Saudi National Bank · TADAWUL:1180
Saudi National Bank — The National Commercial Bank — Q1 2019 Earnings Presentation
58 slides from Saudi National Bank's earnings presentation, 2019
Slide 1: Investor Presentation 1Q 2019
The National Commercial Bank Investor Presentation 1Q 2019 1
Slide 2: Investor Presentation Content
Investor Page Page Page Presentation 3 11 Content 18 NCB – The Grow with KSA Strategy leading KSA Bank Grow with NCB Overview Page Page Page 28 35 49 Financial Results Financial Results Segmental Highlights Details Overview Page 56 Additional Information 2
Slide 3: The Leading KSA Bank
The Leading KSA Bank 1Q 2019 Results
Slide 4: Overview
Overview The National Commercial Bank - The Nation’s Gateway of Progressive Banking NCB’s vision is to be the premier financial services group in the region. To achieve this, five strategic aspirations have been defined: to be number one in revenues, to be number one in profit, to be the 10.7 best d
Slide 5: NCB is the leading banking group in Saudi Arabia
NCB is the leading banking group in Saudi Arabia Established in 1953; IPO in 2014 NCB Snapshot (FY 2018) SAR SAR SAR 7m 13,058 453bn 319bn 144bn Clients Employees* Assets Deposits Market Cap Wholesale branch in Bahrain Offices: Singapore, Seoul, Shanghai Subsidiary in Turkey Subsidiary in KSA: Türki
Slide 6: NCB is the leading banking group in Saudi Arabia
NCB is the leading banking group in Saudi Arabia NCB has a strong market and financial position (FY 2018) Market Position by KSA Financial Position KSA GCC Overall banking Assets #1 Assets #1 #4 Corporate banking Financing #1 Financing #1 #4 Retail banking Financing #2 Deposits #1 #3 Treasury Invest
Slide 7: NCB has a well-diversified business model
NCB has a well-diversified business model Total operating income contribution 3.9bn 20% TREASURY SAR 16.7bn 88% 1.5bn 720mn 8% 4% 3.9bn 21% Capital Markets CORPORATE International NCB Capital NCB Largest Asset Manager in KSA 8.9bn Türkiye Finans Katılım Bankası (TFKB) Largest Shariah-compliant 401 b
Slide 8: NCB has a strong financial position
NCB has a strong financial position Key KPIs Total Assets (SARbn) Total Equity (SARbn) 120 800 +1% +9% 700 100 600 435 449 443 445 453 80 60 64 66 56 47 500 60 400 300 40 200 20 100 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 CAGR CAGR Capital Ratios (%) Liquidity Ratios (%) 22.0% 20.6% 17
Slide 9: NCB has a strong performance track record
NCB has a strong performance track record Key KPIs Total Operating Income (SARbn) Net Income Attributed To Equity Holders (SARbn) 35 +4% 18 +5% 30 16 25 18.6 18.3 18.9 14 9.8 10.7 16.2 17.5 12 8.7 9.1 9.3 20 5.1 4.7 4.6 10 15 4.8 4.9 8 6 14.4 10 11.4 12.6 13.5 13.7 4 5 2 0 0 2014 2015 2016 2017 2018
Slide 10: NCB Group listed on Tadawul in November 2014
NCB Group listed on Tadawul in November 2014 Ranked third in Tadawul, S&P Pan Arab and MSCI Indices with significant weightings Share parameters 31 Mar 2019 MSCI Saudi Arabia Index Float Adj. Mcap (USDb) Weighting (%) Closing Price (SAR) 55 52 week range (SAR) 39-55 SABIC 24.76 16.27 Free Float 35.4
Slide 11: Grow with KSA Grow with NCB
Grow with KSA Grow with NCB 1Q 2019 Results
Slide 12: Record Saudi Budget in 2019
Record Saudi Budget in 2019 Fiscal expansionary policy to underpin economic growth Average Oil Price (USD) Government Revenue (SARbn) Government Expenditure (SARbn) 120 1,200 1,044 97 975 1,110 1,106 131 895 1,030 978 1,200 930 100 1,000 70 692 313 1,000 830 80 65 800 616 288 52 519 800 740 50 256 8
