Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q1 2023 Earnings Presentation
28 slides from Al Rajhi Bank's earnings presentation, 2023
Slide 1: Al Rajhi Bank Results Presentation
Al Rajhi Bank Results Presentation 1Q 2023 Earnings Conference Call and Webcast
Slide 2: 1Q 2023 Earnings Call
1Q 2023 Earnings Call 03 1Q 2023 Results Summary 04 Bank Of The Future – Strategy update 05 1Q 2023 Financial Highlights 17 FY 2023 Guidance 21 ESG Highlights 23 KSA’s Macro-Economic Environment 26 IR Contact Information 1Q2023 Results Presentation 2
Slide 3: First Quarter 2023 Results Summary
First Quarter 2023 Results Summary | Results are in line with expectations 1.5% Sequential Growth in financing portfolio 2.4% Growth in liabilities LDR below regulatory minima 1.9% YTD Balance Net Financing Total Liabilities Loan to Deposit Ratio Sheet Growth 568.3bn +1.5% 577.0bn 661.4bn +2.4% 677.
Slide 4: Bank of the Future strategy update
In strong position to deliver the “Bank of the Future” | Good progress made on strategy implementation Bank OF The Future Build on our core Outperform our competition Transform technology Focus on new client needs Grow Retail including Private Sector Customer Experience Digital Core Banking Platform
Slide 5: 1Q 2023 Financial Highlights
1Q 2023 Financial Highlights
Slide 6: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Balance sheet growth of 2% YTD driven by Financing and Investments Total Assets (SARbn) SAR (mn) 1Q 23 4Q 22 QoQ 1Q 22 YoY 1,000 +18.1% 900 Cash & balances with SAMA 45,625 42,052 +8% 36,143 +26% 762 776 Due from banks & other FI 13,010 25,656 -49% 20,222 -36% 710 741 Inve
Slide 7: Balance Sheet Trends (2)
Balance Sheet Trends (2) | Financing growth driven by mortgage and corporate Financing, Net (SARbn) Movement in Financing (SARbn) +19.1% +1.5% 500 700 568.3 577.0 25.5 26.0 400 568.3 3.2 8.0 0.5 577.0 600 484.5 18.6 1.5 119.3 1.1 111.3 500 300 400 75.7 0.7 (2.7) (0.4) 200 300 200 389.6 430.0 430.6 1
Slide 8: Net Income Trends
Net Income Trends | net profit edged up to SAR 4.1 Bn. in 1Q 2023 Net Income For The Period After Zakat (SARmn) SAR (mn) 1Q 23 1Q 22 YoY 1Q 23 4Q 22 QoQ 6,000 +0.3% Net financing & investment income 5,125 5,340 -4% 5,125 5,579 -8% Fee from banking services, net 1,210 1,148 +5% 1,210 1,179 +3% 4,258
Slide 9: Operating Income Trends
Operating Income Trends | Lower operating income driven by higher cost of funding Total Operating Income (SARmn) Total Operating Income Growth Drivers By Type (SARmn) -2.5% -2.5% 10,000 8,000 7,148 7,206 7,264 7,000 6,957 6,781 6,957 62 8,000 6,000 61 6,781 6,000 5,000 4,000 (215) (84) 4,000 3,000 2
Slide 10: Expenses Trends
Expenses Trends | Cost efficiencies remains solid Operating Expenses (SARmn) 3,000 Operating Expenses Growth Drivers By Type (SARmn) 1,800 +1.8% 1,600 +1.8% 2,500 61 1,400 2,001 67 2,000 1,769 1,820 1,861 1,800 1,200 1,769 1,800 1,000 (97) 1,500 800 600 1,000 400 500 200 0 0 1Q 22 2Q 22 3Q 22 4Q 22
Slide 11: Net Impairment & Cost of Risk
Net Impairment & Cost of Risk | Lower net impairment resulted in cost of risk improvement Net Impairment Charges (SARmn) Cost of Risk (%) 850 -38.0% 0 750 650 578 580 0.48% 0 490 0.47% 0.43% 0.39% 550 0 353 359 0.25% 450 350 0 250 0 150 50 (0) 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 1Q 22 1H 22 9M 22 FY 22 1Q
Slide 12: Asset Quality Trends (1)
Asset Quality Trends (1) | Asset quality remains healthy with high NPL coverage Movement in NPL (SARmn) 3,500 NPL Formation (SARmn) +13.7% +13.7% 5,000 3,000 293 3,507 4,000 1,131 3,507 130 3,085 2,500 3,085 2,000 3,000 1,500 (709) 2,000 1,000 1,000 500 0 0 4Q 22 Retail Non-Retail 1Q 23 4Q 22 Write
