Saudi National Bank · TADAWUL:1180
Saudi National Bank — Q2 2023 Earnings Presentation
45 slides from Saudi National Bank's earnings presentation, August 2023
Slide 1: 2Q 2023 Investor Presentation
2Q 2023 Investor Presentation Saudi National Bank Riyadh | August 2023
Slide 2: Contents
Contents SNB Profile P. 3 - 8 Operating Environment P. 9 - 11 Strategy & Operational Update P. 12 - 16 Financial Results Highlights P. 17 - 22 Financial Results Details P. 23 - 37 Segmental Review P. 38 - 42 Appendix P. 43 - 45 SNB | 2Q 2023 | Investor Presentation 2
Slide 3: SNB Profile
SNB Profile 2Q 2023 SNB | 2Q 2023 | Investor Presentation
Slide 4: SNB Overview
SNB Overview SNB is Saudi Arabia’s largest banking group with a well-diversified business model, leading client offering, and presence in 8 countries Our Purpose: Our Presence Advanced Digital Capabilities To propel our nation Retail User Penetration towards Vision 2030 83% and beyond. Wholesale User
Slide 5: SNB in KSA and GCC Context
SNB in KSA and GCC Context SNB is the leading bank in KSA and amongst the top 3 in the GCC countries SNB Rank SNB Rank Top 5 Banks in GCC by Rank in KSA in GCC Assets (SARbn) Financing (SARbn) Assets #1 #3 Peer 1 1,238 Peer 1 843 Peer 2 1,170 Peer 3 579 Financing #2 #3 SNB 996 SNB 578 Peer 4 828 Pee
Slide 6: Leading, diversified franchise
SNB market position as of 2Q 2023 Leading, diversified franchise KSA Total Market SNB Market Share in SARbn SNB Market Share in % Rank KSA Overall Banking (Assets) 3,577Bn SAR 996 2,581 27.9% #1 Wholesale Banking (Domestic Financing) 1,257Bn SAR 251 1,006 19.9% #1 Retail Banking (Domestic Financing)
Slide 7: Progress on ESG
Progress on ESG Materiality assessment & Sustainability framework Sustainability Framework Materiality Assessment Influence on stakeholder assessment and decisions 1 2 Most important 3 7 Promoting good ethical Preserving the 9 4 More important governance environment around us 10 5 Important 8 6 14 13
Slide 8: Strong credit profile
Credit Ratings Strong credit profile Rating Agency Saudi Arabia SNB Ratings SNB Outlook Quotes Long-term A- “Key strengths: (1) Leading market position A BBB+ in Saudi Arabia; (2) Strong capitalization, S&P Stable Outlook: Stable supported by stable and predictable A-2 A-2 Short-term earnings; (3) B
Slide 9: Operating Environment
Operating Environment 2Q 2023 SNB | 2Q 2023 | Investor Presentation
Slide 10: Supportive KSA macro-economic environment
Operating Environment Supportive KSA macro-economic environment Average Monthly Oil Prices (US$/bbl) Oil Demand Outlook (mmbd) Real GDP Growth (% Y/Y change) 140 102.5 102.2 20.0 120 101.9 102.0 15.0 100 101.5 101.0 10.0 80 101.0 5.5 75 5.0 60 70 100.5 2.4 100.0 0.0 40 100.0 99.6 -2.8 20 99.4 -5.0 9
Slide 11: Strong and stable banking sector
Operating Environment Strong and stable banking sector Bank Lending & Deposits (Y/Y % change) Bank Lending by Sector (M/M % change) Gross Mortgage Originations (SARbn) 20.0 4.0 14,000 200.0 3.0 12,000 150.0 15.0 2.0 10,000 1.0 0.8 8,000 100.0 10.0 0.8 0.0 6,000 50.0 5.0 -1.0 4,000 0.0 -2.0 2,000 0.0
Slide 12: Strategy & Operational Update
Strategy & Operational Update 2Q 2023 SNB | 2Q 2023 | Investor Presentation
Slide 13: SNB is focused on our strategic objectives
