CompanyGraph
Al Rajhi Bank
1120 · Saudi Arabia
Saudi riyal deposits are deployed through murabaha commodity purchases and ijara asset leases only after Shariah supervisory board scholars certify each structure as religiously valid.
Al Rajhi Bank deploys Saudi riyal deposits exclusively through murabaha commodity purchases and ijara asset leases, but because Islamic law requires each structure to be backed by a real asset transfer and certified by the Shariah supervisory board before execution, the bank's capacity to issue new products is hard-capped by the review throughput of a small panel of scholars — not by capital or branch scale. Branch expansion and digital platforms replicate across Saudi Arabia's standardised regulatory environment, yet that growth only amplifies deposit intake and financing demand without relieving the scholarly bottleneck that controls product output. The same scholars whose approval is required to launch products are also the single point of failure: a departure or doctrinal dispute would retroactively invalidate existing certified structures, and no capital injection or secular expertise can substitute for the specific scholarly standing that both customers and regulators require. Customers cannot easily exit this system because Shariah-specific termination clauses block contract transfers to conventional institutions, payroll integration creates operational friction, and religious conviction closes off interest-bearing alternatives — binding deposit supply and financing demand to the bank's continued scholarly approval at the same time.
How does this company make money?
Money flows in through several distinct mechanics: profit-sharing on murabaha commodity sale transactions (where the bank purchases a commodity and resells it to the customer at a disclosed mark-up, replacing an interest charge); rental income from ijara arrangements covering equipment and real estate; charges for Shariah-compliant investment management; and profit distributions to depositors calculated on a profit-sharing basis rather than a fixed interest spread.
What makes this company hard to replace?
Existing murabaha and ijara contracts contain Shariah-specific termination clauses that block transfer to conventional banks. Saudi payroll systems are integrated with Islamic banking products, creating operational complexity for any customer attempting to switch. Religious customers also face a direct spiritual barrier to moving deposits into interest-bearing institutions.
What limits this company?
Scholarly interpretation of Islamic law cannot be parallelised or automated — each novel financing structure requires individual doctrinal review by the Shariah supervisory board — so the throughput of new products is hard-capped by the review capacity of a small panel of credentialled scholars, regardless of capital availability or branch scale.
What does this company depend on?
The mechanism depends on five named inputs: a Saudi Arabian Monetary Authority banking license, Shariah supervisory board religious rulings, commodity trading partnerships that provide the actual purchase intermediary murabaha structures require, Saudi riyal liquidity drawn from domestic deposits, and real estate assets held for ijara leasing products.
Who depends on this company?
Saudi SME manufacturers depend on ijara leasing for equipment financing and would lose access to that channel if ijara structures ceased. Saudi retail customers who observe Islamic banking principles have no alternative Shariah-compliant banking channel given the limited availability of Islamic banking options in the market. Saudi real estate developers rely on murabaha financing because religious conviction prevents them from using conventional mortgage instruments.
How does this company scale?
Branch network expansion and digital banking platforms replicate efficiently across Saudi Arabia's standardised regulatory environment. Shariah compliance review, however, cannot be automated — each financial structure requires individual scholarly interpretation of Islamic law principles — so that review process remains the bottleneck regardless of how far the physical and digital network grows.
What external forces can significantly affect this company?
Three forces originate outside the industry. Saudi Vision 2030's economic diversification program is pushing the customer base beyond oil-dependent sectors. US dollar strength affects Saudi riyal peg stability and the competitiveness of cross-border Islamic finance activity. Global Islamic finance standardisation efforts risk conflicting with the local Shariah interpretations on which existing product structures are certified.
Where is this company structurally vulnerable?
If a board scholar departs or a doctrinal dispute fractures the panel's rulings, existing product structures lose their religious validation retroactively and no new structures can be certified — the financing mechanism stops because no secular expertise or capital injection can substitute for the specific scholarly standing that Saudi religious customers and regulators require.