Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q3 2023 Earnings Presentation
54 slides from Banque Saudi Fransi's earnings presentation, 2023
Slide 1: Banque Saudi Fransi Investor Presentation 3Q 2023
3 Column Slides Banque Saudi Fransi Investor Presentation 3Q 2023
Slide 2: Contents
INVESTOR PRESENTATION 3Q 2023 Contents BSF Profile 3 Operating Environment 7 Strategy 11 ESG Update 19 Financial Performance 24 Outlook & Guidance 41 Segmental Performance 43 Performance Track Record 49 Appendix 52
Slide 3: BSF Profile
INVESTOR PRESENTATION 3Q 2023 BSF Profile
Slide 4: Leading banking group in Saudi Arabia with strong focus on domestic operations
PROFILE | PRESENCE We are a leading banking group in Saudi Arabia with a strong focus on domestic operations BSF is the successor to Banque de l’Indochine (est. 1949) Branches Employees BSF was then established by Royal Decree No. M/23 as a Saudi Arabian joint stock company in 1977, in accordanc
Slide 5: Solid market parameters and credit ratings
PROFILE | SHARE PROFILE AND CREDIT RATINGS Solid market parameters and credit ratings Share Parameters 30 Sep 2023 Total Shareholder Return (TSR) 160 Closing price (SAR) 36.50 140 52 weeks range (SAR) 32.5 - 45.7 120 Shares issued (million) 1,205 100 80 60 Market capitalization (SARbn) 44.00 40 Mark
Slide 6: Experienced and dynamic executive management team
PROFILE | MANAGEMENT Experienced and dynamic 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 B.V.: CFO & Board Saudi Inve
Slide 7: Operating Environment
INVESTOR PRESENTATION 3Q 2023 Operating Environment
Slide 8: Macro-economic environment: rising rates, supportive domestic activity, volatile oil
OPERATING ENVIRONMENT | ECONOMIC CONDITIONS The macro-economic environment is characterized by rising rates, supportive domestic activity, volatile oil and moderating stock prices Brent Oil Price / Barrel (USD) Tadawul Index Oil prices rose to USD 120/bl in 3Q 2022, following Ukraine-Russia disrup
Slide 9: Saudi Arabia real GDP growth forecast at 0.8% in 2023
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK Saudi Arabia’s real GDP growth is forecast at 0.8% in 2023 due to lower oil production Real GDP growth (%) Brent Oil Price / Barrel (USD) Real GDP for Saudi Arabia is expected grow by 0.8% in 2023 following 8.7% expected growth in 2022 due to lower oil prod
Slide 10: 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 (%) 2,520 18.5%|20.1% 1.7% +12% 20.3% 20.1% 19.9% 19.9% 19.4% 2,349 2,520 2.2% 2,059 1.9% 1.9% 1.8% 1,783 1.7% 1,443 1,552 1
Slide 11: Strategy
INVESTOR PRESENTATION 3Q 2023 Strategy
Slide 12: Refocusing and simplifying our existing strategy
STRATEGY | CONTEXT We are refocusing and simplifying our existing strategy for an evolving external environment and an optimized internal structure Rising rate environment Historic increase in levels of inflation Sudden rate declines Geopolitical tensions Covid-19 Recessionary fears In
Slide 13: Refocused strategy to 10 vital initiatives
STRATEGY | SUMMARY In 1Q 2023 we refocused and simplified our existing strategy to 10 vital initiatives for an evolving external environment and internal structure Wholesale Banking Private Banking Technology Expand FIG Expand Infrastructure & MNC product Upgrade Coverage suite 1H 2024 Priority Saud
Slide 14: Strategy driven by ambitious aspirations
STRATEGY | STRATEGIC FRAMEWORK Our strategy is driven by ambitious aspirations for market position, profitability and customer experience Strategic Goals Position: Profitability: Customer Experience: Be among the top players in our target segments Focus on profitability and return on capital Continu
Slide 15: Strategic initiatives built on core business strengths
STRATEGY | STRATEGIC PILLARS Strategic initiatives are built on our core business strengths and opportunities Wholesale Banking Personal Banking Private Banking Saudi Fransi Leasing Saudi Fransi Capital Strategic Goals Strong corporate relationships Solid positioning & strong Leading market po
Slide 16: Strategy execution commenced across business pillars
STRATEGY | STRATEGIC PILLARS Strategy execution commenced across the various business pillars with positive momentum in progress Wholesale Banking Personal Banking Private Banking JB Saudi Fransi Capital Seize existing Leverage segmentation Reinforce market Expand in new Strategic Goals Solidify mar
Slide 17: Two pivotal strategic milestones in Q3 2023
STRATEGY | KEY MILESTONES In Q3 2023 we successfully realized two pivotal strategic milestones JB, formerly known as SFL, has strategically pivoted to diversify its offerings, targeting distinct market JB New segments. Brand This strategic realignment was underpinned by a robust marketing campaign i
