Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — 4Q 2022 Earnings Presentation
39 slides from Al Rajhi Bank's earnings presentation, 2023
Slide 1: Al Rajhi Bank Investor Presentation 4Q 2022 Results
Al Rajhi Bank Investor Presentation 4Q 2022 Results
Slide 2: 4Q 2022 Investor Presentation
4Q 2022 Investor Presentation 03 The World’s Leading Islamic Bank 14 Bank of The Future Strategy 17 KSA Macro-Economic Environment 20 4Q 2022 Financial Highlights 34 FY 2023 Guidance 37 IR Contact Information 4Q2022 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, FY 2022 Presence & Branches, FY 2022 100% 64% Jordan Kuwait Islamic CASA Customers 10 2 516 4,727 Branches ATMs 13.3 million 75% 92:8 533,442 174 NPS Digital:Manual 516 POS Remittance 13 Centers Saudi Arabia Malaysia Largest network in Saudi A
Slide 5: Top 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 64% non-profit bearing deposits
The World’s Leading Islamic Bank | Robust balance sheet with 64% non-profit bearing deposits in 2022 Total Assets (SARbn) Capital Ratios (%) 0 21.4% +109.4% 0 1,000 762 0 19.2% 19.4% 18.9% 800 0 624 0 20.3% 600 469 0 17.5% 364 384 18.1% 18.2% 16.4% 17.8% 0 400 0 16.6% 16.9% 17.0% 200 0 16.4% 16.4% 0
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 22.7% 2.76% 2.70% 0 20.5% 19.9% 0 2.56% 2.46% 0 0 0 0 0 1.04%** 0 7.0%* 0 0 0 0 0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 * As a result of Zakat Settlement – ROE before Zakat is 19.8% *
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 0 0 +40bps +730bps 13.3 0 0 0 0 24.2% 24.6% 0 24.8% 25.2% 24.3% 25.9% 25.2% 0 19.4% 17.3% 17.3% 0 0 Million 0 0 0 0 0 0 Active Customers 0 0 0 2018
Slide 9: 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 1 Market Share - ATMs 1 +10bps +230bps 0 0 0 0 29.6% 0 29.1% 0 0 26.7% 26.2% 27.0% 26.8% 26.8% 0 26.8% 27.6% 28.2% 0 0 0 0 0 0 0 0 0 0 0 0 2018 2019 2020 202
Slide 10: Al Rajhi Bank has a unique franchise
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 +560bps +40bps 1 1 1 1 44.6% 44.3% 40.6% 51.3% 51.8% 51.7% 1 38.7% 1 0 37.7% 1 46.8% 47.6% 0 0 0 0 0 0 0 0 0 2
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) RAJHI SNB Riyad TASI 31 Dec 2022 500 Key Metrics 450 Closing Price SAR 75.2 Market Cap SAR 300.8 bn 400 Market Cap / % Industry 31.8% 350 Mar
Slide 12: ESG Highlights | FY 2022
ESG Highlights | FY 2022 Renovation USD 1.2 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 • GDP grew by 8.7% in 2022 driven by higher oil prices and recovery in 83.1 100.0 77.6 non-oil activities 7.2 70.9 5.2 64.4 80.0 8.7 • IMF revised down Saudi’s GDP growth forecasts i
Slide 19: Banking Sector Highlights
Banking Sector Highlights | Banking system loans growth was broad based in 2022 Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARmn) 79.5% 81.5% 77.4% 77.1% 75.0% • Strong loan growth in the banking system during 2022 despite the 2,349 2,295 80.0% 2,600 slower deposits growth 2,400 70.
