Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q1 2018 Earnings Presentation
40 slides from Al Rajhi Bank's earnings presentation, April 2018
Slide 1: Al Rajhi Bank Investor Presentation 1Q 2018 Results
Al Rajhi Bank Investor Presentation 1Q 2018 Results The Blue Chip Islamic Bank Al Rajhi Bank 1Q 2018 Investor Presentation The Blue Chip Islamic Bank 1
Slide 2: Table of Contents
Table of Contents 1 The World's Leading Islamic Bank ............................................................................................................................................................ 03 2 Al Rajhi Bank Strategy 2020 .........................................................
Slide 3: The World's Leading Islamic Bank
Al Rajhi Bank The World's Leading Islamic Bank The Blue Chip Islamic Bank Al Rajhi Bank 1Q 2018 Investor Presentation The Blue Chip Islamic Bank 3
Slide 4: Al Rajhi Bank: Islamic Banking, Everywhere
Al Rajhi Bank Islamic Banking, Everywhere At a glance Presence & Branches Kuwait Islamic NPB Deposits Deposits Customers Jordan 550 4,854 100% 100% 94% 94% 10 2 Banking % of Total Deposits Branches ATMS 9+ p +31 p +430 9+m million 76,453 234 Transactions Transactions Digital:Manual Digital : Manual
Slide 5: Al Rajhi Bank's Track Record
Al Rajhi Bank's Track Record Extremely resilient performance against economic and banking sector headwinds Weathering the oil price decline ARB continued to finance in a tough economic climate... 16.94% 1 20 1 8.00% 16.49% 16.11% 9.80% 1 2.00% 1 00 1 7.0 0% 1 0.00% 7.00% 80 1 6.00% 8.0 0% 60 3.80% 6
Slide 6: What makes us The Blue Chip Islamic Bank
Al Rajhi Bank What makes us "The Blue Chip Islamic Bank" Institutional Status - World's #1 Islamic Bank (by Assets; SAR bn) Large and Growing Market Cap (in SAR bn) 343 400 .00 123 3 50.00 1 40 3 00.0 0 1 20 103 105 250.00 216 216 1 00 85 200. 00 155 80 1 50 .00 127 60 1 00.00 40 50.00 20 0.0 0 0 RA
Slide 7: Robust Balance Sheet with 94% Non-Profit-Bearing Deposits
Al Rajhi Bank, The Blue Chip Islamic Bank Robust Balance Sheet with 94% Non-Profit-Bearing Deposits Total Assets (SARbn) Capital Ratios (%) 23.3% 600 0 +4% 22.0% 500 0 20.8% 339.7 343.1 0 400 315.6 22.2% 0 300 0 200 0 20.9% 100 0 19.7% 0 0 2015 2016 2017 2015 2016 2017 TC ratio CET1 ratio Total Liab
Slide 8: Outstanding foundation and strong returns
Al Rajhi Bank, The Blue Chip Islamic Bank Outstanding foundation and strong returns ROE (%) ROA (%) +19bps 2.67% 0 0 +19bps +38bps 16.49% +45bps 16.94% 2.29% 2.48% 0 16.11% 0 0 0 0 0 0 0 0 0 0 0 2015 2016 2017 2015 2016 2017 Net Financing & Investment Margin (%) Cost of Funds (%) 0 0 +1bps +19bps +2
Slide 9: Top 10 Facts about Al Rajhi Bank
Top 10 Facts about Al Rajhi Bank 1 Largest Islamic Bank worldwide 61 #1 Bank in KSA (by Assets & Market Cap) (by number of customers) 2 #1 Retail Bank in Middle East 27 #1 Distribution network in Middle East (Retail Deposits & Income) (by # of Branches, POS, ATMs, Remittance Centers) 3 One of the hi
Slide 10: What sets Al Rajhi Bank apart
What sets Al Rajhi Bank apart ARB has the largest retail banking business in the Middle East Market Share - Current Accounts Market Share - Deposits 0 0 0 +2.8% +4.7% 0 0 9+ Million 17.2% 0 0 23.2% 23.7% 23.7% 24.7% 15.5% 16.3% 16.4% 0 0 0 0 Customers 0 0 0 0 0 0 FY 15 FY 16 FY 17 1Q 18 FY 15 FY 16
Slide 11: Al Rajhi Bank's Leading Network
Al Rajhi Bank's Leading Network The Bank has a large distribution network in Saudi Arabia... #1 in Branches #1 in ATMs Market Share - Branches Market Share - ATMs 0 0 0 +0.2% 0 +4.3% 0 0 26.4% 26.4% 26.6% 26.5% 25.0% 26.2% 26.3% 23.9% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 1Q 18 FY 15 FY 16 F
Slide 12: ARB has a unique franchise
ARB has a unique franchise We capture high market share across key products #1 in Personal Loans #1 in Auto Loans Market Share - Personal Loans Market Share - Auto Loans 1 1 -1.7% 1 +1.6% 1 1 40.6% 40.4% 50.6% 52.7% 52.7% 52.4% 39.6% 39.1% 1 1 1 0 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 1Q 18 FY 15 FY 1
Slide 13: ARB Market Performance