Slide 13: Economic growth momentum continues
Economic growth momentum Non-Oil GDP pickup expected, supported by progress of continues ongoing Government Vision Realization Programs Real GDP Real non-oil GDP Oil Production 3.7% 4.1% 25 2.6% 0 5.0% 140.0 1.7% 2.2% 0 3.0% 0 2.7% 97.2 120.0 1.8% 3.0% 20 0 -0.7% 1.0% 0 1.8% 100.0 2.7% 0.6% 0.1% 1.2
Slide 14: Saudi banking sector growth capacity
Saudi banking sector growth Lending capacity enables KSA banks to capture capacity opportunities as fiscal policy offsets monetary drag from rising interest rates Bank Lending (SARbn) Loans to Deposits Ratio (%) Bank Deposits (SARbn) 11.6% 1 81% 35 00 8.9% 15.0% 1 80% 80% 4,000 3000 2.9% 2.8% 10.0%
Slide 15: Saudi banking sector resilience
Saudi banking sector Strong capitalization, high credit quality, adequate resilience coverage and a prudent regulatory environment expected to sustain banking sector profitability NPL & Coverage Ratios (%) Tier 1 Capital Adequacy Ratio (%) 0 183% 0 0 178% 0 172% 1.85% 0 18.5% 0 18.3% 0 1.45% 0 0 17.
Slide 16: Vision 2030 Financial Sector Development Program (FSDP)
Vision 2030 Financial Sector Development Program (FSDP) NCB Is a key Contributor to economic transformation and the FSDP Leading lender for KSA companies with a 15% Corporate market Enabling financial institutions to share and a portfolio of SAR 131bn (2018); support private A leader in the SME
Slide 17: Vision 2030
Vision 2030 Saudi Arabia continues to drive economic growth through it’s comprehensive Vision 2030 program and NCB is fully committed to the success of The National Agenda Pillars A Thriving Economy A Vibrant Society An Ambitious Nation • National Transformation Program • Enriching the Hajj and Umra
Slide 18: Strategy Overview
Strategy Overview 1Q 2019 Results
Slide 19: NCB's 2019 Strategy Framework
NCB’s 2019 Strategy Framework Sustaining Leadership Expand market share in Increase returns in Sustain Treasury Grow value contribution Retail Banking Corporate Banking revenues & diversify of subsidiaries funding Current accounts Vision 2030 Targeted Sectors Investment returns NCBC: AUMs and GLI re
Slide 20: NCB continues to deliver on its strategic plans
NCB continues to deliver on its strategic plans YTD 1Q 2019 Achievements • Grew Retail NOR by 11% YoY on expanded volumes Retail Banking • Grew mortgage by 7% YTD to SAR 25.5bn • Grew Corporate NOR by 15% YoY through margin enhancement and higher average Corporate Banking volumes • Sustaining Cost o
Slide 21: Lean distribution
Lean distribution We will continue to expand with lean distribution in Saudi Arabia by adopting a smaller branch format and implementing extensive digitization Strategic Focus Areas • Continue to expand the network in strategic locations to acquire new customers and expand market share • Expand with
Slide 22: Digitalization
Digitalization Continue to migrate to digital, drive up digital sales and improve operational excellence to deliver superior customer experiences Strategic Focus Areas • Mobile first - anytime, anywhere • Leverage advanced data analytics and grow digital sales • Implement “digital branch” and improv
Slide 23: Retail Banking
Retail Banking We are positioning the retail business to expand market share Strategic Focus Areas • Grow core deposits • Grow Lending Market Share; focus on mortgages and Credit Card • Expand branch network with lean formats enabled by digital migration • Continue to enhance customer service across
Slide 24: Corporate Banking
