Saudi National Bank · TADAWUL:1180

Saudi National Bank — National Commercial Bank — FY2018 Earnings Presentation

58 slides from Saudi National Bank's earnings presentation, 2019

  1. Slide 1: Investor Presentation FY 2018 Results

    National Commercial Bank Investor Presentation FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation 1

  2. Slide 2: Contents

    Investor Presentation Contents 03 NCB Group Profile 10 KSA Economic Outlook 17 Strategy Overview 27 Financial Results Highlights 35 Financial Results Details 49 Segmental Review 56 Additional Information NCB Investor Relations FY 2018 Investor Presentation 2

  3. Slide 3: NCB Group Profile

    National Commercial Bank NCB Group Profile FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation 3

  4. Slide 4: NCB is the leading banking group in Saudi Arabia (1)

    NCB is the leading banking group in Saudi Arabia (1) Established in 1953; IPO in 2014 NCB Snapshot (FY 2018) SAR SAR SAR 7mn Clients 13,058 453bn 319bn 144bn Employees* Assets Deposits Market Cap Wholesale branch in Bahrain Offices: Singapore, Seoul, Shanghai Subsidiary in KSA: NCB Capital Subsidiar

  5. Slide 5: NCB is the leading banking group in Saudi Arabia (2)

    NCB is the leading banking group in Saudi Arabia (2) NCB has a strong market and financial position Market Position by KSA Financial Position KSA GCC Overall banking Assets #1 Assets #1 #4 Corporate banking Financing #1 Financing #1 #4 Retail banking Financing #2 Deposits #1 #4 Treasury Investments

  6. Slide 6: NCB has a well-diversified business model

    NCB has a well-diversified business model Total operating income contribution 3.9bn 20% TREASURY 16.7bn 88% 1.5bn 720mn 8% 4% 3.9bn 21% Capital Markets CORPORATE International NCB Capital NCB Largest Asset Manager in KSA 8.9bn Türkiye Finans Katılım Bankası (TFKB) Largest Shariah-compliant 401 branc

  7. Slide 7: NCB has a strong financial position

    NCB has a strong financial position Key KPIs Total Assets (SARbn) Total Equity (SARbn) 120 800 +1% +9% 700 100 600 435 449 443 445 453 64 66 500 80 56 60 60 47 400 300 40 200 20 100 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 CAGR CAGR Capital Ratios (%) Liquidity Ratios (%) 22.0% 20.6% 2

  8. Slide 8: NCB has a strong performance track record

    NCB has a strong performance track record Key KPIs Total Operating Income (SARbn) Net Income Attributed To Equity Holders (SARbn) 35 +4% 18 +5% 30 16 25 18.6 18.3 18.9 14 9.8 10.7 16.2 17.5 12 8.7 9.1 9.3 20 5.1 4.7 4.6 10 15 4.8 4.9 8 6 14.4 10 11.4 12.6 13.5 13.7 4 5 2 0 0 2014 2015 2016 2017 2018

  9. Slide 9: NCB Group listed on Tadawul in November 2014

    NCB Group listed on Tadawul in November 2014 Ranked third in Tadawul, S&P Pan Arab and MSCI Indices with significant weightings Share parameters 31 Dec 2018 MSCI Saudi Arabia Index Float Adj. Mcap (USDb) Weighting (%) Closing Price (SAR) 47.85 52 week range (SAR) 37-49 SABIC 23.23 17.42 Free Float 3

  10. Slide 10: KSA Economic Outlook

    National Commercial Bank KSA Economic Outlook FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation

  11. Slide 11: Vision 2030

    Vision 2030 Saudi Arabia continues to drive economic growth through it’s comprehensive Vision 2030 program Pillars A Thriving Economy A Vibrant Society An Ambitious Nation • National Transformation Program • The Housing Program • Fiscal Balance Program • Enriching the Hajj and Umrah Experience Visio

  12. Slide 12: NCB is aligned with Government priorities

    NCB is aligned with Government priorities NCB is a key contributor to economic transformation and the Financial Sector Development Program (FSDP) objectives  Leading lender for KSA companies with a 15% Enabling financial Corporate market share (3Q 2018) and a portfolio of institutions to support pr

