Saudi National Bank · TADAWUL:1180
Saudi National Bank — Q2 2021 Earnings Presentation
27 slides from Saudi National Bank's earnings presentation, Aug 23, 2021
Slide 1: 2Q 2021 Earnings Presentation
2Q 2021 Earnings Presentation Saudi National Bank Riyadh | 23 August 2021 SNB | 2Q 2021 | Earnings Presentation
Slide 2: Disclaimer
Disclaimer The Saudi National Bank (SNB) prepared this presentation on a proprietary basis as general background information about the activities of SNB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by SNB is
Slide 3: Pro-forma financial statements are most relevant comparatives
Pro-forma financial statements are most relevant comparatives The pro-forma financial information consists of the unaudited pro-forma condensed consolidated statement of financial position of NCB and SAMBA (together referred to as ‘‘the Group’ or “SNB”’) as at March 31, 2021, as if the merger has ta
Slide 4: SNB Overview
SNB Overview SNB is Saudi Arabia's largest Banking Group with a well-diversified business model, leading client offering, and international presence Our Purpose Our Presence Our Performance (Pro-forma) Subsidiaries: TFKB (Turkey) Operating Income Net Inc. to equity holders Saudi National Bank " 316
Slide 5: Executive Summary
Executive Summary Merger integration and strategic execution progressing well Excellent progress made with Highlights Budgeted Integration Cash Target Cost Synergies Ongoing activities Spend the merger integration and SNB Brand Launched Rebranding products, premises synergies expected to be SAR
Slide 6: Merger Update
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Slide 7: Merger Status Summary
Merger Status Summary Accelerated progress on all key work streams leading to sooner Operational Day 1, from planned 2H22 to YE21 Completed Activities during 2Q 2020 Ongoing Activities Jun 2020 Oct 2020 Apr 2021 Jun 2021 Jul 2021 Dec 2021 Operational & Merger Announced Merger Signed SNB LD 1 SNB Bra
Slide 8: Synergies & Integration Cost
Synergies & Integration Cost Realisation of targeted cost synergies expected to be largely achieved by 2022 Targeted Realization of Cost Synergies (%) 1 Targeted Cost Synergies Sources of synergies 800+ 100% Benefit from the combined talent of SAR Million the two banks and natural FTE 1 80% 1 On t
Slide 9: Financial Performance Update 2Q2021
Financial Performance Update 2Q2021
Slide 10: PPA accounting
PPA accounting Purchase price allocation exercise in progress with preliminary goodwill assessment amounting to SAR 28.5 billion, and intangible assets of SAR 11.7bn Transaction perimeter and structure Summary of Changes in Goodwill (SARbn) On 11 October 2020 , NCB entered into a merger agreement
Slide 11: Summary of fair value adjustments on SAMBA book value
Summary of fair value adjustments on SAMBA book value SAMBA’s adjusted net asset value amounted to SAR 48.2 billion versus the pre-PPA value of SAR 45.7 billion Application of PPA to the NCB-SAMBA merger PPA Fair Value Adjustments SNB is required to align the book value of SAMBA’s assets and liabi
Slide 12: Accounting treatment of goodwill and intangibles
Accounting treatment of goodwill and intangibles Goodwill is subject to annual impairment testing and intangible assets are amortized through the income statement Goodwill and Intangibles (SARbn) 40.2 Intangible assets Intangible assets 11.7 ~90% of intangible assets are driven by core customers’
Slide 13: Financial Performance Dashboard
Financial Performance Dashboard Progress on key financial metrics Balance Sheet 2Q 21 Total Assets 2Q 21 Financing, Net 2Q 21 Total Assets 2Q 21 Financing, Net 861.5 508.0 896.4 503.2 year-to-date year-to-date year-to-date year-to-date SAR SAR SAR SAR Billion -4% Billion +1% Billion +50% Billion +45
Slide 14: Balance Sheet Summary
Balance Sheet Summary Total assets declined 4% YTD primarily from redeployment of reverse repo balances with SAMA and sales of investment portfolio securities Total Assets Movement YTD (SARbn) Total Assets (SARbn) Goodwill & intangibles, net -4% SAR 39.9bn +50% 896.4 5.3 861.5 40.2 896.4 896.4 -0.3
