Welcome everyone to the Al Rajhi Bank Fourth Quarter 2024 earnings call. My name is Lauren, and I'll be your moderator today. If you wish to ask a question during the presentation and you are connected on Webex, then please use the raise hand icon to ask an audio question, or use the Q&A box to submit a written question. Alternatively, if you've joined us on the telephone, then please press star followed by one on your telephone keypad. I'll now hand over to Sultan Attar with Al Rajhi Capital, to begin. Please go ahead.
Good afternoon, everyone. This is Sultan Attar from Al Rajhi Capital. We are pleased to host Al Rajhi Bank Q4 2024 earnings call. Welcome everyone to this event. Without further ado, I will hand it to Mr. Sulaiman Al-Quraishi, the Head of Investor Relations, to introduce the management team. Please.
Thank you, Dr. Sultan. Good day, everyone, and thank you for joining the call. With us on the call today, our Managing Director and CEO, Mr. Waleed Al-Mogbel, CFO, Mr. Abdulrahman Al-Fadda, and Corporate Banking General Manager, Mr. Hossam Al-Basrawi. As always, our CEO will start with the results highlights and strategy performance. Then the CFO will cover the financial performance in more detail, and finally, we will open the floor for your questions, and now I'll hand over to Mr. Waleed.
Thank you, Sulaiman. Welcome, everyone, and thank you for attending our earnings call for the Fourth Quarter of 2024. As always, we will start by taking you through our performance highlight, and then followed by an overview of our performance on our strategy, Harmonize the Group 2026. Then I will give the floor to our CFO to cover detailed financial performance. Now, let's take a closer look on our 2024 financial performance. If we move to the slide number three, please. For the 2024 financial year, the bank delivered an exceptional performance supported by our strategic initiatives and improved economic indicators that led to recording the highest annual net income since the bank's establishment. Starting with the balance sheet, we were able to deliver a 21% growth year on year. The total asset increased to SAR 693 billion.
The growth on the asset was mainly driven by the financing portfolio, which has grown by almost 70% year on year, as well as the investment portfolio growing by above 30% year on year. The non-retail book grew by 31% year on year, supported by 32% growth on our corporate book and 30% growth in our SME book. In addition, mortgage recorded a growth of 14% year on year, and now the mortgage represents around 38% of our total book and 55% of our retail book. If we look at the liability side, total liabilities stand at SAR 851 billion and an increase of 21% year on year, which brings our LDR to around 85.5%. Moving to the profitability side, the net income reached SAR 19.7 billion for the 2024 financial year, higher by 19% compared to last year, 2023. Net yield income grew by 17%, and non-yield income grew by 15%.
This resulted in a total operating income increase of 16% for the 2024 financial year, and standing at SAR 32 billion. Talking about credit quality, we continue to maintain best-in-class asset quality with a cost of risk standing at 32 bps compared to 25 bps in 2023. Additionally, NPLs stand at 76 bps with a healthy coverage ratio of around 160%. Moving into key ratios, our market-leading cost-to-income ratio has improved and now standing at below 25%, backed by our operating efficiency. Also, the bank maintained a strong financial position with a healthy total capital ratio of 20%, which is well above the regulatory minimum. Lastly, our net profit margin expanded to 3.13%, higher by 14 bps year on year, and that is due to continuous efforts to improve the gross yield and optimize the cost of funding of the bank in the current rate environment.
If we move to the slide number four to highlight the progress of our strategy execution, as you all know, 2024 was the first year of our strategy, Harmonize the Group, where the bank has performed across all its KPIs. Now, allow me to give you a highlight on the pillars of our strategy. We will start with the first pillar, which is B2C, business-to-consumer, where we focused on retail cross-selling. The product-per-customer portfolio has increased to around 42% since we introduced our strategy. Also, our sales growth from target customers' portfolio has witnessed a growth of 184% since 2023, which is a result of our continuous effort to expand our portfolio across existing and new segments.
Having a great customer experience is an essential measurement that we assured to maintain, and now our current NPS score reached 85 from 76 since 2023, making it one of the highest among the sector. If we move to the second pillar, it is a growth. If we move to the, sorry, if we move to the second pillar, B2B, our corporate portfolio has continued its growth of 31% year on year, reaching more than SAR 218 billion. As a result of our continuous effort to expand our corporate portfolio and focus more on the SME, which has grown by 30% since the end of 2023, and now it's representing 18% of our non-retail book and 6% of our financing book. Investment banking continues to be a significant revenue stream that the bank is focusing on, which has grown over almost 120% compared to 2023.
