Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q1 2019 Earnings Presentation
49 slides from Al Rajhi Bank's earnings presentation, 2019
Slide 1: Al Rajhi Bank Investor Presentation 1Q 2019 Results
Al Rajhi Bank Investor Presentation 1Q 2019 Results The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1Q 2019 Investor Presentation
Slide 2: Agenda
1 The World's Leading Islamic Bank ................................................................................. 03 41 1Q 2019 Financial Results Overview ................................................................................. 25 Islamic Banking, Everywhere .............................
Slide 3: The World's Leading Islamic Bank
Al Rajhi Bank The World's Leading Islamic Bank The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1Q 2019 Investor Presentation
Slide 4: Islamic Banking, Everywhere
Al Rajhi Bank Islamic Banking, Everywhere At a glance Presence & Branches Kuwait Islamic Islamic NPB Deposits NPB Deposits Customers Jordan 550 5,095 100% 100% 94% 96% 10 2 Banking % of Total Deposits ATMs 9+ Branches 9+m million 90,252 236 Transactions NPS Digital:Manual Digital : Manual 550 18 Rem
Slide 5: What makes us The Blue Chip Islamic Bank
Al Rajhi Bank What makes us "The Blue Chip Islamic Bank" Institutional Status - World's #1 Islamic Bank (by Assets; SAR bn) Large and Growing Market Cap (in SAR bn) 400 365 142 350 160 30 0 140 250 228 215 120 103 105 100 85 200 158 128 80 150 60 100 40 20 50 0 0 RAJHI DIB KFH QIB ADIB 2015 2016 201
Slide 6: Robust balance sheet with 96% non-profit-bearing deposits
Al Rajhi Bank, The Blue Chip Islamic Bank Robust balance sheet with 96% non-profit-bearing deposits at 1Q 2019 Total Assets (SARbn) Capital Ratios (%) 800 23.3% 0 700 0 22.0% 600 +5.0% 0 20.8% 500 20.2% 343.1 365.0 22.2% 0 400 315.6 339.7 0 300 0 20.9% 200 0 19.7% 19.1% 100 0 0 0 2015 2016 2017 2018
Slide 7: Outstanding foundation and strong returns
Al Rajhi Bank, The Blue Chip Islamic Bank Outstanding foundation and strong returns ROE (%) ROA (%) +258bps +26bps +59bps 19.82% 0 0 +54bps +19bps 17.24% +20bps 2.94% 16.65% 2.68% 0 0 16.11% 2.49% 0 2.29% 0 0 0 0 0 0 0 0 0 0 2015 2016 2017 2018 2015 2016 2017 2018 Net Profit Margin (%) Cost of Funds
Slide 8: Top 10 Facts about Al Rajhi Bank
Top 10 Facts about Al Rajhi Bank 1 Largest Islamic Bank worldwide 61 #1 Bank in KSA (by Assets & Market Cap) (by number of customers) 2 #1 Retail Bank in Middle East 27 #1 Distribution network in Middle East (Retail Deposits & Income) (by # of Branches, POS, ATMs, Remittance Centers) 3 One of the hi
Slide 9: What sets Al Rajhi Bank apart
What sets Al Rajhi Bank apart ARB has the largest retail banking business in the Middle East Market Share - Current Accounts Market Share - Deposits +180bps 0 +160bps 0 0 0 17.3% 0 24.8% 16.3% 16.4% 0 0 23.2% 23.7% 23.7% 9+ Million 0 15.5% 0 Customers 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18 FY 15 FY 16
Slide 10: Al Rajhi Bank's Leading Network
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 0 0 +0bps 0 +330bps 0 26.8% 27.2% 0 26.4% 26.4% 26.6% 26.5% 26.4% 25.0% 26.2% 23.9% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18 1
Slide 11: Al Rajhi Bank's Leading Network
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 0 0 +5bps 0 +289bps 0 26.8% 0 26.4% 26.4% 26.6% 26.5% 25.0% 26.2% 23.9% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18 FY 15 FY 16 F
Slide 12: ARB has a unique franchise
ARB has a unique franchise We capture high market share across key products #1 in Personal Loans #1 in Auto Loans Market Share - Personal Loans Market Share - Auto Loans 1 -190bps 1 +70bps 1 40.6% 40.4% 39.6% 50.6% 52.7% 52.7% 51.3% 1 0 38.7% 1 1 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18 FY 15 FY 16