Strategy SNB is focused on our strategic objectives SNB’s Group Strategic Focus Areas This Translates to Specific Strategic Objectives and Initiatives for our Business Segments Grow market share in financing Drive payroll customer acquisition Grow domestic market share in Retail & Retail Corporate fin
Slide 14: 2022 marked by further focus on growth and optimization
Strategy 2022 marked by further focus on growth and optimization in Retail/Wholesale and increasing subsidiaries’ value contribution in line with the Group Strategy Retail 2022 Highlights Financing Market Share, % Mortgage Lending, SARbn Average Employees/Branch, emp. • NSCI and fee income growth, e
Slide 15: Digital Convergence
Digital Convergence Fostering digital leadership through customer adoption, growing digital sales and scaling up innovation Digitize the Bank Retail Digital Banking Digital Penetration, % Clients Digital Account Opening, % accounts Digital Sales, % Units Fortify digital leadership +12% +10% +4%
Slide 16: Merger Update
Merger Update Synergy realization is ahead of target and SNB continues to make progress on delivering merger benefits Unlocking merger benefits… with realized cost synergies already touching revised target of SAR 1.4Bn 1,379 Realized1 1,400 2 Revised Target nd Cost Synergies 99% 1,379 1,164 Realized
Slide 17: Financial Results Highlights
Financial Results Highlights 2Q 2023 SNB | 2Q 2023 | Investor Presentation
Slide 18: 2Q 2023 Performance Highlights
2Q 2023 Performance Highlights Robust net income growth from solid financing growth, improved efficiency and healthy credit quality Robust financing growth from Wholesale financing and Retail financing, including Mortgage financing SAR Bn 577.8 SAR Bn 251.7 SAR Bn 308.1 SAR Bn 151.7 +6% YTD +8% YTD +
Slide 19: Balance Sheet Summary
Balance Sheet Summary Balance sheet expansion of 5% YTD mainly from financing growth, funded by deposits Total Assets (SARbn) Total Assets Movement YTD (SARbn) 945.5 976.1 996.2 +5% 83 87 84 32.5 2.9 996.2 945.5 8.7 6.5 545 566 578 258 264 265 58 63 67 +15% +3% +6% +3% 4Q 22 1Q 23 2Q 23 4Q 22 Cash &
Slide 20: Income Statement Summary
Income Statement Summary Net income rose 10% YoY from higher operating income and lower impairments Net Income Attributed To Equity Holders Movement YoY (SARmn) Net Income (SARmn) +10% 4,725 4,765 5,022 5,016 4,589 410 10,037 420 (169) 370 (84) 9,091 QoQ +3% +1% +5% -0% 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23
Slide 21: Segmental Highlights
Segmental Highlights Solid net income contributions from Retail, Wholesale and International Total Assets Movement YTD (SARbn) Total Liabilities Movement YTD (SARbn) Total Assets Composition (%) +5% +6% Capital Markets 37 1 996 34 825 1.5% 945 16 15 Wholesale 779 (3) (0) (3) 55.8% Int'l 3.0% Retail
Slide 22: Outlook & Guidance
Outlook & Guidance Economic outlook remains positive and FY 2023 NSCI margin guidance revised downwards Macro-Economic Outlook1 SNB Financial Guidance FY 2022 Baseline 1H 2023 Actual FY 2023 Guidance Status Real GDP Growth +1.9% Financing Growth SAR 545Bn +6% Low double-digit Unchanged NSCI Margin 3
Slide 23: Financial Results Details
Financial Results Details 2Q 2023 SNB | 2Q 2023 | Investor Presentation
Slide 24: Balance Sheet Summary