Looking at our third pillar, Support Business, good progress has been made due to centralized and standardized capability that increased by 2022, that increased by 22% since 2023, and that coupled with a focus on becoming a cloud-ready bank. Additionally, we continue to enhance our efficiency through strengthening and improving our technology across the group, that reflecting on process automation, which has grown by 27% in 2024. On the digital and data side, our best-in-class digital capability and our innovative offering supported us to be the bank of choice across the kingdom for over 18.5 million customers from all businesses. The bank continues to explore and improve solutions captured for the opportunity, such as open banking APIs, which has reached 218 by 2024 compared to 119 in 2023.
Lastly, as AI and effort-driven activities are becoming significant for the bank, revenue increase from data-driven marketing has raised by 180% in 2024 compared to 2023. By that, if you allow me, I will hand over to our CFO, Mr. Abdulrahman, to give you a detailed update of our financial performance, and thank you so much.
Thank you, Waleed. Good day, ladies and gentlemen. It is my pleasure to welcome you again in our Q4 earnings call. I'll go over the financial performance very quickly so that we can have further time during the Q&A session. Our total balance sheet reached almost SAR 970 billion, 21% increase year on year and 8% on a sequential basis. To analyze the 21% increase in our total asset year on year, as you can see on the bottom left-hand side of the chart, our investment book has increased by 31%. Our financing book has increased by 17%. I will cover the detail in the following slides. As far as the funding side, we manage as a part of the management initiative to continue to diversify funding sources in order to support the growth, coupled with optimizing our cost of fund efficiently.
We've increased our interbank borrowing by close to SAR 76 billion. We increased our customer deposit by almost 10% year on year, and we will continue to further diversify our funding sources in order to support the growth plan for Al Rajhi Bank. Zooming further into the main driver of our balance sheet movement, our total financing book stands at SAR 693 billion, 17% increase year on year, and almost 7% on a sequential basis. It's worth to highlight that our retail book represents almost 69% of our financing book. To analyze the 17% growth around financing book year to date, we have seen a broad-based growth across all line items. Our mortgage has increased by 14%. Ex-mortgage of the retail book has grown by 8%, which will bring the overall retail book growth of 11%. Corporate and SME have grown by 32% and 30%, respectively.
Mortgage book stands at SAR 266 billion, which represents almost 55% of the retail book and almost 38% of our financing book. Our total customer deposit stands at SAR 628 billion, almost 10% increase year on year, where CASA represents almost 73.4% as of December 2024. To analyze the movement of the 10% year on year on the customer deposit, as you can see on the bottom right-hand side of the chart, we managed to grow our CASA by a healthy level of SAR 94 billion. And if you recall, we mentioned that some of those deposits are transitory, where we are expecting those to shift over the coming period. Having grown our CASA coupled with an interbank increase, we managed to shed off close to SAR 41 billion of the time deposit in order to improve our cost of funds efficiency.
Our investment book stands at SAR 175 billion, which represents almost 18% of the total assets. 80% of the book is Sukuk and Murabaha. Close to 76% are fixed rates. And finally, 83% of the book are in domestic. If we move to the profitability section, our net income for Q4 stands at SAR 5.5 billion, 32% increase year on year and 8% on a sequential basis. To analyze the sequential movement, as you can see on the bottom left-hand side of the chart, our yield income has grown by 8.5%. Non-yield income, a drop of 11%. OpEx were almost flat, which brings the pre-provision profit to be 5% higher. ECL were lower by almost 20% on a sequential basis. Our net income for the full year was SAR 19.7 billion, 19% increase year on year.
The driver, as you can see on the bottom right-hand side of the chart, 17% growth in our yield income, almost 15% on a non-yield income. OpEx were higher by 6%, which will bring the pre-provision profit to be 20% higher year on year. Net impairment charge was almost 40% higher year on year. To further zoom in into the net income driver, I'll start with the operating income. Our operating income for Q4 was almost SAR 8.7 billion, 24% higher year on year and 4% on a sequential basis. Our operating income for the full year stands at SAR 32 billion, 16% higher year on year. The driver, as you can see on the top right-hand side of the chart, yield income was higher by 17%. This is due to the fact that our average earning assets were higher by 11%, coupled with 14 basis points expansions.
