Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q4 2022 Earnings Presentation
28 slides from Al Rajhi Bank's earnings presentation, 2023
Slide 1: Al Rajhi Bank Results Presentation
Al Rajhi Bank Results Presentation 4Q 2022 Earnings Conference Call and Webcast
Slide 2: 4Q 2022 Earnings Call
4Q 2022 Earnings Call 03 Strong Results for FY 2022 04 Bank Of The Future – Strategy update 05 FY 2022 Financial Highlights 17 FY 2023 Guidance 21 ESG Highlights 23 KSA’s Macro-Economic Environment 26 IR Contact Information 4Q2022 Results Presentation 2
Slide 3: 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 4: Bank of the Future strategy progress
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 5: 4Q 2022 Financial Highlights
4Q 2022 Financial Highlights
Slide 6: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Strong 22% YTD 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 7: Balance Sheet Trends (2)
Balance Sheet Trends (2) | Financing growth across all lines of business Financing, Net (SARbn) Movement in Financing (SARbn) +25.5% +25.5% 500 450 700 557.5 568.3 25.5 400 23.3 9.6 1.2 568.3 600 40.4 452.8 350 15.9 1.1 111.3 1.5 13.4 107.9 50.8 500 300 400 70.9 0.3 250 452.8 200 300 425.2 430.0 150
Slide 8: 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) 7,000 +9.8% Net financing & investment income 22,173 20,392 +9% 5,579 5,355 +4% 6,000 Fee from banking services, net 4,624 3,933 +18% 1,179 1,114 +6% 4,258 4,
Slide 9: 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 7,148 7,206 7,264 1,781 691 374 13 28,575 6,855 6,957 8,000 25,716 25,000 20,000 6,000 15,000
Slide 10: 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 11: 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% 0 750 650 590 578 580 0 550 490 0.60% 0 353 0.48% 0.47% 450 0.43% 0 350 0.39% 0 250 0 150 50 0 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 FY 21 1Q 22 1H 22 9M 22 FY
Slide 12: 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 13: 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 -12.7% 8,491 10,000 10,000 8,028 9,198 3,159 8,000 8,000 2,969 8,028 3,037 (397) 6,000 6,000 2,326 1,924 (773) 4,000 1,715 4,000 3,713 3,598 3,276 2,000 2,
Slide 14: Liquidity Trends
Liquidity Trends | Liquidity remains comfortably within regulatory requirements HQLA (SARbn) Loan to Deposits Ratio (SAMA) (%) +24.6% Regulatory 160 1 Maximum 90% 118.1 140 110.0 112.7 1 87.9% 88.4% 85.9% 120 99.4 82.3% 83.8% 100 94.8 1 80 1 60 1 40 1 20 0 0 4Q 21 1Q 22 2Q 22 3Q 22 4Q 22 4Q 21 1Q 22
Slide 15: 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 16: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) +7.8% 2 0 1 1.05 1.07 1.08 0 1.00 1.03 1 3.94% 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 17: FY 2023 Guidance
FY 2023 Guidance
Slide 18: 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 19: 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 20: Q&A
Q&A
Slide 21: ESG Highlights
ESG Highlights
Slide 22: 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 23: KSA's Macro-Economic Environment
KSA’s Macro–Economic Environment
Slide 24: 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 25: 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 26: IR Contact Information
IR Contact Information
Slide 27: 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 28: 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