Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q1 2020 Earnings Presentation
56 slides from Al Rajhi Bank's earnings presentation, 2020
Slide 1: Al Rajhi Bank Investor Presentation
Al Rajhi Bank Investor Presentation 1Q 2020 Investor Pack
Slide 2: Agenda
1 ................................................................................. The World's Leading Islamic Bank 03 41 ................................................................................. 1Q 2020 Financial Results Overview 26 Key Messages 27 .........................................
Slide 3: The World's Leading Islamic Bank
Al Rajhi Bank The World's Leading Islamic Bank 3
Slide 4: Islamic Banking, Everywhere
Al Rajhi Bank Islamic Banking, Everywhere At a glance Presence & Branches Islamic Kuwait Islamic NPB Deposits NPB Deposits Customers Jordan 545 5,259 100% 94% 94% 10 2 100% Banking % of Total Deposits 9+m 9+ Branches ATMs million 127,095 231 NPS Digital: Manual Islamic Transactions 545 Remittance Hi
Slide 5: What makes us The Blue Chip Islamic Bank
Al Rajhi Bank What makes us "The Blue Chip Islamic Bank" Institutional Status - World's #1 Islamic Bank (by Assets; SAR bn) Large and Growing Market Cap (in SAR bn) 384 450 400 180 163 350 160 142 237 238 105 30 0 140 103 85 120 250 168 100 127 200 80 150 60 100 40 50 20 0 0 RAJHI DIB KFH QIB ADIB 2
Slide 6: Al Rajhi Bank, The Blue Chip Islamic Bank
Al Rajhi Bank, The Blue Chip Islamic Bank Robust balance sheet with 93% non-profit-bearing deposits at 2019 Total Assets (SARbn) Capital Ratios (%) 900 23.3% 800 0 22.0% 700 0 600 +13.1% 0 20.1% 19.9% 500 364 384 22.2% 0 400 340 343 0 20.9% 300 0 200 19.0% 0 100 0 18.8% 0 0 2016 2017 2018 2019 2016
Slide 7: The Blue Chip Islamic Bank
The Blue Chip Islamic Bank Outstanding foundation and strong returns Return on Equity (%) Return on Assets (%) 19.82% 20.49% 2.94% 2.76% 2.49% 2.68% 16.65% 17.24% 1.04% 7.01% 2016 2017 2018 2019 2016 2017 2018 2019 ROE Before Zakat ROE After Zakat ROA Before Zakat ROA After Zakat Net Profit Margin (
Slide 8: 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 Centers) 3 One of the hi
Slide 9: 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 +10bps +100bps 0 0 0 9+ Million 25.1% 25.1% 24.8% 25.2% 17.1% 17.3% 0 0 0 16.3% 16.2% 0 0 0 Customers 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 FY 16 FY 17 F
Slide 10: 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 -20bps +260bps 0 0 0 0 26.6% 26.8% 27.6% 0 0 0 26.4% 26.5% 26.2% 0 25.0% 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 FY 16 FY 1
Slide 11: 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 -270bps 1 -590bps 1 40.4% 39.6% 38.7% 37.7% 52.7% 52.7% 51.3% 1 46.8% 1 0 1 0 0 0 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 FY 16 FY 1
Slide 12: 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 Mar 2020 RAJHI NCB RIYAC TASI Key Metrics 220 Closing Price SAR 53.8 200 Market Cap SAR 134.5 bn Market Cap / % Industry 27.50% 180 Market
Slide 13: Market Performance
Market Performance Market cap and liquidity ensures high index weighting Highlights ARB has the highest weight in the MSCI GCC Index... Highest weight in MSCI GCC Index (11.82%) and (13.82%) in MSCI Float Adj Index # Top 10 Constituents Country Weight Sector KSA Index. Mkt Cap (%) Most active st
Slide 14: Awards
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 Best Financial
Slide 15: Our Values
Our Values Modesty Humility in everything we do Integrity & Openness and highest standards of Nurturing imagination and fostering Transparency corporate & personal ethics Innovativeness creativity Passion to A strong commitment to anticipate and Defining, differentiating and reinforcing Serve Our Me
Slide 16: ESG Highlights
