Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q2 2021 Earnings Presentation
47 slides from Al Rajhi Bank's earnings presentation, 2021
Slide 1: Al Rajhi Bank Investor Presentation 2Q 2021 Results
Al Rajhi Bank Investor Presentation 2Q 2021 Results
Slide 2: The World’s Leading Islamic Bank 2Q 2021 Financial Results Al Rajhi Bank Strategy
03 The World’s Leading Islamic Bank 14 Al Rajhi Bank Strategy 23 KSA Macro-Economic Environment 26 40 45 IR Contact Information 2Q 2021 Financial Results 2Q 2021 Operating Results
Slide 3: The World's Leading Islamic Bank
The World’s Leading Islamic Bank
Slide 4: Al Rajhi Bank: Islamic Banking, Everywhere
Al Rajhi Bank Islamic Banking, Everywhere At a glance, 1H2021 Presence & Branches, 1H2021 Islamic Kuwait Islamic NPB Deposits NPB Deposits Customers Jordan 527 4,930 100% 81% 94% 10 2 100% Banking % of Total Deposits 9+m 11+ Branches ATMs million 257,296 217 NPS Digital: Manual Islamic Transactions
Slide 5: 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 Centres) 3 One of the hi
Slide 6: The World's Leading Islamic Bank
The World’s Leading Islamic Bank Robust balance sheet with 80% non-profit-bearing deposits, as of 1H 2021 Total Assets (SARbn) Capital Ratios (%) 900 23.3% 0 800 +59.2% 700 546 20.1% 19.9% 0 600 469 22.2% 19.1% 500 364 384 18.0% 0 400 343 0 300 19.0% 18.8% 200 18.0% 16.9% 0 100 0 0 2017 2018 2019 20
Slide 7: Outstanding foundation and strong returns
The World’s Leading Islamic Bank Outstanding foundation and strong returns ROE (%) ROA (%) -20bps +18bps +317bps 0 0 -55bps 0 -164bps 0 +1348bps +172bps 0 -1023bps 2.68% 2.76% 2.74% 2.56% 0 23.11% 0 0 20.49% 19.94% 0 0 17.24% 0 7.01% 1.04% 0 0 0 0 2017 2018 2019 2020 1H 21 2017 2018 2019 2020 1H 21
Slide 8: 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 - Demand Deposits Market Share - Deposits 0 +180bps 0 +560bps 0 22.0% 0 25.5% 23.7% 24.8% 25.2% 24.3% 11 Million 0 19.4% 0 0 16.4% 17.3% 17.3% 0 0 0 Customers 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY 20
Slide 9: 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 +20bps 0 1 +300bps 0 0 0 26.6% 26.7% 27.0% 26.8% 0 26.2% 26.8% 27.6% 28.2% 29.2% 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY
Slide 10: 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 +380bps 1 -480bps 43.4% 1 39.6% 38.7% 37.7% 40.6% 52.7% 51.3% 47.6% 47.9% 1 46.8% 1 0 1 0 0 0 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY 2
Slide 11: 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 June 2021 RAJHI SNB RIYAD TASI Key Metrics 300 Closing Price SAR 111.0 Market Cap SAR 277.0 bn 250 RAJHI, 245 Market Cap / % Industry 32.3
Slide 12: ESG Highlights
ESG Highlights 1H 2021 7 Window film SAR 49mn batches of ISO 22301: 2019 ISO/DIS 94 women- at branches Graduate Business owned Donation in 37301: 2020 to reduce Development Continuity suppliers energy use 2020 Management Compliance Program engaged since 2015 32% 94 40% SAR 546bn of loans and 801mln
Slide 13: Awards
Awards Recent international recognition Global Awards Regional Awards Best Bank in GCC Fastest Growing Bank in KSA Best Bank in Saudi Arabia Most Innovative Bank in KSA (3 consecutive years 2017, 2018, 2019) Best Retail Bank in KSA Strongest Islamic Retail Bank in the World Strongest Isl
Slide 14: Since inception of ABCDE, the world has changed
Since inception of ABCDE, the world has changed
Slide 15: ABCDE Strategy Initiatives & Outcomes
ABCDE Strategy Initiatives & Outcomes Al Rajhi Bank's 2016-2020 Strategy achieved a lot and set a strong foundation A Accelerate Growth B Become Employer of Choice C Customer Focus D Digital Leadership E Execution Excellence ✓ Exceed Industry ✓ Higher Engagement ✓ Most Recommended ✓ Best-In-Class ✓
Slide 16: Global and KSA Market Forces
Global and KSA Market Forces A forcefield of risks and opportunities KSA Forces Structural Rates Changes Covid-19 Global Forces Regulations Al Rajhi Bank Vision 2030 Global Forces Digital Sustainability Competitive Environment KSA Forces Al Rajhi Bank 2Q 2021 Investor Presentation 16 Bank Of The Fut
Slide 17: Where are future opportunities for growth?
Where are future opportunities for growth?
Slide 18: Where are the growth opportunities?