  13. Slide 13: Record Saudi Budget in 2019

    Record Saudi Budget in 2019 Fiscal expansionary policy to underpin economic growth Average Oil Price (USD) Government Revenue (SARbn) Government Expenditure (SARbn) 120 1,200 1,044 97 975 1,110 1,106 131 895 1,030 978 1,200 930 100 1,000 70 692 313 1,000 830 80 65 800 616 288 52 519 800 740 50 256 8

  14. Slide 14: Economic growth momentum continues

    Economic growth momentum continues Non-Oil GDP pickup expected, supported by progress of ongoing Government Vision Realization Programs Real GDP Real non-oil GDP Oil Production 3.7% 4.1% 25 2.6% 0 5.0% 140.0 1.7% 2.2% 0 3.0% 0 2.7% 97.2 120.0 1.8% 3.0% 20 0 -0.7% 1.0% 0 1.8% 100.0 2.7% 0.6% 0.1% 1.2

  15. Slide 15: Saudi banking sector growth capacity

    Saudi banking sector growth capacity Lending capacity enables KSA banks to capture opportunities as fiscal policy offsets monetary drag from rising interest rates Bank Lending (SARbn) Loans to Deposits Ratio (%) Bank Deposits (SARbn) 11.6% 35 00 8.9% 15.0% 1 81% 4,000 80% 80% 3000 2.9% 2.8% 10.0% 1

  16. Slide 16: Saudi banking sector resilience

    Saudi banking sector resilience Strong capitalization, high credit quality, adequate coverage and a prudent regulatory environment expected to sustain banking sector profitability NPL & Coverage Ratios (%) Tier 1 Capital Adequacy Ratio (%) 0 185% 0 0 183% 1.63% 0 178% 18.3% 0 0 18.1% 0 172% 1.45% 0

  17. Slide 17: Strategy Overview

    National Commercial Bank Strategy Overview FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation

  18. Slide 18: 2018 Strategy update and 12M highlights

    2018 Strategy update and 12M highlights NCB delivered strong performance in 2018 in line with its strategy 2018 Strategic Priorities 12M Updates Position Grew Corporate loan portfolio by 9% Corporate Banking for growth Grow Residential Finance Grew mortgage portfolio by 19% Current Account and Capit

  19. Slide 19: NCB's 2019 Strategy Framework

    NCB’s 2019 Strategy Framework Sustaining Leadership Guiding Strategic Strategic Priorities Focus Areas Principles Enablers Current accounts Expand market share Mortgage / REDF in Retail Banking Credit Card Cost Vision 2030 Targeted Sectors efficiency Lean Distribution Increase returns in Transa

  20. Slide 20: Retail Banking

    Retail Banking We are positioning the retail business to expand market share Strategic Focus Areas  Grow core deposits  Grow Lending Market Share; focus on mortgages and Credit Card  Expand branch network with lean formats enabled by digital migration  Continue to enhance customer service across

  21. Slide 21: Corporate Banking

    Corporate Banking Grow selectively and increase risk-adjusted returns Strategic Focus Areas  Grow lending in V2030 target sectors  Increase cross sell focus to capture full value of relationships  Grow Kafalah-based lending  Expand collections capabilities and strengthen credit lifecycle managem

  22. Slide 22: Treasury

    Treasury Broaden and deepen liquidity access while sustaining revenues Strategic Focus Areas  Increase recurring revenues  Optimize investment portfolio to enhance quality, liquidity and returns  Launch continental hubs to expand coverage (Singapore, UK)  Introduce innovative Shariah compliant p

  23. Slide 23: Lean distribution

    Lean distribution We will continue to expand with lean distribution in Saudi Arabia by adopting a smaller branch format and implementing extensive digitization Strategic Imperatives  Continue to expand the network in strategic locations to acquire new customers and expand market share  Expand with

