Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q4 2023 Earnings Presentation
55 slides from Banque Saudi Fransi's earnings presentation, 2024
Slide 1: Banque Saudi Fransi Investor Presentation 4Q 2023
3 Column Slides Banque Saudi Fransi Investor Presentation 4Q 2023
Slide 2: Contents
INVESTOR PRESENTATION 4Q 2023 Contents BSF Profile 3 Operating Environment 8 Strategy 12 ESG Update 20 Financial Performance 25 Outlook & Guidance 42 Segmental Performance 44 Performance Track Record 50 Appendix 53
Slide 3: BSF Profile
INVESTOR PRESENTATION 4Q 2023 BSF Profile
Slide 4: BSF has a solid investment profile and clearly articulated strategy
PROFILE | INVESTMENT HIGHLIGHTS BSF has a solid investment profile and clearly articulated strategy 1 Leading banking group in Saudi Arabia with a strong focus on domestic operations Domestically systemic important bank (“D-SIB”) with total assets of SAR 253.4bn and market capitalization of SAR 48.2
Slide 5: We are a leading banking group in Saudi Arabia with a strong focus on domestic operations
PROFILE | PRESENCE We are a leading banking group in Saudi Arabia with a strong focus on domestic operations BSF is the successor to Banque de l’Indochine (est. 1949) Branches Employees BSF was then established by Royal Decree No. M/23 as a Saudi Arabian joint stock company in 1977, in accordanc
Slide 6: Solid market parameters and credit ratings
PROFILE | SHARE PROFILE AND CREDIT RATINGS Solid market parameters and credit ratings Share Parameters 31 Dec 2023 Total Shareholder Return (TSR) 160 Closing price (SAR) 40.00 140 52 weeks range (SAR) 32.5 - 45.7 120 Shares issued (million) 1,205 100 80 60 Market capitalization (SARbn) 48.21 40 Mark
Slide 7: Experienced and dynamic executive management team
PROFILE | MANAGEMENT Experienced and dynamic executive management team Bader Alsalloom Ramzy Darwish Chief Executive Officer Chief Financial Officer BSF: appointed Apr-21 BSF: appointed CFO Dec-22 Saudi Investment Bank: Deputy GM SNB: 17 years where positions included Corporate Banking 2 yea
Slide 8: Operating Environment
INVESTOR PRESENTATION 4Q 2023 Operating Environment
Slide 9: The macro-economic environment is characterized by rising rates, supportive domestic activity
OPERATING ENVIRONMENT | ECONOMIC CONDITIONS The macro-economic environment is characterized by rising rates, supportive domestic activity, volatile oil and moderating stock prices Brent Oil Price / Barrel (USD) Tadawul Index Oil prices rose to USD 120/bl in 2Q 2022, following Ukraine-Russia disrup
Slide 10: Saudi Arabia's real GDP growth is estimated at -1.1% in 2023
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK Saudi Arabia’s real GDP growth is estimated at -1.1% in 2023 due to lower oil production Real GDP growth (%) Brent Avg Oil Price / Barrel (USD) Real GDP for Saudi Arabia is expected decline by -1.1% in 2023 following 8.7% growth in 2022 due to lower oil pro
Slide 11: The Saudi banking sector is well positioned for both resiliency and growth
OPERATING ENVIRONMENT | KSA BANKING SECTOR The Saudi banking sector is well positioned for both resiliency and growth Bank Credit (SAR Bn) Capitalization: T1|CAR (%) NPL Ratio (%) 2,584 16.0%|19.5% 2.2% 20.3% +14% 19.9% 19.9% 19.4% 19.5% 2,584 2.2% 2.2% 2,349 2,059 18.7% 1.9% 1.9% 1.8% 1,783 18.1% 1
Slide 12: Strategy
INVESTOR PRESENTATION 4Q 2023 Strategy
Slide 13: We are refocusing and simplifying our existing strategy
STRATEGY | CONTEXT We are refocusing and simplifying our existing strategy for an evolving external environment and an optimized internal structure Rising rate environment Historic increase in levels of inflation Sudden rate declines Geopolitical tensions Covid-19 Recessionary fears In
Slide 14: In 1Q 2023 we refocused our strategy to 10 vital initiatives
STRATEGY | SUMMARY In 1Q 2023 we refocused and simplified our existing strategy to 10 vital initiatives for an evolving external environment and internal structure Wholesale Banking Private Banking Technology Expand FIG Expand Infrastructure & MNC product Upgrade Coverage suite 1H 2024 Priority Saud
