Alinma Bank · TADAWUL:1150
Alinma Bank — 2Q 2022 Earnings Presentation
50 slides from Alinma Bank's earnings presentation, August 2022
Slide 1: Investor Presentation 2Q 2022
Investor Presentation 2Q 2022 August 2022 digital. fast. convenient.
Slide 2: Table of Contents
Table of Contents 1 Alinma Overview 2 Strategy Update 3 Historical Financial Performance 4 1H 2022 Financial Performance 5 Segmental Performance 6 Outlook & Guidance 7 Appendix 2Q 2022 INVESTOR PRESENTATION 2/50
Slide 3: Alinma Overview
Alinma Overview 2Q 2022 digital. fast. convenient.
Slide 4: History
History Alinma Bank was established in 2006 as full-fledged Islamic banking services provider. Est. > > > 2006 2007 2008 2020 Establishment Young Corporate Bank Publicly Listed Company Major Capital Increase Alinma was established by Royal Alinma began providing Shariah Alinma launched its IPO and A
Slide 5: Alinma Overview
Alinma Overview Alinma is the youngest bank in KSA 14.9m 496K 98.8% Monthly Average Users Smartphone Daily Average Users Digital Transactions Retail Digital Snapshot #2 in KSA #3 in KSA #4 in KSA 22.7% CAR 3.31% NIM 12.6% ROE (1Q 2022) (1Q 2022) (1Q 2022) 5.7% 6.3% Assets Financing (1Q 2022) (1Q 202
Slide 6: Management Team
Management Team Alinma has built an experienced new management team poised to execute its strategy Abdullah Ali Al Khalifa Chief Executive Officer (CEO) Saleh Abdullah Al Zumaie Emad Abdulrahman Al Butairi Abdullah Jamaan Al Zahrani Meshary Abdulaziz Al Jubair SVP, Head of Retail & Digital Banking H
Slide 7: Strategy Update
Strategy Update 2Q 2022 digital. fast. convenient.
Slide 8: Strategic Positioning
Strategic Positioning Alinma Bank's strategic positioning cascades down into each business strategy Be recognized and celebrated as the fastest and Excellence most convenient bank in KSA Shariah Compliance Bank wide Be the #1 in Net Promoter Score (NPS) across KSA Banks Digital Corporate Be the #1 E
Slide 9: Strategy Overview
Strategy Overview Key success factors for Alinma Bank's strategic positioning digital fast convenient "Most digitally advanced, fastest, "Best customer experience and and most convenient bank" fastest turnaround time" #1 NPS Large, Mid Corporate Affluent & HNW Project Finance Youth Retail Corporate
Slide 10: Strategy Progress Update
Strategy Progress Update Driving changes across the businesses and bank-wide 2021 - 2025 2Q 2022 2022 Strategic Ambitions Achievements Initiatives In-Progress UX Lab was introduced as a best-in-class enabler to empower UX driven approach Driving Agile delivery of IT projects Build digital factor
Slide 11: Retail
Retail Focus on building two customer franchises Focus to date Customer experience 1 Digitally-savvy 2 Digitally-savvy 3 Alinma Wealth Segments and operational Affluent and HNW Youth Retail Vision excellence Acquisition focused on classic segments > Experienced professionals and self-employed Saudis
Slide 12: Corporate
Corporate Evolve the bank and diversify across sectors Focus to date Global Transaction Large corporates and Large, mid-corporate & High-quality SME Alinma 1 2 3 Banking (GTB) – Cash & project finance project finance portfolio Corporate Vision Trade Management Focused on lending Drive customer centr
Slide 13: Treasury
Treasury Become core partner for corporate clients and grow FI franchise Focus to date Liquidity management and Enhanced financial High Quality Asset Alinma 1 Derivative products 2 3 stable risk institutions franchise Liability Management Treasury Vision Strong track record with well-managed liquidi
Slide 14: Digital
Digital Build Digital to scale customer experience and operational excellence across the bank Focus to date World-Class Digital Improve Operating Drive Operational Alinma 1 2 3 Driving digital capabilities Capabilities Model Excellence Vision Pursuing initiatives across Advanced Analytics and Big >
Slide 15: Human Capital
Human Capital Fostering a great working environment and being the cultural transformation champions in the organization Focus to date Hiring and training Drive cultural Grow capabilities across Organizing Alinma for Alinma 1 2 3 activities change agenda the bank success Human Capital Vision Improve
Slide 16: Historical Financial Performance
Historical Financial Performance digital. fast. convenient.
