Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q3 2020 Earnings Presentation
29 slides from Al Rajhi Bank's earnings presentation, 2020
Slide 1: Al Rajhi Bank Results Presentation
Al Rajhi Bank Results Presentation 3Q 2020 Earnings Conference Call and Webcast
Slide 2: Management Summary
Management Summary 3Q 2020 Highlights Strategy implementation is on track delivering strong results despite the current environment Improved customer service, digitization and new products all contributed to the bottom line. Strategy Growth in mortgages, customers loans, and operating income.
Slide 3: Strategy Update
Strategy Update ABCDE ‘Back to Basics’ strategy delivered strong results in 3Q 2020 A B C D E Accelerated Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence +3% YoY operating income 15 new products launched to Al Rajhi Bank Academy 169K POS 270 Bots growth cater
Slide 4: KSA's Macro-Economic Environment
KSA’s Macro-Economic Environment 4
Slide 5: KSA Economic Outlook
KSA Economic Outlook Recovering from the trough of Covid-19 pandemic Highlights GDP Growth / Brent Oil Price IMF has revised up GDP forecast for 2020 to (-5.4%) driven by the 71.19 64.37 80 non-oil private sector. 6.5 52.32 54.13 70 5.5 43.64 47.07 41.19 60 4.5 Saudi is keeping its fiscal expend
Slide 6: Banking Sector Highlights
Banking Sector Highlights Growth in mortgage lending continues to drive up credit growth Loans to Deposits Ratio (%) Highlights 80.0% 80.7% 80.1% 77.4% 77.1% 75.3% Saudi banks have shown high resilience driven by government’s 2,500 80.0% support and solid macroeconomic fundamentals. 1796 1866 1,67
Slide 7: Government Stimulus Highlights
Government Stimulus Highlights SAR +350bn to combat the negative impact of Covid-19 and low oil prices on the economy In Billions Government Economy Focused MOF Economy Focused SAMA MSMEs Focused Employment and training support to the SAR 5.3 SAR 70 To Support the Private Sector SAR 30 Deferred Paym
Slide 8: Financial Results
Financial Results caaalyl USpap Al Rajhi Bank &
Slide 9: Balance Sheet Trends (1)
Balance Sheet Trends (1) Strong financing growth, mortgage is the main driver Highlights SAR (mn) 3Q 2020 2Q 2020 QoQ 4Q 2019 YTD Cash and balances with SAMA 37,451 45,022 -17% 39,294 -5% Total Assets grew by (+12% YTD) driven by strong growth in Due from banks and other FI 27,517 28,215 -2% 32,05
Slide 10: Balance Sheet Trends (2)
Balance Sheet Trends (2) Stable growth in customers deposits Highlights Asset Drivers By Type (SARbn) Retail financing growth of (+21% YTD) mainly driven by growth in 180 mortgage financing (+61% YTD). 160 +12.0% 140 Financing is dominated by retail (78%) followed by corporate (22%). 430.3 120 1
Slide 11: Net Income Trends
Net Income Trends Resilient results despite unprecedented environment Highlights SAR (mn) 9M 2020 9M 2019 YoY 3Q 2020 3Q 2019 YoY Net Income before Zakat decreased by (-4.5% YoY) caused by Net financing and investment income 12,275 12,168 +1% 4,196 4,164 +1% higher operating expenses & provisions.