Slide 15: Financing and advances
Financing and advances Financing growth of 1% YTD from strong 25% growth in mortgages partly offset by expected Corporate repayments and FI maturities Financing and Advances, Net Movement YTD (SARbn) Financing & Advances, Net (SARbn) +1% +45% 502.7 26.6 508.0 0.3 503.2 503.2 346.7 -8.1 -10.5 -2.7 -5
Slide 16: Investments
Investments Opportunistic capital gains realized resulting 7% lower investments; 85% of portfolio comprised of Saudi Government securities and other investment grade securities Investments, Net Movement YTD (SARbn) Investments, Net (SARbn) -7% +58% 228.9 246.1 2.2 229.2 228.9 144.9 -12.6 -6.5 -0.3 -
Slide 17: Deposits
Deposits Continued CASA growth and optimized deposit mix for improved Balance Sheet optimization Customers' Deposits Movement YTD (SARbn) Customers' Deposits (SARbn) -6% Domestic International +41% SAR -33.6bn (-6%) SAR -2.4bn (-7%) 624.1 12.8 588.1 0.6 588.1 0.0 588.1 416.4 -46.5 -2.9 -6% +3% -29%
Slide 18: Income Statement Summary
Income Statement Summary Net income after Zakat and tax growth of 7% YOY driven mainly by higher operating income Net Income After Zakat and Income Tax Attributed to Equity Holders Movement YoY Total Operating Income (SARmn) (SARmn) +32% +7% 13,274 10,071 578 139 28 43 7,668 7,148 -240 -30 -839 1H 2
Slide 19: NSCI & Margin
NSCI & Margin Stable NSCI as growth in average earnings assets was offset by lower margin NSCI Margin (%) Net Special Commission Income Movement YoY (SARmn) NSCI (SARmn) 0 -0% +23% 0 4.31% 9,962 1,298 8,115 11,068 1,109 11,013 0 278 9,962 3.15% 0 3.09% 2.88% (1,524) (6) 0 2.85% (639) (293) (1,330) 1
Slide 20: Fee & Other Income
Fee & Other Income Fee and other income increased 17% YOY from improved investment-related and brokerage income Fee and Other Income Movement YoY (SARmn) Fee and Other Income (SARmn) +17% +69% 875 4,426 3,312 3,793 224 3,312 1,956 -149 -255 -63 -1,113 +36% -8% +62% -14% +241% Fee & Inv. mgt & Exchan
Slide 21: Operating Expenses
Operating Expenses 5% higher operating expenses attributable to 10% higher VAT and IT related costs which were partially offset by realized synergy savings to date Operating Expenses Movement YoY (SARmn) Operating Expenses (SARmn) +5% +34% 4,754 42 272 4,993 4,301 293 43 9 4,301 3,221 -69 -5 -1,036
Slide 22: Credit Impairments & Cost of Risk
Credit Impairments & Cost of Risk Cost of risk stood at 69bps vs. 73 bps the previous year on a pro-forma basis; Reported cost of risk including merger related items reached 126bps Net Impairment Charge for Financing and Advances Movement YoY (SARmn) Net Impairment (SARmn) -7% +118% Wholesale SAR 27
Slide 23: Credit Quality
Credit Quality Healthy NPL ratio and NPL coverage ratio levels Credit Impaired Financing Movement YTD (SARbn) +23% 2.9 10.4 1.3 7.5 6.1 0.2 -0.1 +23% +30% +31% -8% NPLs Retail Wholesale International NPLs POCI Credit impaired financing 4Q 20 2Q 21 2Q 21 REPORTED REPORTED REPORTED, INCL. POCI NPL Rat
Slide 24: Capitalization
Capitalization Capital position comfortably above regulatory minima, despite modest decline in capital ratios due to merger impact Reconciliation of Shareholders' Equity to Capitilization (SARbn) Total Capital Movement YTD (SARbn) -13% +49% 147.3 39.7 128.5 12.2 122.2 6.3 128.5 5.3 2.0 107.4 2.6 110
Slide 25: Liquidity
Liquidity Strong liquidity profile maintained NSFR (%) SAMA LTD Ratio (%) 123% 122% 121% 800.0 1 27 700.0 1 Regulatory ceiling 647.2 90% 600.0 27 1 500.0 27 1 413.3 420.7 400.0 73.7% 27 1 75.7% 71.9% 300.0 27 1 200.0 27 1 100.0 27 0.0 1 4Q 20 1Q 21 2Q 21 4Q 20 1Q 21 2Q 21 Total available stable fund
Slide 26: Outlook and Guidance
Outlook and Guidance Continued drive on strategic priorities and focus on operating efficiencies; supported by the improving economic outlook Macro-Economic Outlook1 SNB Financial Guidance 2020 2021 Outlook Baseline 2021 Guidance2 Oil Price USD 40 / bbl USD 60 / bbl Financing growth SAR 502.7bn +6%
Slide 27: Q&A 2Q2021
Q&A 2Q2021