ESG Highlights As of FY 2019 unless stated otherwise 32% 94 40% SAR 392bn of loans and 274mn SAR Social 1,198 growth in project finance responsibility Sharia Board female Total Assets Zakat paid integrate ESG programs in Resolutions employees factors 29 cities since 2015 ISO Green 2.6bn SAR Certific
Slide 17: KSA's Macro-Economic Environment
KSA’s Macro-Economic Environment 17
Slide 18: KSA Economic Outlook
KSA Economic Outlook Covid-19 outbreak and low oil prices poses unprecedented environment GDP Growth / Brent Oil Price 71.19 64.36 52.32 54.13 8 75 43.64 65 6 34.13 55 4 45 4.1 2.4 0.3 35 1.7 2 25 0 -0.7 15 -2 -4.5 5 -5 -4 -15 -6 -25 2015 2016 2017 2018 2019 2020 GDP Growth, constant prices (%) Bren
Slide 19: Macro Environment
Macro Environment Supportive of Banking Sector …and moderate pick up in bank deposits amid balance Moderate pickup in sector loan growth… sheet optimisation in rising rate environment 1,6 00 14.2% 16.0 % 1,850 7.3% 8.0 % 14.0 % 9.5% 1,550 7.0 % 1,800 12.0% 1,500 6.0 % 1,7 50 10.0 % 1,4 50 2.5% 5.0%
Slide 20: Al Rajhi Bank Strategy 2020
Al Rajhi Bank Strategy 2020 20
Slide 21: Saudi Arabia Vision 2030
Saudi Arabia Vision 2030 Key objectives A Vibrant Society A Thriving Economy An Ambitious Nation Lower unemployment Rise in Global Competitiveness Increase Umrah capacity from 8 to 30M Increase non-oil government revenue from 11.6% to 7% Index from 25 to top 10 from SAR 163B to 1T Double t
Slide 22: Financial Sector Development Program
Financial Sector Development Program Creating a thriving financial sector that serves as key enabler for Vision 2030 objectives Enable financial Promote and enable financial institutions to support Ensure the formation of an advanced capital market planning private sector growth Increase total GWP
Slide 23: Strategy Update
Strategy Update ABCDE ‘Back to Basics’ strategy delivered strong results in 1Q 2020 A B C D E Accelerated Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence +7% YoY operating income 3 new products launched to Al Rajhi Bank Academy 127 K POS 253 Bots growth cater
Slide 24: Our Response to Covid-19
Our Response to Covid-19 Actions taken to support stakeholders Activate Work from Home for c.60% of our staff. Expand employee awareness programs. Business Open c.50% of branches network. Initiated sanitizations to our premises. Employee Continuity Upgrade IT & Digital Infrastructure. Li
Slide 25: Macro environment impact
Macro environment impact Focused in managing the current challenges & beyond Key Challenges COVID-19 RATE ENVIRONMENT OIL PRICES Impact Growth Forecast Asset Quality Liquidity Profitability Focus Areas to 1 1 1 1 Core Portfolio is low risk, Strict and prudent liquidity Mitigate Consumer lending, mai
Slide 26: Financial Results
Financial Results 1Q 2020 Overview & Trends 26
Slide 27: Key Messages
Key Messages Solid 1Q 2020 Performance Net Income after Zakat down 7.3% Deposits up 7.5%, Financing up by 11.3% Liquidity remained healthy Net Income (SARmn) Total Customers' Deposits (SARbn) Capital Adequacy Ratio (%) -7.3% 20.7% 500 0 +7.5% 18.6% 316 6,000 294 0 19 400 5,00 0 11 0 2,568 2,380 4,0
Slide 28: Progress against guidance and outlook
Progress against guidance and outlook Revised guidance to reflect current macro environment FY 2019 Actual 1Q 2020 Actual FY 2020 Revised Guidance Balance High single digit Financing, Net (SAR bn) 249.7 261.4 Sheet growth Net Profit Margin 5.22% 5.00% -45 bps to -25 bps Profit- ability Cost to Incom
Slide 29: Balance Sheet Trends (1)
Balance Sheet Trends (1) Healthy growth in total assets Highlights SAR (mn) 1Q 2020 4Q 2019 QoQ 1Q 2019 YoY Cash and balances with SAMA 36,293 39,294 -8% 39,203 -7% Total assets increased by (+8%) as an increase in financing Due from banks and other FI 28,014 32,058 -13% 28,076 0% (+11%), investme
Slide 30: Balance Sheet Trends (2)
Balance Sheet Trends (2) Strong financing growth, mortgage is the main driver Highlights Financing, Net Mix By Segment Retail Financing, Net Mix By (SARbn) Type (SARbn) Mortgage Retail financing growth of (+17%) mainly driven by growth in Corporate SAR 65bn SAR 59bn mortgage financing (+77%). 23%