Slide 12: Operating Income Trends
Operating Income Trends Solid operating income growth, inline with our strategy Total Operating Income Growth Drivers By Type (SARmn) Highlights Solid growth of (+3% YoY) driven mainly by growth in fee income. +3.1% 6,000 5,000 Fee income growth of (+17% YoY) mainly from digital & payment 14,927
Slide 13: Expenses Trends
Expenses Trends Upgrading IT & Digital platform, a long term investment Highlights Cost To Income Ratio Trend (%) Cost to income ratio at (33.4%) a 130 bps increase YoY. 0 Operating expenses grew by (+7.2% YoY). 0 0 Higher IT cost primarily related to acceleration of digital and 32.8% 32.6% 33
Slide 14: Asset Quality Trends (1)
Asset Quality Trends (1) Asset quality remains healthy and sound NPL coverage Highlights Impairment Charges (SARmn) & COR (%) 1.10 % Net Provision increased by (+46% YoY). 3,20 0 1.00 % 2,700 1.05% 0.9 0% 0.85% 0.80% NPL ratio at (0.84%) caused by a healthier Retail NPL. 2,200 0.78% 0.71% 0.7 0%
Slide 15: Asset Quality Trends (2)
Asset Quality Trends (2) Healthy stage coverage and prudent risk management Highlights Gross loans by Stage 340 96% of the portfolio is stage 1, above industry coverage across all 320 17.9% the stages. 30 0 2.5 Gross charge of SAR 2,523mn has been taken including SAR 9.5 280 295mn of COVID-19 ov
Slide 16: Liquidity Trends
Liquidity Trends Liquidity remain comfortably within regulatory requirements Highlights Loan to deposit Ratios (%) LDR remains stable at (79.9%). 1 Liquidity remains healthy, LCR at (150%) and NSFR at (124%). 1 1 HQLA increased by (+1.5% YTD). 82.1% 1 81.4% 79.9% 79.9% 1 78.8% 1 1 1 1 3Q 19 4Q
Slide 17: Capitalisation Trends
Capitalisation Trends Capital position well above regulatory minima Highlights 430 RWA (SARbn) Total Capital (SARbn) Total Capital increased by (+7.5% YTD). 380 Risk weighted assets increased by (+10.8% YTD) mainly driven by +10.8% +7.5% 70 growth in credit risk. 33 0 302 1Q 20 2Q 20 58 65 272 3
Slide 18: Return Metrics
Return Metrics Returns remain well above industry average Highlights Earnings Per Share (SAR) Stable growth in EPS of (SAR 1.06). 1 1.13 1 Market-leading ROE at (19.16%), well above peers. 1.06 0.93 0.95 0.97 1 Solid ROA at (2.48%) given the growth in total assets. 1 0 0 (0 ) 3Q 19 4Q 19 1Q 20
Slide 19: Macro environment impact
Macro environment impact Focused in managing the current challenges & beyond Key Challenges COVID-19 RATE ENVIRONMENT OIL PRICES Impact Growth Forecast Asset Quality Liquidity Profitability 1 1 1 Focus Areas to 1 Core Portfolio is low risk, Strict and prudent liquidity Mitigate Consumer lending, mai
Slide 20: Progress against guidance and outlook
Progress against guidance and outlook Revised guidance to reflect current macro environment FY 2019 Actual FY 2020 Latest Guidance 3Q 2020 Actual FY 2020 Revised Guidance Balance Low teens digit High teens digit Financing, Net (SAR bn) 249.7 289.7 (16%) Sheet growth growth Net Profit Margin 5.22% -5
Slide 21: Questions & Answers
Questions & Answers
Slide 22: Appendix
Appendix cnaaljl apap B Al Rajhi Bank 22
Slide 23: Our Response to Covid-19
Our Response to Covid-19 Actions taken to support stakeholders Activate Work from Home for c.60% of our staff. Expand employee awareness programs. Business Open c.50% of branches network. Continue sanitizations to our premises. Employee Continuity Accelerate IT & Digital Infrastructure upg
Slide 24: ESG Highlights
ESG Highlights caaalyl USpap Al Rajhi Bank &
Slide 25: ESG Highlights
ESG Highlights As of FY 2019 unless stated otherwise 32% 94 40% SAR 430bn of loans and 859mn SAR Social 1,198 growth in project finance responsibility Sharia Board female Total Assets Zakat paid integrate ESG programs in Resolutions employees factors 29 cities since 2015 ISO Green 8.3bn SAR Certific
Slide 26: Developments impacting Al Rajhi Bank's operating environment
Developments impacting Al Rajhi Bank's operating environment Major factors integrated into our approach to ESG and our value creation model Major Factors 'ABCDE' Strategy Accelerate growth Client & Investor Demands Improve portfolios in key customer segments Environmental Geopolitics Become Employer
Slide 27: Conclusion and the way forward
Conclusion and the way forward We believe our future success is interlinked with the well-being of our stakeholders ESG Journey • Transparency on management of ESG issues • Relevant KPI disclosures as per GRI & SASB standards Governance • Target setting & Reporting • Open dialogue channels with shar
Slide 28: Additional Information
Additional Information Contact investor relations for more information Mr. Faisal F. Altimyat Visit our website (here) for more Investor disclosers: • Financial Statements Investor Relations Specialist • Investor Presentation Tel: +966 (11) 828 1457 • Factsheet Email: altimyatff@alrajhibank.com.sa •
Slide 29: Disclaimer
Disclaimer AL RAJHI BANK HEREIN REFERRED TO AS ARB MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY REGARDING THIS DOCUMENT OR THE MATERIALS AND INFORMATION CONTAINED OR REFERRED TO ON EACH PAGE ASSOCIATED WITH THIS DOCUMENT. THE MATERIAL AND INFOR- MATION CONTAINED O