Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q1 2021 Earnings Presentation
47 slides from Al Rajhi Bank's earnings presentation, 2021
Slide 1: Al Rajhi Bank Investor Presentation 1Q 2021 Results
Al Rajhi Bank Investor Presentation 1Q 2021 Results
Slide 2: Agenda
03 The World’s Leading Islamic Bank 14 Al Rajhi Bank Strategy 23 KSA Macro-Economic Environment 26 40 45 Appendix & Disclaimer 1Q 2021 Financial Results 1Q 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 Presence & Branches Islamic Kuwait Islamic NPB Deposits NPB Deposits Customers Jordan 543 5,211 100% 89% 94% 10 2 100% Banking % of Total Deposits 9+m 10+ Branches ATMs million 204,549 226 NPS Digital: Manual Islamic Transactions 543 Remittance 6
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: Robust balance sheet with non-profit-bearing deposits
The World’s Leading Islamic Bank Robust balance sheet with 87% non-profit-bearing deposits Total Assets (SARbn) Capital Ratios (%) 1,000 23.3% 900 0 800 +36.6% 0 700 0 600 20.1% 19.9% 469 22.2% 19.1% 0 500 343 364 384 0 400 0 300 200 19.0% 0 18.8% 100 18.0% 0 0 0 2017 2018 2019 2020 2017 2018 2019 2
Slide 7: Outstanding foundation and strong returns
The World’s Leading Islamic Bank Outstanding foundation and strong returns ROE (%) ROA (%) -20bps 0 0 -55bps 20.49% 19.94% 2.76% 0 17.24% 2.68% 2.56% 0 +1348bps 0 -164bps +172bps 0 -1023bps 0 0 0 0 7.01% 0 1.04% 0 0 0 0 0 2017 2018 2019 2020 2017 2018 2019 2020 Net Profit Margin (%) Cost of Funds (%
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 - Current Accounts Market Share - Deposits +60bps 0 +300bps 0 0 0 10+ Million 24.8% 25.2% 19.4% 0 23.7% 24.3% 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 FY 17 FY 1
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 +40bps 0 1 +200bps 0 0 0 26.6% 26.7% 27.0% 0 26.2% 26.8% 27.6% 28.2% 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY 20 FY 17 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 +100bps 1 -510bps 1 39.6% 38.7% 37.7% 40.6% 52.7% 51.3% 47.6% 1 46.8% 1 0 1 0 0 0 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY 20 FY 17 FY 1
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) 31 March 2021 RAJHI NCB RIYAC TASI 290 Key Metrics Closing Price SAR 98.8 240 Market Cap SAR 247.0 bn RAJHI, 229 Market Cap / % Industry 32.2
Slide 12: ESG Highlights
ESG Highlights 1Q 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 512bn of loans and 383mln
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 1Q 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 1Q 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: Strategy 2021-2023
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 Core Banking Platform Become Le
Slide 22: Progress update on delivering the Bank of the Future
Progress update on delivering the "Bank of the Future" Strategy 2021-2023 - Selected Metrics 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 including Priva
Slide 23: KSA's Macro-Economic Environment
KSA’s Macro-Economic Environment
Slide 24: KSA Economic Outlook
KSA Economic Outlook Covid-19 pandemic disruptions have eased GDP Growth / Brent Oil Price Highlights 71.19 64.37 80 62.28 60.49 6.5 IMF has revised up 2021 GDP growth forecast to 2.9% driven by 54.13 70 5.5 recovery in oil prices and economic activities. 60 4.5 3.5 41.69 50 Saudi is keeping its