Slide 17: Balance Sheet Track Record
Balance Sheet Track Record Solid history of strong balance sheet momentum… Total Assets (SARbn) Financing (SARbn) Customers' Deposits (SARbn) +11% CAGR +12% CAGR +8% CAGR 156.9 173.5 111.2 126.3 119.5 121.1 131.8 94.8 89.1 90.1 102.1 114.8 121.5 79.1 83.9 2017 2018 2019 2020 2021 2017 2018 2019 2020
Slide 18: P&L Track Record
P&L Track Record …translating to consistently strong top-line growth and solid profitability Total Operating Income (SARmn) Total Operating Expenses (SARmn) Net Income (SARmn) +11% CAGR +11% CAGR +8% CAGR 6,663 3,484 3,628 2,857 2,535 2,709 5,610 5,682 2,783 4,373 4,845 2,356 2,322 2,011 1,966 2017
Slide 19: 1H 2022 Financial Performance
1H 2022 Financial Performance 2Q 2022 digital. fast. convenient.
Slide 20: 2Q 2022 Balance Sheet Highlights
2Q 2022 Balance Sheet Highlights Balance sheet growth from financing and investments growth funded mainly from CASA Total Assets (SARbn) Total Liabilities (SARbn) Total Equity (SARbn) +6% +7% +2% 173.5 179.5 184.6 142.8 148.0 153.2 30.7 31.5 31.5 164.1 166.8 138.9 136.6 30.2 25.2 2Q 21 3Q 21 4Q 21 1
Slide 21: 2Q 2022 P&L Highlights
2Q 2022 P&L Highlights Net income for 1H 2022 grew by 29% YoY from 15% income growth and lower risk cost Total Operating Income (SARmn) Total Operating Expenses (SARmn) Net Income (SARmn) +17% +5% +30% 1,808 1,932 985 925 1,653 1,724 1,682 861 897 886 903 825 710 738 619 2Q 21 3Q 21 4Q 21 1Q 22 2Q 2
Slide 22: Balance Sheet Trends
Balance Sheet Trends Balance sheet growth of 6% from increase in financing and investments Management Commentary Total Assets Movement YTD (SARbn) Growth in total assets of 6% YTD mainly driven by 4% financing growth and +6% 13% growth in investments. Total liabilities grew by 7% during 1H 2022
Slide 23: P&L Trends
P&L Trends Net income for 1H 2022 grew by 29% YoY due to 15% income growth and lower impairment charges Management Commentary Net Income Movement YoY (SARmn) Net income for 1H 2022 grew 29% YoY to SAR 1,750mn from 15% income +29% growth and a 30% decrease in impairments despite 23% higher operatin
Slide 24: Financing
Financing Increase in gross financing of 4% during 1H 2022 from 17% growth in retail financing Financing, Gross (SARbn) Financing, Gross Movement YTD (SARbn) +4% +4% 123.5 125.5 130.3 133.0 135.1 2.2 2.7 0.4 135.1 130.3 (0.5) 97.1 98.8 102.3 102.1 102.2 26.4 26.7 28.0 30.8 32.9 QoQ 2Q 21 +2% 3Q 21 +
Slide 25: Investments
Investments 13% growth in investments YTD from additional investment grade securities Investments (SARbn) Investments Movement YTD (SARbn) +13% +13% 36.0 37.7 4.1 0.2 0.2 37.7 30.7 31.9 33.3 33.3 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 Total investments Sukuk Funds Equities & other Total investments 4Q 21 2Q
Slide 26: Deposits
Deposits Deposit growth of 8% driven by 16% CASA growth Customers' Deposits (SARbn) Customers' Deposits Movement YTD (SARbn) +8% +8% 125.9 121.1 128.0 130.4 121.1 12.8 130.4 116.7 79.5 75.9 79.7 88.0 92.4 (3.4) 46.4 40.7 41.4 40.0 38.0 QoQ 2Q 21 -7% 3Q 21 +4% 4Q 21 +6% 1Q 22 +2% 2Q 22 Total customer
Slide 27: Income from Financing & Investments
Income from Financing & Investments Gross funded income grew 15% from 29% growth in investment income and 13% growth in financing income Funded Income, Gross (SARmn) Total Funded Income, Gross Movement YoY (SARmn) +21% +15% 1,511 1,653 302 3,127 1,363 1,452 1,474 2,714 111 1,300 1,232 1,242 1,391 1,
Slide 28: Net Profit Margin
Net Profit Margin Average balance of investments and financing grew 4%; while net profit margin saw an increase of 5bps YoY Average Balance of Investments & Financing (SARbn) Net Profit Margin (%) +4% +5bps 152.7 156.8 160.7 162.5 3.37% 3.45% 3.42% 3.31% 3.42% 148.7 120.3 122.5 125.6 129.7 129.3 28.
