Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q2 2023 Earnings Presentation
39 slides from Al Rajhi Bank's earnings presentation, 2023
Slide 1: Al Rajhi Bank Investor Presentation 2Q 2023 Results
Al Rajhi Bank Investor Presentation 2Q 2023 Results
Slide 2: 2Q 2023 Investor Presentation
2Q 2023 Investor Presentation 03 The World’s Leading Islamic Bank 14 Bank of The Future Strategy 17 KSA Macro-Economic Environment 20 2Q 2023 Financial Highlights 34 FY 2023 Guidance 37 IR Contact Information 2Q2023 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, 2Q 2023 Presence & Branches, 2Q 2023 100% 66% Jordan Kuwait Islamic CASA Customers 10 2 513 4,644 Branches ATMs 14.5 million 71% 93:7 577,172 163 NPS Digital:Manual 513 POS Remittance 13 Centers Saudi Arabia Malaysia Largest network in Saudi A
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 66% CASA deposits
The World’s Leading Islamic Bank | Robust balance sheet with 66% CASA deposits in 2Q 2023 Total Assets (SARbn) Capital Ratios (%) +104.3% 0 1,000 762 785 0 800 21.4% 21.7% 624 19.9% 0 19.1% 469 0 600 17.5% 20.3% 20.5% 384 0 400 18.8% 18.0% 17.0% 17.2% 0 200 0 16.4% 0 0 2019 2020 2021 2022 1H 23 2019
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 0 22.7% 20.5% 0 2.76% 2.70% 0 19.9% 19.6% 2.56% 2.46% 2.15% 0 0 0 0 0 0 0 0 2019 2020 2021 2022 1H 23 2019 2020 2021 2022 1H 23 Net Profit Margin (%) Cost of Funds (%) 0 0 0 0 0 2.23% 0 5.22% 0 4
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 14.5 0 0 +60bps 0 +600bps 0 0 24.2% 24.6% 23.3% 0 25.2% 24.3% 25.9% 25.2% 25.8% 0 19.4% 17.3% Million 0 0 0 0 0 0 Active Customers 0 0 0 0 0 2019 20
Slide 9: Leading 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 +120bps +120bps 0 0 0 0 29.6% 29.1% 28.8% 0 0 27.0% 26.8% 26.8% 27.4% 27.6% 28.2% 0 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 0 2019 2020 2021 20
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 +450bps +90bps 1 1 1 44.6% 44.3% 42.2% 51.8% 51.7% 40.6% 1 1 37.7% 1 46.8% 47.6% 47.7% 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) 30 June 2023 RAJHI SNB Riyad TASI 350 Key Metrics Closing Price SAR 73.0 300 Market Cap SAR 292.0 bn Market Cap / % Industry 31.6% 250 Market
Slide 12: ESG Highlights | 2Q 2023
ESG Highlights | 2Q 2023 Renovation USD 1.2 bn Of children with ISO/DIS 37301:2020 Green syndicated loan disability Association Compliance clinic Started using solar energy system in 44 SAR 41.6mn 6 ISO 22301:2019 Key social projects Business Continuity branches to reduce Donation in 2022 delivered
Slide 13: Awards | Recent international and local recognitions
Awards | Recent international and local recognitions Global Finance: International Finance Awards: The Global Economics World Finance: • Best mobile banking app award • Best Mobile Banking Application • Most Innovative Digital Bank – • Best Consumer Digital Bank - for corporate in the middle east –
Slide 14: We are building the Bank of the Future
We are building the “Bank of the Future”
Slide 15: 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 Customer Experience Digital Core Banking Platform Become Leading Finance Company Expand
