Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q3 2021 Earnings Presentation
49 slides from Al Rajhi Bank's earnings presentation, 2021
Slide 1: Al Rajhi Bank Investor Presentation 3Q 2021 Results
Al Rajhi Bank Investor Presentation 3Q 2021 Results
Slide 2: 3Q 2021 Investor Presentation
3Q 2021 Investor Presentation 03 The World’s Leading Islamic Bank 14 Bank of The Future Strategy 25 KSA Macro-Economic Environment 28 3Q 2021 Financial Highlights 42 3Q 2021 Operating Results 47 IR Contact Information 3Q2021 Investor Presentation 2
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, 9M 2021 Presence & Branches, 9M 2021 100% 78% Jordan Kuwait Islamic NPB Deposits Customers 10 2 526 4,910 Branches ATMs 11.6 million 72% 89:11 290,302 215 NPS Digital:Manual 526 POS Remittance 16 Centers Saudi Arabia Malaysia Largest network
Slide 5: Top Facts About Al Rajhi Bank
Top 10 Facts About Al Rajhi Bank Largest Islamic Bank worldwide #1 Bank in KSA 1 (by Assets & Market Cap) 6 (by number of customers) #1 Retail Bank in Middle East #1 Distribution network in Middle East 2 (Retail Deposits & Income) 7 (by # of Branches, POS, ATMs, Remittance Centres) One of the highes
Slide 6: Robust balance sheet with 78% non-profit bearing deposits
The World’s Leading Islamic Bank | Robust balance sheet with 78% non-profit bearing deposits as of 9M 2021 Total Assets (SARbn) Capital Ratios (%) 0 +69.8% 0 23.3% 583 20.1% 19.9% 469 19.1% 22.2% 17.9% 384 0 343 364 19.0% 18.8% 18.0% 0 16.8% 0 2017 2018 2019 2020 9M 21 2017 2018 2019 2020 9M 21 T1 r
Slide 7: Outstanding foundation and strong returns
The World’s Leading Islamic Bank | Outstanding foundation and strong returns ROE (%) ROA (%) 0 0 23.6% 0 20.5% 2.76% 2.72% 0 19.9% 0 2.68% 2.56% 0 17.2% 0 0 0 0 7.0%* 0 1.04%** 0 0 0 0 0 2017 2018 2019 2020 9M 21 2017 2018 2019 2020 9M 21 * As a result of Zakat Settlement – ROE before Zakat is 19.8%
Slide 8: ARB has the largest retail banking business in the Middle East
What sets Al Rajhi Bank Apart | ARB has the largest retail banking business in the Middle East Market Share - Demand Deposits Market Share - Deposits 1 0 0 +240bps +680bps 0 11.6 0 0 0 23.2% 26.1% 0 24.8% 25.2% 24.3% 19.4% 0 23.7% 0 0 16.4% 17.3% 17.3% Million 0 0 0 0 0 0 Customers 0 0 0 2017 2018 2
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 1 1 +20bps +300bps 0 0 0 0 28.2% 29.2% 0 0 0 26.6% 26.7% 26.2% 27.0% 26.8% 0 26.2% 26.8% 27.6% 0 0 0 0 0 0 0 0 0 0 0 0 2017 2018 2019 202
Slide 10: Al Rajhi Bank has a unique franchise
Al Rajhi Bank has a unique franchise | We maintain a leading market share across key products #1 in Personal Loans #1 in Auto Loans Market Share - Personal Loans Market Share - Auto Loans 1 +490bps -430bps 1 1 1 1 44.5% 52.7% 51.3% 40.6% 48.4% 1 1 39.6% 38.7% 37.7% 1 46.8% 47.6% 0 0 0 0 0 0 0 0 0 0
Slide 11: Al Rajhi Bank Market Performance
Al Rajhi Bank Market Performance | ARB maintained its momentum and outperform its peer group • Share Price Performance Top 3 KSA Banks (Daily; Rebased to 100) RAJHI SNB Riyad TASI 30 Sep 2021 300 RAJHI, 287 Key Metrics Closing Price SAR 122.6 250 Market Cap SAR 306.5 bn Riyad, 230 Market Cap / % Ind
Slide 12: ESG Highlights | 3Q 2021
ESG Highlights | 3Q 2021 91 ISO/DIS 37301:2020 kidney transplants Compliance through Shifaa platform Window film at 7 ISO 22301:2019 94 branches to reduce SAR 49mn batches of Graduate Business Continuity women-owned energy use Donation in 2020 Development Program Management suppliers engaged since 2
Slide 13: Awards | Recent international recognition
Awards | Recent international recognition • Global Awards • Regional Awards Best Bank in GCC Best Bank in Saudi Arabia Fastest Growing Bank in KSA (3 consecutive years 2017, 2018, 2019) Most Innovative Bank in KSA Best Retail Bank in KSA Strongest Islamic Retail Bank in the World Stronge
Slide 14: Since inception of ABCDE Strategy, the world has changed
Since inception of ABCDE Strategy, the world has changed
Slide 15: ABCDE Strategy Initiatives & Outcomes
ABCDE Strategy Initiatives & Outcomes | Al Rajhi Bank 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 force field of risks and opportunities KSA Forces Structural Rates Changes Covid-19 Global Forces Regulations Al Rajhi Bank Vision 2030 Global Forces Digital Competitive Sustainability Environment KSA Forces 3Q2021 Investor Presentation 16
