Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q3 2022 Earnings Presentation
44 slides from Banque Saudi Fransi's earnings presentation, 2022
Slide 1: Banque Saudi Fransi Investor Presentation 3Q 2022
3 Column Slides Banque Saudi Fransi Investor Presentation 3Q 2022 Public
Slide 2: Contents
INVESTOR PRESENTATION 3Q 2022 Contents BSF Profile 3 Operating Environment 6 Strategy 10 Financial Performance 16 Outlook & Guidance 33 Segmental Performance 35 Performance Track Record 41 Disclaimer 44 Public
Slide 3: BSF Profile
INVESTOR PRESENTATION 3Q 2022 BSF Profile Public
Slide 4: Leading banking group in Saudi Arabia with strong focus on domestic operations
PROFILE | PRESENCE We are a leading banking group in Saudi Arabia with a strong focus on domestic operations Retail Clients Branches Employees (Million) 1.2 82 3,042 p +2.4% year-to-date q -3 year-to-date p +15.1% year-to-date 9M 22 Operating Income Diversity (SAR Mn) 5,882 Headquartered in Riyadh:
Slide 5: Solid market parameters and credit ratings
PROFILE | SHARE PROFILE AND CREDIT RATINGS Solid market parameters and credit ratings Share Parameters 30 Sep 2022 Total Shareholder Return (TSR) 160 Closing price (SAR) 42.00 140 52 weeks range (SAR) 38.3 - 57.2 120 Shares issued (million) 1,205 100 80 60 Market capitalization (SARbn) 50.63 40 Mark
Slide 6: Operating Environment
INVESTOR PRESENTATION 3Q 2022 Operating Environment Public
Slide 7: 9M 2022 characterized by rising rate environment and higher oil prices
OPERATING ENVIRONMENT | ECONOMIC CONDITIONS 9M 2022 characterized by rising rate environment and higher oil prices Brent Oil Price / Barrel (USD) Tadawul Index ▪ Oil prices rose to USD 120/bl in 2Q 2022, following Ukraine-Russia disruption, but declined to USD 89/bl in 3Q 2022. 89 11,405 ▪ Interbank
Slide 8: GDP growth for Saudi Arabia is expected to reach +7.6% in 2022
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK GDP growth for Saudi Arabia is expected to reach +7.6% in 2022 Real GDP growth (%) Brent Oil Price / Barrel (USD) ▪ GDP growth for Saudi Arabia is expected to reach 7.6% in 2022 following a post-covid recovery of 3.2% growth in 2021. 7.60% 101 ▪ Interest rate
Slide 9: The Saudi banking sector is well positioned for both resiliency and growth
OPERATING ENVIRONMENT | KSA BANKING SECTOR The Saudi banking sector is well positioned for both resiliency and growth Bank Credit (SAR Bn) Capitalization: T1|CAR (%) NPL Ratio (%) 2,316 17.8%|19.4% 2.7% +11% 20.4% 20.3% 20.3% 2.7% 2,316 19.4% 19.9% 19.4% 2,059 2.2% 1,783 2.0% 1.9% 1.9% 1,405 1,443 1
Slide 10: Strategy
INVESTOR PRESENTATION 3Q 2022 Strategy Public
Slide 11: Mission and values
STRATEGY | MISSION AND VAUES In 2018 we redefined our purpose to build a dynamic, energized and modern culture… OUR MISSION OUR VALUES To become the TRUE TO OURSELVES, ALWAYS most modern, We are honest with one another, even at the risk of temporary disharmony. It is never personal. innovative and U
Slide 12: Best-in-class executive management team
STRATEGY | MANAGEMENT TEAM …and set out to build a cohesive, best-in-class executive management team… Bader Alsalloom Sander Aardoom Chief Executive Officer [& Head of Deputy Chief Financial Officer Wholesale Banking] ▪ Business Lease Group B.V.: CFO & Board ▪ BSF: appointed Apr-21 member: 3 years ▪
Slide 13: 5-year strategic plan called LEAP
STRATEGY | 5-YEAR STRATEGIC PLAN …who implemented a comprehensive 5-year strategic plan called ‘LEAP’ to modernize and re-imagine the bank 2018 2023 POSITIONED TO ‘LEAP’ Baseline Aspiration STRATEGIC PILLARS ASSET MARKET SHARE ASSET MARKET SHARE 8.3% Solidify our Scale up in 10% leadership position
Slide 14: Focused on delivering strategic outcomes
STRATEGY | 5-YEAR STRATEGIC PLAN We are clearly focused on delivering strategic outcomes STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder return (TSR) Return on average equity (ROAE) Basic earnings per share(EPS) Dividends per share (DPS) Generate top-q
Slide 15: Positive trends in strategic outcomes during 2021
STRATEGY | 2021 PROGRESS | STRATEGIC OUTCOMES Positive trends in strategic outcomes during 2021 STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder return (TSR) Return on average equity (ROAE) Basic earnings per share(EPS) Dividends per share (DPS) TSR ROA
Slide 16: Financial Performance
INVESTOR PRESENTATION 3Q 2022 Financial Performance Public
Slide 17: Balanced asset and liability growth, improved profitability
FINANCIAL PERFORMANCE | HIGHLIGHTS Balanced asset and liability growth, coupled with improved profitability BALANCE SHEET Loans & Advances Investments Customers' Deposits ▪ High quality loan growth of 10% YoY driven by 10% commercial and 9% consumer lending growth. 158.5 p +10% year-on-year 43.3 u -
Slide 18: Balance sheet growth driven by lending, with commensurate deposit growth
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Balance sheet growth driven by lending, with commensurate deposit growth Total Assets Movement (SAR Bn) ▪ Growth in total assets of 7% YTD, mainly driven by healthy 7% loan growth. ▪ Liabilities grew by 10% during 9M 2022 from 11% deposit growth. 231.
