meed-logo

line1 line2 line3
SIGN IN / REGISTER

Kuwaiti banks enter bounce-back mode

10 August 2023

 

With low levels of non-performing loans (NPLs) and improving funding metrics, 2023 is proving to be a solid year for Kuwaiti banks. At the same time, the promise of project-related lending is also starting to firm up on the horizon.

Profitability is trending in the right direction, with half-year results in 2023 revealing robust performances for the largest banks in the tightly knit firmament of 11 Kuwaiti banks. 

While unlikely to repeat last year’s growth levels, which saw net income increase by 25.3 per cent on average thanks in part to bulging interest margins, lower loan impairments and a continued focus on cost efficiencies, this year’s six-month reporting cycle indicates double-digit growth will be repeated for the full year.

National Bank of Kuwait (NBK), the country’s largest lender, reported a 16 per cent increase in first half 2023 profits to KD275.3m ($895.3m), as interest income rose. Total assets in the first half increased by 5.3 per cent to KD36.1bn ($117.4bn).

As NBK chief executive Isam al-Sager noted: “Strong business growth, robust liquidity and prudent levels of asset quality will continue to drive profit growth throughout 2023.”

Robust fundamentals

Improving NPL metrics – already the lowest in the GCC – and solid funding growth are driving improvements for the country’s banks.

The IMF noted in an assessment earlier this year that banks remain well capitalised and liquid — comfortably exceeding prudential regulatory requirements. Last year, the average capital adequacy ratio was 17.3 per cent, above the 12 per cent limit required by the Central Bank of Kuwait (CBK).

NPLs remain low by regional standards, at least in part because Kuwait’s small and medium-sized enterprise (SME) sector is not as vibrant as some other Gulf states, meaning fewer insolvent customers to deal with. The average bank’s customer portfolio comprises Kuwaiti nationals who work in solid government jobs and are considered low-risk customers.

Another supporting factor in terms of asset quality is the solid performance of Kuwait’s real estate sector, which has relatively little exposure to foreign investments – removing the risk of speculation-driven increases affecting the banking market.  

On a note of caution, Ashraf Madani, vice-president and senior credit officer at Moody’s Investors Service, says there have been some issues for Kuwaiti banks with foreign operations, in Turkey and Egypt, for instance.

“Foreign currency translations have also impacted capital. So we saw a slight decline in the capital ratio over the past two to three years. But there’s still strong capitalisation,” he says.

“Most banks have large corporate borrowers that have been in the business for quite some time. They have established long-term relationships with the banks, and the portfolio has good seasoning.”

The funding side is also improving, Madani notes, and this year there seems to be higher growth from the deposit side compared to the credit side, which is slightly favourable for the funding of banks.

Growth in the pipeline

Lending to the private sector should remain strong, despite a series of interest hikes that have grown by 250 basis points since the global monetary policy tightening cycle began in 2022.

Lending growth averaged a healthy 7.7 per cent last year, although this year will not be as high.

“This year, our expectation is that the credit growth in the system will be around 3 per cent,” says Madani.

“That’s for two reasons. Number one is that we don’t expect the exceptional growth last year to continue on the consumer side because we’re coming from a high base already in 2022.

“And number two, there are some repayments on the corporate side this year, and these are basically offset by some good project awards on the corporate side. There are some big projects awards happening this year.”

Another push for credit growth will come from a new mortgage law, under which local lenders can provide a housing loan of up to KD140,000 ($455,000) and on which the state will cover the interest for the first KD70,000 ($227,000) on behalf of the borrower.

An increase in project awards this year could technically drive credit higher, but expected tepid growth on the consumer side will likely exert a smothering effect on total loan performance.

On the regulatory side, the Central Bank’s regular review of the adequacy of its financial regulatory perimeter and macroprudential policy toolkit have won the IMF’s plaudits.

The fund said the CBK will continue to regularly stress test the banking system's resilience to emerging financial stability risks, and said the existing blanket guarantee on bank deposits should be gradually replaced with a limited deposit insurance framework to address moral hazard.

Meanwhile, the interest rate cap on commercial loans should be phased out to support efficient risk pricing and credit supply to SMEs.

Though NBK, once the largest GCC bank by assets, has been overtaken in size by the region’s emergent banking behemoths such as the UAE’s First Abu Dhabi Bank and Saudi National Bank, it and other national heavyweights remain active lenders with a keen interest in servicing economic opportunities in Kuwait and beyond.