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 3Q2021 Investor Presentation 18
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 A growing Mobile / Digital addressable Market Maturity market Home-ownership Income, Wealth, Lifestyle, Demographi
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 | Strategy 2021–2023
We are building the “Bank of the Future” | Strategy 2021 – 2023 Bank OF The Future Build on our core Outperform our competition Transform technology Focus on new client needs Grow Retail including Private Sector Become Leading Finance Company Customer Experience Digital Core Banking Platform Data Le
Slide 22: Good progress made on strategy implementation
In strong position to deliver the “Bank of the Future” | Good progress made on strategy implementation Bank OF The Future Build on our core Outperform our competition Transform technology Focus on new client needs Grow Retail including Private Sector Customer Experience Digital Core Banking Platform
Slide 23: ARB is well positioned to win the payments market
ARB is well positioned to win the payments market | Leveraging on strong and leading market share KSA is digitizing the payments market: • KSA Govt. & SAMA have launched a series of successful initiatives to digitize payments • New Fintech licenses & other new entrants have increased Bank OF The Fut
Slide 24: neoleap's Objectives and Product offering
neoleap‘s Objectives and Product offering | Ambition shaped the DNA and Culture neoleap’s objectives: • Offer seamless in-store and online payment acceptance solutions • Be the third-party processing of choice of banks and financial institutions through local presence, technological aleadership and
Slide 25: KSA's Macro-Economic Environment
KSA’s Macro–Economic Environment
Slide 26: KSA Economic Outlook
KSA Economic Outlook | Improved economic conditions compared to 2020 Highlights GDP Growth/Brent Oil Price 71.2 68.6 66.0 80.0 • IMF has revised up 2021 GDP growth forecast to 2.8% driven by 64.4 70.0 recovery in economic activities and supported by oil prices 54.1 7.2 60.0 41.7 5.2 Saudi budget per
Slide 27: Banking Sector Highlights
Banking Sector Highlights | Growth in mortgage lending continues to drive credit growth Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARbn) 80.1% 77.4% 77.1% 79.5% 75.0% • REDF resumes tenor cap to 25 years with customers bearing the 80.0% additional 5 years 2,500 2,009 2,058 70.0% 1,
Slide 28: 3Q 2021 Financial Highlights
3Q 2021 Financial Highlights
Slide 29: ARB delivered excellent results in the first nine-months of 2021
ARB delivered excellent results in the first nine-months of 2021 | Results are in line with or ahead of expectations 33.3% Growth in financing driven by mortgages 26.4% Growth in liabilities Healthy LDR Strong 24% YTD Net Financing Total Liabilities Loan to Deposit Ratio Balance Sheet Growth 315.7bn
Slide 30: Trends ahead of expectations | Guidance revisions
Trends ahead of expectations | Guidance revisions driven by solid growth in first 9M 2021 FY 2020 FY 2021 9M 2021 Guidance Revision Actual Latest Guidance Actual Balance Sheet Financing SAR 315.7bn 32% - 35% +33.3% 38% - 41% Net profit margin 4.71% -40 bps to -50 bps -39 bps -45 bps to -55 bps Profi
Slide 31: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Strong 24% YTD balance sheet growth driven by Financing and Investments SAR (mn) 3Q 2021 2Q 2021 QoQ 4Q 2020 YTD Total Assets (SARbn) +35.4% 900 800 Cash & balances with SAMA 34,420 36,914 -7% 47,363 -27% Due from banks & other FI 27,518 26,213 +5% 28,655 -4% 583 700 600 5
Slide 32: Balance Sheet Trends (2)
Balance Sheet Trends (2) | Financing growth driven by all lines of business Financing, Net (SARbn) Financing, Net Mix By Segment Retail Financing Mix By Segment (SARbn) (SARbn) +45.3% Corporate Auto Loans 550 SAR 66bn SME SAR 16bn 421.0 14.5 16% SAR 15bn 5% Credit Cards 450 Mortgage 0.3 3% SAR 4bn 3
Slide 33: Balance Sheet Trends (3)
Balance Sheet Trends (3) | Balance sheet growth funded by NPB deposits Total Liabilities (SARbn) Total Customers' Deposits Mix By Total Liabilities Mix By Segment Type (SARbn) (SARbn) 600 +38.3% Customers’ Time 550 519.0 Investments Treasury 26.0 Corporate SAR 107bn SAR 26bn SAR 183bn 500 23% 5% Oth
