Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q4 2022 Earnings Presentation
49 slides from Banque Saudi Fransi's earnings presentation, 2023
Slide 1: Investor Presentation 4Q 2022
3 Column Slides Banque Saudi Fransi Investor Presentation 4Q 2022 Internal Use
Slide 2: Contents
INVESTOR PRESENTATION 4Q 2022 Contents BSF Profile 3 Operating Environment 6 Strategy 10 Financial Performance 18 Outlook & Guidance 35 Segmental Performance 37 Performance Track Record 43 Appendix 46 Disclaimer 49 Internal Use
Slide 3: BSF Profile
INVESTOR PRESENTATION 4Q 2022 BSF Profile Internal Use
Slide 4: 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 Retail Clients Branches Employees (Million) 1.2 82 3,105 p +2.5% year-on-year q -3 year-on-year p +3.6% year-on-year FY 22 Operating Income Diversity (SAR Mn) 8,017 Headquartered in Riyadh: S
Slide 5: Solid market parameters and credit ratings
PROFILE | SHARE PROFILE AND CREDIT RATINGS Solid market parameters and credit ratings Share Parameters 31 Dec 2022 Total Shareholder Return (TSR) 160 Closing price (SAR) 40.60 140 52 weeks range (SAR) 36.0 - 57.2 120 Shares issued (million) 1,205 100 80 60 Market capitalization (SARbn) 48.94 40 Mark
Slide 6: Operating Environment
INVESTOR PRESENTATION 4Q 2022 Operating Environment Internal Use
Slide 7: 2022 characterized by rising rate environment and higher oil prices
OPERATING ENVIRONMENT | ECONOMIC CONDITIONS 2022 characterized by rising rate environment and higher oil prices Brent Oil Price / Barrel (USD) Tadawul Index ▪ Oil prices rose to USD 120/bl in 2Q 2022, following Ukraine-Russia disruption, but declined to USD 101/bl in 4Q 2022. 101 10,425 ▪ Interbank
Slide 8: GDP growth for Saudi Arabia expected to have reached 8.7% in 2022
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK GDP growth for Saudi Arabia is expected to have reached +8.7% in 2022 Real GDP growth (%) Brent Oil Price / Barrel (USD) ▪ GDP growth for Saudi Arabia is expected to have reached 8.7% in 2022 following a post-covid recovery of 3.2% growth in 2021. 8.70% 101 ▪
Slide 9: Saudi banking sector well positioned for 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 (%) 2,349 17.8%|19.4% 2.7% +11% 2.7% 20.4% 20.3% 19.4% 20.3% 19.9% 19.4% 2,349 2.2% 2,059 2.0% 1.9% 1.9% 1,783 1.6% 1,405 1,
Slide 10: Strategy
INVESTOR PRESENTATION 4Q 2022 Strategy Internal Use
Slide 11: Mission and values
STRATEGY | MISSION AND VAUES In 2018 we redefined our purpose to build a dynamic, energized and modern culture… OUR MISSION OUR VALUES To become the TRUE TO OURSELVES, ALWAYS most modern, We are honest with one another, even at the risk of temporary disharmony. It is never personal. innovative and U
Slide 12: Cohesive, best-in-class executive management team
STRATEGY | MANAGEMENT TEAM …and set out to build a cohesive, best-in-class executive management team… Bader Alsalloom Ramzy Darwish Sander Aardoom Chief Executive Officer Chief Financial Officer Deputy Chief Financial Officer ▪ BSF: appointed Apr-21 ▪ BSF: appointed CFO Dec-22 ▪ Business Lease Group
Slide 13: 5-year strategic plan called LEAP
STRATEGY | 5-YEAR STRATEGIC PLAN …who implemented a comprehensive 5-year strategic plan called ‘LEAP’ to modernize and re-imagine the bank 2018 2023 POSITIONED TO ‘LEAP’ Baseline Aspiration STRATEGIC PILLARS ASSET MARKET SHARE ASSET MARKET SHARE 8.3% Solidify our Scale up in 10% leadership position
Slide 14: Focused on delivering strategic outcomes
STRATEGY | 5-YEAR STRATEGIC PLAN We are clearly focused on delivering strategic outcomes STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder return (TSR) Return on average equity (ROAE) Basic earnings per share(EPS) Dividends per share (DPS) Generate top-q
Slide 15: Positive trends in most strategic outcomes during 2022
STRATEGY | 2022 PROGRESS | STRATEGIC OUTCOMES Positive trends in most strategic outcomes during 2022 STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder return (TSR) Return on average equity (ROAE) Basic earnings per share (EPS) Dividends per share (DPS) T
Slide 16: Excellent progress across four strategic pillars
STRATEGY | 2022 HIGHLIGHTS Excellent progress made in 2022 across our four strategic pillars… Corporate Banking Retail Banking Private Banking Global Markets Group Corporate Loans Corporate Deposits Retail Loans Net Income PB Loans Net Income Investments Fee & Other Income SAR Billion SAR Billion SA
Slide 17: Improvements in key strategic enablers
STRATEGY | 2022 HIGHLIGHTS …supported by solid improvements in key strategic enablers Technology & Digitization Customer Experience & Brand Risk People Bankwide NPS (%) NPL Ratio (%) FransiMobile Transactions ENPS # million 72% % 66% 68% 2.64% 2.78% 2.53% 2.54% 18.0 +2.3ppts 62% p +35.0% YoY 2019 20