Fees have shown a healthy growth of almost 11% year on year. Exchange income 4% and other income by 55% due to the improvement that we've seen in all line items, mark to market of the treasury book, also the contribution from our investment in associates. The NIM for 2024 was 313, almost 14 basis point expansion. The NIM expansion is driven by 48 basis point expansion in our gross yield, offset by 34 basis point increase in our cost of fund. And you can see the details on the bottom right-hand side of that 14 basis point NIM expansion. Our OpEx for Q4 was SAR 2 billion, almost 3% higher year on year and flat on a sequential basis. Our OpEx for the full period at SAR 8 billion, 6% higher year on year. And the driver of that mainly is on the depreciation line item.
This is to support the balance sheet growth and the higher transaction amount, where we've seen 20% plus increase year on year, and finally, the investment that we're making to execute and deliver the Harmonize the Group 2026 strategy. The healthy delivery of 16% growth in our operating income, coupled with a 6% increase in our OpEx, that positive jaws helped us to further improve our cost-to-income ratio from 27.2% to 24.9%, i.e., 240 basis point improvement in our cost-to-income ratio. Our impairment charge for Q4 is almost SAR 550 million, 30% increase year on year and 20% lower on a sequential basis. Cost of risk stands at 32 basis point compared to 25 basis point in 2023. Our net impairment charge for the full year period is at SAR 2.1 billion compared to SAR 1.5 billion.
It's worth to highlight that our gross charge has increased by almost SAR 1.2 billion. However, that has been offset by a healthy improvement in our recovery, which we managed to increase it by SAR 543 million in 2024. Our NPL balance stands at SAR 5.3 billion, almost 24% higher year on year, and as you can see on the top left-hand side of the chart, it's mainly coming from the non-retail. Our NPL ratio stands at 76 basis points as of the year, and 3 basis points improvement compared to Q3, where we have seen an improvement in our corporate NPL that dropped by 6 basis points and also the retail book by 4 basis points. NPL coverage stands at a healthy level of 159%. Our ECL stock stands at SAR 8.5 billion as of 2024.
Our gross financing stands at SAR 700 billion plus, where close to 97% of the book is stage one compared to 96.5% at the same period in 2023, which shows you the healthy origination that we have delivered in 2024. Our stage coverage for stage one, 37 basis point, for stage two, at 12%, and finally at stage three, at 54.8%, no net material movement compared to Q3 2024. The liquidity positions remain healthy and at a comfortable level, where although our headline LDR at 106%, nevertheless, our regulatory LDR at 85.5%. LCR and NSFR at a healthy level and above the minimum regulatory requirement. Our total RWA at SAR 611 billion plus, almost 18% increase year on year, mainly driven by the total asset growth that we have delivered in 2024. It's worth to highlight that our RWA density stands at a very healthy level of 62.8% as of the year end.
Our CET1 ratio is 16%, Tier 1 at 19.3%, and finally, our total capital at 20% plus. We've seen 111 basis point movement in our Tier 1 capital, as you can see on the bottom right-hand side of the chart, where the growth in our total balance sheet, coupled with the dividend declared in 2024, contributed to almost 550 basis point drop in our capital ratio. Nevertheless, that has been offset by close to 360 basis point of an internal capital generation. Giving a very healthy delivery for 2024, we further improved the return metrics in 2024, where you can see our RORWA at 350 compared to 326 in 2023, our ROE at 21% plus compared to 19.35%, and finally, our ROA at 226 versus 212. Before I provide the guidance for 2025, it's worth to highlight a few couple of points.
The overall macro outlook for Saudi is still positive. I think IMF, you guys have seen that I have revised the GDP growth forecast for 2025 to be 3% plus and 4% plus in 2026. Consumer spending in 2024 has increased by almost 7.5% year on year. Credit demand is still healthy, giving the transformation we've seen in the kingdom. On the rate outlook, we've taken a conservative view that we're expecting one rate cut in the second half of 2025. Having said that, our guidance for 2025 is as follows: Financing book to be high single-digit growth, NIM expansion of 5 to 15 basis point, our cost to income ratio to be below 24.5%, ROE to be above 21%, cost of risk in the range between 30 to 40 basis point, and finally, our Tier 1 ratio to be 19.5%. Waleed, back to you.
