Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — FY2021 Earnings Presentation
50 slides from Al Rajhi Bank's earnings presentation, 2022
Slide 1: Al Rajhi Bank Investor Presentation FY 2021 Results
Al Rajhi Bank Investor Presentation FY 2021 Results
Slide 2: FY 2021 Investor Presentation
FY 2021 Investor Presentation 03 The World’s Leading Islamic Bank 14 Bank of The Future Strategy 24 KSA Macro-Economic Environment 27 4Q 2021 Financial Highlights 40 FY 2022 Guidance 43 4Q 2021 Operating Results 48 IR Contact Information FY2021 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, 2021 Presence & Branches, 2021 100% 75% Jordan Kuwait Islamic NPB Deposits Customers 10 2 521 4,891 Branches ATMs 12.2 million 72% 90:10 326,121 207 NPS Digital:Manual 521 POS Remittance 16 Centers Saudi Arabia Malaysia Largest network in Saud
Slide 5: Top 10 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 75% non-profit bearing deposits
The World’s Leading Islamic Bank | Robust balance sheet with 75% non-profit bearing deposits as of 4Q 2021 Total Assets (SARbn) Capital Ratios (%) +81.8% 0 0 23.3% 624 20.1% 19.9% 0 469 0 22.2% 19.1% 364 384 17.6% 343 19.0% 0 18.8% 0 18.0% 16.5% 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
Slide 7: Outstanding foundation and strong returns
The World’s Leading Islamic Bank | Outstanding foundation and strong returns ROE (%) ROA (%) 0 0 23.9% 0 20.5% 2.76% 0 19.9% 0 2.68% 2.56% 2.70% 0 17.2% 0 0 0 0 7.0%* 0 1.04%** 0 0 0 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 * As a result of Zakat Settlement – ROE before Zakat is 19.8% *
Slide 8: 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 +780bps 0 +220bps 0 12.2 0 0 24.2% 0 25.2% 25.9% 0 24.8% 24.3% 0 23.7% 19.4% 0 0 16.4% 17.3% 17.3% Million 0 0 0 0 0 0 Active Customers 0 0 0 2017
Slide 9: Leading network: large distribution network in Saudi Arabia
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 +340bps 0 0 0 0 29.6% 0 0 26.6% 26.7% 27.0% 26.8% 26.8% 27.6% 28.2% 0 26.2% 0 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 2017 2018 2019 202
Slide 10: Unique franchise with leading market share across key products
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 1 +500bps 1 -90bps 1 1 44.6% 52.7% 51.3% 51.8% 40.6% 1 1 39.6% 38.7% 37.7% 1 46.8% 47.6% 0 0 0 0 0 0 0 0 0 0 2
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 31 Dec 2021 Key Metrics 350 RAJHI, 338 Closing Price SAR 141.8 300 Market Cap SAR 354.5 bn Market Cap / % Industry 34.7%
Slide 12: ESG Highlights | FY 2021
ESG Highlights | FY 2021 91 ISO/DIS 37301:2020 kidney transplants Compliance through Shifaa platform Started using solar 9 ISO 22301:2019 101 energy system in 5 SAR 32mn batches of Graduate Business Continuity women-owned branches to reduce Donation in 2021 Development Program Management suppliers e
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 FY2021 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 FY2021 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: Ejada acquisition will help accelerate strategic initiatives
On track to build the “Bank of the Future” | Ejada acquisition will help to accelerate our strategic initiatives The banking model is evolving: • Technology in banks has evolved from being a function to a fundamental part of the organization • Continuous deployment and upgrade to digital capabilitie