Corporate Banking Grow selectively and increase risk-adjusted returns Strategic Focus Areas • Grow lending in V2030 target sectors • Increase cross sell focus to capture full value of relationships • Grow Kafalah-based lending • Expand collections capabilities and strengthen credit lifecycle managem
Slide 25: Treasury
Treasury Broaden and deepen liquidity access while sustaining revenues Strategic Focus Areas • Increase recurring revenues • Optimize investment portfolio to enhance quality, liquidity and returns • Launch continental hubs to expand coverage (Singapore, UK) • Introduce innovative Shariah compliant p
Slide 26: NCB Capital
NCB Capital KSA’s leading investment bank and asset manager; well positioned to capture future growth Strategic Focus Areas • Sustain and grow market leadership product innovation • Grow recurring revenues by increasing AUMs • Grow share of brokerage revenue pool • Continue to enhance efficiency and
Slide 27: Türkiye Finans Katılım Bankası
Türkiye Finans Katılım Bankası We are executing a transformation program to grow TFKB’s net income Strategic Focus Areas • Resume branch expansion, expand digital channels • Strengthen underwriting and collection performance • Increase automation and drive capacity optimization • Instill NCB’s princ
Slide 28: Financial Results Highlights
Financial Results Highlights 1Q 2019 Results
Slide 29: Key messages 1Q 2019 Results
Key messages 1Q 2019 Results Financing (SARbn) Deposits (SARbn) 3% increase in total assets 600 +1% 800 700 -3% 500 1% Financing growth 600 265 269 400 319 500 Balance 310 5% investments growth 300 400 Sheet 200 300 3% decline in customers’ deposits 100 200 100 CASA ratio at 76% of deposit
Slide 30: Income Statement
Income Statement Higher 1Q 2019 net income derived from higher operating income and lower operating expenses, partly offset by higher impairments Profitability Trends SAR (mn) 1Q 2019 4Q 2018 1Q 2018 YoY % change Net special commission income 3,562 3,741 3,419 +4% Fee and other income 1,391 1,015 1,
Slide 31: Balance Sheet
Balance Sheet 3% YTD increase in total assets from financing and investments. Balance Sheet Trends SAR (mn) 1Q 2019 1Q 2018 YoY % change 4Q 2018 YTD % change Investments, net 123,419 113,555 +9% 118,090 +5% Financing and Advances, net 268,657 252,777 +6% 265,317 +1% Total assets 466,348 438,896 +6%
Slide 32: Segmental Information (1/2)
Segmental Information (1/2) 1Q 2019 Total operating and net income growth mainly from Retail and Corporate segments. 1Q 19 Total Operating Income Movement (SARmn) 1Q 19 Net Income Attributed to Equity Holders Movement (SARmn) 1,400 129 242 38 1,200 4,953 800 141 3,165 700 1,000 4,779 (77) (47) 63 (7
Slide 33: Segmental Information (2/2)
Segmental Information (2/2) 1Q 2019 total assets growth mainly driven by Retail and Treasury segments Total Assets (SARbn) Financing and Advances, net (SARbn) 800 +3% 500 +1% 700 400 600 439 453 466 265 269 253 500 36 33 2 34 2 300 10 12 2 25 8 21 21 400 148 150 159 300 200 123 131 130 200 127 134 1
Slide 34: Outlook
Outlook Improved macroeconomic environment expected to drive growth 2019 Macroeconomic FY 2018 1Q 2019 FY 2019 FY 2019 Outlook Reported Reported Guidance Outlook Balance Financing Sheet 6% +1% 4% to 6% Within guidance Average Arabian light oil price of growth USD 65 per barrel No US Fed rate hik
Slide 35: Financial Results Details
Financial Results Details 1Q 2019 Results
Slide 36: Operating Income Highlights