  24. Slide 24: Digitization

    Digitization Continue to migrate to digital, drive up digital sales and improve operational excellence to deliver superior customer experiences Strategic Focus Areas  Mobile first  Expand subscription base and grow usage  Leverage advanced data analytics and grow digital sales  Implement “digita

  25. Slide 25: NCB Capital

    NCB Capital KSA’s leading investment bank and asset manager; well positioned to capture future growth Strategic Focus Areas  Sustain and grow market leadership in Asset Management through fundraising and product innovation  Grow recurring revenues by increasing AUMs  Grow share of brokerage reven

  26. Slide 26: Türkiye Finans Katılım Bankası

    Türkiye Finans Katılım Bankası We are executing a transformation program to grow TFKB’s net income Strategic Focus Areas  Resume branch expansion and expand digital channels to drive customer acquisition  Strengthen underwriting and improve collections  Increase automation and drive capacity opti

  27. Slide 27: Financial Results Highlights

    National Commercial Bank Financial Results Highlights FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation

  28. Slide 28: Key messages

    Key messages FY 2018 Results Financing (SARbn) Deposits (SARbn)  2% increase in total assets 600 +6% 800 700 500 +3%  6% financing growth 600 265 400 249 Balance 319 500 309  3% investments growth 300 400 Sheet 200 300  3% growth in customers’ deposits 100 200 100  CASA at 80% of deposits 0 0 4

  29. Slide 29: Income Statement

    Income Statement 2018 Net income growth from higher NSCI and lower impairments Profitability Trends SAR (mn) 4Q 2018 3Q 2018 4Q 2017 YoY % change FY 2018 FY 2017 YoY % change Net special commission income 3,741 3,637 3,375 +11% 14,370 13,661 +5% Fee and other income 1,015 1,094 1,140 -11% 4,557 4,68

  30. Slide 30: Balance Sheet

    Balance Sheet 2% increase in total assets; excluding 20% Turkish Lira depreciation the growth would have been 5% Balance Sheet Trends SAR (mn) 4Q 2018 3Q 2018 4Q 2017 YoY % change Investments, net 118,090 116,504 114,578 +3% Financing and Advances, net 265,317 268,245 249,234 +6% Total assets 453,39

  31. Slide 31: Segmental Information (1/3)

    Segmental Information (1/3) FY 2018 Total operating income growth mainly from retail and Capital Market segment FY 18 Total Operating Income Movement (SARmn) 4Q 18 Total Operating Income Movement (SARmn) 777 84 18,927 4,500 1,200 144 15 4,756 4,000 18,345 1,000 157 3,500 (205) (23) (51) 4,516 (12) 3

  32. Slide 32: Segmental Information (2/3)

    Segmental Information (2/3) FY 2018 Net income growth driven by all segments apart from International due to Turkish Lira depreciation and goodwill written - off FY 18 Net Income Attributed to Equity Holders 4Q 18 Net Income Attributed to Equity Holders Movement (SARmn) Movement (SARmn) 3,000 900 99

  33. Slide 33: Segmental Information (3/3)

    Segmental Information (3/3) FY 2018 financing growth mainly driven by Corporate and Retail segments Total Assets (SARbn) Financing and Advances, net (SARbn) 500 800 +2% +6% 700 400 600 445 459 453 268 265 249 500 38 31 33 300 16 14 10 20 160 155 26 21 163 400 300 200 120 133 131 200 126 143 138 100

  34. Slide 34: Outlook

    Outlook Improved macroeconomic environment expected to drive growth 2019 Macroeconomic FY 2018 FY 2018 FY 2019 Outlook Target Reported Guidance  Average Arabian light oil price of Balance Financing USD 65 per barrel Sheet 5% to 8% 6% 4% to 6% growth  Up to 2 US Fed rate hikes of 25bps in 2019  20

  35. Slide 35: Financial Results Details

    National Commercial Bank Financial Results Details FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation

  36. Slide 36: Operating Income Highlights

    Operating Income Highlights Higher FY 2018 total operating income largely attributable to net special commission income Total Operating Income (SARbn) Management Commentary 10 35 +3%  FY 2018 total operating income increased by 3% YoY from 5% 9 8 +5% 30 higher net special commission income, partial

