Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Investor Presentation (2021)
49 slides from Al Rajhi Bank's investor presentation, 2021
Slide 1: Al Rajhi Bank Investor Presentation FY 2020 Investor Pack
Al Rajhi Bank Investor Presentation FY 2020 Investor Pack
Slide 2: Contents
1 ................................................................................. The World's Leading Islamic Bank 03 41 ................................................................................. FY 2020 Financial Results Overview 23 Key Messages 24 .........................................
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 543 5,211 100% 89% 94% 10 2 100% Banking % of Total Deposits 9+m 10+ Branches ATMs million 204,549 226 NPS Digital: Manual Islamic Transactions 543 Remittance 6
Slide 5: The Blue Chip Islamic Bank
Al Rajhi Bank, The Blue Chip Islamic Bank Robust balance sheet with 89% non-profit-bearing deposits Total Assets (SARbn) Capital Ratios (%) 1,000 23.3% 900 0 800 +36.6% 0 700 0 600 20.1% 19.9% 469 22.2% 19.1% 0 500 343 364 384 0 400 0 300 200 19.0% 0 18.8% 100 18.0% 0 0 0 2017 2018 2019 2020 2017 20
Slide 6: The Blue Chip Islamic Bank
The Blue Chip Islamic Bank Outstanding foundation and strong returns ROE (%) ROA (%) -20bps 0 0 -55bps 20.49% 19.94% 2.76% 0 17.24% 2.68% 2.56% 0 +1348bps 0 -164bps +172bps 0 -1023bps 0 0 0 0 7.01% 0 1.04% 0 0 0 0 0 2017 2018 2019 2020 2017 2018 2019 2020 Net Profit Margin (%) Cost of Funds (%) +47b
Slide 7: 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 Centres) 3 One of the hi
Slide 8: 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 +60bps 0 +300bps 0 0 0 10+ Million 24.8% 25.2% 19.4% 0 23.7% 24.3% 0 0 16.4% 17.3% 17.3% 0 0 0 Customers 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY 20 FY 17 FY 1
Slide 9: 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 1 +40bps +200bps 0 0 0 0 26.6% 26.7% 27.0% 27.6% 28.2% 0 26.2% 26.8% 0 0 0 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY 20 FY 17 FY
Slide 10: 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 +100bps 1 -510bps 1 39.6% 38.7% 37.7% 40.6% 52.7% 51.3% 47.6% 1 46.8% 1 0 1 0 0 0 0 0 0 0 0 0 FY 17 FY 18 FY 19 FY 20 FY 17 FY 1
Slide 11: 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 Dec 2020 RAJHI NCB RIYAC TASI Key Metrics 240 Closing Price SAR 73.6 220 RAJHI, 217 Market Cap SAR 184.0 bn 200 Market Cap / % Industry 29
Slide 12: Awards
Awards Recent international recognition Global Awards Regional Awards Best Bank in GCC Fastest Growing Bank in KSA Best Bank in Saudi Arabia Most Innovative Bank in KSA (3 consecutive years 2017, 2018, 2019) Best Retail Bank in KSA Strongest Islamic Retail Bank in the World Strongest Isl
Slide 13: 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 14: ESG Highlights
ESG Highlights FY 2020 7 Window film SAR 49mn batches of ISO 22301: 2019 ISO/DIS 94 women- at branches Graduate Business owned Donation in 37301: 2020 to reduce Development Continuity suppliers energy use 2020 Management Compliance Program engaged since 2015 32% 94 40% SAR 469bn of loans and SAR 1.2
Slide 15: KSA's Macro-Economic Environment
KSA’s Macro-Economic Environment 15
Slide 16: KSA Economic Outlook
KSA Economic Outlook Recovering from the trough of Covid-19 pandemic GDP Growth / Brent Oil Price Highlights 71.19 64.37 80 54.13 6.5 IMF has revised down GDP forecast for 2021 to (+2.6%) driven by 52.70 70 5.5 the non-oil private sector. 41.19 60 4.5 3.5 50 2.5 40 Saudi is keeping its fiscal ex
Slide 17: Macro Environment
Macro Environment Supportive of Banking Sector …and moderate pick up in bank deposits amid balance Strong pickup in sector loan growth… sheet optimisation in rising rate environment 14.4% 8.2% 7.3% 1,9 00 20.0% 2,100 10.0 % 1,800 8.0 % 7.4% 15.0% 2,00 0 0.2% 1,7 00 6.0 % 2.8% 2.5% 10.0 % 1,9 00 1,6
