Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q3 2023 Earnings Presentation
39 slides from Al Rajhi Bank's earnings presentation, 2023
Slide 1: Al Rajhi Bank Investor Presentation 3Q 2023 Results
Al Rajhi Bank Investor Presentation 3Q 2023 Results
Slide 2: 3Q 2023 Investor Presentation
3Q 2023 Investor Presentation 03 The World’s Leading Islamic Bank 14 Bank of The Future Strategy 17 KSA Macro-Economic Environment 20 3Q 2023 Financial Highlights 34 FY 2023 Guidance 37 IR Contact Information 3Q2023 Investor Presentation 2
Slide 3: The World's Leading Islamic Bank
The World’s Leading Islamic Bank
Slide 4: Al Rajhi Bank | Islamic Banking, Everywhere
Al Rajhi Bank | Islamic Banking, Everywhere At a glance, 3Q 2023 Presence & Branches, 3Q 2023 100% 67% Jordan Kuwait Islamic CASA Customers 10 2 511 4,604 Branches ATMs 15.2 million 73% 94:6 581,700 163 NPS Digital:Manual 511 POS Remittance 13 Centers Saudi Arabia Malaysia Largest network in Saudi A
Slide 5: Top 10 Facts About Al Rajhi Bank
Top 10 Facts About Al Rajhi Bank Largest Islamic Bank worldwide #1 Bank in KSA 1 (by Assets & Market Cap) 6 (by number of customers) #1 Retail Bank in Middle East #1 Distribution network in Middle East 2 (Retail Deposits & Income) 7 (by # of Branches, POS, ATMs, Remittance Centres) One of the highes
Slide 6: Robust balance sheet with 67% CASA deposits in 3Q 2023
The World’s Leading Islamic Bank | Robust balance sheet with 67% CASA deposits in 3Q 2023 Total Assets (SARbn) Capital Ratios (%) +108.7% 0 1,000 801 0 762 21.4% 800 20.8% 19.9% 0 624 0 19.1% 469 17.5% 600 384 0 20.3% 19.6% 400 18.8% 18.0% 17.0% 0 200 0 16.4% 16.5% 0 0 2019 2020 2021 2022 9M 23 2019
Slide 7: Outstanding foundation and strong returns
The World’s Leading Islamic Bank | Outstanding foundation and strong returns ROE (%) ROA (%) 0 0 23.9% 0 0 22.7% 20.5% 0 2.76% 2.70% 0 19.9% 19.5% 2.56% 2.46% 2.14% 0 0 0 0 0 0 0 0 2019 2020 2021 2022 9M 23 2019 2020 2021 2022 9M 23 Net Profit Margin (%) Cost of Funds (%) 0 0 0 0 0 2.34% 0 5.22% 0 4
Slide 8: ARB has the largest retail banking business in the Middle East
What sets Al Rajhi Bank Apart | ARB has the largest retail banking business in the Middle East Market Share - Demand Deposits Market Share - Deposits 1 15.2 0 0 +50bps 0 +570bps 0 0 24.2% 24.6% 25.9% 25.7% 23.0% 25.2% 24.3% 25.2% 0 0 19.4% 17.3% Million 0 0 0 0 0 0 Active Customers 0 0 0 0 0 2019 20
Slide 9: Large distribution network in Saudi Arabia
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 +130bps +120bps 0 0 0 0 29.6% 29.1% 28.8% 0 28.2% 0 27.0% 26.8% 26.8% 27.5% 27.6% 0 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 0 2019 2020 2021 2022
Slide 10: Unique franchise with leading market share across key products
Al Rajhi Bank has a unique franchise | We maintain a leading market share across key products #1 in Personal Loans #1 in Auto Loans Market Share - Personal Loans Market Share - Auto Loans 1 +380bps -140bps 1 1 1 44.6% 44.3% 51.8% 51.7% 41.5% 1 40.6% 1 37.7% 1 46.8% 47.6% 45.4% 0 0 0 0 0 0 0 0 0 0 20
Slide 11: Al Rajhi Bank Market Performance
Al Rajhi Bank Market Performance | ARB maintained its momentum and outperform its peer group • Share Price Performance Top 3 KSA Banks (Daily; Rebased to 100) 30 Sep 2023 RAJHI SNB Riyad TASI 350 Key Metrics Closing Price SAR 67.9 300 Market Cap SAR 271.6 bn Market Cap / % Industry 32.2% 250 Market
Slide 12: ESG Highlights | 3Q 2023
ESG Highlights | 3Q 2023 Renovation USD 2.6 bn Of children with ISO/DIS 37301:2020 Green syndicated loan disability Association Compliance clinic Started using solar energy system in 44 SAR 41.6mn 6 ISO 22301:2019 Key social projects Business Continuity branches to reduce Donation in 2022 delivered
