Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q3 2020 Earnings Presentation
54 slides from Al Rajhi Bank's earnings presentation, 2020
Slide 1: Al Rajhi Bank Investor Presentation 3Q 2020
Al Rajhi Bank Investor Presentation 3Q 2020 Investor Pack
Slide 2: Contents
1 ................................................................................. The World's Leading Islamic Bank 03 41 ................................................................................. 3Q 2020 Financial Results Overview 26 Key Messages 27 .........................................
Slide 3: The World's Leading Islamic Bank
Al Rajhi Bank The World's Leading Islamic Bank 3
Slide 4: Islamic Banking, Everywhere
Al Rajhi Bank Islamic Banking, Everywhere At a glance Presence & Branches Islamic Kuwait Islamic NPB Deposits NPB Deposits Customers Jordan 546 5,261 100% 94% 94% 10 2 100% Banking % of Total Deposits 9+m 9+ Branches ATMs million 168,665 228 NPS Digital: Manual Islamic Transactions 545 Remittance Hi
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) 384 450 400 180 163 350 160 142 237 238 105 30 0 140 103 85 120 250 168 100 127 200 80 150 60 100 40 50 20 0 0 RAJHI DIB KFH QIB ADIB 2
Slide 6: Al Rajhi Bank, The Blue Chip Islamic Bank
Al Rajhi Bank, The Blue Chip Islamic Bank Robust balance sheet with 93% non-profit-bearing deposits at 2019 Total Assets (SARbn) Capital Ratios (%) 900 23.3% 800 0 22.0% 700 0 600 +13.1% 0 20.1% 19.9% 500 364 384 22.2% 0 400 340 343 0 20.9% 300 0 200 19.0% 0 100 0 18.8% 0 0 2016 2017 2018 2019 2016
Slide 7: The Blue Chip Islamic Bank
The Blue Chip Islamic Bank Outstanding foundation and strong returns Return on Equity (%) Return on Assets (%) 19.82% 20.49% 2.94% 2.76% 2.49% 2.68% 16.65% 17.24% 1.04% 7.01% 2016 2017 2018 2019 2016 2017 2018 2019 ROE Before Zakat ROE After Zakat ROA Before Zakat ROA After Zakat Net Profit Margin (
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 -60bps +170bps 0 0 0 18.0% 9+ Million 25.1% 25.1% 24.8% 25.2% 17.1% 17.3% 0 24.5% 0 0 16.3% 16.2% 0 0 0 Customers 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 2
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 +0bps +290bps 0 0 0 27.6% 27.9% 0 26.6% 26.2% 26.8% 0 0 26.4% 26.5% 26.2% 26.4% 0 25.0% 0 0 0 0 0 0 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 2
Slide 11: 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 -240bps 1 -610bps 1 40.4% 39.6% 38.7% 37.7% 38.0% 52.7% 52.7% 51.3% 1 46.8% 46.6% 1 0 1 0 0 0 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 1
Slide 12: 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) 30 Sep 2020 RAJHI NCB RIYAC TASI 220 Key Metrics Closing Price SAR 65.7 200 Market Cap SAR 164.3 bn 180 RAJHI, 184 Market Cap / % Industry 28
Slide 13: Market Performance
Market Performance Market cap and liquidity ensures high index weighting Highlights ARB has the highest weight in the MSCI GCC Index... Highest weight in MSCI GCC Index (11.98%). Float Adj Index # Top 10 Constituents Country Weight Sector Mkt Cap Highest weight in the sector and second highest w
Slide 14: Awards
Awards Recent international recognition Global Awards Regional Awards Best Bank in GCC Best Bank in Saudi Arabia Fastest Growing Bank in KSA (3 consecutive years 2017, 2018, 2019) Most Innovative Bank in KSA Best Retail Bank in KSA Strongest Islamic Retail Bank in the World Best Financial
Slide 15: 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 16: ESG Highlights
ESG Highlights As of FY 2019 unless stated otherwise 32% 94 40% SAR 430bn of loans and 859mn SAR Social 1,198 growth in project finance responsibility Sharia Board female Total Assets Zakat paid integrate ESG programs in Resolutions employees factors 29 cities since 2015 ISO Green 8.3bn SAR Certific
Slide 17: KSA's Macro-Economic Environment
KSA’s Macro-Economic Environment 17
Slide 18: KSA Economic Outlook
KSA Economic Outlook Covid-19 outbreak and low oil prices poses unprecedented environment GDP Growth / Brent Oil Price 6.5 71.19 64.37 80 52.32 54.13 70 5.5 43.64 47.07 41.19 60 4.5 3.5 50 2.5 40 4.1 1.7 2.4 0.3 3.1 1.5 30 0.5 20 -0.7 -0. 5 -1.5 -5.4 10 -2.5 0 2015 2016 2017 2018 2019 2020 2021 GDP
Slide 19: Macro Environment
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 1,6 00 14.2% 15.0% 7.3% 9.5% 1,850 8.0 % 1,550 7.0 % 10.0% 1,800 1,500 6.0 % 1,7 50 2.9% 1,4 50 2.2% 2.5% 5.0% 5.0%
Slide 20: Al Rajhi Bank Strategy 2020