Slide 34: Net Income Trends
Net Income Trends | Solid net profit growth of 44% YoY SAR (mn) 9M 21 9M 20 YoY 3Q 21 3Q 20 YoY Net Income For The Period Before Zakat (SARmn) 7,000 Net financing & investment income 15,037 12,275 +23% 5,215 4,196 +24% +42.7% Fee from banking services, net 2,819 1,796 +57% 976 649 +50% Exchange Inco
Slide 35: 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) 25,000 11,000 +27.7% 20,000 +26.4% 9,000 6,336 6,578 1,023 153 18,862 5,794 5,948 2,762 15,000 7,000 5,152 14,927 5,000 10,000
Slide 36: Expenses Trends
Expenses Trends | Cost efficiencies resulted in higher positive jaws Operating Expenses (SARmn) 3,500 Operating Expenses Growth Drivers By Type (SARmn) 4,300 +1.8% +3.2% 3,000 2,500 3,800 107 42 5,136 1,724 1,763 1,730 1,754 4,978 8 1,652 2,000 3,300 1,500 2,800 1,000 2,300 500 1,800 0 3Q 20 4Q 20 1
Slide 37: 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) 0 3,000 0 +17.5% 2,500 0 0.78% 0.75% 2,000 693 0.67% 0 0.64% 0.62% 2,890 0 1,500 2,460 (263) 0 1,000 0 500 0 (0) 0 9M 20 FY 20 1Q 21 1H 21 9M 21 9M 20 Retail N
Slide 38: Asset Quality Trends (2)
Asset Quality Trends (2) | Healthy stage coverage reflecting prudent risk management Net Impairment Charges (SARmn) Movement in Net Impairment (SARmn) 1,000 +27.7% +8.6% 900 800 2,550 577 584 594 700 550 329 465 1,755 600 2,050 500 1,616 400 (190) 1,550 300 200 1,050 100 0 550 3Q 20 4Q 20 1Q 21 2Q 2
Slide 39: Liquidity Trends
Liquidity Trends | Liquidity remains comfortably within regulatory requirements HQLA (SARbn) Loan to Deposits Ratio (SAMA) (%) +29.5% 1 150 Regulatory Maximum 90% 130 1 93.1 110 87.7 83.2% 82.7% 81.4 80.6% 1 79.7 79.9% 78.8% 71.9 90 1 70 50 1 30 1 10 1 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 3Q 20 4Q 20 1Q 21
Slide 40: Capitalization Trends
Capitalization Trends | Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) 600 +31.2% +22.0% 100 90 500 395.8 80 71.0 33.3 61.6 323.0 58.2 400 70 301.7 4.5 30.8 33.3 3.6 60 3.5 3.3 300 9.3 50 8.4 40 358.8 66.5 200 30 54.9 58.1 100 262.5 280.4 20 10 0 0 3Q 20 4Q 20 3Q 21
Slide 41: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) 0 0 3 +42.7% 3.94% 4.00% 3.98% 2 3.56% 1.52 0 3.47% 1.33 1.44 2 1.25 1.06 0 1 0 1 0 0 0 9M 20 FY 20 1Q 21 1H 21 9M 21 3Q 20 4Q 20 1Q 21 2Q 21 3Q 21 Return on Equity (%) Return on Assets (%) 0
Slide 42: 3Q 2021 Operating Results
3Q 2021 Operating Results
Slide 43: Retail Banking
Retail Banking | Strong growth supported net income growth YoY Total Operating Income (SARmn) YoY QoQ YoY SAR (mn) 9M 21 9M 20 3Q 21 2Q 21 3Q 20 % % % +9.6% 6,000 Net financing and 5,000 8,708 8,476 +2.7% 2,618 3,015 -13.2% 2,592 +1.0% investment income 3,442 3,695 3,509 Fees and other income 1,838
Slide 44: Corporate Banking
Corporate Banking | Net income growth driven by growth and lower impairment charges Total Operating Income (SARmn) YoY QoQ YoY SAR (mn) 9M 21 9M 20 3Q 21 2Q 21 3Q 20 1,600 % % % 1,400 +53.0% Net financing and 1,200 1,079 investment income 1,811 1,521 +19.1% 813 518 +56.9% 607 +34.0% 948 Fees and oth
Slide 45: Treasury
Treasury | Strong net income growth driven by investment income growth Total Operating Income (SARmn) YoY QoQ YoY SAR (mn) 9M 21 9M 20 3Q 21 2Q 21 3Q 20 3,000 % % % +70.5% Net financing and 2,500 4,467 2,243 +99.1% 1,763 1,502 +17.4% 987 +78.7% 1,942 investment income 1,622 2,000 Fees and other inco
Slide 46: Al Rajhi Capital
Al Rajhi Capital | Continue to maintain a leading market share in brokerage Total Operating Income (SARmn) YoY QoQ YoY SAR (mn) 9M 21 9M 20 3Q 21 2Q 21 3Q 20 450 % % % 400 -17.0% Net financing and 294 51 35 +48.5% 21 17 +25.1% 11 +91.4% 350 279 investment income 300 259 258 Fees and other income 715
Slide 47: IR Contact Information
IR Contact Information
Slide 48: Additional Information
Additional Information | Contact investor relations for more information Rayan Alshuaibi Upcoming Events in 4Q 2021 Head of Investor Relations 8th – 9th November GS 13th Annual CEEMEA Conference +966 (11) 828 1972 9th – 10th November BofA Global Research MENA Conference alshuaibirs@alrajhibank.com.s
Slide 49: 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