Slide 25: Banking Sector Highlights
Banking Sector Highlights Growth in mortgage lending continues to drive up credit growth Recent Developments LDR (%) & Bank Loans and Deposits (SARmn) 80.1% 77.4% 77.1% 75.9% SRC reduced mortgage reference rate, starting from 1st of April. 75.0% 90.0% 2,500 80.0% REDF reduced the tenor of mortga
Slide 26: 1Q 2021 Financial Results
aall pap Al Rajhi Bank 1Q 2021 Financial Results
Slide 27: ARB had an excellent start to the year 2021
ARB had an excellent start to the year 2021 Results in line with or ahead of expectations 13% Growth in financing driven 10% Growth in liabilities Stable LDR by mortgages Net Financing Total Liabilities Loan to Deposit Ratio Strong 9% QoQ +12.8% +10.3% 315.7bn 356.1bn 410.7bn 453.0bn 79% 81% Balance
Slide 28: Trends in line with or ahead of expectations
Trends in line with or ahead of expectations Guidance revisions to financing growth and net profit margin FY 2021 Guidance 1Q 2021 Actual Guidance Revision Balance Sheet Financing Mid teens growth +13% High teens growth Net profit margin -30 bps to -20 bps -15 bps -40 bps to -30 bps Profitability Co
Slide 29: Balance Sheet Trends (1)
Balance Sheet Trends (1) Strong 31% YoY balance sheet growth Total Assets (SARbn) SAR (mn) 1Q 2021 4Q 2020 QoQ 1Q 2020 YoY +30.7% 80 0 700 Cash and balances with SAMA 38,562 47,363 -19% 36,293 +6% Due from banks and other FI 31,730 28,655 +11% 28,014 +13% 512 600 469 Investments, net 67,968 60,285 +
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, Net Mix By 500 Segment (SARbn) Type (SARbn) +36.3% 356.1 Corporate Mortgage 315.7 400 274.9 289.7 6.3 6.5 7.0 1.9 SAR 64bn SAR 125bn 261.4 5.2 1.9 64.1 18% 41% 4.5 56.6
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) 550 +32.3% Time 453.0 500 SAR 55bn Corporate 13% 410.7 31.7 Treasury 450 Other SAR 130bn SAR 16bn 400 365.8 375.4 28.1
Slide 32: Net Income Trends
Net Income Trends Solid net profit growth of 40% YoY Net Income For The Period Before Zakat (SARmn) SAR (mn) 1Q 2021 4Q 2020 QoQ 1Q 2020 YoY 6,000 Net financing and investment income 4,771 4,638 +3% 4,110 +16% +40.1% Fee from banking services, net 909 864 +5% 618 +47% 5,00 0 3,480 3,719 Exchange Inc
Slide 33: Operating Income Trends
Operating Income Trends Solid 20% operating income growth, inline with our strategy Total Operating Income (SARmn) Total Operating Income Growth Drivers By Type (SARmn) 2,500 9,000 +19.7% +19.7% 8,000 5,948 2,000 5,794 7,0 00 6,000 4,968 4,808 5,152 1,500 291 61 5,948 660 5,00 0 4,0 00 1,000 3,000 (
Slide 34: Expenses Trends
Expenses Trends Digital platforms drive cost efficiencies and higher positive jaws Cost To Income Ratio Trend (%) Cost to Income Ratio drivers (%) -4.9% 0 0 0 0 0 32.6% 0 0 0.4% 0.4% 27.8% 33.3% 33.4% 0 32.6% 32.5% 0 -3.6% 0 0 0 -1.7% -0.3% 27.8% 0 0 0 0 0 0 1Q 20 NII Non Yield Staff Depreciation G&
Slide 35: Asset Quality Trends (1)
Asset Quality Trends (1) Asset quality remains healthy and NPL coverage remains strong and stable Impairment Charges (SARmn) & COR (%) Net Allowances (SARmn) 2700 1.10 % 1,200 220 0 1.05% 0.9 0% -16.7% 1,000 0.85% 140 0.78% 693 800 0.75% 170 0 0.7 0% 0.67% 600 577 1200 0.50% (255) 400 700 0.3 0% 200