Slide 19: Net income grew 9% year-on-year from income growth
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income grew 9% year-on-year from income growth Net Income Movement (SAR Mn) ▪ Net income for 9M 2022 grew 9% YoY to SAR 2,672mn from 8% growth in operating income. ▪ Pre-impairment operating income for 3Q 2022 increased 12% YoY to a record SAR
Slide 20: Healthy loan growth for 9M 2022
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy loan growth for 9M 2022; 3Q 2022 impacted by repayments Total Loans & Advances (SAR Bn) Commercial Loans Movement YTD (SAR Bn) Loans & Advances Composition (SAR Mn) 158.5 129.0 158,481 +7% +7% Consumer 18.6% Commercial 147.8 159.6 158.5 2.2 2.2 1.3
Slide 21: Modest YTD decline investment portfolio
FINANCIAL PERFORMANCE | INVESTMENTS Modest YTD decline investment portfolio Investments Movement by Type (SAR Bn) Investments Composition by Type ▪ Investments declined 1% during 9M 2022, (SAR Mn) reflecting gradual reinvestments in 2Q and 3Q 2022 following maturities in 1Q 2022. 43.3 43,341 ▪ The i
Slide 22: Strong 11% growth in deposits YTD
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Strong 11% growth in deposits YTD Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) ▪ Deposits grew 11% during 9M 2022, from growth in both IBD and NIBD. ▪ IBD increased 18% YTD from 34% growth in high-quality 157.8 157.8 Corporate deposit
Slide 23: NII growth of 10% as earning assets growth partly offset by margin contraction
FINANCIAL PERFORMANCE | NET INTEREST INCOME NII growth of 10% as earning assets growth partly offset by modest margin contraction Net Interest Income Movement (SAR Mn) ▪ NII for 9M 2022 grew 10% YoY to SAR 4,437mn on 12% growth in (simple) average earning assets, partly offset by a 5bps margin contr
Slide 24: Reduced hedging impact and higher funding costs drive margin compression
FINANCIAL PERFORMANCE | NET INTEREST MARGIN Reduced cash flow hedging impact and higher funding costs drive modest YoY margin compression YTD Net Interest Margin Trend (%) Net Interest Margin Movement (%) ▪ The YTD NIM declined 5bps YoY as the cash flow hedging impact and higher funding costs more t
Slide 25: BSF is positively positioned for a rising rate environment
FINANCIAL PERFORMANCE | RATE SENSITIVITY BSF is positively positioned for a rising rate environment Exposure to Interest Rate Risk as at 31 December 2021 (SAR Bn) • At the start of the year, BSF estimated a 1-year NIM sensitivity of a 100bps rates rise at 31bps; at a stable balance sheet structure t
Slide 26: Non-interest income grew 2% YoY
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income grew 2% YoY from higher exchange and other income ▪ Non-interest income for 9M 2022 grew 2% YoY to SAR 1,445mn as improved exchange and Non-Interest Income Movement (SAR Mn) other income was partly offset by lower net fee & commission a
Slide 27: Operating expenses growth of 6%
FINANCIAL PERFORMANCE | OPERATING EXPENSES Operating expenses growth of 6% from higher employee-related and G&A expenses Operating Expenses Movement (SAR Mn) ▪ Operating expenses increased 6% YoY to SAR 1,930mn in 9M 2022 due to: • higher general and administrative expenses from increased business a
Slide 28: Cost of risk trend increased modestly YoY to 83bps
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Cost of risk trend increased modestly YoY to 83bps for 9M 2022 Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 400 400 0.83% 0.98% u +2 bps year-on-year +38% +38% 400 0.85% 0.79% 0.80% 0.83% 319 400 289 0.71% 0.71
Slide 29: NPL ratio trend impacted by isolated pockets of Commercial book migration
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL ratio trend impacted by isolated pockets of Commercial book migration; underlying credit quality healthy Non Performing Loans & Advances Non Performing Loans & Advances (SAR NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) Bn) 4.5 4.5 2.73% 3.2% p +29 bps ye
Slide 30: NPL coverage declined 5.9ppts YTD