Slide 15: Our strategy is driven by ambitious aspirations
STRATEGY | STRATEGIC FRAMEWORK Our strategy is driven by ambitious aspirations for market position, profitability and customer experience Strategic Goals Position: Profitability: Customer Experience: Be among the top players in our target segments Focus on profitability and return on capital Continu
Slide 16: Strategic initiatives are built on our core business strengths and opportunities
STRATEGY | STRATEGIC PILLARS Strategic initiatives are built on our core business strengths and opportunities Wholesale Banking Personal Banking Private Banking Saudi Fransi Leasing Saudi Fransi Capital Strategic Goals Strong corporate relationships Solid positioning & strong Leading market po
Slide 17: Strategy execution commenced across the various business pillars
STRATEGY | STRATEGIC PILLARS Strategy execution commenced across the various business pillars with positive momentum in progress Wholesale Banking Personal Banking Private Banking JB Saudi Fransi Capital Seize existing Leverage segmentation Reinforce market Expand in new Strategic Goals Solidify mar
Slide 18: In 2023 we successfully realized two pivotal strategic milestones
STRATEGY | KEY MILESTONES In 2023 we successfully realized two pivotal strategic milestones JB, formerly known as SFL, has strategically pivoted to diversify its offerings, targeting distinct market JB New segments. Brand This strategic realignment was underpinned by a robust marketing campaign in 4
Slide 19: Good progress in the implementation of the four key strategic programs
STRATEGY | STRATEGIC ENABLERS Good progress in the implementation of the four key strategic programs across the IT & Technology and rebranding priorities Technology Infrastructure Upgrade Rebranding Integrated Corporate Omnichannel Core Banking System Portal New corporate platform supporting New hig
Slide 20: ESG Update
INVESTOR PRESENTATION 4Q 2023 ESG Update
Slide 21: ESG is woven into our strategic fabric
ESG | OUR STRATEGIC ESSENCE AT BSF ESG is woven into our strategic fabric, driving with our business objectives while nurturing our environment, society, and governance ESG is Part of BSF DNA BSF’s Recent ESG Highlights BSF’s ESG Pillars are born from within BSF’s corporate mission and values Enviro
Slide 22: Significance to stakeholders: materiality matrix
ESG | MATERIALITY MATRIX We have identified and prioritized 15 sustainability-related material issues that have a substantial impact on our strategic objectives and are deemed crucial by our stakeholders Materiality Matrix 1 Governance, accountability, transparency and ethics Such issues have been d
Slide 23: Comprehensive ESG governance and policy framework with Board oversight
ESG | ESG GOVERNANCE BSF has implemented a comprehensive ESG governance and policy framework with Board oversight Nomination & BSF Board of Board Strategy Board Risk Executive Committee Audit Committee Remuneration Directors Committee Committee Committee Abdullatif Alothman Rayan Fayez Bader Al Issa
Slide 24: Charting The Course Of Excellence: Our ESG journey
ESG | OUR STRATEGIC ESSENCE AT BSF Charting The Course Of Excellence: Our ESG journey from a strong foundations to future innovation Established the ESG Policy Framework Published the Inaugural Published the Published the Implemented the ESG 2020 ESG Report 2021 ESG Report 2022 ESG Report Governance
Slide 25: Financial Performance
INVESTOR PRESENTATION 4Q 2023 Financial Performance
Slide 26: Improved profitability in FY 2023 from NIM expansion and balanced asset growth
FINANCIAL PERFORMANCE | HIGHLINGHTS Improved profitability in FY 2023 from NIM expansion and balanced asset growth BALANCE SHEET Loans & Advances Investments Customers' Deposits Healthy loan growth of 13% YoY driven by 14% commercial and 10% consumer lending growth. 179.4 +13% year-on-year 48.5
