Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — FY2020 Earnings Presentation
31 slides from Al Rajhi Bank's earnings presentation, 2021
Slide 1: Al Rajhi Bank Results Presentation
Al Rajhi Bank Results Presentation FY 2020 Earnings Conference Call and Webcast
Slide 2: Management Summary
Management Summary FY 2020 Highlights Strategy implementation is on track delivering strong results despite the current environment Improved customer service, digitization and new products all contributed to the bottom line. Strategy Growth in mortgages, customers loans, and operating income.
Slide 3: Going forward
Going forward We will have to navigate 5 key market forces to succeed Competition – Consolidation & Digital Disruption Regulatory Environment SAIBOR “Lower for Longer” Impacts of COVID-19 Vision 2030 Al Rajhi Bank FY 2020 Results Presentation
Slide 4: Digital Disruption and KSA Economic Changes
Digital Disruption and KSA Economic Changes Impacting our core businesses; changing the formula required to win in the market The KSA banking market is changing rapidly ARB will take two paths to adapt its business model Digital banking entrants Protect our Expand in new Retail segments Digital
Slide 5: Key priorities 2021-2023
Bank Of The Future Outlines our growth plan and priorities for 2021-2023 B O T F Bank Of The Future Build on the Core Outperform the Market Transform Technology Fulfill More Customer Needs Be known as a leading brand for Implement Digital Core Banking Become the Leading Finance Grow Retail Banking C
Slide 6: KSA’s Macro-Economic Environment
KSA’s Macro-Economic Environment 6
Slide 7: KSA Economic Outlook
KSA Economic Outlook Recovering from the trough of Covid-19 pandemic GDP Growth / Brent Oil Price Highlights 6.5 71.19 64.37 80 52.32 54.13 52.70 70 IMF has revised down GDP forecast for 2021 to (+2.6%) driven by 5.5 43.64 41.19 60 4.5 the non-oil private sector. 3.5 50 2.5 40 Saudi is keeping i
Slide 8: Banking Sector Highlights
Banking Sector Highlights Growth in mortgage lending continues to drive up credit growth Highlights Loans to Deposits Ratio (%) 80.0% 80.7% 80.1% 77.4% 77.1% 75.0% Saudi banks have shown high resilience driven by government’s 2,500 80.0% support and solid macroeconomic fundamentals. 1,796 1,703 1,
Slide 9: Government Stimulus Highlights
Government Stimulus Highlights SAR +350bn to combat the negative impact of Covid-19 and low oil prices on the economy In Billions Government Economy Focused MOF Economy Focused SAMA MSMEs Focused Employment and training support to the SAR 5.3 SAR 70 To Support the Private Sector SAR 30 Deferred Paym
Slide 10: Financial Results
Financial Results caaalyl USpap Al Rajhi Bank & 10
Slide 11: Balance Sheet Trends (1)
Balance Sheet Trends (1) Strong financing growth, mortgage is the main driver 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% 32,0
Slide 12: Balance Sheet Trends (2)
Balance Sheet Trends (2) Solid growth in customers deposits Highlights Asset Drivers By Type (SARbn) Retail financing growth of (+34% YTD) mainly driven by growth in mortgage financing (+90% YTD). 400 +22.1% Financing is dominated by retail (79%) followed by corporate (21%). 0.6 468.8 66.0 300 3
Slide 13: Net Income Trends
Net Income Trends Resilient 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
Slide 14: Operating Income Trends
Operating Income Trends Solid operating income growth, inline with our strategy Total Operating Income Growth Drivers By Type (SARmn) Highlights Solid growth of (+6% YoY) driven mainly by growth in fee income. 9,000 +6.3% 8,000 Fee income growth of (+34% YoY) mainly from digital & payment 7,000
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 20: 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 21: 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 22: 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 23: Questions & Answers
Questions & Answers
Slide 24: Appendix
Appendix cnaaljl apap B Al Rajhi Bank 24
Slide 25: 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 26: Our Response to Covid-19
Our Response to Covid-19 Actions taken to support stakeholders Activate Work from Home for c.60% of our staff. Expand employee awareness programs. Business Open c.50% of branches network. Continue sanitizations to our premises. Employee Continuity Accelerate IT & Digital Infrastructure upg
Slide 27: ESG Highlights
ESG Highlights caaalyl USpap Al Rajhi Bank &
Slide 28: 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 29: 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 & SASB standards Governance • Target setting & Reporting • Open dialogue channels with shar
Slide 30: 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 31: 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