Slide 18: Progress on four key strategic programs
STRATEGY | STRATEGIC ENABLERS Good progress in the implementation of the four key strategic programs across the IT & Technology and rebranding priorities Technology Infrastructure Upgrade Rebranding Integrated Corporate Omnichannel Core Banking System Portal New corporate platform supporting New hig
Slide 19: ESG Update
INVESTOR PRESENTATION 3Q 2023 ESG Update
Slide 20: BSF materiality matrix
ESG | MATERIALITY MATRIX The BSF materiality matrix defines the most significant ESG topics to the organization and its stakeholders Most Important 1 1 Governance, Accountability, Transparency and Ethics 2 Financial and Economic Performance 2 3 Risk Management 4 Responsible Customer Relations and Sa
Slide 21: ESG Framework of 5 pillars and 15 material issues
ESG | ESG FRAMEWORK The ESG Framework consists of 5 pillars and 15 material issues, and was approved by the Board in November 2022 Exemplifying the Highest Ethical and Governance Accelerating Sustainable Economic Growth Standards Financial and Economic Performance 2 1 Governance, Accountability, Tra
Slide 22: ESG governance and policy framework with Board oversight
ESG | ESG GOVERNANCE A comprehensive ESG governance and policy framework was implemented in November 2022, with Board oversight Nomination & BSF Board of Board Strategy Board Risk Executive Committee Audit Committee Remuneration Directors Committee Committee Committee Abdullatif Alothman Rayan Fayez
Slide 23: Good progress along ESG roadmap
ESG | ESG PROGRESS & ROADMAP BSF is making good progress along its ESG roadmap ESG Progress ESG Ratings ESG Governance & Framework MSCI Sustainalytics 1 ESG Board & Management Committees appointed in November 2022 ESG Rating ESG Rating Materiality matrix and framework approved in November 2022 ESG P
Slide 24: Financial Performance
INVESTOR PRESENTATION 3Q 2023 Financial Performance
Slide 25: Improved profitability in 9M 2023 from NIM expansion
HIGHLIGHTS | FINANCIAL PERFORMANCE Improved profitability in 9M 2023 from NIM expansion and balanced asset growth BALANCE SHEET Loans & Advances Investments Customers' Deposits High quality loan growth of 10% YoY driven by 11% commercial and 7% consumer lending growth. 174.7 +10% year-on-year 46
Slide 26: Balance sheet growth driven by lending, funded by IBD growth
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Balance sheet growth driven by lending, funded by IBD growth Growth in total assets of 8% YTD, mainly driven by healthy 10% loan growth. Total Assets Movement (SAR Bn) Liabilities grew by 9% during 9M 2023 from 6% deposit growth, a 22% increase in
Slide 27: Net income grew 27% YoY from strong NII growth
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income grew 27% YoY from strong NII growth, partly offset by increased operating expenses and impairments Net Income Movement (SAR Mn) Net income for 9M 2023 grew 27% YoY to SAR 3,395mn from 24% growth in operating income, partly offset by 13
Slide 28: Healthy and balanced 10% loan growth during 9M 2023
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy and balanced 10% loan growth during 9M 2023 Total Loans & Advances (SAR Bn) Commercial Loans Movement YTD (SAR Bn) Loans & Advances Composition (SAR Mn) 174.7 143.1 174,681 +10% +11% Consumer 18.1% Commercial 169.7 174.7 3.8 1.7 0.7 0.5 143.1 81.9%
Slide 29: 4% increase in the investment portfolio
FINANCIAL PERFORMANCE | INVESTMENTS 4% Increase in the investment portfolio in 9M 2023 Investments Movement by Type (SAR Bn) Investments Composition by Type Investments increased 4% YTD reflecting (SAR Mn) increased investment in longer-term fixed- rate Government securities. 46.4 46,390 The inv
Slide 30: 6% growth in deposits YTD from increased IBDs
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS 6% growth in deposits YTD from increased IBDs Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) Deposits grew 6% during 9M 2023 from increased IBDs. IBD increased 20% YTD from 50% growth in Corporate, partly offset by a 28% decline in
Slide 31: NII growth of 28%
FINANCIAL PERFORMANCE | NET INTEREST INCOME NII growth of 28% from margin expansion and earning assets growth Net Interest Income Movement (SAR Mn) NII for 9M 2023 grew 28% YoY to SAR 5,967mn from margin expansion and 6% growth in (simple) average earning assets. 5,967 Interest income rose 72% Y
Slide 32: 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 NIM increased 65bps YoY due to improved loan yields, partly offset by the higher funding costs and the hedging
Slide 33: 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 34: Non-interest income increased 3% YoY