Thank you, Abdulrahman, for the financial performance overview. We are proud of the progress made across all KPIs of our Harmonize the Group strategy, which helped us to achieve our strategic goal and exceptional result for 2024. Now, we will open the floor for Q&A session. Operator, back to you.
Thank you. We will now begin the Q&A session. As a reminder, if you would like to ask a question and you have joined the call via Webex, then please press the raise hands icon on your screen to ask an audio question or submit a written question in the Q&A box. Alternatively, if you've joined us on the telephone, then please press star followed by one on your telephone keypad. Our first question today comes from Nida Iqbal from Morgan Stanley. Nida, please go ahead.
Hi, thank you very much for the presentation.
My first question is on loan growth. Al Rajhi, 7% sequential loan growth was very impressive in the fourth quarter, and what was quite interesting was the pickup in mortgage loan growth as well, so it would be helpful if you can talk about what's driving this and if you expect this momentum to continue, and importantly, do you believe your high single-digit guidance is conservative? Because we did start off 2024 with a similar guidance as well and ended up in the mid- to high-teens. My second question is around the margin guidance for 2025. If you can please walk us through your expectations around asset yield repricing from here in 2025, should we expect any repricing benefits in 1H? And if I may ask, please, what does the guidance assume for a split of CASA to term ratio?
Rajhi's increase in CASA ratio has been impressive, but you've also mentioned in the past the transitory nature of some of these deposits. And so if you can comment on the cost of funding headwinds in 2025 as well, please, given that we're seeing loan growth outpace deposit growth at a sector level. Thank you.
On the first part, Nida, yes, on the fourth quarter, we had a very healthy growth of the overall 7% on a sequential basis. The growth is coming, which I think equates to almost SAR 44 billion. SAR 15 billion of that is coming from the mortgage book, given that we've seen the mortgage origination at the system level for Q4, we're at SAR 30 billion compared to SAR 20 billion in the third quarter of 2024. So there has been an almost 50% increase at the system level.
And given that the market share of Al Rajhi Bank leveraged by the distribution network, the access to the real estate developer, the lots of initiatives that we are doing, and I think we are capturing a very healthy portion of that mortgage origination in the fourth quarter. I think mortgage origination is still expected to be healthy over the medium term, given that it is one of the key government objectives to increase the home ownership, increase on the household in Saudi. So all of that, and I think that will provide a very healthy mortgage origination over the medium term. The second part of your first question, are we conservative into our loan guidance in 2025?
Usually, as a management of Al Rajhi Bank, which has been communicated a few times over the last couple of years, when we plan our growth, first of all, we sit down, we plan, first of all, what is our funding capacity. We take into consideration the change in the macro outlook, the environment, and multiple factors, and accordingly, we plan our financing book growth outlook over the medium term. That's onto the loan growth for 2025. As far as the NIM, although that we have delivered 14 basis point NIM expansion in 2024, the guidance takes into consideration that we will still continue to focus as a management on a value rather than a volume. It's not about market share. It's about improving the profitability, where we've seen good improvement.
And as I mentioned in my earlier remark, asset yield has grown by in 2024 by close to 48 basis points. Our expectation in the current environment, if the asset yield has not reached the peak, we're almost at the peak. Nevertheless, our expectation that the drop in the cost of fund will outpace the drop into the asset yield, hence will further improve the NIM over the medium term. As far as the CASA, I mentioned that, and I think we have delivered a very good growth into CASA in 2024. This is our bread and butter as Al Rajhi Bank to further improve our market share into the CASA.
Nevertheless, I've been transparent, and we're expecting that some of those CASA growth that we have delivered are coming from a transitory account, which will have those CASA will move either to the time deposit, will increase the cost of fund, and this was taken into our consideration as a part of the NIM guidance that we have highlighted of 5-15 basis point NIM expansion in 2025.
Thank you very much. Super helpful.
Thank you. Our next question comes from Olga Veselova from Bank of America. Olga, please go ahead.
Deposit ratio, do you have a ceiling of LDR, not regulatory, which we know is regulated, but nominal, beyond which you would not want to go? Or maybe credit rating agencies advise you what would be the maximum comfortable limit? So this is my first question. My second question is on mortgage portfolio.