Slide 16: 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 17: KSA's Macro-Economic Environment
KSA’s Macro–Economic Environment
Slide 18: KSA Economic Outlook
KSA Economic Outlook | Economic conditions remain positive for the Kingdom Highlights GDP Growth/Brent Oil Price 99.0 • GDP grew by 1.1% in 2Q 2023 driven by higher non-oil activities 83.5 100.0 7.2 79.5 70.9 64.4 80.0 IMF revised down Saudi’s GDP growth forecasts to 1.9% for 2023 and 5.2 • 8.7 2.8%
Slide 19: Banking Sector Highlights
Banking Sector Highlights | Banking system deposits growth outpaced loans growth in 1H2023 Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARmn) 79.5% 81.5% 78.7% 77.1% 75.0% Deposits growth in the banking system during first half outperformed 2,800 • 80.0% 2,349 2,471 2,440 loans growt
Slide 20: 2Q 2023 Financial Highlights
2Q 2023 Financial Highlights
Slide 21: First Half 2023 Results Summary
First Half 2023 Results Summary | Results are in line with expectations 1.9% YTD Growth in financing portfolio 3.0% Growth in liabilities LDR below regulatory minima 3.0% YTD Balance Net Financing Total Liabilities Loan to Deposit Ratio Sheet Growth 568.3bn +1.9% 579.1bn 661.4bn +3.0% 681.3bn 85.9%
Slide 22: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Balance sheet growth of 3% YTD driven by Financing and Investments Total Assets (SARbn) SAR (mn) 2Q 23 1Q 23 QoQ 4Q 22 YTD 1,100 1,000 +10.6% Cash & balances with SAMA 46,020 45,625 +1% 42,052 +9% Due from banks & other FI 10,983 13,010 -16% 25,656 -57% 785 900 762 776 Inv
Slide 23: Balance Sheet Trends (2)
Balance Sheet Trends (2) | Financing growth driven by Mortgage and Corporate Financing, Net (SARbn) Financing, Net Mix By Segment Retail Financing Mix By Segment (SARbn) (SARbn) +11.4% Corporate SAR 121bn Auto Loans 750 SME SAR 18bn 579.1 21% 568.3 27.4 SAR 27bn 650 4% Credit Cards 519.7 25.5 5% 550
Slide 24: Balance Sheet Trends (3)
Balance Sheet Trends (3) | Balance sheet shows improving funding mix Total Liabilities (SARbn) Total Customers' Deposits Mix By Total Liabilities Mix By Segment Type (SARbn) (SARbn) Treasury +8.6% SAR 104bn 900 Customers’ Time 681.3 15% 800 627.4 661.4 25.3 Investments Other 31.9 25.7 customer Rajhi
Slide 25: Net Income Trends
Net Income Trends | net profit lower by 1.2% for the first half 2023 Net Income For The Period After Zakat (SARmn) SAR (mn) 1H 23 1H 22 YoY 2Q 23 2Q 22 YoY Net financing & investment income 10,319 10,907 -5% 5,194 5,567 -7% 7,000 6,000 -2.5% Fee from banking services, net 2,339 2,310 +1% 1,129 1,163
Slide 26: Operating Income Trends
Operating Income Trends | Lower operating income driven by higher cost of funding Total Operating Income (SARmn) Total Operating Income Growth Drivers By Type (SARmn) 18,000 10,000 -4.5% 16,000 -3.5% 7,148 7,206 7,264 14,104 14,000 6,781 6,827 28 44 19 13,608 8,000 12,000 10,000 6,000 8,000 (588) 4,
Slide 27: Expenses Trends
Expenses Trends | Cost efficiencies remains solid Operating Expenses (SARmn) Operating Expenses Growth Drivers By Type (SARmn) 3,500 +1.4% 3,000 +1.1% 3,000 2,500 2,001 148 101 2,000 1,820 1,861 1,800 1,840 2,500 3,589 3,640 2,000 1,500 1,500 (198) 1,000 1,000 500 500 0 0 2Q 22 3Q 22 4Q 22 1Q 23 2Q