Slide 13: ARB Market Performance
ARB Market Performance Al Rajhi Bank maintained its momentum and outperformed its peer group Share Price Performance Top 3 KSA Banks (Monthly; Rebased to 100) 31 March 19 Key Metrics RAJHI NCB RIYAD TASI Closing Price SAR 108.40 220 Market Cap SAR 176.2 bn RAJHI, 211 Market Cap / % Industry 24.08% 2
Slide 14: Market cap and liquidity ensures high index weighting
Market Performance Market cap and liquidity ensures high index weighting ARB has the highest weight in the MSCI GCC Index... …and is "certain" to be included in MSCI EM Index Index RAJHI ATVR* vs. MSCI Minimum Requirement (>15%) Float Adj # Top 10 Constituents Country Weight Sector Mkt Cap (%) 117%
Slide 15: Awards
Awards Recent international recognition Global Awards Regional Awards Best Bank in GCC Best Bank in Saudi Arabia Fastest Growing Bank in KSA Most Innovative Bank in KSA Best Retail Bank in KSA Strongest Islamic Retail Bank in the World Best Financial Institution in Saudi Arabia Strongest
Slide 16: Our Values
Our Values Modesty Humility in everything we do Integrity & Openness and highest standards of Nurturing imagination and fostering Transparency corporate & personal ethics Innovativeness creativity Passion to A strong commitment to anticipate and Defining, differentiating and reinforcing Serve Our Me
Slide 17: Al Rajhi Bank's Social Responsibilities
Al Rajhi Bank's Social Responsibilities Our responsibility to our community has always been at the forefront of what we do Focus areas Examples 101 programs conducted 21 cities Participation 2,420 volunteering hours clocked in 1Q 2019 CSR People In Need, Volunteering, Financial Strategic Literacy an
Slide 18: Saudi Arabia's Macro-Economic Environment
Saudi Arabia’s Macro-Economic Environment Supportive of Growth The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1Q 2019 Investor Presentation
Slide 19: Macro Environment
Macro Environment Expected continued improvement in economic growth KSA GDP Growth is Expected to Improve, in part from …as well as expansionary fiscal policy… more supporting oil prices… 57.36 5 70 52.32 54.13 1,001 1,030 1,003 953 1,035 60 1,200 4 43.64 936 996 50 898 860 1,00 0 3 40 613 622 800 2
Slide 20: Macro Environment: Supportive of Banking Sector
Macro Environment Supportive of Banking Sector …and moderate pick up in bank deposits amid balance Moderate pickup in sector loan growth… sheet optimisation in rising rate environment 1,3 80 9.5% 12.0% 1,6 80 2.6% 3.0 % 1,6 60 1,3 60 1.9% 10.0 % 2.5% 1,6 40 1,3 40 8.0 % 1,327 1,6 20 2.0% 1,619 1,3 2
Slide 21: Al Rajhi Bank Strategy 2020
Al Rajhi Bank Strategy 2020 ABCDE 'Back to Basics' The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1Q 2019 Investor Presentation
Slide 22: Saudi Arabia Vision 2030
Saudi Arabia Vision 2030 Key objectives A Vibrant Society A Thriving Economy An Ambitious Nation Lower unemployment Rise in Global Competitiveness Increase Umrah capacity from 8 to 30M Increase non-oil government revenue from 11.6% to 7% Index from 25 to top 10 from SAR 163B to 1T Double t
Slide 23: Financial Sector Development Program
Financial Sector Development Program Creating a thriving financial sector that serves as key enabler for Vision 2030 objectives 2020 metrics & targets Enable financial Promote and enable financial institutions to support Ensure the formation of an advanced capital market planning private sector grow
Slide 24: Key initiatives 2017-2020
Strategy Overview ABCDE 'Back to Basics' strategy already delivers results A B C D E Accelerate Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence A B C D E Grow mortgage, private Update value Smartly expand channels World-class sector, affluent, ladies & Engaged