Big ticket mergers are not in the pipeline this year, but after the tumult of recent years, Kuwaiti lenders will be happy with stable, if unspectacular, growth.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11060286/main.gif
James Gavin

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Samsung confirms Saudi chemical contract award

    28 September 2023

    Register for MEED’s guest programme 

    South Korea’s Samsung Engineering has issued an official statement confirming that it has been awarded the front-end engineering and design (feed) contract for Alujain Corporation’s planned propylene plant in Saudi Arabia’s Yanbu Industrial Complex.

    MEED revealed that Samsung was working on the feed contract for the petrochemical project earlier this month.

    In its statement, Samsung said that it had been given the notice of award for the feed contract for the facility, which is being developed by Alujain and will produce propylene and polypropylene (PP).

    The scope of the contract will also include utilities and offsites.

    The value of the contract is $19.4m and the feed work is expected to be carried out in Samsung Engineering’s offices in the South Korean capital of Seoul until May 2024.

    The regional project-tracking service MEED Projects has estimated that the EPC contract will be worth $2bn.

    The propane dehydrogenation (PDH) plant, which produces propylene, will have an annual capacity of 600,000 tonnes, and the PP plant will have a yearly capacity of 500,000 tonnes.

    Samsung Engineering said: “Alujain has expressed its confidence in Samsung Engineering by awarding feed after previously awarding Samsung Engineering with the pre-feed contract.”

    The South Korean company also said that it intended to win the engineering, procurement and construction (EPC) contract.

    Samsung Engineering said it expected the EPC contract for the petrochemical project to be released in mid-2024.

    It has already executed 32 projects in Saudi Arabia, five of which were propylene projects.

    Samsung Engineering also worked on the Luberef lube base oil plant in Yanbu, located near the planned Alujain petrochemical project site.

    Hong Namkoong, president and CEO of Samsung Engineering, said: “As we are proceeding from the initial pre-feed stage to the feed stage of the project, we are applying all of Samsung Engineering’s innovative technologies.”

    In May, it was announced that Alujain had selected the C3 Catofin PDH technology from US-based Lummus Technology for the planned propylene plant.

    The scope of work for Lummus Technology covers the provision of the technology licence and basic engineering.

    Alujain said in April this year that it intends to accelerate work on the planned project.

    In a filing with the Saudi Stock Exchange (Tadawul) on 10 April, it said it would improve its business through “accelerating work on the development of engineering works and then the construction and operation of the company’s new factory to produce propylene, polypropylene and other specialised products”.

    MEED’s October 2023 special report on Saudi Arabia includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > SPORT: Saudi Arabia’s football vision goes global
    > ECONOMY: Riyadh prioritises stability over headline growth
    > BANKS: Saudi banks track more modest growth path
    > UPSTREAM: Aramco focuses on upstream capacity building
    > DOWNSTREAM: Saudi chemical and downstream projects in motion
    > POWER: Riyadh rides power projects surge
    > WATER: Saudi water projects momentum holds steady
    > GIGAPROJECTS: Gigaproject activity enters full swing
    > TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
    > JEDDAH TOWER: Jeddah developer restarts world’s tallest tower

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11179043/main.jpg
    Wil Crisp
  • Riyadh reshapes its global role

    28 September 2023

    Commentary
    John Bambridge
    Analysis editor

    Riyadh is on a mission to cultivate its global status and diplomatic and geopolitical soft power like never before, seeking out forums and platforms of interest at all levels of international engagement and interaction. 

    In 2023 alone, Saudi Arabia has joined the Shanghai Cooperation Organisation, launched the Global Water Organisation and been formally invited to join the Brics bloc of emerging markets.

    Global sports has also become a major new arena of activity for Saudi Arabia. The kingdom has secured the rights to host football’s 2027 Asian Cup and the 2029 Asian Winter Games. In 2022, it oversaw the Public Investment Fund’s launch of the LIV Golf League. 

    It also directed Saudi Pro League clubs to engage in an extraordinary spending spree in the 2023 summer transfer season, buying 94 overseas players, including 37 from Europe’s Big Five leagues. 

    Riyadh is bidding for the 2030 Winter Olympics and has dispensed with its efforts to jointly host the 2030 World Cup with Egypt and Greece in favour of a standalone bid for the 2034 World Cup that would ensure undivided global attention for Saudi Arabia.