Slide 36: Asset Quality Trends (2)
Asset Quality Trends (2) Healthy stage coverage and prudent risk management Gross Loans by Stage (SARbn) Covid Overlay (SARbn) 450 +35.4% 364.3 80 0 2.6 631 400 608 323.2 700 2.4 350 9.5 600 269.0 423 2.9 9.5 30 0 500 400 313 295 7.9 250 352.2 311.3 30 0 200 150 257.9 200 100 100 0 1Q 20 4Q 20 1Q 21
Slide 37: Liquidity Trends
Liquidity Trends Liquidity remains comfortably within regulatory requirements LCR (%) Loan to Deposit Ratio (%) Regulatory 177% Maximum 90% 164% 155% 150% 2 1 142% 83.9% 84.5% 82.8% 2 1 2 1 82.2% 82.5% 1 1 Regulatory 1 1 1 1 Minimum 100% 82.1% 80.6% 1 1 78.8% 79.9% 78.8% 1 1 0 1 0 1 0 1 1Q 20 2Q 20
Slide 38: Capitalisation Trends
Capitalisation Trends Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) 90 +25.2% 430 85 +19.9% 353 80 380 75 323 33 62 63 70 33 0 282 33 65 10 53 60 31 280 9 310 55 9 280 58 4 59 4 3 50 230 242 45 50 180 40 1Q 20 4Q 20 1Q 21 1Q 20 4Q 20 1Q 21 Credit risk Market risk Op
Slide 39: Return Metrics
Return Metrics Returns remain well above industry average Return on RWA (%) Earnings per Share (SAR) 3 3.94% 0 3 +40.1% 3.47% 3.56% 3.43% 3.43% 0 2 1.25 1.33 0 1.06 2 0 0.95 0.97 1 0 1 0 0 1Q 20 1H 20 9M 20 FY 20 1Q 21 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 Return on Equity (%) Return on Assets (%) 0 0 22.43
Slide 40: 1Q 2021 Operating Results
aall pap Al Rajhi Bank 1Q 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) 1Q 2021 4Q 2020 QoQ 1Q 2020 YoY 8,000 Net financing and investment income 3,075 2,811 +9% 2,975 +3% +6.5% 7,0 00 Fee and other income 620 744 -17% 495 +25% 6,000 Total
Slide 42: Corporate Banking
Corporate Banking Net income growth driven by lower impairment charges Total Operating Income (SARmn) SAR (mn) 1Q 2021 4Q 2020 QoQ 1Q 2020 YoY 1,800 Net financing and investment income 480 859 -44% 535 -10% 1,6 00 1,4 00 -7.1% Fee and other income 107 (74) -244% 97 +10% 1,200 Total operating income
Slide 43: Treasury
Treasury Strong net income growth driven by investment income growth Total Operating Income (SARmn) SAR (mn) 1Q 2021 4Q 2020 QoQ 1Q 2020 YoY 3,000 Net financing and investment income 1,201 956 +26% 589 +104% 2,500 +82.8% Fee and other income 170 219 -22% 162 +5% 2,00 0 Total operating income 1,372 1
Slide 44: Rajhi Capital
Rajhi Capital Strong net income growth driven by increased brokerage income Total Operating Income (SARmn) SAR (mn) 1Q 2021 4Q 2020 QoQ 1Q 2020 YoY 700 600 Net financing and investment income 14 13 +4% 12 +12% 500 +155.8% Fee and other income 280 266 +5% 103 +173% Total operating income 294 279 +5%
Slide 45: Appendix: Additional Slides
nai)! apap Al Rajhi Bank APPENDIX Additional Slides
Slide 46: Additional Information
Additional Information Contact investor relations for more information Mr. Rayan Alshuaibi Visit our website (here) for more Investor disclosers: • Annual Report Head of Investor Relations • Financial Statements Tel: +966 (11) 828 1972 • Investor Presentation Email: alshuaibirs@alrajhibank.com.sa •
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