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL coverage declined 5.9ppts YTD to 166.8% due to isolated pockets of Commercial book migration; underlying coverage improved Allowance For Impairment (SAR Bn) Allowance For Impairment (SAR Bn) NPL Coverage Ratio (%) Commercial NPL Coverage (%) 5.2 5.2 116.8%
Slide 31: Capital ratios declined during 9M 2022
FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios declined during 9M 2022 from RWA growth, dividends and negative MTM Total Capital (SAR Bn) RWA (SAR Bn) ▪ Total capital declined 2% to SAR 41.9bn during 9M 2022 as net income generation was more than offset by dividends and negative MTM on invest
Slide 32: Liquidity remains strong and within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR & NSFR (%) HQLA (SAR Bn) ▪ LCR improved by 6.3ppts during 9M 2022 to 185%. ▪ NSFR was 113% as at 30 September 2022. ▪ The bank continues to manage the LTD ratio for optimum 185% 38.6 efficiency in
Slide 33: Outlook and Guidance
INVESTOR PRESENTATION 3Q 2022 Outlook and Guidance Public
Slide 34: Healthy outlook for 2022 on solid loan growth and NIM expansion
GUIDANCE & OUTLOOK | GUIDANCE Healthy outlook for 2022 on expected solid loan growth and NIM expansion Previous 2022 Guidance 9M 2022 Outcome Revised 2022 Guidance Loans & Advances ▪ 3Q 2022 growth of 10% SAR Billion YoY. 147.8 147.8 LOANS & ADVANCES, NET ▪ Balanced growth of consumer and Low- to mi
Slide 35: Segmental Performance
INVESTOR PRESENTATION 3Q 2022 Segmental Performance Public
Slide 36: Profitability boosted by growth in Retail and Corporate
SEGMENTAL PERFORMANCE | SUMMARY Profitability boosted by growth in Retail and Corporate Operating Income Movement (SAR Mn) Net Income Before Zakat Movement (SAR Mn) 5,882 2,960 +8% +7% 297 5,882 154 2,960 180 2,778 90 5,463 (32) (25) (29) (33) Operating income Retail Corporate Treasury Investment Ba
Slide 37: Retail: higher profits YoY from higher net interest income
SEGMENTAL PERFORMANCE | RETAIL Higher profits YoY from higher net interest income Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 554 646 538 +38.1% p year-on-year +19% +37% SAR Million 179 0 646 554 464 472 492 108 Fee & other income (63) (27) 82 55 +31
Slide 38: Higher operating income drives growth in Corporate profitability
SEGMENTAL PERFORMANCE | CORPORATE Higher operating income drives growth in Corporate profitability Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,082 961 781 +18.9% p year-on-year +17% +20% SAR Million 203 93 961 1,082 803 838 928 180 Fee & other inco
Slide 39: Treasury: net income declined 2% YoY
SEGMENTAL PERFORMANCE | TREASURY Net income declined 2% YoY from higher funding costs and investment income Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,152 429 305 -14.4% q year-on-year -2% -19% SAR Million 1,181 11 1,152 529 452 429 173 Fee & othe
Slide 40: Profitability decline due to lower brokerage fees
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Profitability decline due to lower brokerage fees Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 173 99 22 +4.0% p year-on-year -16% -11% SAR Million 27 111 113 206 99 173 Fee & other income 90 79
Slide 41: Performance Track Record
INVESTOR PRESENTATION 3Q 2022 Performance Track Record Public
Slide 42: Balance Sheet Metrics
PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 147.8 215.8 142.0 21.09% +5% +3% -2% 21.57% 21.09% 147.8 215.8 151.0 148.4 142.0 19.39% 19.77% 19.20% 121.9 120.6 125.7 130.6 192.9 190.3 178.1 194.1 132.8 127.1 20.56%
Slide 43: Income Statement Metrics
PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 7,188 2.85% 34.0% 0.71% 2.07% +2% 3.04% 2.97% 7,188 2.85% 2.85% 36.3% 6,576 6,799 6,873 7,045 34.0% 2.50% 33.7% 33.3% 33.6% 0.72% 0.79% 0.71% +2% YoY 0.38% 20
Slide 44: Disclaimer
INVESTOR PRESENTATION 3Q 2022 Disclaimer This presentation is being provided to you for general information purposes. The information contained in the presentation has been obtained from sources believed by Banque Saudi Fransi (“BSF") to be up to date, correct and reliable, but BSF does not make any