    In its determined emphasis on sport, Riyadh is emulating a strategy pursued by Doha for many years to cultivate a role for itself as an international sports hub for the region. However, Saudi Arabia’s approach – together with its larger population or captive audience, and even greater economic clout – is amplifying its position within global sport at an astonishing rate.

    Of equally vital interest to Saudi Arabia’s long-term economic prosperity and stability are its efforts to better physically connect itself with its surrounding neighbourhood. Projects such as the GCC railway network, which is back on track, and the electrical grid interconnection projects launched this year, including a $1.8bn connection with Egypt and $570m connection with Iraq through Kuwait, also point to Riyadh’s intent to be a regional nexus and conduit for everything from freight to power.

    Perhaps no clearer sign of the kingdom’s will to reshape the regional future is its recent moves to bury the hatchet with Iran – a detente that yet hangs in the balance over Saudi Arabia’s position on Israel amid the murmurings of a normalisation deal being within sight. Riyadh may have to choose one or the other. Yet regardless, down either path lies the potential for a change that overthrows decades of regional geopolitical convention.

    MEED's October 2023 special report on Saudi Arabia includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > SPORT: Saudi Arabia’s football vision goes global
    > ECONOMY: Riyadh prioritises stability over headline growth
    > BANKS: Saudi banks track more modest growth path
    > UPSTREAM: Aramco focuses on upstream capacity building
    > DOWNSTREAM: Saudi chemical and downstream projects in motion
    > POWER: Riyadh rides power projects surge
    > WATER: Saudi water projects momentum holds steady
    > GIGAPROJECTS: Gigaproject activity enters full swing
    > TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
    > JEDDAH TOWER: Jeddah developer restarts world’s tallest tower

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11176946/main.gif
    John Bambridge
  • Riyadh prioritises stability over headline growth

    28 September 2023

    MEED's October 2023 special report on Saudi Arabia also includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > GIGAPROJECTS: Gigaproject activity enters full swing
    > TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
    > UPSTREAM: Aramco focuses on upstream capacity building
    > DOWNSTREAM: Saudi chemical and downstream projects in motion
    > POWER: Riyadh rides power projects surge
    > WATER: Saudi water projects momentum holds steady
    > BANKS: Saudi banks track more modest growth path
    > SPORT: Saudi Arabia’s football vision goes global
    > JEDDAH TOWER: Jeddah developer restarts world’s tallest tower

     

    As 2023 heads towards its final quarter, Saudi Arabia has elected to continue to pursue further voluntary Opec+ oil production cuts, supporting oil prices at the expense of its own immediate GDP growth.

    On 5 September, Riyadh confirmed its intention to roll over its additional 1 million barrels a day (b/d) of production cuts until the end of the fourth quarter. Analysts had largely expected Saudi Arabia to extend the cuts with a view to further tightening oil markets, and the price of Brent crude broke the $90-a-barrel mark and reached its highest point in 10 months shortly after the cut extension was announced.

    Despite the rise in prices, Saudi Arabia’s ongoing oil production restraint will ensure no improvement is likely to be made on its modest mid-year real GDP growth forecasts.

    In July, the Washington-based IMF lowered its projection for Saudi Arabia’s economic growth to 1.9 per cent, down from an earlier forecast of 3.1 per cent in April – and compared to an 8.7 per cent growth figure for 2022, which saw oil reach highs of up to $124 a barrel and the kingdom’s first fiscal surplus in nearly a decade.

    The country also entered a technical recession in the second quarter after its economy contracted for its second successive quarter in a row – shrinking by 0.1 per cent after a contraction of 1.4 per cent in the first quarter, according to estimates from the General Authority for Statistics (Gastat). This resulted in a slowing of year-on-year growth to 3.8 per cent in the first quarter and 1.1 per cent in the second.

    There is now a risk that the Saudi economy could see an overall contraction for 2023. The further three months of production cuts will translate into a 9 per cent overall fall in production in 2023, the largest drop in 15 years, according to Khalij Economics.

    Non-oil growth

    Despite the disappointing headline GDP growth figures and projections, however, Saudi Arabia is maintaining a robust non-oil growth rate.

    The non-oil economy is estimated to have grown 5.5 per cent year-on-year in the second quarter of 2023, according to Gastat, while oil sector growth declined by 4.2 per cent. Private sector growth for the quarter has been estimated to be even higher, at about 6.1 per cent.

    At the same time, the Riyad Bank Saudi Arabia purchasing managers’ index (PMI) settled to an 11-month low of 56.6 in August 2023, down from 57.7 in July, reflecting a moderation of non-oil activity. It was the second stepdown in two months for the index from a multi-year high for new business in June.

