 to 2008. He served as Senior Executive Vice President of Audit at HUSI and HSBC North America Inc., (HNAI) from January 1, 2006 to February 2007. He served as Chief Administrative Officer at HSBC USA Inc. from February 2007 to March 2007. He served as Chief Auditor, Group Audit, HSBC Finance Corporation from November 2004 to December 2005. Mr. Dew served as Chief Operating Officer of SABB from March 2001 to November 2004; Deputy Chief Executive Officer of The Hongkong and Shanghai Banking Corporation Limited, Singapore from September 1997 to March 2001 and Chief Executive Officer of HSBC Bank plc, Milan, Italy from November 1994 to September 1997. He served as Head of Audit at HSBC Bank U.S.A. North America in New York from 2004 to 2007. He has been a Director of HSBC Bank Middle East Limited since 17 May 2017. He has been a Director of Junior Achievement of New York, Inc. since 2008. He served as a Non-Executive Director at SABB Takaful Company since 2007. He served as an Executive Director of The Saudi British Bank, Riyadh, Saudi Arabia from March 2001 to November 2004. Mr. Dew holds a Masters in Economics from Cambridge University in the United Kingdom.
Insufficient data for David to compare compensation growth.
Insufficient data for David to establish whether their remuneration is reasonable compared to companies of similar size in .
Management Team Tenure
Average tenure of the
Saudi British Bank
management team in years:
The tenure for the Saudi British Bank management team is about average.
MD & Executive Director
Chief Financial Officer
Chief Compliance Officer
Head of Corporate Communications
Chief Human Resources Officer
Majed Kamal Najm
Deputy Managing Director of Corporate & Institutional Banking
Deputy Managing Director of Retail Banking & Wealth Management
Chief Risk Officer
Deputy Managing Director of Treasury
Board of Directors Tenure
Average tenure and age of the
Saudi British Bank
board of directors in years:
The average tenure for the Saudi British Bank board of directors is less than 3 years, this suggests a new board.
Board of Directors
Chairman of the Board
MD & Executive Director
Saad Bin Al-Fadhli
Abdullah Bin Al Manea
Chairman of Shariah Committee
Mohammed Bin Omran Alomran
Khalid Bin Al-Mulhem
Maria D. C. D. N. Ramos
Who owns this company?
Recent Insider Trading
No 3 month open market individual insider trading information.
The Saudi British Bank provides banking and financial services in the Kingdom of Saudi Arabia. The company operates through Retail Banking, Corporate Banking, Treasury, and Others segments. The company’s personal banking services include current and savings, and commodity investment accounts; personal and home financing, and financing against deposits products; credit and debit cards; wealth management solutions, such as asset management, brokerage, securities, investment banking advisory, debt capital markets, project and export finance, and equity research services, as well as takaful services; payments and money transfer services; safe deposit lockers; and online, mobile, and phone banking services. Its business banking services comprise deposit accounts, credit facilities, and business credit cards; liquidity and cash management services, including collection and payment management services, and point of sale services; trade and supply chain services, including export, trade finance, receivables finance, and guarantees; investment banking services; and foreign exchange, derivative solutions, deposits and loans, bonds, structured products, Islamic solutions, and economic research and market analysis. The company also acts as an insurance agent; and purchases, sells, and leases land and real estate properties. It operates through a network of 78 branches in the Kingdom of Saudi Arabia. The Saudi British Bank was founded in 1978 and is headquartered in Riyadh, the Kingdom of Saudi Arabia.
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