Operating Income Highlights Higher 1Q 2019 total operating income driven by net special commission income and investment related income Management Commentary Total Operating Income (SARbn) • Total operating income increased 4% YoY from a 4% improvement 10 in net special commission income, higher inv
Slide 37: Net special commission income trends
Net special commission income trends 1Q 2019 net special commission income grew by 4%, despite 61% increase in special commission expenses Net Special Commission Income Management Commentary SAR (mn) 1Q 2019 4Q 2018 1Q 2018 YoY % change • NSCI improved by 4% on higher SCI (+15%), despite 61% increas
Slide 38: Fee and other income trends
Fee and other income trends Higher 1Q 2019 Investment income partially offset by lower fees and exchange income, Fee Income Fee and Other Income (SARmn) SAR (mn) 1Q 2019 4Q 2018 1Q 2018 YoY % change 3,300 2,800 +2% Finance and lending 364 367 358 +2% 2,300 1,361 1,391 Trade finance 104 79 137 -24% 1
Slide 39: Expense highlights
Expense highlights Digitization, productivity enhancement and optimization delivered expense savings in 1Q 2019 Operating Expenses (SARmn) 3,500 Management Commentary 3,000 -3% • Expenses declined by 3% YoY, 2,500 • The cost to income ratio was 32.67%, lower by 223bps 1,668 1,618 compared to 1Q 2018
Slide 40: Asset highlights and composition
Asset highlights and composition 3% growth in balance sheet as a result of increase in financing and investments. Total Assets (SARbn) 800 +3% Management Commentary 700 • Total assets increased 3% due to increase in financing and 600 439 453 466 investments. 500 49 48 46 • 1% financing increase driv
Slide 41: Financing and advances
Financing and advances Financing growth driven by Consumer and Other segments Financing and Advances, net (SARbn) 500 Management Commentary +1% • Domestically, financing grew for the Consumer (+2%) and other 450 400 350 265 269 segment (+20%) from 4Q 2018. 253 300 25 8 21 10 21 12 • Corporate segmen
Slide 42: Financing and advances credit quality (1/2)
Financing and advances credit quality (1/2) YTD NPLs have fallen, particularly in the manufacturing sector NPL (SARbn) Movement NPLs by Economic Sector (SARbn) 9 -6% 1 5.25 8 7 5.25 1 6 4.72 4.75 5.06 4.95 (0.02) (0.00) 5 1.03 1.23 1.12 0 1.40 1.26 0.52 0.62 4 0.54 0.59 0.02 4.95 3 0.53 0 2.80 2.94
Slide 43: Financing and advances credit quality (2/2)
Financing and advances credit quality (2/2) Stable NPL ratio and higher NPL coverage NPL Ratios (%) NPL Coverage Ratios (%) 5.3% 5.5% 192% 5.2% 185% 2 0 5.1% 4.8% 2 170% 164% 157% 0 2 0 165% 2 161% 0 154% 145% 1 1.8% 1.7% 1.8% 1.9% 1.8% 142% 1 0 1 0 1.6% 1.6% 1.5% 99% 96% 93% 1.4% 1.4% 1 90% 0 83% 1
Slide 44: Domestic financing and advances credit quality
Domestic financing and advances credit quality Corporate and Consumer NPL ratios have improved NPL Ratios (%) NPL Coverage Ratios (%) 0 2.5% 2.5% 2.4% 4 0 2.2% 2.2% 298% 305% 288% 279% 3 0 264% 0 3 0 0 2 170% 164% 0.5% 0.5% 0.5% 0.6% 0.5% 149% 0 136% 141% 2 (0) Corporate Consumer and credit card Cor
Slide 45: Investments trends and composition
Investments trends and composition Investments increased 5% and quality remains strong; ~89% of the investment portfolio remains Saudi Government and investment grade Investments (SARbn) Management Commentary 200 +5% • The investment portfolio is built on high quality securities with ~89% being Saud
Slide 46: Liabilities trends and composition