Al Rajhi Bank Strategy 2020 20
Slide 21: 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 22: Financial Sector Development Program
Financial Sector Development Program Creating a thriving financial sector that serves as key enabler for Vision 2030 objectives Enable financial Promote and enable financial institutions to support Ensure the formation of an advanced capital market planning private sector growth Increase total GWP
Slide 23: Strategy Update
Strategy Update ABCDE ‘Back to Basics’ strategy delivered strong results in 3Q 2020 A B C D E Accelerated Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence +3% YoY operating income 15 new products launched to Al Rajhi Bank Academy 169K POS 270 Bots growth cater
Slide 24: 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 25: Financial Results
Financial Results 3Q 2020 Overview & Trends 25
Slide 26: Key Messages
Key Messages Solid 3Q 2020 Performance Net Income after Zakat down 4.7% Deposits up 10.5%, Financing up by 16% Liquidity remained healthy Net Income (SARmn) Total Customers' Deposits (SARbn) Capital Adequacy Ratio (%) +10.5% 19.5% 19.3% 500 0 345 14,000 -4.7% 312 21 0 7,841 12,00 0 7,474 400 10,000
Slide 27: Progress against guidance and outlook
Progress against guidance and outlook Revised guidance to reflect current macro environment FY 2019 Actual FY 2020 Latest Guidance 3Q 2020 Actual FY 2020 Revised Guidance Balance Low teens digit High teens digit Financing, Net (SAR bn) 249.7 289.7 (16%) Sheet growth growth Net Profit Margin 5.22% -5
Slide 28: Balance Sheet Trends (1)
Balance Sheet Trends (1) Healthy growth in total assets driven by growth in mortgage Highlights SAR (mn) 3Q 2020 2Q 2020 QoQ 4Q 2019 YTD Cash and balances with SAMA 37,451 45,022 -17% 39,294 -5% Total Assets grew by (+12% YTD) driven by strong growth in Due from banks and other FI 27,517 28,215 -2
Slide 29: Balance Sheet Trends (2)
Balance Sheet Trends (2) Strong financing growth, mortgage is the main driver Highlights Financing, Net Mix By Segment Retail Financing, Net Mix By (SARbn) Type (SARbn) Mortgage Retail financing growth of (+21% YTD) mainly driven by growth in Corporate SAR 88bn SAR 62bn mortgage financing (+61% YT
Slide 30: Balance Sheet Trends (3)
Balance Sheet Trends (3) Continued growth in demand deposits Highlights Total Customers' Deposits Mix Total Customers' Deposits Mix By Type (SARbn) Time By Segment (SARbn) Customers deposits growth of (+11% YTD) contributed by growth SAR 21bn Corporate SAR 54bn in demand deposits. 6% Other 16% SME
Slide 31: Net Income Trends
Net Income Trends Resilient results despite unprecedented environment Highlights SAR (mn) 9M 2020 9M 2019 YoY 3Q 2020 3Q 2019 YoY Net Income before Zakat decreased by (-4.5% YoY) caused by Net financing and investment income 12,275 12,168 +1% 4,196 4,164 +1% higher operating expenses & provisions.
Slide 32: 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 (+3% YoY) driven mainly by growth in fee income. +3.1% 6,000 5,000 Fee income growth of (+17% YoY) mainly from digital & payment 14,927
Slide 33: Expenses Trends
Expenses Trends Upgrading IT & Digital platform, a long term investment Highlights Cost To Income Ratio Trend (%) Cost to income ratio at (33.4%) a 130 bps increase YoY. 0 Operating expenses grew by (+7.2% YoY). 0 0 Higher IT cost primarily related to acceleration of digital and 32.8% 32.6% 33
Slide 34: Asset Quality Trends (1)
Asset Quality Trends (1) Asset quality remains healthy and sound NPL coverage Highlights Impairment Charges (SARmn) & COR (%) 1.10 % Net Provision increased by (+46% YoY). 3,20 0 1.00 % 2,700 1.05% 0.9 0% 0.85% 0.80% NPL ratio at (0.84%) caused by a healthier Retail NPL. 2,200 0.78% 0.71% 0.7 0%
Slide 35: Asset Quality Trends (2)
Asset Quality Trends (2) Healthy stage coverage and prudent risk management Highlights Gross loans by Stage 340 96% of the portfolio is stage 1, above industry coverage across all 320 17.9% the stages. 30 0 2.5 Gross charge of SAR 2,523mn has been taken including SAR 9.5 280 295mn of COVID-19 ov
Slide 36: Liquidity Trends
Liquidity Trends Liquidity remain comfortably within regulatory requirements Highlights Loan to deposit Ratios (%) LDR remains stable at (79.9%). 1 Liquidity remains healthy, LCR at (150%) and NSFR at (124%). 1 1 HQLA increased by (+1.5% YTD). 82.1% 1 81.4% 79.9% 79.9% 1 78.8% 1 1 1 1 3Q 19 4Q
Slide 37: Capitalisation Trends
