Decrease in Risk-Weighted Assets (RWA) Rate for Residential Mortgages from 75% to 50%

In the Name of Allah, the Most Gracious, the Most Merciful

Saudi Arabian Monetary Authority (SAMA) Head Office

Banking Policy Department

Ref. No.: 391000047997 Date: 27/04/1439 AH Enclosures: None

Circular

To the Esteemed,

Peace, mercy, and blessings of Allah be upon you. Subject: Decrease in the Risk-Weighted Assets (RWA) Rate for Residential Mortgage Financing from 100% to 50%.

In continuation of the Authority's Circular No. 290 dated 12/06/2006 CE detailing the Basel II requirements for calculating Risk-Weighted Assets (RWA), and Circular No. 381000077671 dated 22/07/1438 AH detailing the reduction of the RWA rate for residential mortgage financing from 100% to 75%.

In light of regulatory developments in mortgage financing and collateral execution, as well as the impact analysis studies conducted by the Authority on other regulatory ratios and rates aligned with existing and new Basel requirements, the Authority has decided to reduce the Risk-Weighted Assets (RWA) rate for residential mortgage financing to 50%, effective from 1 January 2018, with implementation commencing in the prudential reporting templates (Q17) for the first quarter of 2018.

Yours sincerely,

Ahmed bin Abdullah Al-Sheikh Deputy Governor for Supervision

Distribution Scope: Local banks operating in the Kingdom.

P.O. Box 2992, Riyadh 11169 | Telex: MARKAZI | Fax: 404400 | Tel: 4633000 | Fax: 4662414 Saudi Central Bank