Derayah Financial’s AUM rise 5% in Q1 2025

Mohammed AlShammasi, CEO of Derayah Financial Co.

Derayah Financial Co.’s assets under management (AUM) rose by 5% to SAR 18.1 billion during the first quarter of 2025, despite market headwinds. Further, assets under custody grew by over 20%, reaching SAR 36 billion by the end of the three-month period, said CEO Mohammed AlShammasi.

In a meeting with analysts and investors to discuss Q1 2025 financial results, AlShammasi confirmed that the number of clients exceeded 555,000, emphasizing the continued strong momentum in the services and products segment, paired with the company's success in achieving its initiative targets.

Meanwhile, the decline in performance fee revenues during Q1 2025 was due to weak market performance and returns, compared to the same quarter last year, said the top executive, noting that efforts are underway to offset this drop in the second half of 2025 through launching new investment products and boosting the value of AUM.

The CEO also pointed to Derayah Financial’s rollout of several technology initiatives during the first three months of 2025, most notably the relaunch of the Derayah Smart app, which targets amateur individual investors. The app’s investment performance was among the best in the market, he added.

AlShammasi further stated that the final regulatory approvals are being sought for the Saudi-listed company’s algorithmic trading platform, which was successfully tested in May and is expected to be officially launched soon.

As for cooperation with D360 Bank, the CEO highlighted ongoing integration efforts, including linking cash accounts and providing banking products such as credit cards and loans to Derayah Financial’s clients. This is in exchange for investment solutions like robo-advisory and savings plans for bank customers, with the aim to offer a comprehensive digital financial experience.

For his part, CFO Bilal Bushnaq said client assets reached an all-time high of about SAR 55 billion, expecting this uptrend to continue through the second quarter of this year.

However, during the first quarter of 2025, Derayah Financial witnessed higher operating expenses after accounting for an employee incentive program worth SAR 8.5 million. This is a long-term program, the accounting impact of which will be felt until full maturity, estimated at SAR 10 million per quarter. An actual cash impact, meanwhile, will not materialize and not affect company’s investor obligations, according to Bushnaq.

The CFO also noted that the brokerage segment saw a 6% year-on-year (YoY) hike in the first-quarter revenues, backed by ongoing enhancements to digital platforms and the expansion of the active client base, despite a 16% YoY decline in trading values during the quarter.

As for financing products, he revealed that Derayah Financial completed the pilot phase of its equity lending and borrowing product in Q1 2025, presented to a limited group of clients. The official launch is anticipated in July 2025, pending regulatory approvals.

He added that revenues from brokerage and private commissions remain on track. On the other hand, the pullback in asset management was attributed to global market performance during the first quarter, especially due to the impact of the trade war and market value volatility, which weighed on performance fees.

Elsewhere, the brokerage performance remained strong, as the 40% contraction in the local market’s trading volume led to a slight slowdown of 16% in trading activity on Derayah Financial’s platforms, reflecting the resilience of the infrastructure and its ability to meet investor needs locally and internationally.

The asset management segment recorded growth in fixed fee revenues, attracting nearly SAR 1 billion in new funds during the quarter, hence underscoring investor confidence.

Furthermore, Derayah Financial’s capital adequacy ratio stood at 26%, compared to a regulatory requirement of 8%, giving it a margin exceeding 400% to withstand potential future risks, while maintaining high-cost management efficiency and a low cost-to-income ratio.

According to Argaam’s data, Derayah Financial’s Q1 2025 net profit declined 22% to SAR 106.2 million, compared to SAR 136.2 million in the same period of 2024.