Saudi Investment Bank · TADAWUL:1030

Saudi Investment Bank — The Saudi Investment Bank — 9M 2023 Earnings Presentation

45 slides from Saudi Investment Bank's earnings presentation, November 2023

  1. Slide 1: Investor Presentation 9M 2023

    Investor Presentation 9M 2023 November 2023 The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 1

  2. Slide 2: Contents

    Contents SAIB Overview 3 KSA Operating Environment 7 Strategy 10 Financial Performance 23 2023 Guidance 36 Segmental Performance 38 Appendix 45 The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 2

  3. Slide 3: SAIB Overview

    SAIB Overview The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 3

  4. Slide 4: Strong corporate and private banking franchise with well capitalized balance sheet

    Strong corporate and private banking franchise with well capitalized balance sheet Total assets Number of branches % of Digital transactions Number of customers Credit ratings +19% YTD Unchanged YTD Unchanged YTD +11% YTD S&P / Fitch / Moody’s 129.8 SAR bn  51  99.6%  +840 k  BBB / A- / A3  Tot

  5. Slide 5: Robust financial performance with double digit net profit growth and improved profitability

    Robust financial performance with double digit net profit growth and improved profitability Total Operating Income Operating Expenses Net Income +5% CAGR  +6% CAGR  +27% CAGR  3,265 1,433 1,508 2,713 2,818 2,846 2,753 1,234 1,214 1,270 1,133 1,062 980 576 239 2018 2019 2020 2021 2022 2018 2019 20

  6. Slide 6: Resilient asset quality, adequate capital and liquidity position to accelerate growth and returns

    Resilient asset quality, adequate capital and liquidity position to accelerate growth and returns Loans & Advances Deposits RoTE +4% CAGR  +2% CAGR  +569bps  68.9 69.1 69.6 9.90% 59.4 57.1 57.8 63.7 60.1 61.5 55.1 6.95% 6.92% 4.21% 1.01% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019

  7. Slide 7: Operating Environment

    Operating Environment The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 7

  8. Slide 8: The Saudi Economy is healthy, though 2023 GDP growth impacted by oil production cuts

    The Saudi Economy is healthy, though 2023 GDP growth impacted by oil production cuts Real GDP Growth (%) Oil Prices (USD) 80.5 Brent Oil Price / Barrel (avg) WTI Oil Price / Barrel (avg) +0.8% 8.7% 96.4 WTI 94.8 80.5 79.9 3.9% 4.0% 4.2% 76.0 69.3 77.3 76.9 72.6 0.8% 68.0 2021 2022 2023 2024 2025 202

  9. Slide 9: The Saudi Banking sector is profitable and showing solid growth momentum

    The Saudi Banking sector is profitable and showing solid growth momentum, though liquidity is tighter amidst higher rate environment Bank Credit (SARbn) Bank Deposits (SARbn) Profitability (%) ROE ROA 12.9% ROE +12% CAGR  +8% CAGR  2,349 2,411 2,295 2,401 13.9% 2,059 2,104 12.5% 1,783 1,796 1,943

  10. Slide 10: Strategy

    Strategy The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 10

  11. Slide 11: SAIB has started to see real growth momentum, reaching Revenue of SAR1 bn in 3Q 2023

    SAIB has started to see real growth momentum, reaching Revenue of SAR1 bn in 3Q 2023 Revenue (3Q 2014 to 3Q 2023) Net Loans (3Q 2014 to 3Q 2023) SAR 1.0 1.X bn SAR SAR 80 77 bn bn 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 Total

  12. Slide 12: Strategy built on agility, innovation and focus on corporate and HNW customers

    This is underpinned by the Bank’s strategy to build on its agility, culture of innovation and focus on corporate and HNW customer relationships… SAIB’s size allows agility Corporate and Private Banking Focus Corporate and HNW customers are in SAIB’s DNA Total Assets (2Q23, SARbn) Total Assets by Seg

  13. Slide 13: …and a real focus on building on market opportunities

    …and a real focus on building on market opportunities Corporate banking is still underpenetrated in KSA with… …ample room to grow – SAIB market shares have upside from today Saudi Arabia Credit to GDP SAIB Market Share by Corporate Loans (FY22, %) 63% by 2025 63% Large & Medium Corporate 3.40% Mediu

  14. Slide 14: We have identified key areas for improvement and are addressing them…

    We have identified key areas for improvement and are addressing them… Further Upside - Cost Efficiency from Digitization of Branches Significant opportunity to improve the NIBD ratio Total assets per branch (2Q23, SARm) NIBD % of Total Deposits (2Q23, %) 54% 2,423 2,084 40% SAIB KSA Average SAIB KSA

  15. Slide 15: Strategic priorities for core segments and enablers

    Strategic priorities for out core segments and enablers Core Corporate Public Private Consumer Key Strategic Segments  Banking Institutions Banking Banking Priorities  • Serve large corporates • Increase coverage for • Increase focus on • Segregate coverage Revisit and mid-market prioritized custo