Slide 29: Fee and Other Income
Fee and Other Income Non-funded income for 1H 2022 increased by 24% YoY Non-Funded Income (SARmn) Non-Funded Income Movement YoY (SARmn) +23% +24% 496 519 106 50 1,015 422 819 4 36 331 373 225 222 142 117 73 280 259 256 271 297 QoQ 2Q 21 -21% 3Q 21 +13% 4Q 21 +33% 1Q 22 +5% 2Q 22 Non-Funded Fees fro
Slide 30: Operating Expenses
Operating Expenses 1H 2022 saw 23% growth in operating expenses YoY mainly from higher employee and G&A costs Operating Expenses (SARmn) Operating Expenses Movement YoY (SARmn) +28% +23% 684 642 663 140 1,306 618 1,060 93 13 519 266 327 253 284 196 63 66 66 69 61 1,306 262 288 291 323 310 QoQ 2Q 21
Slide 31: Impairments for Financing
Impairments for Financing Cost of risk for 1H 2022 declined by 41bps from 28% lower credit impairment charges YoY Impairments for Financing (SARmn) Impairments for Financing (SARmn) -26% -28% 337 684 279 289 241 248 489 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 1H 21 1H 22 QoQ -17% +4% -17% +3% Impairments Allo
Slide 32: Non-Performing Loans
Non-Performing Loans The NPL ratio has improved by 36bps YoY Non-Performing Loans, Gross (SARbn) NPL, Gross Movement YTD (SARbn) +13% +13% 2.8 2.9 2.7 0.2 2.6 2.6 2.3 0.1 2.3 2.6 2.7 2.5 2.4 2.1 0.2 0.2 0.1 0.2 0.2 QoQ 2Q 21 +2% 3Q 21 -20% 4Q 21 +17% 1Q 22 -4% 2Q 22 Total NPL Retail Corporate Total
Slide 33: NPL Coverage
NPL Coverage NPL coverage improved YoY Stage-Wise Financing, Gross (SARbn) Stage-Wise Financing, Gross Composition (SARbn) +4% 2% 7% 133.0 135.1 Stage 1 123.5 125.5 130.3 2.9 2.3 2.7 2.6 2.8 8.9 6.9 6.8 9.1 8.9 121.4 123.6 135.1 Stage 2 113.8 115.8 118.9 Stage 3 QoQ 2Q 21 +2% 3Q 21 +4% 4Q 21 +2% 1Q
Slide 34: Capitalization
Capitalization Capital grew 2% YTD and capital ratios remained stable while ROE saw an increase of 2.5ppts YoY Total Capital (SARbn) Risk Weighted Assets (SARbn) +2% +7% 32.5 33.1 33.9 33.9 143.5 145.2 145.3 149.2 155.1 27.5 3.6 3.4 0.9 0.8 0.8 11.9 1.6 1.7 1.7 1.8 11.2 11.6 10.7 11.0 1.6 30.9 31.4
Slide 35: Liquidity
Liquidity Alinma’s liquidity position is healthy and comfortably within regulatory limits NSFR (%) LDR SAMA Ratio (%) 115% 111.7% 95% 109.4% 110.1% 110.5% 110% 105.8% 90% 90% 105% 86.0% 85% 82.8% 100% 100% 80% 95% 90% 75% 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 NSFR Regulatory Mi
Slide 36: Segmental Performance
Segmental Performance 2Q 2022 digital. fast. convenient.