Slide 27: Balance sheet growth driven by lending, funded by IBD growth
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Balance sheet growth driven by lending, funded by IBD growth Growth in total assets of 9% YoY, mainly driven by healthy 13% loan growth, further aided by Total Assets Movement (SAR Bn) a 9% increase in investments. Liabilities grew by 10% during F
Slide 28: Net income grew 18% YoY from strong NII growth
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income grew 18% YoY from strong NII growth, but sequential decline of 34% from NIM impact of shifting deposit mix to IBDs Net Income Movement (SAR Mn) Net income for FY 2023 grew 18% YoY to SAR 4,223mn from 16% growth in operating income, par
Slide 29: Healthy and balanced 13% loan growth during FY 2023
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy and balanced 13% loan growth during FY 2023 Total Loans & Advances (SAR Bn) Commercial Loans Movement YoY (SAR Bn) Loans & Advances Composition (SAR Mn) 179.4 147.0 179,391 +13% +14% Consumer 18.1% Commercial 174.7 179.4 5.9 2.8 1.5 1.0 147.0 81.9%
Slide 30: 9% Increase in the investment portfolio in FY 2023
FINANCIAL PERFORMANCE | INVESTMENTS 9% Increase in the investment portfolio in FY 2023 Investments Movement by Type (SAR Bn) Investments Composition by Type Investments increased 9% YoY reflecting (SAR Mn) increased investment in longer-term fixed- rate Government securities, partly offset 48.5 48
Slide 31: 9% growth in deposits from increased IBDs partly offset by lower NIBDs
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS 9% growth in deposits from increased IBDs partly offset by lower NIBDs Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) Deposits grew 9% during FY 2023 from increased IBDs, partly offset by an expected decline in NIBDs IBD increased 4
Slide 32: NII growth of 22% from margin expansion and earning assets growth
FINANCIAL PERFORMANCE | NET INTEREST INCOME NII growth of 22% from margin expansion and earning assets growth Net Interest Income Movement (SAR Mn) NII for FY 2023 grew 22% YoY to SAR 7,835mn from margin expansion and 6% growth in (simple) average earning assets. 7,835 Interest income rose 59% Y
Slide 33: Improved loan yields from higher rate environment drive margin expansion
FINANCIAL PERFORMANCE | NET INTEREST MARGIN Improved loan yields from higher rate environment drive margin expansion YTD Net Interest Margin Trend (%) Net Interest Margin Movement (%) The NIM increased 46bps YoY to 3.53% due to improved loan yields, partly offset by the higher funding costs and th
Slide 34: BSF has reduced its sensitivity to interest rate changes
FINANCIAL PERFORMANCE | RATE SENSITIVITY BSF has reduced its sensitivity to interest rate changes • As of 31 December 2023, BSF estimates a 1-year NIM Balance Sheet Repricing Profile as at 31 December 2023 NIM, Rates and CFH Impact Trends (%) sensitivity of a 100bps rates change at ±3bps; this would
Slide 35: Non-interest income decreased 6% YoY
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income decreased 6% YoY due to lower trading, exchange and investment income Non-interest income for FY 2023 decreased 6% YoY to SAR 1,489mn due to lower trading, Non-Interest Income Movement (SAR Mn) exchange and investment income, partly o
Slide 36: Operating expenses growth of 14% mainly from higher employee-related expenses
FINANCIAL PERFORMANCE | OPERATING EXPENSES Operating expenses growth of 14% mainly from higher employee-related expenses Operating Expenses Movement (SAR Mn) Operating expenses increased 14% YoY to SAR 3,022mn in FY 2023 due to increased employee-related costs, non-recurring transformation-related
Slide 37: Cost of risk increased by 11bps YoY to 0.96% for FY 2023
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Cost of risk increased by 11bps YoY to 0.96% for FY 2023 from improving Commercial coverage Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 413 413 0.96% 1.18% +19 bps year-on-year -13% 1.16% -13% 1.07% 0.98% 0.