Slide 13: Asset Quality Trends (2)
Asset Quality Trends (2) | Healthy stage coverage reflecting prudent risk management ECL by Stage (SARmn) Movement in ECL by Group (SARmn) 10,000 9,422 10,000 -14.2% 8,028 8,082 9,422 249 3,271 8,000 8,000 8,082 6,000 3,037 3,428 6,000 2,350 (1,589) 4,000 1,715 1,773 4,000 3,801 3,276 2,000 2,000 2,
Slide 14: Liquidity Trends
Liquidity Trends | Liquidity remains comfortably within regulatory requirements HQLA (SARbn) Loan to Deposits Ratio (SAMA) (%) +22.7% 160 1 Regulatory Maximum 90% 118.1 122.0 87.9% 88.4% 87.8% 140 112.7 85.9% 1 110.0 83.8% 99.4 120 1 100 80 1 60 1 40 1 20 0 0 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 1Q 22 2Q 2
Slide 15: Capitalization Trends
Capitalization Trends | Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) +13.0% 140 +22.8% 600 498.0 505.0 500 446.7 42.3 38.4 120 106.6 105.4 37.8 6.4 85.8 1.6 5.7 5.7 100 400 2.8 5.1 80 300 60 454.0 460.1 100.9 99.6 200 406.1 40 80.7 100 20 0 0 1Q 22 4Q 22 1Q 23 1Q 2
Slide 16: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) -4.6% 2 0 1 0 1.03 1.05 1.07 1.08 0.99 1 0 3.79% 3.74% 3.76% 3.71% 1 0 3.31% 1 0 1 0 0 0 0 0 0 1Q 22 1H 22 9M 22 FY 22 1Q 23 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 Return on Equity (%) Return on Assets
Slide 17: FY 2023 Guidance
FY 2023 Guidance
Slide 18: FY 2023 Assumptions and Outlook
FY 2023 Assumptions and Outlook | High interest rates is expected to weigh on credit demand • IMF revised GDP growth forecasts to 3.1% in 2023 and 3.1% in 2024 • Saudi economy grew by 5.5% in 4Q 2022, resulting in 8.7% of GDP growth in full year 2022 Economy • Consumer spending increased by 7.9% in
Slide 19: FY 2023 Guidance
FY 2023 Guidance | Progressing in line with “Bank of The Future” strategy FY 2023 Guidance 1Q 2023 Actual Guidance Revision Balance Sheet Financing Mid single digit +1.5% Mid single digit Net profit margin -15 bps to -25 bps -55 bps -25 bps to -35 bps Profitability Cost to income ratio Below 26% 26.
Slide 20: Q&A
Q&A
Slide 21: ESG Highlights
ESG Highlights
Slide 22: ESG Highlights | 1Q 2023
ESG Highlights | 1Q 2023 Renovation USD 1.2 bn Of children with ISO/DIS 37301:2020 Green syndicated loan disability Association Compliance clinic Started using solar energy system in 44 SAR 41.6mn 6 ISO 22301:2019 Key social projects Business Continuity branches to reduce Donation in 2022 delivered
Slide 23: KSA's Macro-Economic Environment
KSA’s Macro–Economic Environment
Slide 24: KSA Economic Outlook
KSA Economic Outlook | Economic conditions remain positive for the Kingdom Highlights GDP Growth/Brent Oil Price 99.0 • GDP grew by 8.7% in 2022 driven by higher oil prices and recovery in 85.0 81.2 100.0 non-oil activities 7.2 70.9 5.2 64.4 80.0 8.7 • IMF revised up Saudi’s GDP growth forecasts in
Slide 25: Banking Sector Highlights
Banking Sector Highlights | Banking system deposits growth outpaced loans growth in 1Q2023 Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARmn) 79.5% 81.5% 80.7% 77.1% 75.0% • Deposits growth in the banking system during 1Q2023 outperformed 2,411 2,401 2,600 80.0% 2,349 2,295 loans gro
Slide 26: IR Contact Information
IR Contact Information
Slide 27: Additional Information
Additional Information | Contact investor relations for more information Rayan Alshuaibi Director of Investor Relations +966 (11) 828 1972 alshuaibirs@alrajhibank.com.sa Abdulrahman Alyami Assistant Manager Investor Relations +966 (11) 828 3586 AlyamiAH@alrajhibank.com.sa Alrajhi Mobile App Alrajhi
Slide 28: 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