BAJ commenced its business in 1976 – one of the few banks operating in Saudi Arabia at the time. In 1998, BAJ’s management took a strategic decision to convert its methods from conventional to Sharia-compliant banking. This change can be described as the most critical milestone in the history of BAJ; it was the first bank in the world to convert its operations and business to be in full compliance with the principles and rules of Islamic finance.

To ensure compliance with Sharia principles, BAJ underwent a complete restructuring process of its infrastructure, operational basics, service parameters, and human resources’ skills. A Sharia Advisory Board was established to include a number of distinguished scholars specialised in Islamic Banking.

BAJ succeeded in converting all its branches in 2002 to operate according to Sharia rules and principles. It then began to cultivate the results of its strategic conversion into Sharia-compliant banking and its service excellence approach, achieving progressive growth and a remarkable market image and presence. BAJ witnessed its full conversion into a Sharia-compliant financial institution in 2007 and simultaneously increased its capital to SAR 3bn ($800m), which came entirely from the bank’s profits.

BAJ’s core business segments are retail banking, corporate banking and treasury, while offering distinguished investment banking and Takaful protection and savings (Islamic life insurance) products and services. As of March 1 2011, BAJ’s market capitalisation was $1.2bn.

Upgrading distribution
BAJ proved itself to be a leading Sharia compliant bank through its fast growth in deposits, its expanding branch network, and an ROAEand ROAA of 16.3 percent and 3.7 percent  respectively over 2006-10. It is strongly positioned in the mortgage market, holding a 5.1 percent market share in 2010 – up from a 1.7 percent  share in 2009. The bank has a growing focus on retail business, complemented by a rapidly expanding branch network: from 24 branches in 2007 to 52 in 2011. It has also significantly upgraded its delivery channels, and now offers online and telephone banking, credit cards, and an ATM network.

BAJ also has demonstrated impressive growth, achieving 75 percent growth over the last three years, 153 percent over five years, and 673 percent in 10 years, while widening the customer base and launching new products and services in response to customer and market needs. The bank has been working hard to establish branches in key areas in Saudi Arabia to ensure provision of a nationwide distribution platform. In part testament to this, customer deposits increased 23 percent in 2010.

The bank runs a prudent risk management and diversified business model – evidenced by a strong credit rating of A- stable from Fitch, and one of the lowest leverage ratios in the industry, with a robust capital adequacy ratio of 15.7 percent and a tier 1 capital ratio of 15.1 percent (five year average CAR: 26 percent).

A growing nation
BAJ is well positioned to grow on the back of the strong Saudi economy. The country has a GDP of $434bn and a low debt-to-GDP ratio of 10 percent; it owns the largest oil reserves in the world; and it has a young population delivering demographic dividend and augmenting growth in banking services. Saudi Arabia is also engaged in a four-year infrastructure spending programme of around $373bn, with the effect of spurring economic growth.

In promoting its image as a multi-specialist Sharia-compliant financial group, BAJ has been able to effectively communicate its new market positioning and comprehensive range of products and services. Among these is BAJ’s Mortgage Finance Programme: distinctive among other competitive programmes by the speed and efficiency with which applications are processed, giving BAJ a distinct market edge. To better serve corporate customers, BAJ has established corporate regional offices in Riyadh, Jeddah, and Dammam, to provide a one-stop service with a dedicated team of experts and a full suite of products. Cash management and trade finance are newly established areas within the bank’s corporate business department, achieving remarkable success.

Aljazira Capital Company (AJC), the investment arm of BAJ, has continued to strengthen its brokerage offerings through the introduction of other tradable securities, enhancing its award-winning TadawulCom platform to offer online trading across multiple regional and international markets. AJC also reinstated its sell-side research capacity by introducing a best-of-breed array of economic, technical, company, and sector reports. AJC has maintained its market leadership position in the Saudi share trading market over the last seven years.

BAJ was the first banking institution in Saudi Arabia to introduce Takaful Ta’awuni (TT) in 2002 as a fully fledged Sharia-compliant alternative solution to conventional life insurance. Since then, TT proved itself as a market leader and has been growing fast to satisfy clients’ needs. TT underwent dynamic improvements in infrastructure, offerings, and resources. In 2009, TT was awarded the “Life Insurer of the Year” award by Middle East Insurance (Insurex) for the third consecutive year, adding to the great number of honours the organisation has been awarded by various international and local bodies.

People power
BAJ has invested heavily in its human capital, and so this vital resource’s potential has been growing alongside the dynamic development of the bank’s offerings, channels and infrastructure. BAJ is proud of having developed a world-class HR management style, characterised by a well-set performance development and review system, key performance indicators, a motivation programme, and structured, specialised training programmes. BAJ has been maintaining an efficient working environment with long-term recruitment and retention programmes.

In 2006, BAJ launched its programme “Khair Aljazira Le Ahl Aljazira” with a huge fund in support of BAJ’s social responsibility towards the community. Since then, BAJ has been implementing a range of activities designed to support the community. The bank has been providing financial assistance to various charitable societies, launching apprenticeship programmes to train young Saudi men and women, and sponsoring programmes to train the handicapped, blind and deaf. Through many programmes, BAJ successfully promoted family welfare by sponsoring a huge number of productive family projects and cultural events.