Saudi Awwal Bank · TADAWUL:1060
Saudi Awwal Bank — Saudi British Bank — Q1 2021 Earnings Presentation
27 slides from Saudi Awwal Bank's earnings presentation, 2021
Slide 1: 1Q21 Results and Strategy Announcement
Saudi British Bank 1Q21 Results and Strategy Announcement Presentation to investors and analysts
Slide 2: Contents
Contents 1. Key messages 2. 1Q21 SABB performance 3. Strategy
Slide 3: 1Q21 Key messages
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY 1Q21 Key messages We completed ‘Customer Day 1’, which was the final migration of our retail customers following the migration of our corporate customers in 1 2020. We are now one bank where our customers enjoy a single, seamless quality experience Our fina
Slide 4: 1Q21 SABB performance
1. Key messages 2. 1Q21 SABB performance 3. Strategy
Slide 5: Financial Summary
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Financial Summary 1Q21 underlying net income of SAR1.2bn Highlights Key ratios and Income statement • Reported net income before Zakat and income tax of SAR1.1bn down 1%; underlying down 6%; driven by: • Lower revenue partly offset by lower impairment charg
Slide 6: NIM analysis
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY NIM analysis NIM fell to 2.0% from competitive pressures together with the one-off impact of aligning the treatment of suspended interest on non-performing Alawwal loans following CD1 Net special commission income, SARm Unwind of the fair value adjustment 1
Slide 7: Operating expenses: 1Q21 vs. 1Q20
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Operating expenses: 1Q21 vs. 1Q20 Costs have continued their downward trajectory from robust cost management Highlights 1Q21 vs. 1Q20 operating expenses movement Integration costs • Total costs fell 9% 1,001 • Underlying costs which remove merger-related fe
Slide 8: Operating expenses: 1Q21 vs. 4Q20
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Operating expenses: 1Q21 vs. 4Q20 Quarterly costs remain well-controlled Highlights 1Q21 vs. 4Q20 operating expenses movement Integration costs One-off costs • Underlying costs broadly unchanged compared with the fourth quarter 1,241 • SAR33m of merger-rela
Slide 9: Expenses trend
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Expenses trend Quarterly underlying costs remain at historic pro forma levels in a sector that has grown by over 9% over the same time Pro forma operating expenses, SARm Merger-related One-offs Underlying costs % increase in quarterly costs between 4Q18 and
Slide 10: Impairment analysis
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Impairment analysis Expected credit losses remain low Quarterly ECL charge, SARm NPLs / Provisions, SARbn NPLs Provisions Purchased or originated credit impaired Coverage 133% 142% 132% 126% 132% 1,309 ratio NPL ratio 5.1% 5.8% 6.1% 5.8% 5.6% 239 3.8 3.9 3.
Slide 11: Gross customer advances
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Gross customer advances Gross customer advances grew 2% in the quarter Highlights Gross customer advances, 1Q21 vs. 4Q20 • Gross customer advances increased by 2% compared with 4Q20 • Growth in the 1st quarter was mainly from corporate lending 0.3 163.8 • S
Slide 12: Customer deposits, liquidity and funding
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Customer deposits, liquidity and funding Liquidity and funding remain strong Highlights • Stable customer deposit base • SAR184bn of customer deposits with 71% demand deposit, with both CIB and Retail businesses contributing to this strong position • Robust
Slide 13: Capital adequacy
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Capital adequacy Strong CET1 ratio of 19.59% Core Tier 1 ratio: 31 Mar 2021 vs. 31 Dec 2020, % 19.59 0.03 0.15 0.44 18.96 31-Dec-20 1Q21 net Movement in Movement in 31-Mar-21 income RWAs Other reserves SABB 1Q21 Investor presentation 13
Slide 14: Synergy realisation and integration spend
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Synergy realisation and integration spend Achieved c. SAR0.8bn of annualised synergies to date with integration spend on track Cost synergies guidance and 2020 achievement Revenue and funding synergies guidance %s are baselined against the 2017 combined cos
Slide 15: Closing remarks
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Closing remarks 1 We are now one bank where our customers enjoy a single, seamless quality experience. We are positioned for growth. Both corporate and retail businesses are gaining traction and we are well on our 2 strategic roadmap. 3 We possess robust le
Slide 16: Strategy
1. Key messages 2. 1Q21 SABB performance 3. Strategy
Slide 17: SABB's strengths
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY SABB’s strengths Diversified businesses 2020 credentials Retail Banking Retail Banking and Wealth Management provides We are the leading international bank the Kingdom through a deep and Wealth services and products to personal and private understanding of
Slide 18: Strategy 2025 objectives
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Strategy 2025 objectives VISION We bring a world of financial opportunity to an ambitious Kingdom 2025 TARGETS 1 Top 3 bank for Loans Current Mid-single digit loan Best in class Be the leading international Offer a leading online The best expectation: growt
Slide 19: Corporate and Institutional Banking strategy
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Corporate and Institutional Banking strategy We aim to be the #2 CIB bank in the Kingdom by 2025 by outgrowing the market, and we aim to maintain our position as the leading international bank in the Kingdom The current corporate landscape OUR AIMs by 2025
Slide 20: Retail Banking and Wealth Management strategy
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Retail Banking and Wealth Management strategy We aim to grow our retail business by building on our strengths in Wealth and cards, and increasing our participation in mortgage lending; all supported by digital innovation and best-in-class customer experienc
Slide 21: Environmental, Social and Governance
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Environmental, Social and Governance ESG will be part of SABB’s identity and will form an integral part of our strategy Our ambition: Set the leading standards for ESG in the KSA banking sector, leveraging our partnership with HSBC Environmental Launch sust
Slide 22: Enablers
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Enablers Key enablers to be in place to support SABB’s growth ambition; Digital, Technology, Talent and Automation will be at the heart of our strategy • Double our capex for transformation over • Revamp our HR and change the mix the next 5 years of our wor
Slide 23: Our Balance sheet will outperform the market
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Our Balance sheet will outperform the market Gross Loans Revenue Capital Market Market Median KSA share 10% Increase market share share 9% Increase market share 19.2% banks Expectation: Expectation: Mid to high Expectation: Mid-single single digit growth St
Slide 24: Cost efficiency
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Cost efficiency Operating costs will increase over the plan from inflation, additional depreciation and investment, but partly offset by further cost optimisation; aim to reduce CER to below 32% Synergies CER ratio 39% <32% • We will continue to achieve mer
Slide 25: Targets
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Targets 2025 TARGETS RoE / RoTE progression1 1 Top 3 bank for Loans Current Mid-single digit loan expectation: growth per year Steady progression in RoTE through the plan to a minimum target of 13% 2 Top 3 bank for Revenue min Current Mid to high single dig
Slide 26: Our investment case
KEY MESSAGES | 1Q21 PERFORMANCE | STRATEGY Our investment case SIX REASONS TO INVEST IN SABB 1. We are the leading international bank in the Kingdom thanks to our partnership with HSBC Group 2. We have increased scale and a diversified business mix, reinforced by the merger with Alawwal Bank, ready
Slide 27: Important notice
Important notice The information, statements and opinions set out in this presentation are for informational and reference purposes only and do not constitute a public offer for the purposes of any applicable law or an offer to sell or solicitation of any offer to purchase any securities or other fi