Liabilities trends and composition Higher total liability base from bank placements Total Liabilities (SARbn) • Management Commentary 700 +3% • 3 % increase in total liabilities mainly from Due to Bank as a 600 result of the change in funding mix and other labilities. 374 388 398 • Customers’ deposi
Slide 47: Liquidity
Liquidity NCB maintained a strong liquidity profile HQLA and Average Liquidity Coverage (SARbn/%) Management Commentary • As at 1Q 2019, the financing to customers’ deposit ratio 211.9% 250.0% 200 198.6% was 86.8% and comfortably below the regulatory 184.4% 176.0% 183.9% 200.0% guidelines. 150 • HQL
Slide 48: Capital
Capital Capital position comfortably above regulatory minima Capitalisation (SARbn) Pillar I Risk Weighted Assets (SARbn) Capital Ratios (%) 140 700 0 20.4% 20.3% 20.6% -3% +4% 0 20.0% 120 600 19.3% 0 18.2% 18.1% 18.5% 100 73 74 500 375 17.8% 72 360 0 358 8 3 12 13 16 0 18.4% 35 80 400 8 7 34 35 7 7
Slide 49: Segmental Review
Segmental Review 1Q 2019 Results
Slide 50: NCB Bank (standalone)
NCB Bank (standalone) Strong 9% 1Q 2019 net income growth resulting from operating income growth and lower operating expenses Summary Financial Performance Financing and Advances, net (SARbn) YoY % SAR (mn) 1Q 2019 4Q 2018 1Q 2018 change +2% 450 400 350 Total assets 438,700 426,865 409,258 +7% 300 2
Slide 51: Retail Banking
Retail Banking Higher 1Q 2019 net income from higher operating income Financing & Advances, net (SARbn) Summary Financial Performance YoY % 250 SAR (mn) 1Q 2019 4Q 2018 1Q 2018 change 200 +2% Total assets 137,774 134,020 125,975 +9% 150 97 104 106 Total operating income 2,359 2,248 2,117 +11% 100 Ne
Slide 52: Corporate Banking
Corporate Banking 22% 1Q 2019 growth in net income from higher operating income and lower operating expenses Financing & Advances, net (SARbn) Summary Financial Performance YoY % 250 SAR (mn) 1Q 2019 4Q 2018 1Q 2018 -0% change 200 Total assets 133,847 134,385 127,191 +5% 123 131 130 150 Total operat
Slide 53: Treasury
Treasury Higher 1Q 2019 net income driven by lower impairment Investments, net (SARbn) Summary Financial Performance YoY % SAR (mn) 1Q 2019 4Q 2018 1Q 2018 +5% change 200 Total assets 159,027 150,468 147,993 +7% 150 114 118 123 Total operating income 1,113 942 1,190 -6% 100 Net special commission in
Slide 54: Capital Markets
Capital Markets Lower 1Q 2019 net income growth, driven by lower operating income Assets Under Management (SARbn) Summary Financial Performance YoY % SAR (mn) 1Q 2019 4Q 2018 1Q 2018 250 +5% change Assets Under Management 151,248 144,096 134,652 +12% 151 200 135 144 Brokerages Volume 45,559 57,580 4
Slide 55: International (in TRY)
International (in TRY) 1Q 2019 net income decreased by 8% YoY due to higher operating expenses and higher impairment charge % in foreign currency xx% Financing & Advances, net (TRYbn) Summary Financial Performance +2% +3% YoY % SAR (mn) 1Q 2019 4Q 2018 1Q 2018 change 0.5 30.8 Total assets 50,434 46,
Slide 56: Additional Information
Additional Information 1Q 2019 Results
Slide 57: Additional Information
Additional Information Please don’t hesitate to contact NCB Group Investor Relations Mr. Abdulbadie Alyafi More information Head, Investor Relations Download copies of National Commercial Bank’s: +966 12 646 3988 Financial statements investorrelations@alahli.com Earnings release Investor presentatio
Slide 58: Disclaimer
Disclaimer The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background information about the activities of NCB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by NC
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