Slide 18: Financial Performance
INVESTOR PRESENTATION 4Q 2022 Financial Performance Internal Use
Slide 19: Balanced asset and liability growth, solid income growth
FINANCIAL PERFORMANCE | HIGHLIGHTS Balanced asset and liability growth, coupled with solid income growth and improved profitability BALANCE SHEET Loans & Advances Investments Customers' Deposits ▪ High quality loan growth of 8% YoY driven by 7% commercial and 8% consumer lending growth. 159.0 p +8%
Slide 20: Balance sheet growth driven by lending
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Balance sheet growth driven by lending, with commensurate deposit growth ▪ Growth in total assets of 8% YoY, mainly driven by healthy 8% loan growth. Total Assets Movement (SAR Bn) ▪ Liabilities grew by 10% during 2022 from 11% deposit growth and debt
Slide 21: Net income grew 4% year-on-year
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income grew 4% year-on-year as solid income growth was partly offset by increased impairment charge Net Income Movement (SAR Mn) ▪ Net income for 2022 grew 4% YoY to SAR 3,575mn from 12% growth in operating income, partly offset by a 61% rise i
Slide 22: Healthy loan growth for 2022
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy loan growth for 2022; 2H 2022 impacted by repayments Total Loans & Advances (SAR Bn) Commercial Loans Movement YoY (SAR Bn) Loans & Advances Composition (SAR Mn) 159.0 129.5 159,012 +8% +7% Consumer 18.6% Commercial 158.5 159.0 2.9 2.0 0.4 1.5 129.5
Slide 23: Modest 2% increase in the investment portfolio
FINANCIAL PERFORMANCE | INVESTMENTS Modest 2% increase in the investment portfolio Investments Movement by Type (SAR Bn) Investments Composition by Type ▪ Investments increased 2% during 2022, (SAR Mn) reflecting [gradual reinvestments of maturities during the year and 44.5 44,518 appreciation of fl
Slide 24: Strong 11% growth in deposits YoY
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Strong 11% growth in deposits YoY Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) ▪ Deposits grew 11% during 2022, mainly from IBDs. ▪ IBD increased 31% YoY from 34% growth in Corporate and 26% growth in Retail deposits. 157.6 157.6 ▪ NI
Slide 25: NII growth of 13%
FINANCIAL PERFORMANCE | NET INTEREST INCOME NII growth of 13% from earning assets growth and margin expansion Net Interest Income Movement (SAR Mn) ▪ NII for 2022 grew 13% YoY to SAR 6,427mn on 11% growth in (simple) average earning assets and a 4bps margin expansion. 6,427 ▪ Interest income rose 34
Slide 26: Improved loan yields 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 YTD NIM increased 4bps YoY due to improved loan yields, partly offset by the hedging impact and higher funding
Slide 27: BSF positively positioned for a rising rate environment
FINANCIAL PERFORMANCE | RATE SENSITIVITY BSF is positively positioned for a rising rate environment Exposure to Interest Rate Risk as at 31 December 2022 (SAR Bn) • At 31 December 2022, BSF estimated a 1-year NIM sensitivity of a 100bps rates rise at 10bps; this would translate into SAR 219mn higher
Slide 28: Non-interest income grew 11% YoY
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income grew 11% YoY from higher exchange and trading income ▪ Non-interest income for 2022 grew 11% YoY to SAR 1,591mn from improved exchange and Non-Interest Income Movement (SAR Mn) trading income. ▪ Net fee & commission income grew 1% YoY t
Slide 29: Operating expenses growth of 8%
FINANCIAL PERFORMANCE | OPERATING EXPENSES Operating expenses growth of 8% from higher employee-related and G&A expenses Operating Expenses Movement (SAR Mn) ▪ Operating expenses increased 8% YoY to SAR 2,654mn in 2022 due to: • higher general and administrative expenses from increased business acti
Slide 30: Cost of risk increased by 18bps to 0.85%
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Cost of risk increased by 18bps YoY to 0.85% for 2022 Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 476 476 0.85% 0.99% u +20 bps year-on-year +1595% +1595% 476 0.85% 348 476 0.80% 0.76% 0.76% 0.74% +37% 0.67% 0
Slide 31: NPL ratio trend impacted by Commercial book migration
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL ratio trend impacted by isolated pockets of Commercial book migration; underlying credit quality healthy Non Performing Loans & Advances Non Performing Loans & Advances (SAR NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) Bn) 4.2 4.2 2.54% 3.0% u +6 bps yea
Slide 32: NPL coverage declined 2.8ppts YoY to 119.9%
