1080.SR WACC - Weighted Average Cost of Capital
The WACC of Arab National Bank (1080.SR) is 11.8%.
| Range | Selected | |
| Cost of equity | 11.2% - 13.7% | 12.45% |
| Tax rate | 15.0% - 16.2% | 15.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 10.6% - 12.9% | 11.8% |
| Category | Low | High |
| Long-term bond rate | 5.9% | 6.4% |
| Equity market risk premium | 6.1% | 7.1% |
| Adjusted beta | 0.86 | 0.95 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.2% | 13.7% |
| Tax rate | 15.0% | 16.2% |
| Debt/Equity ratio | 0.09 | 0.09 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 10.6% | 12.9% |
| Selected WACC | 11.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| 1080.SR | Arab National Bank | 0.09 | 1.01 | 0.94 |
| 1010.SR | Riyad Bank SJSC | 0.16 | 1.38 | 1.22 |
| 1020.SR | Bank Aljazira JSC | 0.78 | 1.04 | 0.63 |
| 1030.SR | Saudi Investment Bank SJSC | 1.35 | 0.75 | 0.35 |
| 1050.SR | Banque Saudi Fransi SJSC | 1.93 | 1.11 | 0.42 |
| 1060.SR | Saudi British Bank SJSC | 0.44 | 1.29 | 0.94 |
| 1120.SR | Al Rajhi Banking & Investment Corporation SJSC | 0.02 | 0.97 | 0.95 |
| 1140.SR | Bank Albilad Sjsc | 0.09 | 0.88 | 0.82 |
| 1150.SR | Alinma Bank SJSC | 1.67 | 0.92 | 0.38 |
| U11.SI | United Overseas Bank Ltd | 0.71 | 1.29 | 0.81 |
| Low | High | |
| Unlevered beta | 0.73 | 0.87 |
| Relevered beta | 0.79 | 0.93 |
| Adjusted relevered beta | 0.86 | 0.95 |
1080.SR's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for 1080.SR:
cost_of_equity (12.45%) = risk_free_rate (6.15%) + equity_risk_premium (6.60%) * adjusted_beta (0.86) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.