Slide 13: Awards | Recent international and local recognitions
Awards | Recent international and local recognitions Global Finance: International Finance Awards: The Global Economics World Finance: • Best mobile banking app award • Best Mobile Banking Application • Most Innovative Digital Bank – • Best Consumer Digital Bank - for corporate in the middle east –
Slide 14: We are building the "Bank of the Future"
We are building the “Bank of the Future”
Slide 15: Bank of the Future Strategy 2021-2023
We are building the “Bank of the Future” | Strategy 2021 – 2023 Bank OF The Future Build on our core Outperform our competition Transform technology Focus on new client needs Grow Retail including Private Sector Customer Experience Digital Core Banking Platform Become Leading Finance Company Expand
Slide 16: Good progress made on strategy implementation
In strong position to deliver the “Bank of the Future” | Good progress made on strategy implementation Bank OF The Future Build on our core Outperform our competition Transform technology Focus on new client needs Grow Retail including Private Sector Customer Experience Digital Core Banking Platform
Slide 17: KSA's Macro-Economic Environment
KSA’s Macro–Economic Environment
Slide 18: KSA Economic Outlook
KSA Economic Outlook | Economic conditions remain positive for the Kingdom Highlights GDP Growth/Brent Oil Price 99.0 94.9 • GDP declined by 4.6% in 3Q 2023 driven by lower oil activities 84.1 100.0 7.2 70.9 64.4 80.0 • IMF revised down Saudi’s GDP growth forecasts to 0.8% for 2023 and 5.2 8.7 revis
Slide 19: Banking Sector Highlights
Banking Sector Highlights | Banking system deposits growth outpaced loans growth in 9M2023 Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARmn) 79.5% 81.5% 79.7% 77.1% 75.0% Deposits growth in the banking system during first eight months is in 2,800 • 80.0% 2,544 2,455 line with loans
Slide 20: 3Q 2023 Financial Highlights
3Q 2023 Financial Highlights
Slide 21: First Nine Months 2023 Results Summary
First Nine Months 2023 Results Summary | Results are in line with expectations 4.0% YTD Growth in financing portfolio 5.7% Growth in liabilities LDR below regulatory minima 5.2% YTD Balance Net Financing Total Liabilities Loan to Deposit Ratio Sheet Growth 568.3bn +4.0% 590.8bn 661.4bn +5.7% 699.2bn
Slide 22: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Balance sheet growth of 5% YTD driven by Financing and Investments Total Assets (SARbn) SAR (mn) 3Q 23 2Q 23 QoQ 4Q 22 YTD 1,100 1,000 +8.3% Cash & balances with SAMA 43,838 46,020 -5% 42,052 +4% Due from banks & other FI 8,128 10,983 -26% 25,656 -68% 785 801 900 762 776 I
Slide 23: Balance Sheet Trends (2)
Balance Sheet Trends (2) | Financing growth driven by Mortgage and Corporate Financing, Net (SARbn) Financing, Net Mix By Segment Retail Financing Mix By Segment (SARbn) (SARbn) Corporate +6.0% Auto Loans 750 SAR 134bn SME SAR 18bn 590.8 23% 568.3 SAR 30bn 4% Credit Cards 557.5 29.6 650 23.3 25.5 5%
Slide 24: Balance Sheet Trends (3)
Balance Sheet Trends (3) | Balance sheet shows improving funding mix Total Liabilities (SARbn) Total Customers' Deposits Mix By Total Liabilities Mix By Segment Type (SARbn) (SARbn) Treasury 900 +6.9% SAR 137bn Customers’ Time 20% 661.4 699.2 Other 800 653.9 29.5 Investments 700 26.3 25.7 SAR 189bn
Slide 25: Net Income Trends
Net Income Trends | net profit lower by 2% for the first nine months of 2023 Net Income For The Period After Zakat (SARmn) SAR (mn) 9M 23 9M 22 YoY 3Q 23 3Q 22 YoY 7,000 Net financing & investment income 15,720 16,594 -5% 5,401 5,687 -5% -4.6% 6,000 Fee from banking services, net 3,238 3,445 -6% 899
Slide 26: Operating Income Trends