Slide 24: KSA’s Macro–Economic Environment
KSA’s Macro–Economic Environment
Slide 25: KSA Economic Outlook
KSA Economic Outlook | Improved economic outlook compared to 2021 Highlights GDP Growth/Brent Oil Price 75.0 71.2 70.9 80.0 • GDP grew by 3.3% in 2021 driven by recovery in economic activities 64.4 70.0 and supported by oil prices. IMF forecasts Saudi Arabia's economy to 54.1 7.2 60.0 expand by 4.8
Slide 26: 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% • Strong loan growth was recorded in 2021 supported by mortgages with 80.0% healthy LDR well below the regulatory m
Slide 27: FY 2021 Financial Highlights
FY 2021 Financial Highlights
Slide 28: ARB delivered excellent results in 2021
ARB delivered excellent results in 2021 | Results are in line with or ahead of expectations 43.4% Growth in financing driven by mortgages 35.5% Growth in liabilities Healthy LDR Strong 33% YoY Net Financing Total Liabilities Loan to Deposit Ratio Balance Sheet Growth 315.7bn +43.4% 452.8bn 410.7bn +
Slide 29: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Strong 33% YoY balance sheet growth driven by Financing and Investments SAR (mn) 4Q 21 3Q 21 QoQ 4Q 2020 YoY Total Assets (SARbn) 900 800 +33.0% Cash & balances with SAMA 40,363 34,420 +17% 47,363 -15% 624 Due from banks & other FI 26,065 27,518 -5% 28,655 -9% 583 700 600
Slide 30: 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) 650 +43.4% Corporate Auto Loans SAR 71bn 550 SME SAR 17bn 452.8 15.9 16% 421.0 SAR 16bn 4% Credit Cards 14.5 Mortgage 450 0
Slide 31: 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) 700 +35.5% Customers’ Time Investments Treasury 556.4 SAR 130bn Corporate SAR 29bn 519.0 26.3 600 26.0 26% SAR 208bn
Slide 32: Net Income Trends
Net Income Trends | Solid net profit growth of 39% YoY SAR (mn) FY 21 FY 20 YoY 4Q 21 4Q 20 YoY Net Income For The Period Before Zakat (SARmn) Net financing & investment income 20,392 16,913 +21% 5,355 4,638 +15% +28.5% Fee from banking services, net 3,933 2,660 +48% 1,114 864 +29% 7,000 6,000 Excha
Slide 33: 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) 33,000 11,000 9,000 +18.3% +24.1% 28,000 6,578 6,855 5,948 6,336 1,273 4 239 25,716 5,794 3,479 7,000 23,000 5,000 18,000 20,72
Slide 34: Expenses Trends
Expenses Trends | Cost efficiencies resulted in higher positive jaws Operating Expenses (SARmn) 3,500 Operating Expenses Growth Drivers By Type (SARmn) 6,000 +1.6% +2.7% 3,000 5,500 2,500 5,000 1,763 1,730 1,754 1,791 155 24 6 6,927 1,652 2,000 4,500 6,742 1,500 4,000 1,000 3,500 500 0 3,000 4Q 20 1
Slide 35: 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) +23.1% 0 3,000 0 2,500 0 0.75% 746 3,010 2,000 0.67% 0 0.64% 0.62% 0.60% 1,500 0 2,445 0 1,000 (181) 0 500 0 0 FY 20 Retail Non-Retail FY 21 (0) FY 20 1Q 21 1H
Slide 36: Asset Quality Trends (2)
Asset Quality Trends (2) | Healthy stage coverage reflecting prudent risk management Net Impairment Charges (SARmn) Movement in Net Impairment (SARmn) 2,700 1,000 +7.3% 2,500 +8.3% 800 253 584 594 590 2,300 600 550 577 2,345 2,166 2,100 400 1,900 (74) 200 1,700 0 1,500 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21
Slide 37: Liquidity Trends