Where are the growth opportunities? The Bank of the Future has two main avenues for growth in KSA Market Maturity The Bank of the Future Market Share Al Rajhi Bank 2Q 2021 Investor Presentation 18 Bank Of The Future
Slide 19: The Bank of the Future has two avenues for growth
The Bank of the Future has two avenues for growth A maturing market in KSA and market share growth Mega Projects, Privatization, Capital Markets Underpenetrated KSA Financial Services Mobile / Digital A growing Market Maturity addressable market Home-ownership Income, Wealth, Lifestyle, Demographics
Slide 20: We are building the "Bank of the Future"
We are building the "Bank of the Future"
Slide 21: We are building the "Bank of the Future"
We are building the "Bank of the Future" Strategy 2021-2023 Build on our core → Outperform our competition → Transform technology → Focus on new client needs → FOCUS AREA FOCUS AREA FOCUS AREA FOCUS AREA Grow Retail including Private Sector Customer Experience Digital CoreBanking Digital Core Bankin
Slide 22: In strong position to deliver the "Bank of the Future"
In strong position to deliver the "Bank of the Future" Good progress made on strategy implementation Build on our core → Outperform our competition → Transform technology → Focus on new client needs → FOCUS AREA PROGRESS FOCUS AREA PROGRESS FOCUS AREA PROGRESS FOCUS AREA PROGRESS Grow Retail includi
Slide 23: KSA's Macro-Economic Environment
KSA’s Macro-Economic Environment
Slide 24: KSA Economic Outlook
KSA Economic Outlook Improved economic conditions compared to 2020 GDP Growth / Brent Oil Price Highlights 71.2 68.8 66.6 80 64.4 6.5 IMF has revised up 2021 GDP growth forecast to 2.4% driven by 70 54.1 5.5 recovery in oil prices and economic activities. 60 4.5 3.5 41.7 50 Saudi is keeping its
Slide 25: Banking Sector Highlights
Banking Sector Highlights Growth in mortgage lending continues to drive credit growth Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARmn) SRC reduced mortgage reference rate, starting from June by 10bps. 80.1% 77.4% 77.1% 77.8% 75.0% 90.0% 2,500 80.0% Continuous migration to cashl
Slide 26: 2Q 2021 Financial Results
aall pap Al Rajhi Bank 2Q 2021 Financial Results
Slide 27: ARB had an excellent first half 2021
ARB had an excellent first half 2021 Results are in line with or ahead of expectations 23.6% Growth in financing driven 18.4% Growth in liabilities Stable LDR by mortgages Net Financing Total Liabilities Loan to Deposit Ratio Strong 16% YTD +23.6% +18.4% 315.7bn 390.3bn 410.7bn 486.5bn 79% 83% Balan
Slide 28: Trends ahead of expectations
Trends ahead of expectations Guidance revisions driven by solid growth in first half 2021 FY 2021 Guidance 2Q 2021 Actual Guidance Revision Balance Sheet Financing High teens growth +23.6% 32% - 35% Net profit margin -30 bps to -40 bps -27 bps -40 bps to -50 bps Profitability Cost to income ratio Be
Slide 29: Balance Sheet Trends (1)
Balance Sheet Trends (1) Strong 16% YTD balance sheet growth driven by Financing and investments Total Assets (SARbn) SAR (mn) 2Q 2021 1Q 2021 QoQ 4Q 2020 YTD 900 80 0 +30.8% Cash and balances with SAMA 36,914 38,562 -4% 47,363 -22% 700 Due from banks and other FI 26,213 31,730 -17% 28,655 -9% 512 5
Slide 30: Balance Sheet Trends (2)
Balance Sheet Trends (2) Financing growth driven by mortgage growth Financing, Net (SARbn) Financing, Net Mix By Retail Financing, Mix By Segment (SARbn) Type (SARbn) 550 500 +42.0% 390.3 Corporate Mortgage 450 12.3 SAR 65bn SAR 140bn 400 315.7 64.6 1.8 17% 44% 9.9 350 274.9 7.2 53.3 SME 30 0 1.9 SA
Slide 31: Balance Sheet Trends (3)
Balance Sheet Trends (3) Balance sheet growth funded by NPB deposits Total Liabilities (SARbn) Total Customers' Deposits Total Liabilities Mix By Mix By Type (SARbn) Segment (SARbn) 80 0 Time +33.0% 700 SAR 83bn 486.5 600 19% Corporate Treasury 410.7 39.0 SAR 152bn 500 365.8 28.1 Other SAR 21bn 31.1
Slide 32: Net Income Trends
Net Income Trends Solid net profit growth of 44% YoY Net Income For The Period Before Zakat (SARmn) SAR (mn) 1H 2021 1H 2020 YoY 2Q 2021 2Q 2020 YoY Net financing and investment income 9,822 8,078 +22% 5,052 3,968 +27% +48.1% 6,000 Fee from banking services, net 1,843 1,147 +61% 934 529 +77% Exchang