Operating Income Trends | Lower operating income driven by higher cost of funding Total Operating Income (SARmn) Total Operating Income Growth Drivers By Type (SARmn) 10,000 -4.6% 25,000 -3.9% 7,206 7,264 6,873 21,311 6,781 6,827 (208) 191 20,481 8,000 20,000 61 6,000 15,000 (874) 4,000 10,000 2,000
Slide 27: Expenses Trends
Expenses Trends | Cost efficiencies remains solid Operating Expenses (SARmn) Operating Expenses Growth Drivers By Type (SARmn) -0.1% +0.9% 3,000 5,000 2,500 2,001 91 172 5,500 4,000 2,000 1,861 1,800 1,840 1,860 5,450 3,000 1,500 (213) 2,000 1,000 1,000 500 0 0 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 9M 22 Sa
Slide 28: Net Impairment & Cost of Risk
Net Impairment & Cost of Risk | Lower net impairment resulted in cost of risk improvement Net Impairment Charges (SARmn) Cost of Risk (%) 850 750 -22.6% 0 650 0 490 0.43% 0.39% 550 379 0 353 359 360 0.25% 0.25% 0.25% 450 350 0 250 0 150 50 (0) 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 9M 22 FY 22 1Q 23 1H 23 9M
Slide 29: Asset Quality Trends (1)
Asset Quality Trends (1) | Asset quality remains healthy with high NPL coverage Movement in NPL (SARmn) 3,500 NPL Formation (SARmn) 3,000 +0.1% 5,000 +0.1% 2,500 3,586 342 3,590 4,000 3,586 2,287 3,590 2,000 3,000 (338) 1,500 2,000 1,000 1,000 (2,283) 500 0 0 4Q 22 Retail Non-Retail 3Q 23 4Q 22 Writ
Slide 30: Asset Quality Trends (2)
Asset Quality Trends (2) | Healthy stage coverage reflecting prudent risk management ECL by Stage (SARmn) Movement in ECL by Group (SARmn) 8,992 12,000 8,529 8,613 10,000 10,000 -4.2% 809 8,000 3,470 8,992 3,538 4,101 8,000 8,613 6,000 6,000 1,924 (1,188) 1,715 1,649 4,000 4,000 3,598 3,276 2,000 2,
Slide 31: Liquidity Trends
Liquidity Trends | Liquidity remains comfortably within regulatory requirements HQLA (SARbn) Loan to Deposits Ratio (SAMA) (%) 200 +16.5% 1 Regulatory Maximum 90% 131.3 1 88.4% 85.9% 87.8% 126.7 150 118.1 122.0 81.9% 81.0% 112.7 1 100 1 1 50 1 0 0 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 3Q 22 4Q 22 1Q 23 2Q 2
Slide 32: Capitalization Trends
Capitalization Trends | Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) +8.4% 160 +16.0% 700 140 519.4 600 479.2 498.0 38.4 106.6 107.9 37.8 42.3 120 93.0 500 1.6 7.6 100 5.7 5.9 400 1.1 80 5.5 300 473.3 60 440.3 454.0 100.9 102.0 200 40 87.5 100 20 0 0 3Q 22 4Q 22 3Q
Slide 33: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) 2 0 2 -7.8% 0 1 1.07 1.08 0.99 0.98 0.99 0 1 0 3.76% 3.71% 1 3.31% 3.31% 3.26% 1 0 1 0 0 0 0 0 0 9M 22 FY 22 1Q 23 1H 23 9M 23 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 Return on Equity (%) Return on Asse
Slide 34: FY 2023 Guidance
FY 2023 Guidance
Slide 35: FY 2023 Assumptions and Outlook
FY 2023 Assumptions and Outlook | High interest rates is expected to weigh on credit demand • IMF revised down Saudi GDP growth forecasts to 0.8% in 2023 and revised up 2024 to 4.0% • Saudi economy declined by 4.6% in 3Q23, driven by 17.3% contraction in oil activities and 3.6% growth in non-oil Eco
Slide 36: FY 2023 Guidance
FY 2023 Guidance | Progressing in line with “Bank of The Future” strategy FY 2023 Guidance 9M 2023 Actual Guidance Revision Balance Sheet Financing Mid single digit +4.0% Mid single digit Net profit margin -40 bps to -50 bps -57 bps -40 bps to -50 bps Profitability Cost to income ratio Below 27.5% 2
Slide 37: IR Contact Information
IR Contact Information
Slide 38: Additional Information
Additional Information | Contact investor relations for more information Safwan Alsulaimani Director of Investor Relations +966 (11) 834 6626 AlsulaimaniSA@alrajhibank.com.sa Mohammed Alqahtani Assistant Manager Investor Relations +966 (11) 828 1921 AlqahtaniM-M@alrajhibank.com.sa Alrajhi Mobile App
Slide 39: 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