Would you be comfortable to start disclosing average yield on mortgages, backbook and frontbook? I apologize I keep asking this. It just would help us to model margin more accurately. And finally, interbank, there was a spike in interbank funding in the fourth quarter. What was the nature of it? Was this just syndicated debt or more active domestic money market borrowing? Thank you.
Thank you, Olga. First of all, on the LDR, the regulatory cap is right here, 90%. And I'm sure that you guys know that Al Rajhi Bank has been implemented a conservative risk management policy. We do have our internal risk appetite that are below the regulatory requirement to be conservative. Our comfort zone in the LDR is anywhere between 85% to 88%. That's our comfort zone versus the minimum or the maximum regulatory requirement of 90%.
As far as the second question, Olga, again, it will be the same answer that I've given several times in Q2, Q1, and this time. But unfortunately, that is not disclosed information. As far as the third question, which relates to the interbank increase, as I mentioned earlier, this is part of the Treasury initiative to diversify our funding sources, where if you recall from the year 2022, Al Rajhi Bank started the alternative funding plan. We tapped into the international debt capital market, either in the form of Sukuk or a syndicated loan or in the form of certificate of deposit.
This is as a part of those initiatives, is a part of multiple initiatives that our Treasury teams are looking at as a part of the discussion that we're having on our ALCO on a regular basis to diversify the funding sources in order to make sure that we have a stable funding that will support the growth over the medium term.
Thank you. I appreciate it.
Thank you. Our next question today comes from Mohammed Al-Rashid from Ashmore Group. Mohammed, please go ahead. Hello, Mohammed. You may just need to unmute yourself.
Assalamualaikum. Am I audible? Yes, you are. Thank you, gentlemen, for the call. I have two questions from my side. My first question is, if you can please provide a guidance or a targeted ROE after Tier 1 Sukuk expense, given that the bank has been very active in the issuance of Tier 1.
My second question is regarding your stage one allowance ratio. So we noticed a drop during the year to around 37 basis points. I understand that this was mainly driven by the strong loan book growth. But where do you see your stage one allowance going into 2025, given that it is now slightly below the market level?
Thank you. Mohammed, on our ROE post the AT1 issuance, the ROE on a standalone, as I mentioned, we deliver for 2024 at 21.1%. The ROE post deducting the Sukuk cost is almost 20%. So I think I'm sure that you will be able to do the delta. In 2023, our ROE on a standalone was 19.35. Post the deduction of the Sukuk cost was 18.39. So I'll leave it up to you, and I think you can work the math. That's on the first part.
The second part, in terms of the stage coverage, I think we always look at our coverage on a regular basis. We compare it against the benchmark. Nevertheless, the coverage or the ECL stock or the charge, it's a model-driven, which takes into consideration the macro outlook, takes into consideration multiple factors, probability of default, etc., etc., and the nature of the portfolio, whether it's a retail or a corporate. So we do have an internal target, but I think that is dependent into multiple factors as long as we are charging our ECL stock based on our model, and I think that we are comfortable.
Okay. Just to follow up regarding the first question, I was asking for 2025 after your recent issuance of Tier 1 and also your targeted future issuance of Tier 1 during 2025.
So perhaps in 2025, you will issue more and more of Tier 1.
Yeah. And I think you can do the backward calculation, Mohammed, and you will be able to ROE guidance for 2025 is above 21%.
Okay. Okay. Clear. Thank you.
Thank you. Our next question today comes from Jon Peace from UBS. Jon, please go ahead.
This question, please, is on your guidance assuming one rate cut in the second half of the year. And it's maintained your sensitivity with 25 basis point rate cuts. And the second question, please, is I know you don't guide normally of loan growth, but should we imagine it would be similar to lending? Thank you.
Jon, and I think the line was not clear. Would you mind to repeat it again if you don't mind?
The first question was about the NIM guidance.
Does it assume one rate cut and your sensitivity to lower rates?
Again, you know my disclaimer about the NIM sensitivity. It's at one point of time not taken into consideration the change in asset mix nor the liability mix. With that disclaimer, our NIM sensitivity as of end of 2024 is 6 to 7 basis point NIM expansion for every 25 basis point cut. Thank you.
Thank you. Our next question today comes from Shabbir Malik from EFG Hermes. Shabir, please go ahead. Yes, we can.
Okay. Thank you very much for the presentation. My first question is non-interest income outlook. If you can, I know you don't share a guidance for that, but anything to suggest what can we expect in terms of non-funded income in 2025? I think that would be pretty useful. Also, I wanted to check what was the exit NIM for 2024.