Balance Sheet Summary Balance sheet expansion of 5% YTD mainly from financing growth, funded by deposits Total Assets (SARbn) SAR (mn) 2Q 2023 4Q 2022 Δ 2Q 2022 Δ 958.5 964.4 945.5 976.1 996.2 84 88 83 87 84 Cash & interbank 66,811 58,108 +15% 90,132 -26% Investments 264,827 258,292 +3% 247,851 +7%
Slide 25: Financing & Advances
Financing & Advances Solid, broad-based financing expansion Financing & Advances, Net (SARbn) Financing & Advances, Net Movement YTD (SARbn) 2023 Guidance Low double-digit 566.3 577.8 +6% 536.2 536.2 545.3 2 2 2 2 2 19 16 18 17 17 11.2 7.8 577.8 243 252 9.2 5.4 233 228 233 545.3 (0.7) (0.4) Retail W
Slide 26: Investments
Investments Investments up 3% primarily in other fixed income Investments, Net (SARbn) Investments, Net Movement YTD (SARbn) 252.2 258.3 263.6 264.8 247.9 +3% 26 23 24 21 22 56 58 57 52 8.6 264.8 58 0.8 258.3 (1.8) (1.0) 169 174 175 183 189 Domestic: SAR +7.6bn (+3%) QoQ +2% +2% +2% +0% +1% +12% -7%
Slide 27: Deposits
Deposits CASA growth YTD, though QoQ outflow of some transitory deposits moderated CASA ratio Customers' Deposits (SARbn) Customers' Deposits Movement YTD (SARbn) 593.0 596.9 610.8 602.2 +6% 568.3 23 22 21 21 24 15.1 602.2 104 137 120 134 117 20.8 568.3 (1.7) (0.3) 466 438 428 470 447 Domestic: Int’
Slide 28: Income Statement Highlights
Income Statement Highlights Net income rose 10% YoY from higher operating income and lower impairments SAR (mn) 1H 2023 1H 2022 Δ 2Q 2023 2Q 2022 Δ Net Income (SARmn) +9% NSCI 13,302 12,932 +3% 6,524 6,824 -4% 4,725 4,765 5,022 5,016 Fee & other income 3,926 3,506 +12% 1,973 1,521 +30% 4,589 Total o
Slide 29: NSCI & Margin
NSCI & Margin NSCI growth of 3% from earning assets expansion partly offset by margin moderation from shift in funding mix Net Special Commission Income Movement YoY (SARmn) Net Special Commission Income Composition (%) +3% Capital Markets 1,882 Wholesale 1.2% 4,615 35.1% 12,932 1,661 13,062 240 13,
Slide 30: NSCI & Margin
NSCI & Margin NSCI margin declined by 4bps driven mainly by -11bps impact from International, which was partially offset by +7bps improvement in the overall domestic NIM 1 Net Special Commission Margin Movement YoY (%) 1 2023 Guidance NSCI Margin YTD (%) 3.0%-3.2% -4bps 3.24% 0.40% 3.12% 3.15% 1.04%
Slide 31: Fee & Other Income
Fee & Other Income Fee and other income increased 12% YoY from higher international income Fee & Other Income (SARmn) Fee & Other Income Movement YoY (SARmn) 1,934 1,953 1,973 +12% 1,521 1,277 760 680 710 3,926 792 3,506 19 535 343 493 526 330 488 348 (96) (33) (180) 952 889 912 1,037 1,078 QoQ +27%
Slide 32: Operating Expenses
Operating Expenses Stable operating expenses as synergies and improved efficiency domestically offset increased International costs impacted by hyper inflation Operating Expenses (SARmn) Operating Expenses Movement YoY (SARmn) 2,547 2,609 2,431 2,363 2,441 +1% 701 626 593 778 686 4,990 169 5,050 585
Slide 33: Financing Credit Impairments & Cost of Risk
Financing Credit Impairments & Cost of Risk 17bps reduction in COR from Wholesale recoveries 1 Impairment Charge For Financing & Advances Movement YoY Cost of Risk YTD (%) 2023 Guidance 0.3% to 0.5% (SARmn) -41% 0.39% 0.35% 0.37% 0.33% 982 0.31% 75 15 581 0.33% 0.29% 0.27% 0.20% (490) 0.13% Domestic
Slide 34: Credit Quality: Improving NPL ratio