Slide 31: Balance Sheet Trends (3)
Balance Sheet Trends (3) Continued growth in non-profit bearing deposits Highlights Total Customers' Deposits Mix Total Customers' Deposits Mix By Type (SARbn) By Segment (SARbn) Time Customers deposits growth of (+8%) contributed by growth in SAR 19bn Corporate SAR 15bn demand deposits. 6% 5% Oth
Slide 32: Net Income Trends
Net Income Trends Resilient results despite unprecedented environment Highlights SAR (mn) 1Q 2020 4Q 2019 QoQ 1Q 2019 YoY Net financing and investment income 4,110 4,259 -3% 3,944 4% Net income decreased by (-7%) caused by higher operating Fee from banking services, net 618 456 35% 473 31% expense
Slide 33: Operating Income Trends
Operating Income Trends Solid operating income growth, inline with our strategy Total Operating Income Growth Drivers By Type (SARmn) Highlights Solid growth of (+7%) driven by yield income & fees. +7.1% 2,000 1,800 1,600 Fee income growth of (+31%) mainly from digital & payment. 4,968 1,400 1,2
Slide 34: Expenses Trends
Expenses Trends Upgrading IT & Digital platform, a long term investment Highlights Cost to income (%) Cost to income ratio at (32.6%) a 320 bps increase YoY. 0 0 Operating expenses grew by (+15.7%). 32.8% 32.6% 31.3% 0 0 30.2% 30.9% Higher IT related expenses primarily due to digital infrastru
Slide 35: Asset Quality Trends (1)
Asset Quality Trends (1) Asset quality remains healthy, despite an increase in corporate NPL Highlights Impairment Charges (SARmn) & COR (%) 693 3.20% 701 665 Provision increased by (+78%). 2.70% 601 2.20% NPL ratio at (1.07%) with an increase in Corporate NPL ratio. 389 386 501 1.70 % 401 332
Slide 36: Asset Quality Trends (2)
Asset Quality Trends (2) Healthy stage coverage & prudent risk management Highlights Gross loans by Stage (SARmn) 30 0 10.8% 96% of the portfolio is stage 1, above industry coverage across all 290 280 the stages. 2.9 270 2.3 260 Gross charge of SAR 939 has been taken in Q1 including SAR 250 8.0
Slide 37: Liquidity Trends
Liquidity Trends Liquidity remain comfortably within regulatory requirements Highlights Loan to deposit Ratios (%) LDR remains stable at (82%) driven by increase in financing. 1 Liquidity remains healthy, LCR at (177%) and NSFR at (127%). 1 1 HQLA decreased by (-6%) during Q1 2020. 82.1% 1 81.
Slide 38: Capitalisation Trends
Capitalisation Trends Capital position well above regulatory minima Total Capital (SARbn) Highlights -2.2% 70 Total Capital decreased by (2.2%) due to 2019 dividends payout. 65 Lower CAR at (18.6%), and CET1 at (17.6%) driven by growth in 60 53.8 54.1 financing. 55 52.6 2.8 2.9 3.0 Risk weight
Slide 39: Return Metrics
Return Metrics Returns remain well above industry average Return on Equity (%) Return on Assets (%) 0 0 3.21% 23.09% 2.93% 0 0 21.64% 2.84% 2.76% 20.72% 20.49% 2.49% 0 0 18.36% 0 0 0 0 0 0 1Q 19 1H 19 9M 19 FY 19 1Q 20 1Q 19 1H 19 9M 19 FY 19 1Q 20 A market-leading ROE Stable ROA Al Rajhi Bank The B
Slide 40: Operating Results
Operating Results 1Q 2020 Performance 40
Slide 41: Retail Banking
Retail Banking Strong growth in net profit driven by higher fee income Highlights SAR (mn) 1Q 2020 4Q 2019 QoQ 1Q 2019 YoY % % Retail Banking net income increased by (+12%), reflecting strong Net financing and investment income 2,975 3,193 -7% 2,834 +5.0% operating income performance. Fee and othe
Slide 42: Corporate Banking
Corporate Banking High impairment charge drives net income to decrease Highlights SAR (mn) 1Q 2020 4Q 2019 QoQ 1Q 2019 YoY % % Corporate Banking net income decreased by (74%) as a result of Net financing and investment income 535 558 -4% 516 +3.6% higher impairment charge. Fee and other income 97
Slide 43: Treasury