Slide 18: Strategy 2020
Al Rajhi Bank Strategy 2020 18
Slide 19: 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 20: 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 21: Strategy Update
Strategy Update ABCDE ‘Back to Basics’ strategy delivered strong results in FY 2020 A B C D E Accelerated Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence +6% YoY operating income 25 new products launched to Al Rajhi Bank Academy 205K POS 310 Bots growth cater
Slide 22: 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 1 1 1 Focus Areas to 1 Core Portfolio is low risk, Strict and prudent liquidity Mitigate Consumer lending, mai
Slide 23: Financial Results
Financial Results FY 2020 Overview & Trends 23
Slide 24: Key Messages
Key Messages Solid FY 2020 Performance Net Income (SARmn) Total Customers' Deposits (SARbn) Capital Adequacy Ratio (%) 600 +22.5% 0 19.9% 19.1% 25,000 383 500 43 0 312 20,0 00 400 +4.3% 22 0 10,159 10,596 15,00 0 6 30 0 12 0 +15.2% 328 10,000 200 284 0 100 5,00 0 0 0 0 0 FY 19 FY 20 4Q 19 4Q 20 4Q 1
Slide 25: Progress against guidance and outlook
Progress against guidance and outlook 2020 results in line with our guidance FY 2019 Actual FY 2020 Latest Guidance FY 2020 Actual FY 2021 Guidance Balance Financing, Net (SAR bn) 249.7 High teens growth 315.7 (+26%) Mid teens growth Sheet Net Profit Margin 5.22% -55 bps to -35 bps 4.71% (-51 bps) -
Slide 26: Balance Sheet Trends (1)
Balance Sheet Trends (1) Solid growth in total assets driven Highlights SAR (mn) 4Q 2020 3Q 2020 QoQ 4Q 2019 YTD Cash and balances with SAMA 47,363 37,451 +26% 39,294 +21% Total Assets grew by (+22% YTD) driven by strong growth in Due from banks and other FI 28,655 27,517 +4% 32,058 -11% financing
Slide 27: 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 Type (SARbn) (SARbn) Mortgage Retail financing growth of (+34% YTD) mainly driven by growth in Corporate SAR 104bn SAR 57bn mortgage financing (+90% Y
Slide 28: Balance Sheet Trends (3)
Balance Sheet Trends (3) Resilient growth in demand deposits Highlights Total Customers' Deposits Mix Total Liabilities Mix By By Type (SARbn) Segment (SARbn) Time Customers deposits growth of (+22% YTD) contributed by growth SAR 43bn Corporate SAR 109bn in demand deposits. 11% 41% Other Strong
Slide 29: Net Income Trends
Net Income Trends Healthy results despite unprecedented environment Highlights SAR (mn) FY 2020 FY 2019 YoY 4Q 2020 4Q 2019 YoY Net Income before Zakat increased by (+4.3% YoY) caused by Net financing and investment income 16,913 16,428 +3% 4,638 4,259 +9% growth in fee income. Fee from banking se
Slide 30: Operating Income Trends
Operating Income Trends Operating income growth of 6%, driven by 34% growth in Fee income Total Operating Income Growth Drivers By Type (SARmn) Fee From Banking Services, Net - Growth Drivers By Type (SARmn) 9,000 4,500 8,000 +6.3% 4,000 +33.8% 7,000 3,500 6,000 3,000 672 69 20,721 375 2,660 10 5,00
Slide 31: Expenses Trends
Expenses Trends Upgrading IT & Digital platform, a long term investment Highlights Cost To Income Ratio Trend (%) Cost to income ratio at (32.5%) a 24 bps decrease YoY. 0 Operating expenses grew by (+5.6% YoY). 0 0 Higher IT cost primarily related to acceleration of digital and 0 32.8% 32.6% 3
Slide 32: Asset Quality Trends (1)
Asset Quality Trends (1) Asset quality remains healthy and sound NPL coverage Highlights Impairment Charges (SARmn) & COR (%) 1.05% Net Provision increased by (+22% YoY). 1.10 % 0.85% 0.78% 3,20 0 0.71% 0.75% NPL ratio at (0.76%) lower by 14bps compared to last year. 0.9 0% 2,700 2,200 0.7 0%
Slide 33: Asset Quality Trends (2)