Slide 37: Segmental Performance Highlights
Segmental Performance Highlights Retail and corporate comprise the majority of segmental income Operating Income Composition (SARmn) Net Profit Before Zakat Composition (SARmn) 10% 13% Retail 34% Treasury 37% 21% Corporate Retail 3,740 22% 1,951 Treasury Corporate Investments & brokerage Investments
Slide 38: Segmental Performance Highlights
Segmental Performance Highlights All segments reported growth in operating income YoY Operating Income Movement YoY (SARmn) Net Income Before Zakat Movement YoY (SARmn) +15% +29% 94 93 281 14 3,740 245 10 1,951 3,257 1,508 307 (118) Total operating Retail Corporate Treasury Investments & Total opera
Slide 39: Segmental Performance - Retail
Segmental Performance - Retail Strong financing and deposit growth driving operating income growth of 7% YoY SAR (mn) 1H 2022 1H 2021 Δ% 2Q 2022 2Q 2021 Δ% Retail NPL (%) 0.8% Income from investments and 0.6% 0.6% 1,222 1,158 +6% 652 584 +12% financing, net Fees from services & other income 153 123
Slide 40: Segmental Performance - Corporate
Segmental Performance - Corporate Strong income growth and lower impairments translate to significant net income growth SAR (mn) 1H 2022 1H 2021 Δ% 2Q 2022 2Q 2021 Δ% Financing, Gross Composition (SARbn) 19% Real Estate Income from investments and 27% 1,020 923 +10% 524 461 +14% Services financing,
Slide 41: Segmental Performance - Treasury
Segmental Performance - Treasury Strong income and net income growth SAR (mn) 1H 2022 1H 2021 Δ% 2Q 2022 2Q 2021 Δ% Investments (SARbn) Income from investments and +13% 438 314 +40% 214 163 +31% financing, net Investment-related income 241 135 -78% 147 81 -82% 37.7 33.3 36.0 Fees from services & oth
Slide 42: Segmental Performance – Investments & Brokerage
Segmental Performance – Investments & Brokerage Modest income growth and lower expenses driving strong net income growth in 1H 2022 Assets Under Management (SARbn) SAR (mn) 1H 2022 1H 2021 Δ% 2Q 2022 2Q 2021 Δ% +2% Income from investments and 73.2 73.1 76.4 76.3 77.5 46 44 +5% 23 23 -2% financing, n
Slide 43: Outlook & Guidance
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Slide 44: Economic Outlook
Economic Outlook Improving economic outlook supportive for the banking sector, despite the rise of political tensions and Covid risks remaining Real GDP Growth (%) 10.0% 7.6% Further rebound in real GDP growth The KSA economy is expected grow by 7.6% in 2022; this 5.0% 3.2% projection is however hea
Slide 45: Guidance
Guidance 2022 outlook remains promising. Revised guidance for NPM and financing growth 1H 2022A Drivers 2022G Strong Mid-Corp, SME & Retail growth from strategic Balance Sheet Financing Growth +10% initiatives; modest growth on large corporate given Low teens YoY expected pricing competition Net Pro
Slide 46: Appendix
Appendix 2Q 2022 digital. fast. convenient.
Slide 47: ESG in Action
ESG in Action Alinma is progressing on key initiatives to drive the ESG agenda and enhance its ratings Deployment of digital channels Energy efficient lighting are now Air conditioning timers Renewable (solar) energy Environment and digital signatures to reduce in all branches. Planning to installed
Slide 48: ESG in Action
ESG in Action In 2Q 2022 Alinma BoD formed a Governance and Sustainability committee to oversee the ESG framework and progress Governance and Sustainability Committee Objectives The committee members are to be actively engaged in ESG Alinma’s management team manages the implementation initiatives an
Slide 49: IR Contact
IR Contact Ahmed Sager Head of Investor Relations Mobile: +966-53-775-3352 Direct: +966-11-218-86364 Email: aosager@alinma.com Visit our new website here for more investor disclosures: Ibrahim Al Khudair • Financial statements Investor Relations Assistant Manager • Annual reports Mobile: +966-55-788
Slide 50: Disclaimer
Disclaimer This presentation is being provided to you for general information purposes only. The information contained in the presentation has been obtained from sources believed by Alinma Bank (“Alinma") to be up to date, correct and reliable, but Alinma does not make any representation or warranty