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income increased 3% YoY as higher trading and fee & commission income was partly offset by lower investment income Non-interest income for 9M 2023 increased 3% YoY to SAR 1,166mn as higher trading and Non-Interest Income Movement (SAR Mn) fe
Slide 35: Operating expenses growth of 13%
FINANCIAL PERFORMANCE | OPERATING EXPENSES Operating expenses growth of 13% from higher employee-related expenses Operating Expenses Movement (SAR Mn) Operating expenses increased 13% YoY to SAR 2,176mn in 9M 2023 due to increased employee-related costs and excess accrual reversals in 1Q 2022. T
Slide 36: Cost of risk increased 24bps YoY to 0.98%
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Cost of risk increased by 24bps YoY to 0.98% for 9M 2023 from improving Commercial coverage Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 345 345 0.98% 1.22% +29 bps year-on-year -1% -1% 1.16% 1.07% 0.98% 431
Slide 37: NPL ratio trend moderating during 9M 2023
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL ratio trend moderating during 9M 2023 following previous migration of isolated exposures in the Commercial book Non Performing Loans & Advances Non Performing Loans & Advances (SAR NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) Bn) 3.5 3.5 1.97% 2.3% -95
Slide 38: NPL coverage improved 19.6ppts YTD to 139.5%
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL coverage improved 19.6ppts YTD to 139.5% Allowance For Impairment (SAR Bn) Allowance For Impairment (SAR Bn) NPL Coverage Ratio (%) Commercial NPL Coverage (%) 4.9 4.9 139.5% 138% +25 ppts year-on-year 139.5% -1% -1% 133.3% 131.3% 5.7 5.2 5.4 5.7 126.5% 5
Slide 39: Strong capital ratios despite modest decline YTD
FINANCIAL PERFORMANCE | CAPITALIZATION Strong capital ratios despite modest decline YTD Total Capital (SAR Bn) RWA (SAR Bn) Total capital (Tier 1 + Tier 2 regulatory capital) declined 1% to SAR 42.1bn during 9M 2023 as net income generation was more than offset by dividend payments and 42.1 219.3
Slide 40: Liquidity remains strong within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR & NSFR (%) HQLA (SAR Bn) LCR declined by 25ppts during 9M 2023 to 171%. NSFR moderated 6ppts to 116% as of 30 Sept. 2023. 171% 42.4 The SAMA regulatory LTD ratio was within required levels a
Slide 41: Outlook and Guidance
INVESTOR PRESENTATION 3Q 2023 Outlook and Guidance
Slide 42: 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 9M 2023 Outcome 2023 Guidance Revision Drivers Financing Growth Financing Growth REVISED UP Balanced growth of consumer and commercia
Slide 43: Segmental Performance
INVESTOR PRESENTATION 3Q 2023 Segmental Performance
Slide 44: Profitability driven by Retail and Corporate growth
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) 7,133 3,776 +24% +28% 726 2 7,133 980 287 1,074 3,776 5,774 2,960
Slide 45: Retail: higher profits 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 1,514 950 917 +71.1% year-on-year +184% +63% SAR Million 1,119 883 950 94 1,514 32 33 582 Fee & other income (44) (188) 47
Slide 46: Corporate: increased profitability partly offset by impairments
SEGMENTAL PERFORMANCE | CORPORATE Increased Corporate profitability from net interest income growth partly offset by increased impairments Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,386 1,137 984 +15.0% year-on-year +26% +17% SAR Million 601 125
Slide 47: Treasury: net income declined 39% on funding costs
SEGMENTAL PERFORMANCE | TREASURY Net income declined 39% YoY due to higher funding costs Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 705 253 107 -64.7% year-on-year -39% -42% SAR Million 1,156 433 332 2 3 705 130 253 Fee & other income 135 (445) (1
Slide 48: Investment Banking and Brokerage: modest profitability decline
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Modest profitability decline due to lower brokerage fees Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 171 128 61 +178.7% year-on-year -1% +29% SAR Million 45 128 173 171 99 108 Fee & other inc
Slide 49: Performance Track Record
INVESTOR PRESENTATION 3Q 2023 Performance Track Record
Slide 50: 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 51: 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 52: Appendix
INVESTOR PRESENTATION 3Q 2023 Appendix
Slide 53: Contact Investor Relations team or download BSF's IR App
EARNINGS PRESENTATION 3Q 2023 Please contact the Investor Relations team for additional information or download BSF’s IR App For more information, please contact us at: Access our IR website: Banque Saudi Fransi BSF IR Website P.O. Box 56006, Riyadh 11554 Kingdom of Saudi Arabia IR@alfransi.com.sa F
Slide 54: Disclaimer
INVESTOR PRESENTATION 3Q 2023 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