  37. Slide 37: Net special commission income trends

    Net special commission income trends FY 2018 net special commission income growth of 5%, despite 19% increase in special commission expenses Management Commentary Net Special Commission Income YoY % YoY %  FY 2018 NSCI improved by 5% on higher SCI SAR (mn) 4Q 2018 3Q 2018 4Q 2017 change FY 2018 FY

  38. Slide 38: Fee and other income trends

    Fee and other income trends Lower FY 2018 fee and other income mainly due to lower investment income partly offset by higher fee and exchange income and lower other operating expenses Fee and Other Income (SARmn) Fee Income YoY % YoY % 11,500 SAR (mn) 4Q 2018 3Q 2018 4Q 2017 change FY 2018 FY 2017 c

  39. Slide 39: Expense highlights

    Expense highlights Despite VAT and cost of living allowances, we maintained operating expenses in 2018 Operating Expenses (SARmn) 16,000 Management Commentary 14,000 3,500 12,000  FY 2018 stable operating expenses YoY, while 4Q 2018 operating 3,000 -10% 10,000 +0% expenses decreased by 10% YoY. 2,5

  40. Slide 40: Asset highlights and composition

    Asset highlights and composition 2% growth in balance sheet as a result of increase in financing and Investments. Total Assets (SARbn) Management Commentary  6% Financing increase driven by 9% increase in domestic financing, 800 +2% 700 despite 19% decline in international financing impacted by 20%

  41. Slide 41: Financing and advances

    Financing and advances 6% Financing growth driven by Corporate and Consumer segments Financing and Advances, net (SARbn) Management Commentary 500 +6%  Domestically, financing grew for the Corporate Segment (+9%) and 450 400 Consumer segment (+7%). 350 249 268 265  Growth in the Corporate segment

  42. Slide 42: Financing and advances credit quality (1/2)

    Financing and advances credit quality (1/2) Rise in Corporate NPLs and impairment allowances, while Consumer remains stable NPL (SARbn) Movement NPLs by Economic Sector (SARbn) 12 1 0.32 0.03 10 1 +10% 1 8 (0.03) (0.01) 5.25 1 4.77 4.72 4.75 5.06 0.17 5.25 6 1 1.40 1.26 1.03 1.23 1.40 0.51 0.56 1 0.

  43. Slide 43: Financing and advances credit quality (2/2)

    Financing and advances credit quality (2/2) Slightly higher NPL ratio at YE 2018, but NPL coverage remained stable NPL Ratios (%) NPL Coverage Ratios (%) 5.3% 5.5% 192% 185% 2 0 5.1% 5.1% 4.8% 2 164% 170% 157% 0 2 0 165% 2 161% 0 1 154% 1.9% 1.8% 1.7% 1.8% 1.9% 143% 142% 1 0 1 0 1.5% 1.6% 1.6% 99% 9

  44. Slide 44: Domestic financing and advances credit quality

    Domestic financing and advances credit quality Corporate NPLs increased while Consumer NPLs were stable NPL Ratios (%) NPL Coverage Ratios (%) 0 2.5% 2.5% 4 2.2% 2.2% 2.2% 301% 0 290% 3 279% 276% 0 0 3 236% 0 0 2 171% 166% 0.6% 0.5% 0.5% 0.5% 0.6% 148% 149% 0 2 136% (0) Corporate Consumer and credit

  45. Slide 45: Investments trends and composition

    Investments trends and composition Investments increased 3% and quality remains strong; ~91% of the investment portfolio remains Saudi Government and investment grade Investments (SARbn) Management Commentary 200 +3%  The investment portfolio is built on high quality securities with ~91% being Saud

  46. Slide 46: Liabilities trends and composition

    Liabilities trends and composition Higher total liability base and a improving deposit mix towards CASA balances (80%) Total Liabilities (SARbn) Management Commentary 700 +2%  2% Increase in total liabilities. Excluding Turkish Lira depreciation, 600 the growth would have been 13%. 500 381 396 388