Slide 28: Net Impairment & Cost of Risk
Net Impairment & Cost of Risk | Lower net impairment resulted in cost of risk improvement Net Impairment Charges (SARmn) Cost of Risk (%) 950 850 -37.9% 0 750 580 0 0.47% 650 550 490 0.43% 0.39% 0 450 353 359 360 0.25% 0.25% 0 350 250 0 150 50 (0) 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 1H 22 9M 22 FY 22 1Q 2
Slide 29: Asset Quality Trends (1)
Asset Quality Trends (1) | Asset quality remains healthy with high NPL coverage Movement in NPL (SARmn) 3,500 NPL Formation (SARmn) 3,000 +15.8% 5,000 +15.8% 535 3,574 2,500 4,000 2,127 3,574 3,085 3,085 2,000 3,000 (46) 1,500 2,000 1,000 (1,638) 1,000 500 0 0 4Q 22 Retail Non-Retail 2Q 23 4Q 22 Wri
Slide 30: Asset Quality Trends (2)
Asset Quality Trends (2) | Healthy stage coverage reflecting prudent risk management ECL by Stage (SARmn) Movement in ECL by Group (SARmn) 8,861 10,000 8,028 8,041 10,000 -9.3% 519 8,000 3,061 8,000 8,861 6,000 3,037 3,600 8,041 6,000 2,157 1,715 (1,339) 1,571 4,000 4,000 3,643 3,276 2,000 2,870 2,0
Slide 31: Liquidity Trends
Liquidity Trends | Liquidity remains comfortably within regulatory requirements HQLA (SARbn) Loan to Deposits Ratio (SAMA) (%) +15.2% Regulatory 180 1 160 Maximum 90% 126.7 1 88.4% 85.9% 87.8% 140 118.1 122.0 83.8% 81.9% 120 110.0 112.7 1 100 1 80 60 1 40 1 20 0 0 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 2Q 22
Slide 32: Capitalization Trends
Capitalization Trends | Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) 700 +6.9% +22.4% 160 600 140 498.0 503.5 471.1 42.3 38.4 106.6 109.0 37.8 120 500 1.6 5.1 89.1 5.7 5.7 100 2.7 400 5.4 80 300 454.0 460.0 60 430.7 100.9 103.3 83.7 200 40 100 20 0 0 2Q 22 4Q 22 2Q
Slide 33: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) 2 0 -6.7% 2 0 1 1.05 1.07 1.08 0.99 0.98 0 1 0 3.74% 3.76% 3.71% 1 3.31% 3.31% 1 0 1 0 0 0 0 0 0 1H 22 9M 22 FY 22 1Q 23 1H 23 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 Return on Equity (%) Return on Asse
Slide 34: FY 2023 Guidance
FY 2023 Guidance
Slide 35: FY 2023 Assumptions and Outlook
FY 2023 Assumptions and Outlook | High interest rates is expected to weigh on credit demand • IMF revised down Saudi GDP growth forecasts to 1.9% in 2023 and 2.8% in 2024 • Saudi economy grew by 1.1% in 2Q23, driven by 5.5% growth in non-oil activities and 4.2% contraction in oil activities. Economy
Slide 36: FY 2023 Guidance
FY 2023 Guidance | Progressing in line with “Bank of The Future” strategy FY 2023 Guidance 1H 2023 Actual Guidance Revision Balance Sheet Financing Mid single digit +1.9% Mid single digit Net profit margin -25 bps to -35 bps -57 bps -40 bps to -50 bps Profitability Cost to income ratio Below 27% 26.
Slide 37: IR Contact Information
IR Contact Information
Slide 38: Additional Information
Additional Information | Contact investor relations for more information Rayan Alshuaibi Director of Investor Relations +966 (11) 828 1972 alshuaibirs@alrajhibank.com.sa Abdulrahman Alyami Manager Investor Relations +966 (11) 828 3586 AlyamiAH@alrajhibank.com.sa Alrajhi Mobile App Alrajhi Business A
Slide 39: 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