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL coverage declined 2.8ppts YoY to 119.9% due to isolated pockets of Commercial book migration; underlying coverage improved Allowance For Impairment (SAR Bn) Allowance For Impairment (SAR Bn) NPL Coverage Ratio (%) Commercial NPL Coverage (%) 5.0 5.0 119.9%
Slide 33: Capital ratios declined during 2022
FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios declined during 2022 from RWA growth, dividends and investment MTM Total Capital (SAR Bn) RWA (SAR Bn) ▪ Total capital was stable at SAR 42.8bn during 2022 as net income generation was mostly offset by dividends and negative MTM on investment sec
Slide 34: Liquidity remains strong and within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR & NSFR (%) HQLA (SAR Bn) ▪ LCR improved by 17.5ppts during 2022 to 196%. ▪ NSFR strengthened 4ppts to 122% as at 31 December 2022. 196% 37.7 ▪ The bank continues to manage the LTD ratio for optimu
Slide 35: Outlook and Guidance
INVESTOR PRESENTATION 4Q 2022 Outlook and Guidance Internal Use
Slide 36: Improving profitability expected in 2023
FINANCIAL PERFORMANCE | GUIDANCE Improving profitability expected in 2023 from solid loan growth, continued NIM expansion, positive jaws and lower cost of risk Metric 2022 Guidance 2022 Outcome 2023 Guidance Drivers Financing Growth Financing Growth Financing Growth LOANS & Balanced growth of consum
Slide 37: Segmental Performance
INVESTOR PRESENTATION 4Q 2022 Segmental Performance Internal Use
Slide 38: Profitability driven by growth in Retail and Corporate
SEGMENTAL PERFORMANCE | SUMMARY Profitability driven by growth in Retail and Corporate, partly offset by lower Treasury and Investment Banking and Brokerage Operating Income Movement (SAR Mn) Net Income Before Zakat Movement (SAR Mn) 8,017 4,004 +12% +4% 600 8,017 274 38 391 3,837 4,004 7,128 (93) (
Slide 39: Retail: higher profits YoY from higher net interest income
SEGMENTAL PERFORMANCE | RETAIL Higher profits YoY from higher net interest income Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 803 694 +51% 646 +58.4% p year-on-year +52% SAR Million 36 694 355 625 41 803 48 460 71 Fee & other income 529 (158) 52 +11%
Slide 40: Corporate: modest rise in profitability
SEGMENTAL PERFORMANCE | CORPORATE Modest rise in Corporate profitability as operating income growth partly offset by increased impairments Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,500 1,055 903 +45.7% p year-on-year +3% +48% SAR Million 1,055 50
Slide 41: Treasury: net income declined 8% YoY
SEGMENTAL PERFORMANCE | TREASURY Net income declined 8% YoY from lower investment income Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 372 1,464 193 -44.7% q year-on-year -8% -14% SAR Million 432 429 372 1,588 77 6 1,464 84 124 179 Fee & other income -
Slide 42: Investment Banking and Brokerage: profitability decline
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Profitability decline due to lower brokerage fees Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 236 120 37 +61.3% p year-on-year -8% +15% SAR Million 41 120 258 236 104 99 Fee & other income (50)
Slide 43: Performance Track Record
INVESTOR PRESENTATION 4Q 2022 Performance Track Record Internal Use
Slide 44: Balance Sheet Metrics
PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 159.0 232.1 157.6 19.92% +7% +5% 21.57% 21.09% +2% 19.77% 19.92% 19.20% 147.8 159.0 215.8 232.1 148.4 157.6 20.56% 19.94% 130.6 190.3 194.1 132.8 142.0 18.32% 18.90% 12
Slide 45: Income Statement Metrics
PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 8,017 3.06% 33.1% 0.85% +4% 2.07% 3.04% 3.02% 3.06% 33.7% 33.3% 33.6% 34.3% 33.1% 2.85% 2.97% 8,017 6,799 6,873 7,045 7,128 0.79% 0.85% 0.72% 0.67% +12% YoY 2
Slide 46: Appendix
EARNINGS PRESENTATION 4Q 2022 Appendix Internal Use
Slide 47: Summary of accounting restatements in 4Q 2022 (1)
APPENDIX | RESTATEMENTS Summary of accounting restatements in 4Q 2022 (1) SAR (Mn) 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 Original Special commission income 1,407 1,459 1,542 1,460 5,869 1,492 1,767 2,188 2,569 8,016 Reclassified Processing fees 100 90 69 67
Slide 48: Summary of accounting restatements in 4Q 2022 (2)
APPENDIX | RESTATEMENTS Summary of accounting restatements in 4Q 2022 (2) SAR (Mn) 1Q 2021 2Q 2021 3Q 2021 4Q 2021 FY 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 FY 2022 Original Cost to income ratio 32.9% 35.8% 31.8% 36.0% 34.0% 32.6% 34.2% 31.8% 31.2% 32.4% Restated Cost to income ratio 33.2% 36.0% 32.0%
Slide 49: Disclaimer
INVESTOR PRESENTATION 4Q 2022 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