Credit Quality Improving NPL ratio YTD from write-offs in Wholesale Credit Impaired Financing Movement YTD (SARbn) NPL Ratio (%) 1.62% -12% 1.63% 1.57% 2.8 10.7 1.57% 9.0 0.0 1.59% 7.9 1.53% (1.1) (0.0) 1.36% 1 Domestic: SAR -1.1bn 1.34% (-13%) 1.30% +1% -16% -3% 1.30% NPLs Retail Wholesale Int'l NP
Slide 35: Credit Quality: ECL coverage
Credit Quality ECL coverage remained healthy ECL Allowance by Stage (SARbn) Total Financing & Advances, Gross by Stage (SARbn) 11.7 11.3 11.4 +6% 10.6 10.8 545.0 544.5 553.8 573.9 585.8 9 8 8 6 6 6 9 9 6 6 25 25 23 22 25 3 3 513 514 519 541 553 3 3 3 2 2 2 2 2 QoQ -4% +1% -7% +2% QoQ -0% +2% +4% +2%
Slide 36: Capitalization
Capitalization Capitalization remains healthy Total capital (SARbn) Total Eligible Capital Movement YTD (SARbn) 132.6 136.2 135.4 127.3 129.0 +2% 5 5 5 6 5 16 14 15 12 15 10.0 135.4 132.6 (2.7) (0.9) (2.2) (1.4) 110 108 112 115 116 QoQ +1% +3% +3% -1% 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 4Q 22 Net income D
Slide 37: Capitalization & Liquidity
Capitalization & Liquidity Liquidity is strong and stable Stable Funding (SARbn/%) Loan-to-Deposit Ratio (%) 1,200 119.1% 115.6% 115.4% 119.9% 113.4% 120.0% 1,000 90.0% 653.8 653.6 654.6 651.3 100.0% 800 634.2 80.0% 79.2% 82.6% 79.1% 600 81.2% 60.0% 77.3% 400 40.0% 200 20.0% QoQ -0% -3% +3% -1% 0 0.
Slide 38: Segmental Review
Segmental Review 2Q 2023 SNB | 2Q 2023 | Investor Presentation
Slide 39: Retail
Retail Robust 20% net income growth YoY on NSCI growth and positive “jaws” SAR (mn) 2Q 2023 1Q 2023 Δ 2Q 2023 4Q 2022 Δ Net Income Before Zakat & Tax Movement YoY (SARmn) Total assets 395,897 389,025 +2% 395,897 380,314 +4% +20% Financing and advances, net 308,082 302,663 +2% 308,082 293,430 +5% 1,0
Slide 40: Wholesale
Wholesale 4% net profit growth YoY as fee income growth and credit recoveries were partly offset by higher funding costs Net Income Before Zakat & Tax Movement YoY (SARmn) SAR (mn) 2Q 2023 1Q 2023 Δ 2Q 2023 4Q 2022 Δ Total assets 555,741 537,922 +3% 555,741 519,030 +7% +4% Financing and advances, ne
Slide 41: Capital Markets
Capital Markets Net income decline of 19% on lower brokerage income SAR (mn) 2Q 2023 1Q 2023 Δ 2Q 2023 4Q 2022 Δ Net Income Before Zakat & Tax Movement YoY (SARmn) Total assets 14,862 14,622 +2% 14,862 13,844 +7% -19% Financing and advances, net 1,991 2,032 -2% 1,991 2,449 -19% 69 748 12 0 609 Asset
Slide 42: International
International Strong fee & other income momentum drives 48% net income growth SAR (mn) 2Q 2023 1Q 2023 Δ 2Q 2023 4Q 2022 Δ Net Income Before Zakat & Tax Movement YoY (SARmn) Total assets 29,664 34,484 -14% 29,664 32,308 -8% +48% Financing and advances, net 16,001 18,796 -15% 16,001 16,740 -4% 707 16
Slide 43: Appendix
Appendix 2Q 2023 SNB | 2Q 2023 | Investor Presentation
Slide 44: Additional Information
Additional Information Write to Us Visit our website The Saudi National Bank Tower, Unit No. 778 alahli.com King Abdullah Financial District 3208, Al Aqeeq District, King Fahad Road Access SNB’s current and previous Investor Disclosures Riyadh, Kingdom Of Saudi Arabia, 13519 - 6676 SNB Corporate Rep
Slide 45: Disclaimer
Disclaimer The Saudi National Bank (SNB) prepared this presentation on a proprietary basis as general background information about the activities of SNB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by SNB is