Slide 33: Operating Income Trends
Operating Income Trends Strong income growth reflecting successful strategy execution Total Operating Income (SARmn) Total Operating Income Growth Drivers By Type (SARmn) 16,000 +31.8% 10,000 14,000 +25.7% 6,336 8,000 12,000 5,794 5,948 4,808 5,152 696 86 12,284 10,000 1,744 6,000 9,775 8,000 6,000
Slide 34: Expenses Trends
Expenses Trends Cost efficiencies resulted in higher positive jaws Operating Expenses (SARmn) Operating Expenses Growth Drivers By Type (SARmn) 3,000 +5.9% +3.9% 1,200 2,500 1,000 1,634 1,724 1,763 1,652 1,730 49 3,382 97 2,00 0 3,255 800 1,500 600 1,0 00 400 (19) 500 200 0 0 1H 20 Salaries & benefi
Slide 35: Asset Quality Trends (1)
Asset Quality Trends (1) Asset quality remains healthy and NPL coverage remains strong and stable Cost of Risk (%) Movement in NPL (SARmn) -7.8% 0 3,400 0 3,200 0.85% 216 0.78% 3,000 0.75% 2,890 0 0.67% 0.64% 2,800 2,663 0 2,600 0 2,400 (443) 2,200 0 2,000 0 1,800 0 1,600 1H 20 9M 20 FY 20 1Q 21 1H
Slide 36: Asset Quality Trends (2)
Asset Quality Trends (2) Healthy stage coverage reflecting prudent risk management Net Impairment Charge (SARmn) Movement in Net Impairment (SARmn) +0.9% 1,0 00 +27.5% 1,700 900 248 80 0 1,500 550 577 584 700 1,300 458 465 1,151 1,161 600 500 1,100 400 (237) 900 30 0 200 700 100 0 500 2Q 20 3Q 20 4Q
Slide 37: Liquidity Trends
Liquidity Trends Liquidity remains comfortably within regulatory requirements HQLA (SARbn) SAMA LDR (%) Regulatory 180 Maximum 90% 160 140 +22.9% 1 1 120 87.7 1 81.4 83.2% 71.4 100 1 80.6% 80 79.9% 1 78.8% 78.8% 60 1 40 1 20 1 0 1 2Q 20 4Q 20 2Q 21 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 LCR (%) NSFR (%) 164%
Slide 38: Capitalisation Trends
Capitalisation Trends Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) +28.2% 85 +21.2% 370.8 410 66.7 75 360 323.0 33.3 61.6 4.2 3.4 55.1 3.5 65 310 289.2 33.3 55 3.1 30.8 9.3 334.1 58.1 62.6 260 45 8.4 51.9 280.4 250.0 35 210 25 160 2Q 20 4Q 20 2Q 21 2Q 20 4Q 20 2Q 2
Slide 39: Return Metrics
Return Metrics Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) 3 +48.0% 3.94% 0 4.00% 3 3.43% 3.47% 3.56% 0 2 1.33 1.44 1.25 0 0.97 1.06 2 0 1 0 1 0 0 1H 20 9M 20 FY 20 1Q 21 1H 21 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21 Return on Equity (%) Return on Assets (%) 0 0
Slide 40: 2Q 2021 Operating Results
aall pap Al Rajhi Bank 2Q 2021 Operating Results
Slide 41: Retail Banking
Retail Banking Despite balance sheet growth, net income declined YoY from higher impairments Total Operating Income (SARmn) SAR (mn) 2Q 2021 1Q 2021 QoQ 2Q 2020 YoY 8,000 7,0 00 Net financing and investment income 3,015 3,075 -2% 2,909 +4% +3.2% Fee and other income 494 620 -20% 491 +1% 6,000 Total
Slide 42: Corporate Banking
Corporate Banking Net income growth driven by lower impairment charges Total Operating Income (SARmn) SAR (mn) 2Q 2021 1Q 2021 QoQ 2Q 2020 YoY 2,00 0 Net financing and investment income 518 480 +8% 379 +37% 1,800 1,6 00 +94.1% 1,4 00 Fee and other income 430 107 +303% 109 +295% 948 Total operating i
Slide 43: Treasury
Treasury Strong net income growth driven by investment income growth Total Operating Income (SARmn) SAR (mn) 2Q 2021 1Q 2021 QoQ 2Q 2020 YoY 3,50 0 3,000 +111.4% Net financing and investment income 1,502 1,201 +25% 668 +125% 2,500 Fee and other income 119 170 -30% 99 +21% Total operating income 1,62
Slide 44: Rajhi Capital
Rajhi Capital Strong net income growth driven by increased brokerage income Total Operating Income (SARmn) SAR (mn) 2Q 2021 1Q 2021 QoQ 2Q 2020 YoY 700 600 +69.6% Net financing and investment income 17 14 +22% 11 +46% 500 Fee and other income 242 280 -14% 141 +71% Total operating income 258 294 -12%
Slide 45: IR Contact Information
aall pap Al Rajhi Bank IR Contact Information
Slide 46: Additional Information
Additional Information Contact investor relations for more information Upcoming Events in 3Q 2021 Mr. Rayan Alshuaibi 31st Aug - 2nd Sep JPM MENA Investment Forum 8th - 9th Sep Goldman Sachs CEEMEA & LatAm Financials Symposium Head of Investor Relations 8th - 10th Sep Citi GEMS Conference Tel: +966
Slide 47: 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