Riyadh, August 03, 2023 The Deputy of Market Institutions at the esteemed Capital Market Authority (CMA), Bander Sulaiman Alayed, has made a noteworthy announcement. He revealed that the capital market institutions, duly authorized by the CMA, have demonstrated exceptional financial performance. Their net income for the year 2022 reached an impressive SAR 6.1 billion, showcasing a remarkable surge of 29.8% when compared to the previous year's figure of SAR 4.7 billion. This substantial increase in net income is truly historic and speaks volumes about the resilience and growth potential of these institutions. The remarkable progress was achieved as the CMA diligently executed its all-encompassing growth strategy in seamless partnership with the capital market ecosystem.
Alayed emphasized the crucial role played by the Capital Market Authority (CMA) in effectively regulating market institutions. The CMA's primary objective is to establish a robust framework of rules and guidelines that prioritize investor protection. By doing so, the CMA ensures that market institutions are held accountable for fulfilling their responsibilities in a transparent and accountable manner. This showcases the pivotal and impactful role undertaken by capital market institutions in the Saudi financial sector, a significant aspect within the ambit of the Kingdom's Vision 2030.
In addition, it is worth highlighting that the retained profits of capital market institutions have achieved an exceptional milestone, reaching a record high of SAR 60.34 billion by the end of 2022. This represents a remarkable growth rate of 39.17% compared to the previous year, where the retained profits stood at SAR 43.36 billion in 2021.
In 2022, the capital market institutions witnessed a remarkable surge in profits, driven by a substantial 26% growth in revenues. This impressive performance resulted in the generation of SAR 12 billion, marking the highest recorded figure in the history of these esteemed institutions. Asset management revenues, accounting for a significant 33.64% of aggregate revenues, demonstrate our expertise in effectively managing a diverse range of assets. Our commitment to delivering exceptional results is further exemplified by our dealing activity, which contributed 19.67% to our overall revenues. With a focus on strategic investments, we have successfully generated substantial returns, as evidenced by our investment revenue share of 16.45%. Additionally, our proficiency in investment banking has allowed us to secure lucrative opportunities, resulting in a noteworthy contribution of 9.71% to our total revenues. The allocation of the remaining ratios was strategically diversified across various revenue sources, including advisory services and custody solutions.
The portfolio manager is pleased to report that the capital market institutions under management have achieved significant growth. As of the end of 2022, the number of portfolios managed has reached an impressive record high of 37,021, representing a remarkable increase of approximately 1204% compared to the previous year-end figure of 2,839 portfolios in 2021. This notable expansion demonstrates the portfolio manager's ability to effectively oversee and optimize a diverse range of investment portfolios. The outstanding performance can be attributed to the robust expansion of portfolios within a newly established capital market institution.
In Discretionary Portfolio Management (DPM), the allocation of assets is strategically managed to optimize returns. As of the end of 2022, the largest portion of the portfolio, accounting for 45.61%, was invested in local shares, with a substantial value of SAR 120.97 billion. Following closely behind, the investment funds category held a significant share of 23.48%. This balanced distribution ensures diversification and potential growth opportunities within the portfolio. The portfolio manager successfully allocated a significant portion, precisely 30.91%, of the assets under management towards international shares, debt instruments, and various other investment categories.
Alayed further emphasized the pivotal role of the Capital Market Authority (CMA) in effectively overseeing and regulating capital market institutions. It is worth noting that the CMA has successfully implemented the Capital Market Institutions Regulations, which serve as a robust framework governing the legal structure of these institutions. Moreover, it is imperative for prospective candidates desiring to partake in the security business to have a well-established presence within the Kingdom. In order to engage in the activities of dealing, custody, and business management, it is imperative that the applicant possess the status of being a subsidiary of a local bank, a joint-stock company, a financial services subsidiary of a Saudi joint-stock company, or a licensed subsidiary of a foreign financial institution under the purview of the Banking Control Law.
Prospective candidates, regardless of their legal entity, possess the opportunity to submit an application for a license to engage in the facilitation or provision of counsel pertaining to securities transactions. In order to secure a license for conducting dealing and custody business, it is imperative for the applicant to possess a paid-up capital of no less than SAR 50 million. Similarly, for managing investments and operating funds, a minimum paid-up capital of SAR 20 million is required. Moreover, it is imperative for the prospective candidate to possess a substantial amount of capital in order to adequately address anticipated expenditures associated with the proficient management of investments over a span of one year.
In conclusion, the performance and achievements of capital market institutions, as per the insightful analysis provided by Alayed, showcase their valuable contribution to the Saudi financial sector. These institutions have consistently demonstrated their commitment to adhering to the regulations set forth by the Capital Market Authority (CMA), thereby safeguarding the interests of investors and fostering a culture of responsible practices.