  16. Slide 16: Corporate Banking Strategy: Accelerate profitable growth

    Corporate Banking Strategy: Accelerate profitable growth Status quo  Strong corporate franchise with a large number of borrowing customers served through RMs with standard coverage model  Key Strategic Revisit segmentation Redesign the Revamp value Streamline and Priorities  and coverage operatin

  17. Slide 17: Public Institutions Strategy: Increase penetration and grow DDA and fees

    Public Institutions Strategy: Increase penetration and grow DDA and fees Status quo  Current PI franchise with a good number of depositing customers contributing a significant percentage of DDA deposits  Key Strategic Revisit segmentation Redesign the Revamp value Streamline and Priorities  and c

  18. Slide 18: Private Banking Strategy: Accelerate profitable growth

    Private Banking Strategy: Accelerate profitable growth Status quo  Strong private banking franchise with many customers served through RMs with same coverage for HNW & UHNW  Key Strategic Revisit segmentation Redesign the Revamp value Streamline and Priorities  and coverage operating model propos

  19. Slide 19: Consumer Banking Strategy: Build differentiated value proposition

    Consumer Banking Strategy: Build differentiated value proposition Status quo  Affluent are the key contributors to volume and profitability with a significant number of customers  Key Strategic Revisit segmentation Redesign the Revamp value Streamline and Priorities  and coverage operating model

  20. Slide 20: Strategic Enablers

    Strategic Enablers Key Enablers  Treasury IT/Digital Human Resources Risk • Optimize funding structure • Test automation by writing • Redesign organization • Review and simplify risk to support growth plans and and running tests to assure structure based on strategic appetite statement enhance NII

  21. Slide 21: We aim to grow market share, increase fee income and improve efficiency to drive higher ROTE

    We aim to grow market share, increase fee income and improve efficiency to drive higher ROTE Grow Market Share in Corporate Loans Grow Market Share in Retail Loans SAIB has already started to close the gap Corporate KSA Market Share Retail KSA Market Share towards KSA peers’ return on equity Return

  22. Slide 22: Financial Performance

    Financial Performance 9M 2023 The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 23

  23. Slide 23: SAIB is focused on delivering strong results across key performance indicators

    SAIB is focused on delivering strong results across key performance indicators 9M 2023 DRIVERS LOANS & ADVANCES SAR 80.2bn +16% YTD Strong growth in Corporate (+23%) and Private Banking (+6%) loans Balance Sheet DEPOSITS SAR 85.5bn +23% YTD Strong growth in IBDs (+41%) mainly from public institution

  24. Slide 24: Growth momentum sustained in 9M 2023 demonstrating solid progress

    Growth momentum sustained in 9M 2023 demonstrating solid progress Loans Deposits Loan growth of 16% YTD driven by corporate segment while deposits grew 23% +16% YTD +23% YTD YTD on higher time deposits Double digit growth in operating income underpinned by 19% YTD growth in assets SAR 80.2 bn  SAR

  25. Slide 25: Growth across assets, funded largely by increase in deposits

    Growth across assets, funded largely by increase in deposits Total assets increased by 19% YTD as loans grew 16% and investments rose 16%, further supported by increase in SAMA and bank placements Loans & Advances (SARbn) Retail Corporate Other Total liabilities increased 23% YTD, mainly driven by g

  26. Slide 26: Loan growth continues to gain momentum driven by corporate lending

    Loan growth continues to gain momentum driven by corporate lending 16% YTD growth in loans driven by 23% increase in Loans & Advances by segment (%) corporate lending Active participation in syndicated loan market for +4% Loans QoQ  infrastructure projects, well supported by demand from other key

  27. Slide 27: Investments grew 16% YTD driven by debt securities

    Investments grew 16% YTD driven by debt securities 96% of investments were fixed rate debt securities as Investments, Gross by type (%) Investments by accounting classification (%) of 9M 2023 61% of investments were accounted for at fair value through other comprehensive income and 38% at amortized

  28. Slide 28: Customer deposits increased 23% driven by IBDs

    Customer deposits increased 23% driven by IBDs Deposits grew 23% YTD during 9M 2023 mainly driven Deposits by segment (%) by increase in interest-bearing deposits IBDs rose 41% YTD from large inflows to time deposits +23% Deposits YTD  amid higher interest rate environment NIBDs were stable YTD Ret

  29. Slide 29: 14% growth in 9M 2023 earnings driven by NCSI growth moderated by lower recoveries

    14% growth in 9M 2023 earnings driven by NCSI growth moderated by lower recoveries Net income increased 14% YoY in 9M 2023 driven by strong growth of 26% in operating income, partially offset by an increase of 18% in operating expenses and a rise Total Operating Income Movement YoY (SARmn) in impair

  30. Slide 30: NSCI growth of 29% YoY on 19% growth in earning assets and NIM expansion

    NSCI growth of 29% YoY on 19% growth in earning assets and a 24bps NIM expansion NSCI growth of 29% YoY was underpinned by 19% NIM Average Earning Assets (SARbn) Consumer loans NIM Asset yield CoF 3.07%  growth in average earnings assets as well as NIM Corporate & other loans expansion of 24 bps re