Capitalisation Trends Capital position well above regulatory minima Highlights 430 RWA (SARbn) Total Capital (SARbn) Total Capital increased by (+7.5% YTD). 380 Risk weighted assets increased by (+10.8% YTD) mainly driven by +10.8% +7.5% 70 growth in credit risk. 33 0 302 1Q 20 2Q 20 58 65 272 3
Slide 38: Return Metrics
Return Metrics Returns remain well above industry average Highlights Earnings Per Share (SAR) Stable growth in EPS of (SAR 1.06). 1 1.13 1 Market-leading ROE at (19.16%), well above peers. 1.06 0.93 0.95 0.97 1 Solid ROA at (2.48%) given the growth in total assets. 1 0 0 (0 ) 3Q 19 4Q 19 1Q 20
Slide 39: Operating Results
Operating Results 3Q 2020 Business Performance 39
Slide 40: Retail Banking
Retail Banking Strong growth in total assets driven by growth in mortgage financing Highlights SAR (mn) 9M 2020 9M 2019 YoY 3Q 2020 3Q 2019 YoY Retail Banking net income decreased by (-12.3% YoY). Net financing and investment income 8,476 9,133 -7.2% 2,592 3,161 -18.0% Fee and other income 1,330 9
Slide 41: Corporate Banking
Corporate Banking High impairment charge drives net income to decrease Highlights SAR (mn) 9M 2020 9M 2019 YoY 3Q 2020 3Q 2019 YoY Corporate Banking net income decreased by (-47% YoY) as a Net financing and investment income 1,521 1,526 -0.3% 607 514 +18.0% result of higher impairment charge . Fee
Slide 42: Treasury
Treasury Excellent profit growth from growth in investment income Highlights SAR (mn) 9M 2020 9M 2019 YoY 3Q 2020 3Q 2019 YoY Total operating income growth of (+26% YoY) driven by growth in Net financing and investment income 2,243 1,493 +50.2% 987 483 +104.5 % investment income. Fee and other inc
Slide 43: Rajhi Capital
Rajhi Capital Outstanding growth driven by higher operating income Highlights SAR (mn) 9M 2020 9M 2019 YoY 3Q 2020 3Q 2019 YoY Net income for Rajhi Capital increased by (+106% YoY) driven by Net financing and investment income 35 16 +120.3% 11 6 +89.6% (+69% YoY) operating income growth. Fee and o
Slide 44: Appendix
Appendix Additional Information
Slide 45: 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 46: Management Team
Management Team International expertise combined with deep roots in Saudi Arabia Chief Executive Officer Chief Financial Officer Chief Operating Officer Waleed Al-Mogbel Abdulrahman Al Fadda Robin Jones Banking experience: 22 years Banking experience: 22 years Banking experience: 30 years Chief Risk
Slide 47: Al Rajhi Bank ESG
Al Rajhi Bank ESG Investor Presentation 47
Slide 48: ESG is part of Al Rajhi Bank's DNA
ESG is part of Al Rajhi Bank's DNA Ethical values are central to Islamic Finance, UN SDGs and KSA Vision 2030 Protection of faith, ISLAMIC FINANCE Zakat, no usury, risk sharing, life, mind, wealth, anti-speculation, prohibited and human dignity PRINCIPLES sectors, sanctity of contracts Vibrant Socie
Slide 49: Developments impacting Al Rajhi Bank's operating environment
Developments impacting Al Rajhi Bank's operating environment Major factors integrated into our approach to ESG and our value creation model Major Factors 'ABCDE' Strategy Accelerate growth Client & Investor Demands Improve portfolios in key customer segments Environmental Geopolitics Become Employer
Slide 50: Placing customer relationships at the heart of ARB
Placing customer relationships at the heart of ARB We achieved our target of becoming the most recommended bank in KSA #7 ARB NPS-Score in KSA #1 NPS-Score 14 21 34 42 43 47 49 49 58 60 62 55% 50% 60% 65% 66% 68% 69% 69% 72% 73% 74% 4% 21% 14% 12% 11% 11% 10% 10% 14% 41% 14% 14% 29% 26% 23% 23% 21%
Slide 51: Ensuring ARB staff are proud, valued and energized
Ensuring ARB staff are proud, valued and energized The ARB employee engagement index (EEI) score is at its peak 27 ARB Employee Engagement Index 66 EEI Score = Highly Engaged + Engaged 27 46 53 59 62 60 66 15% 29% 34% 28% 12% 38% 39% 38% 12% 17% 14% 19% 21% 21% 37% 13% 23% 6% 6% 6% 7% 13% 12% 11% 11
Slide 52: 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 sha
Slide 53: Additional Information
Additional Information Contact investor relations for more information Mr. Faisal F. Altimyat Visit our website (here) for more Investor disclosers: • Financial Statements Investor Relations Specialist • Investor Presentation Tel: +966 (11) 828 1457 • Factsheet Email: altimyatff@alrajhibank.com.sa •
Slide 54: 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