    The headline PMI figures remain deeply positive, however, with the index well above the 50 mark that delineates growth from contraction. 

    The index also saw the rate of job creation pick up further in August amid sustained new business growth. This reflects a continuation of a job creation trend in the country that has seen unemployment fall from 9 per cent during the Covid-19 pandemic to 4.8 per cent at the end of 2022. Meanwhile, youth unemployment has been halved over the past two years to 16.8 per cent in 2022.

    On the flipside, input cost inflation accelerated to its fastest rate in over a year due to a sharper uptick in purchase prices, though selling prices partially compensated for this by also rising. Business confidence nevertheless slid to the lowest level since June 2020 over concerns of rising market competition.

    Project performance

    The kingdom’s non-oil sector should continue to be well supported by Saudi Arabia’s infrastructure and project spending plans. These schemes remain affordable thanks to the kingdom’s broad financial reserves and buffers.

    As of mid-September, Saudi Arabia’s project spending for 2023 had already all but matched that of 2022, with contract awards in the kingdom approaching the $57bn mark – last year’s figure – but with three and a half months still left to run. 

    This is the third straight year with project awards of around $55bn or more. This is a 75 per cent increase in spending compared to the period from 2016 to 2020, which witnessed an average of only slightly more than $30bn in awards each year.

    There is a further $50bn-worth of project work in bid evaluation and expected to be awarded this year. Even accommodating the possibility of delays for much of this work, the award of even a modest portion of this would make 2023 by far the strongest year on record for project awards in Saudi Arabia.

    This heightened level of projects activity is as much due to above-average spending on oil and gas infrastructure, amid a spree of investment by Saudi Aramco in the optimisation of its core assets, as it is to the kingdom’s gigaproject programme. 

    Oil and gas project awards alone have exceeded $21bn in 2023 to date and could readily be on track to beat the previous award high of $24.7bn seen in 2019.

    It is the construction and transport sector that has the furthest to go to outdo itself in the last quarter of 2023. 

    Awards in the sector to date have hit $24.6bn, whereas awards in 2022 reached $34.7bn – so there is a $10.1bn gap to bridge to beat last year’s performance. This is not unrealistic given the $14.2bn-worth of projects in the sector under bid evaluation, and especially given the backing of the Public Investment Fund for the kingdom’s gigaprojects and other Vision 2030 schemes.

    Overall, the ongoing upsurge in projects activity should continue to prove supportive of the non-oil economy, regardless of either the vicissitudes of the oil price or Saudi Arabia’s moderation of its own oil production.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11153290/main.gif
    John Bambridge
  • Saudi’s Jeddah Tower reaches for new heights

    27 September 2023

     

    A landmark moment came for Saudi Arabia’s construction sector in mid-September when Jeddah Economic Company (JEC) invited firms to bid for a contract to complete the world’s tallest tower project, the 1,000-metre-plus Jeddah Tower.

    Work on the tower “is back in full [swing]”, a source close to the project told MEED.

    When completed, Jeddah Tower will be the first structure in history to exceed 1 kilometre in height. It will also be taller than the current world’s tallest building, Dubai’s Burj Khalifa, by more than 172 metres. 

    When contacted by MEED, Talal Ibrahim Almaiman, CEO of Kingdom Holding Company, confirmed that the tender to complete the record-breaking tower had been officially issued.

    The companies that have been invited to bid for the contract include:

    • Almabani (local)
    • Bawani (local)
    • China Harbour (China)
    • China State Construction Engineering Corporation (China)
    • Consolidated Contractors Company (CCC – Lebanon)
    • El-Seif Engineering Contracting (local)
    • Hyundai Engineering Construction (South Korea)
    • Mohammed Abdulmohsin al-Kharafi & Sons (Kuwait)
    • Nesma & Partners (local)
    • Powerchina (China)
    • Samsung C+T (South Korea)
    • Saudi Freyssinet (local)
    • Skanska (Sweden)
    • Strabag (Europe)

    The contractors have been given three months to prepare their bids, and are expected to form joint ventures comprising local and international partners. It is understood that contractors have visited the site.

    When completed, Jeddah Tower will be the first structure in history to exceed 1 kilometre in height

    Restarting construction

    One important question for the potential bidders is the condition of the tower’s existing structure. JEC commissioned an independent assessment of the structure before the tender was issued. Sources close to the project have told MEED that the report concluded that building work can restart.