Given that we've seen a few rate cuts already, how much of the impact of those rate cuts have already been felt in terms of cost of fund improvement? Is there scope for more reduction in time deposit costs in the coming quarters? If you can address those two questions and maybe one more. We've seen one of the key components of funding over the last year has been due to banks and other banks. What are the key metrics that these counterparties are looking at when they give funding to a bank like Rajhi? Is there any benefit of being an Islamic bank? Is there a benefit of being a highly rated credit, having a high credit rating? Are those factors taken into consideration when pricing this interbank funding? I just wanted to understand that. Thank you.
Shabir, I think non-interest income. I think the only thing that I can assure you is the management team under the leadership of our CEO. One of the key focuses for us as a management is to further improve the non-interest income contribution. And I'm sure that you guys have seen with the MD presentation earlier, we managed to further improve the cross-sell activities, improve the percentage of the customers that is having more than one product. And I think the whole of our strategy, Harmonize the Group, and I think as we mentioned, and I'm sure that you guys have seen the video that we have done. I think our subsidiaries have done a great job in 2024 where they have improved their contribution to the operating income for the bank.
So this is something that we will continue as a management in order to further improve the shareholder value. As far as the NIM exit, NIM exit for Q4 is a 327 for Q4. And again, as a disclaimer, as I mentioned, the guidance that we have provided, 5 to 15 basis points, is taken into consideration the impact of the movement of those transitory cash. As far as the last question related to the new counterpart, what they're looking for in terms of the interbank lending, and I think I cannot speak on their behalf, but I think through the discussion that we're having with those counterparts, whether they are mainly outside the Kingdom, they're looking forward to diversify their geographic distribution.
And I think we can take an advantage given the healthy credit rating that Al Rajhi Bank has been enjoying, and especially it is with all the rating agencies that they're providing the reports and giving the healthy and the superior return metrics coupled with one of the healthiest NPL in the kingdom.
Got it. Thank you.
Thank you. Our next question today comes from Murad Ansari from GTN. Murad, please go ahead.
Results, I think you smashed all the guidance targets that you had given at the third quarter. So great quarter from that. A few questions from my end, and I'm sorry that this has been asked again and again, but I mean, when we look at your NIM guidance, I mean, your exit NIM is roughly about 14-15 basis points above what your average has been for 2024.
When you're guiding to 5 to 15 basis points improvement in 2025, it's essentially, I mean, what it suggests is that you're expecting NIMs to be broadly flat from the 4Q exit levels. This felt that guidance number looks a bit conservative, and I understand you're guiding towards some movement in CASA deposits, some transitional, and also some movement from current to time. But I mean, where do you think, I mean, on the lower end of things, where do you see CASA could drop into 2025? That's on NIMs. The other one is on the risk-weighted risk ratings. You've continued to improve that. So now at 63%, you've had strong growth, and initial impression was, is it mortgages, but then you've had very strong growth in corporate and SMEs.
So if you can just help us understand a little bit on what's driving that RWA improvement, RWA weightage improvement. And then on cost of risk, 30 basis points, obviously great macro backdrop. So I mean, where's the risk on that side? And finally, on mortgages, I mean, we've had a very good number on December as per SAMA data on mortgages. I mean, we're back to SAR 12 billion in origination, which was last seen in somewhere in 2022. Do you think that number could accelerate? I mean, what's your read on the market? You suggested on your slide that the mortgage rate actually has, or the lending rate has been slightly higher. So how do you see that environment on mortgages evolving over 2025? Thank you so much.
Murad, I will try to beat the how long you asked the question by providing a short and precise answer.
NIM. I mentioned to you our guidance taken into consideration, the CASA migration. Again, rest assured that as a management, and I believe that I mentioned the focus for us as a management is a value rather than a volume. We take in a very conservative view on the rate outlook. We will assess on a regular basis. Nevertheless, this is something that I assure you that our focus is to further improve the NIM accordingly. On the RWA density, although that has been a decent growth in the fourth quarter that we've seen, but the devil in the detail. Some of the investment book is attracting zero RWA. Some of the corporate exposure are also attracting a very minimal RWA. And also, out of the SAR 44 billion growth in our financing, SAR 15 billion of that is mortgage which attracts 35% RWA. Cost of risk, 32 basis points.