Slide 20: 4Q 2022 Financial Highlights
4Q 2021 Financial Highlights
Slide 21: ARB had a strong set of results in 2022
ARB had a strong set of results in 2022 | Results are in line with or ahead of expectations 25.5% Growth in financing driven by all lines of 19.0% Growth in liabilities LDR below regulatory minima business 22% YoY Balance Net Financing Total Liabilities Loan to Deposit Ratio Sheet Growth 452.8bn +25
Slide 22: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Strong 22% YoY balance sheet growth driven by Financing and Investments Total Assets (SARbn) SAR (mn) 4Q 22 3Q 22 QoQ 4Q 21 YTD +22.2% 1,000 900 Cash & balances with SAMA 42,052 43,995 -4% 40,363 +4% 741 762 Due from banks & other FI 25,656 14,744 +74% 26,065 -2% 710 800 6
Slide 23: Balance Sheet Trends (2)
Balance Sheet Trends (2) | Financing growth driven by all lines of business Financing, Net (SARbn) Financing, Net Mix By Segment Retail Financing Mix By Segment (SARbn) Corporate (SARbn) 750 +25.5% SAR Auto Loans 111bn SME 568.3 SAR 19bn 557.5 650 25.5 20% SAR 26bn 23.3 4% Credit Cards 4% SAR 5bn 45
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) 900 +19.0% Treasury SAR 89bn 800 654.5 662.1 Customers’ Time 700 26.9 26.4 Investments Other 13% 556.4 customer Rajhi
Slide 25: Net Income Trends
Net Income Trends | Solid net profit growth of 16% YoY SAR (mn) FY 22 FY 21 YoY 4Q 22 4Q 21 YoY Net Income For The Period After Zakat (SARmn) Net financing & investment income 22,173 20,392 +9% 5,579 5,355 +4% 7,000 +9.8% 6,000 Fee from banking services, net 4,624 3,933 +18% 1,179 1,114 +6% Exchange
Slide 26: Operating Income Trends
Operating Income Trends | Strong income growth reflecting successful strategy execution Total Operating Income (SARmn) Total Operating Income Growth Drivers By Type (SARmn) +6.0% +11.1% 35,000 10,000 30,000 8,000 6,855 6,957 7,148 7,206 7,264 1,781 691 374 13 28,575 25,716 25,000 6,000 20,000 15,000
Slide 27: Expenses Trends
Expenses Trends | Cost efficiencies resulted in higher positive jaws Operating Expenses (SARmn) Operating Expenses Growth Drivers By Type (SARmn) 3,000 +11.7% 6,000 +7.6% 188 74 7,451 2,500 2,001 263 5,000 1,791 1,820 1,861 6,927 2,000 1,769 4,000 1,500 3,000 1,000 2,000 500 1,000 0 0 4Q 21 1Q 22 2Q
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 -40.3% 0 750 590 0 650 578 580 490 0 0.60% 550 353 0.48% 0.47% 0.43% 450 0 350 0.39% 0 250 0 150 0 50 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 FY 21 1Q 22 1H 22 9M 22 FY
Slide 29: Asset Quality Trends (1)
Asset Quality Trends (1) | Asset quality remains healthy with strong NPL coverage Movement in NPL (SARmn) NPL Formation (SARmn) 3,000 +2.5% 4,500 +2.5% 396 4,000 4,557 3,085 2,500 3,085 3,010 3,010 3,500 2,000 3,000 (322) 2,500 1,500 2,000 1,000 1,500 1,000 500 (4,483) 500 0 0 4Q 21 Retail Non-Retai
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) 9,198 8,491 -12.7% 10,000 10,000 8,028 8,000 3,159 8,000 9,198 2,969 8,028 6,000 3,037 (397) 6,000 2,326 1,924 (773) 4,000 1,715 4,000 3,713 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) (%) 160 +24.6% 1 Regulatory Maximum 90% 118.1 87.9% 88.4% 140 112.7 85.9% 1 110.0 82.3% 83.8% 99.4 120 100 94.8 1 1 80 60 1 40 1 20 0 0 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 4Q 21 1Q 22
Slide 32: Capitalization Trends
Capitalization Trends | Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) 600 +17.0% 140 +43.2% 479.2 498.0 37.8 42.3 120 106.6 425.6 500 37.8 92.9 1.1 1.6 100 5.7 74.5 400 2.4 80 5.5 4.8 300 60 440.3 454.0 100.9 385.4 87.4 200 69.6 40 100 20 0 0 4Q 21 3Q 22 4Q 22 4Q 21
Slide 33: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) 0 +7.8% 2 1 0 1.03 1.05 1.07 1.08 3.94% 1.00 1 0 3.79% 3.74% 3.76% 3.71% 1 1 0 1 0 0 0 0 0 FY 21 1Q 22 1H 22 9M 22 FY 22 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 Return on Equity (%) Return on Assets (%)
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 GDP growth forecasts to 8.7% in 2022 and 2.6% in 2023 and 3.4% in 2024 • Saudi economy grew by 5.4% in 4Q 2022, resulting in 8.7% of GDP growth in full year 2022 Economy • Consumer spending incr
Slide 36: FY 2023 Guidance
FY 2023 Guidance | Progressing in line with “Bank of The Future” strategy FY 2022 Change FY 2022 Actual FY 2023 Guidance Balance Sheet Financing +25.5% SAR 568 Bn. Mid single digit Net profit margin -66 bps 3.55% -15 bps to -25 bps Profitability Cost to income ratio -0.9% 26.1% Below 26% ROE -1.19%
Slide 37: IR Contact Information
IR Contact Information
Slide 38: Additional Information
Additional Information | Contact investor relations for more information Upcoming Events in 1Q 2023 Rayan Alshuaibi Saudi Capital Market Forum 2023 – Riyadh 12th – 13th February Director of Investor Relations Goldman Sachs Sixth Annual Saudi Arabia Conference - London 1st – 2nd March +966 (11) 828 1
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