Liquidity Trends | Liquidity remains comfortably within regulatory requirements HQLA (SARbn) Loan to Deposits Ratio (SAMA) (%) 1 140 +16.4% Regulatory 120 1 Maximum 90% 93.1 94.8 87.7 83.2% 82.7% 82.3% 81.4 1 80.6% 100 79.7 78.8% 80 1 60 1 40 1 20 0 1 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 4Q 20 1Q 21 2Q 21
Slide 38: Capitalization Trends
Capitalization Trends | Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) 120 600 +31.8% 100 +21.7% 425.6 500 395.8 37.8 71.0 75.0 33.3 80 323.0 61.6 400 2.4 4.8 33.3 3.6 60 4.5 3.5 300 9.3 385.4 70.2 40 358.8 66.5 200 280.4 58.1 20 100 0 0 4Q 20 3Q 21 4Q 21 4Q 20 3Q 21
Slide 39: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) 0 0 3 +28.5% 3.94% 4.00% 3.98% 3.94% 2 0 3.56% 1.52 1.60 1.33 1.44 0 2 1.25 1 0 1 0 0 0 FY 20 1Q 21 1H 21 9M 21 FY 21 4Q 20 1Q 21 2Q 21 3Q 21 4Q 21 Return on Equity (%) Return on Assets (%) 0
Slide 40: 2022 Guidance
2022 Guidance FY2021 Investor Presentation
Slide 41: FY 2022 Assumptions and Outlook
FY 2022 Assumptions and Outlook | Positive economic outlook with focus in delivering efficiencies • IMF forecasted Saudi GDP growth of 4.8% in 2022 while MoF forecasts stands at 7.8%. • MoF forecasted a budget surplus of SAR90bn. representing 2.5% of GDP in 2022 Economy • Consumer spending increased
Slide 42: FY 2022 Guidance
FY 2022 Guidance | Continuation of excellent results and strategy execution FY 2020 FY 2021 FY 2021 FY 2022 Actual Latest Guidance Actual Guidance Balance Sheet Financing SAR 315.7bn 38% - 41% +43.4% High teens Net profit margin 4.71% -45 bps to -55 bps -50 bps -45 bps to -55 bps Profitability Cost
Slide 43: FY 2021 Operating Results
FY 2021 Operating Results
Slide 44: Retail Banking
Retail Banking | Strong growth supported operating income growth YoY Retail YoY Total Operating Income (SARmn) SAR (mn) FY 21 FY 20 % 6,000 -2.1% Net financing and investment 11,353 11,335 +0.2% 5,000 income 3,695 Fees and other income 2,654 2,122 +25.1% 4,000 3,537 3,509 3,342 3,461 Total operating
Slide 45: Corporate Banking
Corporate Banking | Net income growth driven by growth and lower impairment charges Corporate YoY Total Operating Income (SARmn) SAR (mn) FY 21 FY 20 % 1,600 +0.1% Net financing and investment 1,400 2,440 2,332 +4.6% 1,200 1,079 income 1,000 905 948 907 Fees and other income 1,080 399 +170.8% Total
Slide 46: Treasury
Treasury | Strong net income growth driven by investment portfolio growth Treasury YoY Total Operating Income (SARmn) SAR (mn) FY 21 FY 20 % 3,500 +112.7% Net financing and investment 3,000 6,524 3,199 +104.0% income 2,500 2,280 Fees and other income 691 530 +30.5% 1,942 1,622 Total operating income
Slide 47: Al Rajhi Capital
Al Rajhi Capital | Continue to maintain a leading market share in brokerage ARC YoY Total Operating Income (SARmn) SAR (mn) FY 21 FY 20 450 % 400 -25.9% Net financing and investment 75 48 +57.0% 294 350 279 income 300 258 Fees and other income 899 758 +18.7% 250 215 207 Total operating income 974 80
Slide 48: IR Contact Information
IR Contact Information
Slide 49: Additional Information
Additional Information | Contact investor relations for more information Rayan Alshuaibi Upcoming Events in 1Q 2022 Head of Investor Relations 28th – 8th March EFG Hermes’ annual One-on-One Conference +966 (11) 828 1972 2nd – 3rd March Goldman Sachs Fifth Annual Saudi Arabia Conference alshuaibirs@a
Slide 50: 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