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Dr. John Sfakianakis Group General Manager, Chief Economist Al Khobar May 29, 2010

Dr. John Sfakianakis Group General Manager, Chief Economist Al Khobar May 29, 2010. Where is the global economy going now?. V. If you think Greece is the only one having a debt problem in Europe, think again. Macroeconomically Saudi Arabia is very healthy and solid.

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Dr. John Sfakianakis Group General Manager, Chief Economist Al Khobar May 29, 2010

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  1. Dr. John SfakianakisGroup General Manager, Chief EconomistAl KhobarMay 29, 2010

  2. Where is the global economy going now? V

  3. If you think Greece is the only one having a debt problem in Europe, think again

  4. Macroeconomically Saudi Arabia is very healthy and solid

  5. Real estate exposure is the smallest in the region – NPLs are very low at 3.3%

  6. Government debt is still going down

  7. Private sector credit growths slowly picks up, YoY could be at 8%

  8. Business confidence in Saudi Arabia is gradually on the rise

  9. Robust growth of non-oil private sector? 9.0 8.0 7.0 6.0 YoY % change 5.0 4.0 3.0 2.0 1.0 0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Real GDP Non-oil private sector real GDP Source: SAMA, Banque Saudi Fransi forecasts The economy is slowly rebounding in 2010

  10. SAMA repleneshing foreign assets as oil prices gain momentum

  11. Oil prices are providing good support

  12. Challenge No. 1 Inflation is down in ’010 but historically high

  13. Saudi food prices track global trends after lag

  14. Challenge No. 2: Labour Market, expatriates, remittances etc.

  15. Labour productivity is very low

  16. Challenge No. 3: Energy (oil, electricity and water)

  17. Water demand is rising fast: Around 33% of water is wasted via pipeline system

  18. Our renewable water resources are among the lowest

  19. Electricity demand is rising fast (7-8% per year)

  20. State is spending more and more

  21. More power but are we efficient users? But something has to give in here?

  22. Scenario 1: Oil at $102 through 2015 and $131 through 2020)

  23. Scenario 2: Oil at $70 through 2015 and $80 through 2020)

  24. Scenario 3: Oil at $150 through 2015, $200 through 2020)

  25. Energy subsidies, high oil revenues, high spending, we can’t have them all

  26. At $70 per barrel between 2010-2020 we are losing SR 3.3 trillion in crude oil revenue

  27. Disclaimer This presentation contains indicative terms only. All materials contained here are for discussion purposes only. Finalized terms are subject to further discussion, revision and negotiation. BSF makes no representation and has given you no advise concerning the appropriate accounting treatment or possible tax consequences of this potential transaction(s). The information in this document does not constitute a solicitation for the purchase of sale of any security or commodity and was obtained from sources believed to be reliable but which has not been independently verified, and its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are given in good faith but are subject to change without notice. No liability whatsoever is accepted for any direct or consequential loss arising from the use of this document. This document is for private circulation to institutional or professional clients only. All terms are subject to completion and amendment.

  28. Disclosure appendix The following analyst(s), who is (are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Dr. John Sfakianakis This report is designed for, and should only be utilised by, institutional investors. Furthermore, BSF believes an investor’s decision to make an investment should depend on individual circumstances such as the investor’s existing holdings and other considerations. Analysts are paid in part by reference to the profitability of BSF which includes investment banking revenues. For disclosures in respect of any company, please see the most recently published report on that company available at www.bsf.com.sa Additional disclosures This report is dated as at 29 May 2010. All market data included in this report are dated as at close 24 May 2010, unless otherwise indicated in the report. BSF has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. A Chinese Wall is in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

  29. Thank you

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