  47. Slide 47: Liquidity

    Liquidity NCB maintained a strong liquidity profile HQLA and Average Liquidity Coverage (SARbn/%) Management Commentary 211.9% 250.0%  As at 4Q 2018, the financing to customers’ deposit ratio was 83% 200 198.6% 177.3% 184.4% 176.0% and comfortably below the regulatory guidelines. 200.0% 150  HQLA

  48. Slide 48: Capital

    Capital Capital position comfortably above regulatory minima Capitalisation (SARbn) Pillar I Risk Weighted Assets (SARbn) Capital Ratios (%) 140 700 0 20.4% 20.3% 20.6% +3% -0% 0 20.0% 20.0% 120 600 0 18.2% 18.1% 18.5% 100 74 500 17.7% 17.8% 72 72 361 361 0 360 0 80 8 400 9 12 13 7 8 7 8 7 34 35 35

  49. Slide 49: Segmental Review

    National Commercial Bank Segmental Review FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation

  50. Slide 50: NCB Bank (standalone)

    NCB Bank (standalone) Strong 11% FY 2018 net income growth resulting from operating income growth and lower impairment charge Summary Financial Performance Financing and Advances, net (SARbn) YoY % YoY % SAR (mn) 4Q 2018 3Q 2018 4Q 2017 FY 2018 FY 2017 change change 450 +9% 400 Total assets 426,865

  51. Slide 51: Retail Banking

    Retail Banking Higher FY 2018 net income from higher operating income and lower impairment charge Summary Financial Performance Financing & Advances, net (SARbn) YoY % YoY % SAR (mn) 4Q 2018 3Q 2018 4Q 2017 FY 2018 FY 2017 change change +7% 160 140 Total assets 125,908 123,856 116,530 +8% 125,908 11

  52. Slide 52: Corporate Banking

    Corporate Banking Higher FY 2018 net income by 13% from lower operating expense and lower impairment charge. Summary Financial Performance Financing & Advances, net (SARbn) YoY % YoY % SAR (mn) 4Q 2018 3Q 2018 4Q 2017 FY 2018 FY 2017 change change 250 +9% 200 Total assets 138,203 142,725 126,184 +10

  53. Slide 53: Treasury

    Treasury Stable FY 2018 net income in treasury segment Summary Financial Performance Investments, net (SARbn) YoY % YoY % SAR (mn) 4Q 2018 3Q 2018 4Q 2017 FY 2018 FY 2017 change change 200 +3% Total assets 154,763 159,829 162,510 -5% 154,763 162,510 -5% 150 115 117 118 Total operating income 822 851

  54. Slide 54: Capital Markets

    Capital Markets Higher FY 2018 net income growth, driven by asset management Summary Financial Performance Assets Under Management (SARbn) YoY % YoY % SAR (mn) 4Q 2018 3Q 2018 4Q 2017 FY 2018 FY 2017 change change 250 +17% Assets Under Management 144,096 136,659 123,329 +17% 144,096 123,329 +17% 200

  55. Slide 55: Türkiye Finans Katılım Bankası (TRY)

    Türkiye Finans Katılım Bankası (TRY) FY 2018 net income increased by 20% YoY due mainly to higher operating income % in foreign currency xx% Financing & Advances, net (TRYbn) Summary Financial Performance YoY % YoY % TRY (mn) 4Q 2018 3Q 2018 4Q 2017 FY 2018 FY 2017 +1% +14% change change 3.4 30.0 To

  56. Slide 56: Additional Information

    National Commercial Bank Additional Information FY 2018 Results NCB Investor Relations FY 2018 Investor Presentation

  57. Slide 57: Disclaimer

    Disclaimer The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background information about the activities of NCB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by NC

  58. Slide 58: NCB Contacts

    NCB Contacts Please don’t hesitate to contact NCB Group Investor Relations NCB Investor Relations More information +966 12 646 3988 Download copies of National Commercial Bank’s: investorrelations@alahli.com  Financial statements  Earnings release National Commercial Bank  Investor presentation P

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