Slide 25: Strategy Update
Strategy Update ABCDE 'Back to Basics' strategy delivered strong results in 1Q 2019 A B C D E Accelerate Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence 12% YoY operating income 12 new products launched to Al Rajhi Bank Academy 90K POS 253 Bots growth cater to
Slide 26: Financial Results
Financial Results Overview & Trends The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1Q 2019 Investor Presentation
Slide 27: Key Messages
Key Messages Good start to the year 2019 Liquidity remained healthy, CAR declined Net Income up 21.1% YoY Deposits up 3.4%, Financing up by 3.6% but remains strong Net Income (SARmn) Total Customers' Deposits (SARbn) 10,000 500 Capital Adequacy Ratio (%) +3.4% 21.5% 9,000 20.9% 0 400 284 294 8,000 1
Slide 28: Net Income Trends
Net Income Trends 21.1% YoY profit growth from solid income growth Commentary Net Income Growth Drivers By Segment (SARmn) Net income for 1Q 2019 increased 21.1 % YoY to SAR2,885 million 2,500 mainly driven by 12.0% total operating income growth from yiel- +21.1% 2,000 related income improvements
Slide 29: Progress against guidance and outlook
Progress against guidance and outlook Financing & income growth, efficiency and cost of risk in line with FY 2019 guidance FY 2018 1Q 2019 Actual FY 2019 Guidance Balance Mid single digit Financing, Net (SAR bn) 234 236 (+0.9%) Sheet growth Net Profit Margin 4.34% 4.80% (+46 bps) +25 to +30 bps Prof
Slide 30: Operating Income Trends
Operating Income Trends 12.0% YoY income growth from financing and investment income(+14.6%) Total Operating Income (SARmn) Total Operating Income Mix By Segment (SARmn) Investment services & brokerage 120% SAR 102mn 6,000 +12.0% 100% Treasury 4,383 4,506 4,639 4,142 4,288 5,00 0 80% SAR 734mn 4,0 0
Slide 31: Operating Income Trends
Operating Income Trends Stronger YoY financing margin & good banking fee income growth Commentary Net Profit Margin (%) 1Q 2019 net financing and investment income grew 14.6% YoY due to 5.17% 4.75% 0 improved financing margins, further aided by 3.7% growth in average 0 4.61% 4.65% 4.70% profit-bea
Slide 32: Expenses Trends
Expenses Trends YoY expense growth of 4.2%, but efficiency improved 220 bps on positive "jaws" Operating Expenses (SARmn) Operating Expenses Mix By Segment (SARmn) Investment services & brokerag 120% SAR 38mn 3,000 100% Treasury 2,500 +4.2% SAR 109mn 80% 2,00 0 Corporate 1,309 1,386 1,393 1,403 1,36
Slide 33: Assets
Assets 4.3% YoY increase in total assets Commentary Total Assets Mix By Type (SARbn) Other Assets, Net Total assets increased by 4.3% YoY as an increase in financing (+3.6%), SAR 16bn investments (+12.0%) and interbank balances (+64.9%) were offset by 4% Cash & Balances with lower cash and balance
Slide 34: Financing
Financing Financing dominated by retail Commentary Financing, Net Mix By Segment Retail Financing, Net Mix By (SARbn) Type (SARbn) Financing is dominated by retail (72%) followed by corporate (26%) Corporate Mortgage SAR 62bn SAR 37bn while SME and financial institutions are negligible 26% 22% R
Slide 35: Asset Quality Trends (1)
Asset Quality Trends (1) Cost of Risk remains stable Total Impairment Charge (SARmn) Impairment Charge Drivers By Segment (SARmn) 900 800 281 700 80 0 600 450 700 600 450 500 0 389 500 417 389 333 330 400 (331) (10) 400 300 30 0 200 200 100 100 0 0 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 1Q 18 Retail Corporat
Slide 36: Asset Quality Trends (2)
Asset Quality Trends (2) Asset quality remains solid NPL Ratio Trends%) NPL coverage ratio 0 2.41% 4 0 1.88% 1.98% 1.92% 4 0 1.30% 3 0.81% 0.95% 0.94% 342% 346% 314% 3 0.83% 0 2 0.72% 0 0 2 231% 0 1 177% (0 ) 0.35% 0.36% 0.38% 0.34% 0.34% 1 0 (0 ) 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2015 2016 2017 2018 1Q