Slide 38: NPL ratio trend moderating during FY 2023
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL ratio trend moderating during FY 2023 following previous migration of isolated exposures in the Commercial book Non Performing Loans & Advances Non Performing Loans & Advances (SAR NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) Bn) 1.9 1.9 1.06% 1.2% -18
Slide 39: NPL coverage improved 17.8ppts YoY to 137.7%
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL coverage improved 17.8ppts YoY to 137.7% Allowance For Impairment (SAR Bn) Allowance For Impairment (SAR Bn) NPL Coverage Ratio (%) Commercial NPL Coverage (%) 2.6 2.6 137.7% 137% +21 ppts year-on-year -47% 139.5%137.7% -47% 133.3% 131.3% 5.0 4.9 5.2 5.4
Slide 40: Strong capital ratios
FINANCIAL PERFORMANCE | CAPITALIZATION Strong capital ratios Total Capital (SAR Bn) RWA (SAR Bn) Total capital (Tier 1 + Tier 2 regulatory capital) increased 2% to SAR 43.6bn during FY 2023 as net income generation was partly offset by dividend payments and 43.6 223.0 movements in FVOCI & other re
Slide 41: Liquidity remains strong and comfortably within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR & NSFR (%) HQLA (SAR Bn) LCR was broadly stable YoY at 196% at end-2023. NSFR moderated 5ppts to 117% at end-2023. The SAMA regulatory LTD ratio was within required levels 196% 43.1 at 84.1%
Slide 42: Outlook and Guidance
INVESTOR PRESENTATION 4Q 2023 Outlook and Guidance
Slide 43: BSF is optimistic about the outlook for 2024
FINANCIAL PERFORMANCE | GUIDANCE BSF is optimistic about the outlook for 2024 Metric 2023 Guidance FY 2023 Outcome 2024 Guidance 2024 Guidance Drivers Financing Growth Financing Growth Financing Growth Continued robust corporate activity and credit appetite driven by LOANS & ADVANCES GROWTH Low doub
Slide 44: Segmental Performance
INVESTOR PRESENTATION 4Q 2023 Segmental Performance
Slide 45: Profitability driven by growth in Retail and Corporate, partly offset by lower Treasury
SEGMENTAL PERFORMANCE | SUMMARY Profitability driven by growth in Retail and Corporate, partly offset by lower Treasury Operating Income Movement (SAR Mn) Net Income Before Zakat Movement (SAR Mn) 9,324 4,708 +16% +18% 1,322 723 18 9,324 1,123 376 8,017 5 4,708 4,004 (757) (799) Operating income Ret
Slide 46: Retail: higher profits YoY from NIM expansion and loan growth
SEGMENTAL PERFORMANCE | RETAIL Higher profits YoY due to higher net interest income from NIM expansion and loan growth Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,926 942 893 +33.3% year-on-year +140% +36% SAR Million 1,342 950 942 33 1,926 695 F
Slide 47: Corporate: increased profitability from net interest income growth
SEGMENTAL PERFORMANCE | CORPORATE Increased Corporate profitability from net interest income growth partly offset by increased impairments Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,876 1,057 939 -12.6% year-on-year +25% +4% SAR Million 1,137 1,
Slide 48: Treasury: net income declined 55% YoY due to higher funding costs
SEGMENTAL PERFORMANCE | TREASURY Net income declined 55% YoY due to higher funding costs Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 665 54 -6 -103.0% year-on-year -85% -55% SAR Million 372 1,464 253 179 Fee & other income 665 146 54 -79% 193 QoQ 1
Slide 49: Investment Banking and Brokerage: modest profitability improvement
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Modest profitability improvement as higher NII partly offset by lower brokerage fees and expenses Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 241 137 41 +13.3% year-on-year +2% +14% SAR Milli
Slide 50: Performance Track Record
INVESTOR PRESENTATION 4Q 2023 Performance Track Record
Slide 51: Balance Sheet Metrics
PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 179.4 253.4 172.2 19.54% +9% +9% 21.57% 21.09% +7% 19.92% 19.54% 19.20% 179.4 253.4 172.2 20.56% 19.94% 159.0 215.8 232.1 157.6 18.90% 18.92% 147.8 194.1 132.8 142.0 18
Slide 52: Income Statement Metrics
PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 9,324 3.53% 32.4% 0.96% +8% 3.53% 2.07% 3.04% 3.02% 3.06% 33.3% 33.6% 34.3% 33.1% 2.97% 32.4% 9,324 8,017 6,873 7,045 7,128 0.96% 0.79% 0.85% 0.67% +16% YoY 2
Slide 53: Appendix
INVESTOR PRESENTATION 4Q 2023 Appendix
Slide 54: Please contact the Investor Relations team for additional information
EARNINGS PRESENTATION 4Q 2023 Please contact the Investor Relations team for additional information or download BSF’s IR App For more information, please contact us at: Access our IR website: Banque Saudi Fransi BSF IR Website P.O. Box 56006, Riyadh 11554 Kingdom of Saudi Arabia IR@alfransi.com.sa F
Slide 55: Disclaimer
INVESTOR PRESENTATION 4Q 2023 Disclaimer This presentation is being provided to you for general information purposes. The information contained in the presentation has been obtained from sources believed by Banque Saudi Fransi (“BSF") to be up to date, correct and reliable, but BSF does not make any