    The construction work for the superstructure of the tower, which began in the early 2010s with the local Saudi Binladin Group (SBG) as the contractor, is one-third complete.

    SBG stopped working on the project in February 2018. In September this year, JEC called in the performance guarantees or bonds provided by SBG. A source close to the project said that the value of the bonds totals SR653m ($174m).

    Almaiman confirmed that the developer has exercised its rights under the contract after having given SBG five years to re-engage.

    While SBG is no longer working as the contractor on the project, the consultancy team remains the same. The architect is US-based Adrian Smith & Gordon Gill, and the engineering consultant is Lebanon’s Dar al-Handasah (Shair & Partners).

    Project stakeholders 

    The shareholders in JEC are Kingdom Holding Company with a 40 per cent stake, Bakhsh Group with a 40 per cent stake, and Sharbatly Group with a 20 per cent share.

    In 2015, JEC and Saudi Arabia’s Alinma Investment established a $2.24bn fund to finance the first phase of the Jeddah Economic City project and Jeddah Tower. The Alinma Jeddah Economic City Fund is a sharia-compliant fund that will operate under the Saudi Arabian Capital Market Authority. 

    Alinma Bank agreed to finance the fund, which is managed by Alinma Investment. Prince Alwaleed bin Talal bin Abdulaziz al-Saud, chairman of Kingdom Holding Company, was appointed as chair of the fund’s board. 


    The 170-storey Jeddah Tower will have a variety of revenue streams and will
    feature the world’s highest observation deck. Credit: Jeddah Economic Company

    Development plans

    Jeddah Tower is the centrepiece of the Jeddah Economic City development in the Obhur district, north of Jeddah. The project’s first phase, which includes Jeddah Tower, covers an area of 1.5 square kilometres.

    The mixed-use tower will have 170 storeys, seven of which will be allocated to a five-star, 200-room Four Seasons Hotel. There will also be 11 storeys housing 121 serviced apartments, and seven storeys of offices. 

    A further 61 storeys of the tower will comprise 318 residential units, a gym, spa, cafes and restaurants. Plans also include several sky lobbies and the world’s highest observation deck, located on the top floors of the tower, 660 metres above the ground. 

    Development work on the project began in 2006. Building the world’s tallest tower requires state-of-the-art technologies and construction methods. 

    The piling and foundations work for the tower was completed in 2014. Germany’s Bauer was the piling contractor, and 270 piles were cast, reaching 105 metres below ground. The raft sitting on top of the piles is one of the world’s largest reinforced steel foundations, with a thickness of between 4.5 and 5 metres. 

    Cranage is a major challenge when constructing megatall towers. In early 2015, JEC took delivery of custom-made cranes, supplied by Germany’s Liebherr & WolffKran.

    For elevators, Finland’s Kone was appointed to supply the fastest and highest double- decker elevator system in the world. The planned system will travel at a speed of more than 10 metres a second, rising to 660 metres. 

    MEED's October 2023 special report on Saudi Arabia includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > SPORT: Saudi Arabia’s football vision goes global
    > ECONOMY: Riyadh prioritises stability over headline growth
    > BANKS: Saudi banks track more modest growth path
    > UPSTREAM: Aramco focuses on upstream capacity building
    > DOWNSTREAM: Saudi chemical and downstream projects in motion
    > POWER: Riyadh rides power projects surge
    > WATER: Saudi water projects momentum holds steady
    > GIGAPROJECTS: Gigaproject activity enters full swing
    > TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
    > JEDDAH TOWER: Jeddah developer restarts world’s tallest tower

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11177248/main.gif
    Colin Foreman
  • Saudi Arabia’s football vision goes global

    27 September 2023

    MEED's October 2023 special report on Saudi Arabia also includes: 

    > POLITICS: Saudi Arabia looks both east and west
    > GIGAPROJECTS: Gigaproject activity enters full swing
    > TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
    > UPSTREAM: Aramco focuses on upstream capacity building
    > DOWNSTREAM: Saudi chemical and downstream projects in motion
    > POWER: Riyadh rides power projects surge
    > WATER: Saudi water projects momentum holds steady
    > BANKS: Saudi banks track more modest growth path
    > JEDDAH TOWER: Jeddah developer restarts world’s tallest tower

     

    Saudi Arabia has invested more than $6.3bn in sport since early 2021, but that figure will be a fraction of what is coming if plans for its 18-club Saudi Pro League bear fruit.