Asset Quality Trends (2) Healthy stage coverage and prudent risk management Gross loans by Stage (SARbn) 400 Highlights 25.9% 96% of the portfolio is stage 1, above industry coverage across all 350 the stages. 2.4 2.5 9.5 30 0 Gross charge of SAR 3,418mn has been taken including SAR 9.5 608mn of
Slide 34: Liquidity Trends
Liquidity Trends Liquidity remain comfortably within regulatory requirements Highlights Loan to deposit Ratios (%) LDR remains stable at (78.8%). 1 Liquidity remains healthy, LCR at (155%) and NSFR at (123%). 1 1 HQLA increased by (+15.0% YTD). 82.1% 1 79.9% 79.9% 1 78.8% 78.8% 1 1 1 1 4Q 19 1
Slide 35: Capitalisation Trends
Capitalisation Trends Capital position well above regulatory minima Highlights RWA (SARbn) Total Capital (SARbn) Total Capital increased by (+13.9% YTD). 480 430 Risk weighted assets increased by (+18.6% YTD) mainly driven by 80 +18.6% +13.9% 75 380 323 1Q 20 2Q 20 growth in credit risk. 62 70 3
Slide 36: Return Metrics
Return Metrics Returns remain well above industry average Highlights Earnings per Share (SAR) Stable growth in EPS of (SAR 4.24). 7 6 +4.3% Market-leading ROE at (19.94%), well above peers. 4.06 4.24 5 Solid ROA at (2.56%) given the growth in total assets. 2.99 4 1.93 3 0.95 2 1 0 FY 19 1Q 20
Slide 37: Operating Results
Operating Results FY 2020 Business Performance 37
Slide 38: Retail Banking
Retail Banking Strong growth in total assets driven by growth in mortgage financing Highlights YoY YoY SAR (mn) FY 2020 FY 2019 4Q 2020 4Q 2019 % % Retail Banking net income decreased by (-4.4% YoY). Net financing and investment income 11,287 12,326 -8.4% 2,811 3,193 -12.0% Fee and other income 2,
Slide 39: Corporate Banking
Corporate Banking High impairment charge drives net income to decrease Highlights YoY YoY SAR (mn) FY 2020 FY 2019 4Q 2020 4Q 2019 % % Corporate Banking net income decreased by (-40% YoY) as a Net financing and investment income 2,379 2,085 +14.1% 859 558 +53.8% result of higher impairment charge
Slide 40: Treasury
Treasury Excellent profit growth from growth in investment income Highlights SAR (mn) FY 2020 FY 2019 YoY 4Q 2020 4Q 2019 YoY % % Total operating income growth of (+36% YoY) driven by growth in Net financing and investment income 3,199 1,993 +60.5% 956 500 +91.2% investment income. Fee and other i
Slide 41: Rajhi Capital
Rajhi Capital Outstanding growth driven by higher operating income Highlights SAR (mn) FY 2020 FY 2019 YoY 4Q 2020 4Q 2019 YoY % % Net income for Rajhi Capital increased by (+108% YoY) driven by Net financing and investment income 48 24 +96.1% 13 9 +52.2% (+73% YoY) operating income growth. Fee an
Slide 42: Appendix
Appendix Additional Information
Slide 43: Board of Directors
Board of Directors Members Chairman Vice Chairman Abdullah bin Sulaiman Al Rajhi Ibrahim bin Mohammed Alromaih Non-Executive Independent 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 Ibra
Slide 44: 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: 23 years Banking experience: 24 years Banking experience: 33 years Chief Risk
Slide 45: ESG
Al Rajhi Bank ESG Investor Presentation 45
Slide 46: 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 47: Conclusion and the way forward
Conclusion and the way forward We believe our future success is interlinked with the well-being of our stakeholders. ESG Journey • Transparency on management of ESG issues • Relevant KPI disclosures as per GRI standards Governance • Target setting & Reporting • Open dialogue channels with shareholde
Slide 48: Additional Information
Additional Information Contact investor relations for more information Mr. Rayan Alshuaibi Visit our website (here) for more Investor disclosers: • Financial Statements Head of Investor Relations • Investor Presentation Tel: +966 (11) 828 1972 • Factsheet Email: alshuaibirs@alrajhibank.com.sa • Data
Slide 49: 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