Treasury steady profit growth from increased fee income Highlights SAR (mn) 1Q 2020 4Q 2019 QoQ 1Q 2019 YoY % % Treasury net income rose (+1%) driven by inverse impairment Net financing and investment income 589 500 +18% 588 +0.0% charge of 2 mln, and (+2%) total operating income growth. Fee and o
Slide 44: Investment Services & Brokerage
Investment Services & Brokerage Healthy growth driven by higher operating income Highlights SAR (mn) 1Q 2020 4Q 2019 QoQ 1Q 2019 YoY % % Net income for Investment Services & Brokerage increased by Net financing and investment income 12 9 +41% 5 +155.4% (+21%) principally from (+12%) operating inco
Slide 45: Appendix
Appendix Additional Information
Slide 46: Board of Directors
Board of Directors Members Chairman Abdullah bin Sulaiman Al Rajhi Salah bin Ali AbalKhail Non-Executive Non-Executive Vice Chairman Alaa bin Shakib Al Jabiri Bader bin Mohammed Al Rajhi Khaled bin Abdulrahman Al Qoaiz Independent Non-Executive Non-Executive Abdulaziz bin Khaled Al Ghefaily Ibrahim
Slide 47: Management Team
Management Team International expertise combined with deep roots in Saudi Arabia Chief Executive Officer Chief Financial Officer Chief Operating Officer Waleed Al-Mogbel Abdulrahman Al Fadda Robin Jones Banking experience: 22 years Banking experience: 22 years Banking experience: 30 years Chief Risk
Slide 48: Al Rajhi Bank ESG FY 2019
Al Rajhi Bank ESG Investor Presentation FY 2019 48
Slide 49: ESG is part of Al Rajhi Bank's DNA
ESG is part of Al Rajhi Bank's DNA Ethical values are central to Islamic Finance, UN SDGs and KSA Vision 2030 Protection of faith, ISLAMIC FINANCE Zakat, no usury, risk sharing, life, mind, wealth, anti-speculation, prohibited and human dignity PRINCIPLES sectors, sanctity of contracts Vibrant Socie
Slide 50: Developments impacting Al Rajhi Bank's operating environment
Developments impacting Al Rajhi Bank's operating environment Major factors integrated into our approach to ESG and our value creation model Major Factors 'ABCDE' Strategy Accelerate growth Client & Investor Demands Improve portfolios in key customer segments Environmental Geopolitics Become Employer
Slide 51: ESG Highlights
ESG Highlights As of 2019 32% 94 40% SAR 384bn of loans and SAR 1.1 bn Social 1,198 growth in project finance responsibility Sharia Board female Total Assets Zakat paid integrate ESG programs in Resolutions employees factors 29 cities since 2015 ISO Green 11.3bn SAR Certification SAR3.1 bn 16,265 13
Slide 52: Placing customer relationships at the heart of ARB
Placing customer relationships at the heart of ARB We achieved our target of becoming the most recommended bank in KSA #7 ARB NPS-Score in KSA #1 NPS-Score 14 21 34 42 43 47 49 49 55% 50% 60% 65% 66% 68% 69% 69% 4% 21% 14% 12% 11% 11% 10% 10% 41% 29% 26% 23% 23% 21% 21% 20% 2015 2016 2017 2018 Q1' 1
Slide 53: Ensuring ARB staff are proud, valued and energized
Ensuring ARB staff are proud, valued and energized The ARB employee engagement index (EEI) score is at its peak 27 ARB Employee Engagement Index 66 EEI Score = Highly Engaged + Engaged 27 46 53 59 62 60 66 15% 29% 34% 28% 12% 38% 39% 38% 12% 17% 14% 19% 21% 21% 37% 13% 23% 6% 6% 6% 7% 13% 12% 11% 11
Slide 54: Conclusion and the way forward
Conclusion and the way forward We believe our future success is interlinked with the well-being of our stakeholders and the world around us. ESG Journey • Transparency on management of ESG issues • Relevant KPI disclosures as per GRI & SASB standards Governance • Target setting & Reporting • Open di
Slide 55: Additional Information
Additional Information Contact investor relations for more information Mr. Amr M. Sager Head of Investor Relations Tel: +966 (11) 828 3536 Email: sagera@alrajhibank.com.sa Mr. Faisal F. Altimyat Investor Relations Specialist Tel: +966 (11) 828 1457 Email: altimyatff@alrajhibank.com.sa Al Rajhi Bank
Slide 56: 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