    The kingdom’s entry into world football started in October 2021, when the Public Investment Fund (PIF) bought Newcastle United. Benefitting from a new manager and fresh on-field talent, the team came fourth in the premiership in the 2022-23 season and qualified for this year’s European Champions League.

    It is said that Riyadh aims to emulate Abu Dhabi, which bought Manchester City in 2008, but the kingdom’s ambitions go beyond owning a single European club: it is aiming to remake its position in world sport. 

    The exertions are not dissimilar to the way in which the Brics economic grouping, which the kingdom was invited to join in August, hopes to remake the world’s monetary dogma by breaking the dollar’s grip on the global economy. The Saudi Pro League may be the kingdom’s way of ending Europe’s dominance in football.

    Establishing the Saudi Pro League as one of the best will enhance the kingdom’s desire for a say at the highest levels of global club football

    Mixed returns

    Abu Dhabi has demonstrated that owning a football club can deliver benefits that go beyond income and capital appreciation. It has boosted the emirate’s image, promoted its airline Etihad and given Abu Dhabi a seat at the table of the English Premier League. It has also faced challenges.

    Manchester City has been accused of breaching Premier League and Uefa rules about licensing and financial sustainability. In 2020, it was fined and banned from European competitions for two years for alleged breaches of Uefa’s fair play rules, though that was overruled. The club is now subject to a long-term investigation into 115 alleged breaches of Europe’s fair play rules.

    Now Newcastle United, which the premiership never wanted to be bought by Saudi Arabia, is being closely scrutinised for evidence that the kingdom is unfairly boosting the club’s spending.

    There are also signs that the British football boom, which began after the English premiership was created in 1992, is coming to an end. Top clubs enjoyed a windfall from satellite television rights and then the influx of investment from wealthy individuals, starting with Russia’s Roman Abramovitch 10 years later. This has now been overshadowed by the financial might of Abu Dhabi and Saudi Arabia in England and by Qatar, owner of Paris Saint Germain since 2011, in France.

    But the appetite among even the wealthiest investors for football assets may be fading. Earlier this year, Manchester United’s owners rejected an offer for the club from Qatar as inadequate.

    Sports Saudisation

    Saudi Arabia’s new approach is different. Instead of sending money overseas, it is looking to invest heavily in football within the kingdom. In the 2023 summer transfer season, Saudi Pro League clubs spent a net $907m on players, more than all of the Big Five leagues but the Premier League, which spent $1.39bn.

    The economic benefits are easily comprehended. PIF finance would go into building domestic stadiums and training facilities. Money paid to players and support staff would be retained in the kingdom. In addition to a domestic audience of football fans, Saudi Arabia has international airports and an aviation network to bring in fans from across the globe.

    Establishing the Saudi Pro League as one of the best will enhance the kingdom’s desire for a say at the highest levels of global club football. 

    European football’s perilous financial position is why plans for a European Super League comprising 12 teams, announced in the spring of 2021, initially attracted support from the clubs involved. It was scrapped at the last minute, but dreams of a super league – and the problems that inspired it – remain. It is conceivable that the kingdom could argue a case for membership should it be revived, though that is a consideration for the future.

    In the meantime, Saudi Arabia’s impact on football is already being felt. Last December, Portugal’s Cristiano Ronaldo signed for Riyadh’s Al-Nassr. Other top players that have since signed to play in the kingdom include Brazil’s Neymar, Ballon d’Or holder Karim Benzema, African Footballer of the Year Sadio Mane, World Cup winner N’Golo Kante and former Liverpool captain Jordan Henderson.

    In July, Kylian Mbappe turned down an offer from Riyadh’s Al-Hilal worth almost €300m ($321.5m) and a salary of €200m for a one-season stay. But – in what would be a coup for the Saudi league if it is accepted – a world-record signing fee is reported to have been offered by Al-Ittihad in September for Egypt’s Mohamed Saleh.

    Newcastle United could fit into the kingdom’s broader football plan as a source of talent that can be sold to the Saudi league to bring money into the English club while avoiding the fair play charges encumbering Manchester City. The first example of the process may have been Allan Saint Maximim, who was transferred to Al-Ahli for a reported transfer fee of almost $30m in July.

    Last summer, Riyadh also launched what is now the Liv Golf League. There has also been talk of it buying a US National Football League club. The kingdom is investing in other sports as well, but it is football that it is bringing home this autumn.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11140172/main.gif
    Edmund O’Sullivan