ARB Market Performance Al Rajhi Bank maintained its momentum and outperformed its peer group Share Price Performance Top 3 KSA Banks (Monthly; Rebased to 100) 30 April 18 Key Metrics RAJHI NCB RIYAD TASI Closing Price SAR 84.01 RAJHI, 163 160 Market Cap SAR 136.5 bn Market Cap /% Industry 23.57% 140
Slide 14: Market Performance
Market Performance Strong Index representation (TASI 2nd) and liquidity (4th) ARB has the highest weight in the MSCI GCC Index... …and is "certain" to be included in MSCI EM Index Index RAJHI ATVR* vs. MSCI Minimum Requirement (>15%) Float Adj # Top 10 Constituents Country Weight Sector Mkt Cap (%)
Slide 15: Awards
Awards Recent international recognition Global Awards Regional Awards § Best Bank in GCC Best Bank in Saudi Arabia § Fastest Growing Bank in KSA § Most Innovative Bank in KSA § Best Retail Bank in KSA Best Financial Institution in Saudi Arabia § Strongest Islamic Retail Bank in the World Largest Ban
Slide 16: Our Values
Our Values Modesty Humility in everything we do Integrity & Openness and highest standards of Nurturing imagination and fostering Transparency corporate & personal ethics Innovativeness creativity Passion to A strong commitment to anticipate and Defining, differentiating and reinforcing Serve Our Me
Slide 17: Al Rajhi Bank's Social Responsibilities
Al Rajhi Bank's Social Responsibilities Our responsibility to our community has always been at the forefront of what we do Focus areas Examples 101 programs conducted 21 cities Participation 5753 volunteering hours clocked in 2017 CSR People In Need, Volunteering, Financial Strategic Literacy and In
Slide 18: Al Rajhi Bank Strategy 2020
Al Rajhi Bank Strategy 2020 ABCDE 'Back to Basics' The Blue Chip Islamic Bank Al Rajhi Bank 1Q 2018 Investor Presentation The Blue Chip Islamic Bank 18
Slide 19: Saudi Arabia Vision 2030
Saudi Arabia Vision 2030 Key objectives A Vibrant Society A Thriving Economy An Ambitious Nation § Lower unemployment § Rise in Global Competitiveness § Increase Umrah capacity from 8 to 30M § Increase non-oil government revenue from 11.6% to 7% Index from 25 to top 10 from SAR 163B to 1T § Double t
Slide 20: Key initiatives 2017-2020
Strategy Overview ABCDE 'Back to Basics' strategy already delivers results A B C D E Accelerate Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence A B C D E Grow mortgage, private Update value Smartly expand channels World-class sector, affluent, ladies & Engaged
Slide 21: Accelerate Growth
Accelerate Growth Key Initiatives 2017 - 2020 Criticality Initiative Progress to date Examples: 2017 1Q 2018 Grow mortgages, private 23% +5 PP 28% A sector, affluent, ladies & Tahweel (remittances) Increase branches with ladies' sections Enhance SME & eCorp A Corporate capabilities Diversified 100+
Slide 22: Become Employer of Choice
Become Employer of Choice Key Initiatives 2017 - 2020 Criticality Initiative Progress to date Examples: B Engaged workforce Positive NPS among employees Graduate Expand development & Al Rajhi Bank School of B training programs Academy Banking Development Program Higher percentage of women B Strength
Slide 23: Customer Focus
Customer Focus Al Rajhi Bank has significantly improved its NPS score NPS 14% 21% 34% 40% Promoters 55% 50% 60% 63% Passives 4% 21% 14% 14% 41% Detractors 29% 26% 23% 2015 2016 2017 Q1 2018 Base 3,554 4,587 31,058 4,079 Q : Based on your experience with your main bank , how likely are you to recomme
Slide 24: Digital Leadership
Digital Leadership Key Initiatives 2017 - 2020 Criticality Initiative Progress to date Examples: Smartly expand D channels & formats Digital : Manual Ratio 44:56 52:48 2016 1Q 2018 Digitize customer D journeys Migrate customers to D self-service channels D Innovate in payments Al Rajhi Bank 1Q 2018
Slide 25: Execution Excellence
Execution Excellence Key Initiatives 2017 - 2020 Criticality Initiative Progress to date Examples: World-class E compliance Maintain world-class compliance Enhance IT IT E infrastructure Transformation Systems Risks Finance Centralize and Increase operational efficiency E automate operations [Roboti
Slide 26: Financial Results
Financial Results Overview & Trends The Blue Chip Islamic Bank Al Rajhi Bank 1Q 2018 Investor Presentation The Blue Chip Islamic Bank 26
Slide 27: Key Messages