Again, these are depending on the macro outlook. We are updating our ECL model on a regular basis and will continue as a part of the IFRS requirement to update our ECL model taking into consideration the multiple factors. Mortgage, yes, we've seen an average mortgage origination in the fourth quarter of SAR 10 billion per month. In the third quarter, it used to be around SAR 6.7 billion. Our expectation for the mortgage origination for 2025 is in the range between SAR 7 billion plus minus mortgage origination going forward. Did I beat your time?
Yes, you did. Thank you so much. Just one follow-up, if I could. I mean, on the funding mix, so rough calculation deposits are roughly now about 75%-76% of your total funding, and you've continued to diversify your funding sources. What level should we see?
I mean, is that mix going to continue going higher in favor of borrowings, or is this something on the overall funding mix between deposits and others to be kind of stabilizing now?
I'll beat the time. Again, as long as we do have a very healthy LDR, liquidity ratio, and capital adequacy ratio, it will give the management the flexibility to optimize our cost of fund efficiently.
Great. Thank you so much and all the best for 2025.
Thank you. Our next question comes from Naresh Bilandani from Jefferies. Naresh, please go ahead.
Hi, good evening. Can you hear me? Yes, we can. Excellent. Hi, it's Naresh Bilandani from Jefferies. Thanks for the call and congrats on a good set of results. Just two quick questions, please, and one probably following up from the previous question.
Did NIM guidance that you have provided, the range that you have provided, does this scenario consider, as you mentioned, you were quite conservative in your rate outlook, does this consider a scenario of no rate cut at all? If not, could you please offer some insight into how should we think of the margin trajectory panning out this year? Should the Fed stay put on the back of inflationary pressures? That's the first question. Second is, we've seen the mix of interbank funding currently at roughly about 18% of total assets, which is significantly higher as compared to the previous year. And thanks for offering the color on this. I'm just trying to gauge some insight into what is the maturity of this new funding that has come through.
Should we see a volatility on this mix going into Q1, like this number should drop significantly as you diversify your funding source back into CASA or term, or do you anticipate that over the course of the next couple of quarters, the mix should stay within the mid to high teens range? I'm just trying to get some comfort from a modeling perspective here. Thank you very much.
Thank you for the question, Naresh, and welcome back. As far as the rate outlook, and I think we've modeled in only one rate cut and mainly in the second half of 2025. Again, NIM sensitivity, as I mentioned, is a theoretical, is 6 to 7 basis points for every 25 basis point cut in the rate.
Nevertheless, and I think this is taken into consideration, also the three-month SAIBOR outlook, despite that the current repo rate at 4.5, but we've seen the three-month SAIBOR at 5.35. We will assess on a regular basis that NIM guidance. But again, I just want to be very transparent and clear. We have modeled in that the transitory deposit that we have received in 2024 will move, which will have an impact in our NIM guidance. As far as the second part of your question, Naresh, related to the interbank borrowing, and I think if you recall my earlier statement, we have taken lots of initiative to improve the funding profile for Rajhi Bank.
We've seen lots of opportunity giving the credit rating, and especially with the rating upgrade for Al Rajhi Bank, along with the suffering that we've seen last year from the major rating agencies, that will give us an advantage to attract and diversify our funding sources at a very comfortable level. From a duration perspective, it's vice. For example, the certificate of deposit is usually three to six months. Nevertheless, but I think you guys have seen that we also become active in the debt capital market. We are active into the syndicated loans to be able to diversify, and where we raised close to $2.6 billion over the last couple of years on a syndicate loan at a very attractive spread.
All of those initiatives will help us to further diversify, improve our cost of fund, and most importantly as well, to make sure that we have a stable, diversified funding that will be able to help us to further grow our financing book without impacting on overall the NIM outlook. And lastly, if you recall my earlier comments, when we sit down and put our forecast for financing book guidance, we take into consideration that how much funding at a very comfortable level we can source in order to support the growth without compromising into the overall profitability.
All right. Thank you very much for the color.
Thank you. In the interest of time, that is now the end of the Q&A session. So I'll now hand back over to Mr. Waleed for closing remarks.
For dialing in and for your trust in us.
We are very proud of our 2024 results, and we will continue to focus on execution and achieving our strategic goal for this year, inshallah, and beyond. We look forward to meeting you in the next quarter earnings call. Thank you.