  31. Slide 31: Growth in fee and other income driven by foreign exchange and investment income

    Growth in fee and other income driven by foreign exchange and investment income Fee & other income increased 9% YoY in 9M 2023, Fee & Other Income Movement YoY (SARmn) mainly driven by foreign exchange and investment income Foreign exchange income was well supported by strong +9%  transaction volum

  32. Slide 32: An 18% increase in operating expenses reflects implementation of strategic initiatives

    An 18% increase in operating expenses reflects implementation of strategic initiatives Operating expenses increased 18% YoY in 9M 2023, Operating Expenses Composition Operating Expenses (SARmn) mainly due to increase in general & administration expenses and employee related costs as bank continued (

  33. Slide 33: Credit quality improved further with NPL ratio at low levels

    Credit quality improved further with NPL ratio at low levels Total impairments increased SAR 306mn YoY in 9M Impairments (SARmn) Impairment for loans Cost of risk 2023 mainly due elevated recoveries in 9M 2022 Other impairments totaling SAR 294mn vs. SAR 45mn in 9M 2023 0.45% 249 0.43% Cost of risk

  34. Slide 34: Solid liquidity, funding and capital position with adequate buffers

    Solid liquidity, funding and capital position with adequate buffers LCR declined by 18.3ppts during 9M 2023 to 201.6%, Liquidity Ratios LCR NSFR Loans to Deposits Ratio SAMA LTD Headline LTD while NSFR moderated 3.6ppts to 111.1% As of 9M 2023, the SAMA regulatory LTD ratio was within required level

  35. Slide 35: 2023 Guidance

    2023 Guidance The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 36

  36. Slide 36: 2023 Guidance and Outlook

    2023 Guidance and Outlook 2022A 9M 2023A 2023 GUIDANCE DRIVERS Balance Sheet LOANS & ADVANCES +19% +16% Mid to high teens Strong growth in Corporate and Private Banking loans; guidance YoY YTD unchanged from 2Q 23 NET INTEREST MARGIN 2.92% 3.07% 3.00% – 3.05% Guidance downgraded from 3.10% – 3.20% o

  37. Slide 37: Segmental Performance

    Segmental Performance The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 38

  38. Slide 38: Strong operating performance across segments

    Strong operating performance across segments Total Operating Income Movement YoY (SARmn) Net Income Before Zakat Movement YoY (SARmn) +26%  +8%  213 316 10 2,954 1,412 259 10 1,528 2,348 98 (31) (22) (31) (100) 9M 22 Retail Corporate Treasury Asset Mgmt. Other 9M 23 9M 22 Retail Corporate Treasury

  39. Slide 39: Segmental breakdown

    Segmental breakdown Total Operating Income (SARmn) Retail Corporate Net Income Before Zakat (SARmn) Retail Corporate Treasury & Investment Asset Mgmt. & Brokerage Treasury & Investment Asset Mgmt. & Brokerage Other Other +17%  -20%  917 960 989 1,005 671 858 17 516 537 38 51 56 52 475 42 137 23 33

  40. Slide 40: Corporate

    Corporate SAR Million 3Q 2023 3Q 2022 Δ 9M 2023 9M 2022 Δ Net Income Before Zakat Movement YoY (SARmn) Net Special Commission Income 328 302 +9% 939 732 +28% Fee & other income 55 54 +1% 149 143 +4% -12%  207 5 Total operating income 382 356 +7% 1,088 875 +24% 818 718 Operating expenses (72) (67) +

  41. Slide 41: Retail

    Retail SAR Million 3Q 2023 3Q 2022 Δ 9M 2023 9M 2022 Δ Net Income Before Zakat Movement YoY (SARmn) Net Special Commission Income 294 278 +6% 846 740 +14% Fee & other income 30 29 +4% 89 97 -8% -8%  106 Total operating income 324 307 +5% 934 837 +12% 262 240 (8) Operating expenses (198) (173) +14%

  42. Slide 42: Treasury and Investments

    Treasury and Investments SAR Million 3Q 2023 3Q 2022 Δ 9M 2023 9M 2022 Δ Net Income Before Zakat Movement YoY (SARmn) Net Special Commission Income 261 163 +60% 802 527 +52% Fee & other income 50 44 +13% 156 115 +36% +62%  Total operating income 311 208 +50% 958 642 +49% 275 41 0 675 Operating expe

  43. Slide 43: Asset management and brokerage

    Asset management and brokerage SAR Million 3Q 2023 3Q 2022 Δ 9M 2023 9M 2022 Δ Net Income Before Zakat Movement YoY (SARmn) Net Special Commission Income 15 13 +12% 42 34 +23% Fee & other income 37 29 +28% 117 115 +2% +15%  8 3 0 81 71 Total operating income 52 42 +23% 159 149 +7% (0) Operating exp

  44. Slide 44: Appendix

    Appendix The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 45

  45. Slide 45: SAIB Investor Relations

    SAIB Investor Relations For more information, please visit www.saib.com.sa/en/investor-relations or contact SAIB Investor Relations at ir@saib.com.sa The Saudi Investment Bank – 3Q 2023 Investor Presentation P. 46

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