Key Messages Good start to the year 2018 Liquidity further improved, but CAR Net Income for the quarter up 7% YoY Deposits up 4% YTD, Financing subdued temporarily declined Net Income (SARmn) Total Customers' Deposits (SARbn) CAR (%) 23.3% +4% 6,0 00 +7% 0 22.1% 500 5,00 0 21.9% 0 285.4 283.9 21.5%
Slide 28: Net Income Trends
Net Income Trends 7% Profit Growth from Solid Income Growth & a Strong Retail Banking Performance Commentary Net Income Growth Drivers by Segment (SARmn) § Net income increased 7% YoY to SAR 2,383 million mainly driven by 2,500 8% total operating income growth from both financing (+8%) and fees 2,00
Slide 29: Progress against guidance
Progress against guidance Financing & income growth, efficiency and cost of risk in line with FY 2018 guidance Financing, Net (SARbn) NPM (%) Guidance Range +3 to +5% 180 Guidance Range 0 160 +19 bps +9 bps 140 234 3.89% 4.08% 4.17% +10 to +20 bps 225 +4% -2% 229 0 120 100 0 80 0 60 40 0 20 0 0 2016
Slide 30: Operating Income Trends
Operating Income Trends 8% YoY total income growth from financing (+8%) and fees & other income (+6%) Total Operating Income, Net (SARmn) 8, 000 7 ,000 6,0 00 +8% 5,00 0 3,853 3,877 3,976 4,198 4,142 4,0 00 3 ,000 2,00 0 1 ,000 0 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 Total Operating Income Growth Drivers by
Slide 31: Operating Income Trends
Operating Income Trends Improved YoY financing margin & strong banking fee income growth Commentary Net Margin (%) § Net financing and investment income grew 8% YoY due to improved 0 0 financing margins on stable average profit-bearing assets. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4.30% 0 0 § The ne
Slide 32: Expenses Trends
Expenses Trends YoY expense growth of 4%, but efficiency improved 109 bps on positive "jaws" Operating Expenses (SARmn) Total Operating Expenses Mix by Segment (SARmn) Investment services & brokerag 120% SAR 37mn 2,500 -5% 100% Treasury SAR 111mn 2,00 0 +4% 80% 1,290 1,301 1,385 1,309 Corporate 1 ,5
Slide 33: Asset quality trends
Asset quality trends Rise in Corporate impairments, partly offset by Retail improvement; NPL ratio improved to 0.72%; coverage rose to 483% on IFRS 9 first time adoption impact Total Impairment Charge (SARmn) Impairment Charge Drivers by Segment (SARmn) 1,800 +25% 900 +21% 1,600 80 0 1,400 +21% 422
Slide 34: Funding & Liquidity Trends
Funding & Liquidity Trends All regulatory requirements are managed comfortably within guidelines Commentary Total Liabilities Mix by Type (SARbn) Other SAR 13bn § Liquidity remained strong during 1Q 2018 and comfortably within 4% regulatory guidelines. Banks SAR 2bn § HQLA increased strongly by 23%
Slide 35: Funding & Liquidity Trends
Funding & Liquidity Trends Continued growth in non-profit bearing deposits Commentary Total Customers' Deposits Mix by Type (SARbn) Time § Strong stable funding with 95% of liabilities sourced from customer SAR 16bn 6% deposits, of which 94% are non-profit bearing. Other § Customer deposits grew 4%
Slide 36: Capitalisation Trends
Capitalisation Trends Strong capitalization despite dividend payment & one-off IFRS 9 impact Total capital (TC) (SARbn) Commentary 1 20 § Capital ratios declined by approximately 1.8% during 1Q 18 as the payment of the 2H 2017 dividend of SAR 4.1 billion and the first time 1 00 -2% 80 adoption impac
Slide 37: Appendix
Appendix Additional Information The Blue Chip Islamic Bank Al Rajhi Bank 1Q 2018 Investor Presentation The Blue Chip Islamic Bank 37
Slide 38: Board of Directors
Board of Directors Members Chairman Abdullah bin Sulaiman Al Rajhi Salah bin Ali AbalKhail Abdulaziz bin Khaled Al Ghefaily Bader bin Mohammed Al Rajhi Khaled bin Abdulrahman Al Qoaiz Alaa bin Shakib Al Jabiri Ibrahim F. Al-Ghofaily Ameen F. Al Shiddi Hamza O. Khushaim Raed A. Al-Tamimi Abdulatif A.
Slide 39: Management Team
Management Team International expertise combined with deep roots in Saudi Arabia Chief Executive Officer Steve Bertamini Banking experience: 31 years Chief Financial Officer Chief Risk Officer Chief Operating Officer Abdullah Alkhalifa Christopher Maclean Waleed Al-Mogbel Banking experience: 27 year
Slide 40: 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