Slide 37: Funding & Liquidity Trends
Funding & Liquidity Trends Liquidity and funding remain comfortably within regulatory requirements Commentary Total Liabilities Mix By Type (SARbn) Other SAR 16bn Liquidity remained healthy during 1Q 2019 and comfortably within 5% regulatory guidelines Banks SAR 3bn HQLA decreased slightly YoY r
Slide 38: Funding & Liquidity Trends
Funding & Liquidity Trends Continued growth in non-profit bearing deposits Commentary Total Customers' Deposits Mix Total Customers' Deposits Mix By Type (SARbn) By Segment (SARbn) Strong stable funding with 94% of liabilities sourced from customers’ Time Corporate SAR 11bn SAR 28bn deposits, of w
Slide 39: Capitalisation Trends
Capitalisation Trends Rising profitability drives total capital higher Total Capital (SARbn) Commentary 120 Total capital increased by 1.8% on rising profitability +1.8% 100 80 Capitalization remains strong with CAR of 20.9% and CET1 of 19.8% as at 31 March 2019 60 53 51 54 40 3 3 3 20 50 49 51
Slide 40: Operating Results
Operating Results 1Q 2019 Performance The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1Q 2019 Investor Presentation
Slide 41: Retail Banking
Retail Banking 3.7% increase in profit on strong financing growth tempered by higher provisions Commentary YoY SAR (mn) 1Q 2019 1Q 2018 % Retail Banking net income increased by 3.7% YoY, reflecting stronger Net financing & investment income 2,834 2,506 +13.1% financing and investment income Fee an
Slide 42: Corporate Banking
Corporate Banking Strong top line and lower impairment charge lead to 259.6% profit growth Commentary YoY SAR (mn) 1Q 2019 1Q 2018 % Corporate Banking net income grew 259.6% YoY as a result of higher Net financing & investment income 516 493 +4.7% income, improved operating efficiency and a drop i
Slide 43: Treasury
Treasury Strong profit growth from increased investment portfolio Commentary YoY SAR (mn) 1Q 2019 1Q 2018 % Treasury net income rose 16.5% YoY to SAR634 million from 12.4% total Net financing & investment income 588 437 +34.7% operating income growth Fee and other income 146 217 -32.8% Total Tre
Slide 44: Investment Services & Brokerage
Investment Services & Brokerage 36% drop in profit on lower fees Commentary YoY SAR (mn) 1Q 2019 1Q 2018 % Net income for Investment Services & Brokerage declined 36.0% YoY to Net financing & investment income 5 6 -17.7% SAR 65 million principally from 26.0% operating income drop Fee and other inc
Slide 45: Appendix
Appendix Additional Information The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1Q 2019 Investor Presentation
Slide 46: Board of Directors
Board of Directors Members Chairman Abdullah bin Sulaiman Al Rajhi Salah bin Ali AbalKhail Non-Executive Non-Executive Vice Chairman Alaa bin Shakib Al Jabiri Bader bin Mohammed Al Rajhi Khaled bin Abdulrahman Al Qoaiz Independent Non-Executive Non-Executive Abdulaziz bin Khaled Al Ghefaily Ibrahim
Slide 47: Management Team
Management Team International expertise combined with deep roots in Saudi Arabia Chief Executive Officer Chief Financial Officer Chief Risk Officer Steve Bertamini Abdullah Alkhalifa Christopher Maclean Banking experience: 32 years Banking experience: 28 years Banking experience: 35 years Deputy Chi
Slide 48: Additional Information
Additional Information Contact investor relations for more information Mr. Amr M. Sager Head of Investor Relations Tel: +966 (11) 828 1985 Email: sagera@alrajhibank.com.sa Al Rajhi Bank The Blue Chip Islamic Bank 48 1Q 2019 Investor Presentation
Slide 49: 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