Saudi National Bank · TADAWUL:1180

Saudi National Bank — The National Commercial Bank — 3Q 2019 Earnings Presentation

60 slides from Saudi National Bank's earnings presentation, 2019

1. Slide 1: Investor Presentation 3Q 2019 Results

   The National Commercial Bank Investor Presentation 3Q 2019 Results 1

2. Slide 2: Investor Presentation Content

   Investor Page Page Page Presentation Content 3 9 17 NCB – The Grow with KSA Strategy leading KSA Bank Grow with NCB Overview Page Page Page 26 34 48 Financial Results Financial Results Segmental Highlights Details Overview Page Page 55 58 Key Performance Additional Indicators Information 2

3. Slide 3: The Leading KSA Bank

   The Leading KSA Bank 3Q 2019 Results

4. Slide 4: Overview

   Overview The National Commercial Bank The Nation’s Gateway of Progressive Banking 10.7 NCB’s vision is to be the premier financial NCB realizes that it can be a powerful force for services group in the region. To achieve this, good in the communities it serves, leading by five strategic aspirations

5. Slide 5: NCB is the leading banking group in Saudi Arabia

   NCB is the leading banking group in ⎮Established in 1953; IPO in 2014 Saudi Arabia (3Q 2019 Snapshot) SAR SAR SAR 8m 12,680 498bn 340bn 138bn Clients Employees* Assets Deposits Market Cap Wholesale branches in Bahrain & Singapore Offices in Seoul & Shanghai International: Capital Markets Subsidiary

6. Slide 6: NCB has a well-diversified business model

   NCB has a well-diversified ⎮Total operating income contribution 9M 2019 business model 3.0bn 20% TREASURY SAR 13.4bn 90% 1.0bn 561mn 7% 3% 2.9bn 20% CORPORATE NCB International (TFKB) Capital Markets (NCBC) 7.5bn 50% RETAIL NCB Investor Relations | 3Q 2019 Investor Presentation 6

7. Slide 7: NCB Group listed on Tadawul

   NCB Group listed on Tadawul ⎮Ranked third in Tadawul, S&P Pan Arab and MSCI Indices with significant weightings in November 2014 Float Adj. Mcap Share parameters 30 Sept 2019 MSCI Saudi Arabia Index Weighting (%) (USDb) Closing Price (SAR) 46.05 Al Rajhi Banking & Investment 20.67 14.83 52 week rang

8. Slide 8: NCB has a strong market and financial position

   NCB is the leading banking group in ⎮NCB has a strong market and financial position Saudi Arabia Market Position by KSA Financial Position KSA GCC Overall banking Assets #1 Assets #1 #4 Corporate banking Financing #1 Financing #1 #4 Retail banking Financing #2 Deposits #1 #3 Treasury Investments #1

9. Slide 9: Grow with KSA Grow with NCB

   Grow with KSA Grow with NCB 3Q 2019 Results

10. Slide 10: Record Saudi Budget in 2019

    Record Saudi Budget in 2019 ⎮Fiscal expansionary policy to underpin economic growth Oil Production Government Revenue (SARbn) Government Expenditure (SARbn) 1,044 1,110 975 1,106 25 1,200 1,079 895 140.0 1,000 131 1,200 978 930 20 97.2 120.0 830 692 313 1,000 100.0 800 616 288 15 10.2 10.5 10.3 10.0

11. Slide 11: Economic growth momentum continues

    Economic growth momentum ⎮Non-Oil GDP pickup expected, supported by progress of ongoing Government Vision Realization continues Programs Real GDP* Real non-oil GDP 3.7% 4.1% 0 2.4% 2.6% 5.0% 0 2.7% 1.7% 3.0% 0 0 1.8% 3.0% 0 1.3% -0.7% 1.0% 0 0.6% 1.2% 2.0% 0 2.1% 0.0% 0.8% -1.0% 0 0.7% 2.3% 0.5% 0.1

12. Slide 12: Saudi banking sector growth capacity

    Saudi banking sector ⎮Lending capacity enables KSA banks to capture opportunities emerging from the national growth capacity transformation initiatives Bank Lending (SARbn) Bank Deposits (SARbn) 11.6% 35 00 8.9% 15.0% 4,000 12.4% 3000 3.3% 2.8% 3.1% 10.0% 3,500 15.0% -0.9% 5. 0% 3,000 2500 10.0% 2,5

13. Slide 13: Saudi banking sector resilience

    Saudi banking sector resilience ⎮Strong capitalization, high credit quality, adequate coverage and a prudent regulatory environment expected to sustain banking sector profitability NPL & Coverage Ratios (%) Tier 1 Capital Adequacy Ratio (%) 183% 1.85% 0 178% 1.69% 0 1.45% 0 0 0 172% 18.5% 0 0 0 18.4

14. Slide 14: Residential Finance

    Residential Finance ⎮Sustainable growth in mortgage is expected over the next several years and NCB is well positioned in Saudi Arabia to leverage the opportunity KSA Polulation Demographics 2018 (Saudi Nationals mn) KSA Industry Retail Mortgage (SARbn) 700 +4% +6% 600 60+ 1,123 500 400 280 291 308

15. Slide 15: Vision 2030 Financial Sector Development Program (FSDP)

    Vision 2030 Financial Sector ⎮NCB Is a key contributor to economic transformation and the FSDP Development Program (FSDP)  Leading lender for KSA companies with a 15.0% Corporate Enabling financial market share (2Q 2019) and a portfolio of SAR 137bn; institutions to support private  A leader in th

16. Slide 16: Vision 2030

    Vision 2030 ⎮Saudi Arabia continues to drive economic growth through it’s comprehensive Vision 2030 program and NCB is fully committed to the success of The National Agenda Pillars A Thriving Economy A Vibrant Society An Ambitious Nation • National Transformation Program • Enriching the Hajj and Umr

17. Slide 17: Strategy Overview

    Strategy Overview 3Q 2019 Results

18. Slide 18: NCB's 2019 Strategy Framework

    NCB’s 2019 Strategy Framework ⎮Sustaining Leadership Retail Corporate Treasury Subsidiaries Expand Market Share Consolidate Leadership Sustain Revenues & Grow Value Contribution Diversify Funding  Current accounts  Vision 2030 Targeted Sectors  Investment returns  NCBC: Grow AUMs; Product Innova

19. Slide 19: Lean distribution

    Lean distribution ⎮We will continue to expand with lean distribution in Saudi Arabia by adopting a smaller branch format and implementing extensive digitization Strategic Focus Area 9M 2019 Update  Continue to expand the network in strategic locations to acquire new  Continued network expansion, a

20. Slide 20: Digitization

    Digitization ⎮Continue to migrate to digital, drive up digital sales and improve operational excellence to deliver superior customer experiences Strategic Focus Area 9M 2019 Update  Mobile first - anytime, anywhere  2.2 Million active customers. 58% active digital user penetration up from 50% at F

21. Slide 21: Retail Banking

    Retail Banking ⎮We are positioning the retail business to expand market share Strategic Focus Area 9M 2019 Update  Grow core deposits  Retail Financing up 9% YTD at SAR 112bn  Grow Lending Market Share; focus on mortgages  Retail financing market share up 110bps YTD in 2Q 2019 to reach 21.8%  E

22. Slide 22: Corporate Banking

    Corporate Banking ⎮Grow selectively and increase risk-adjusted returns Strategic Focus Area 9M 2019 Update  Grow lending in V2030 targeted sectors  Corporate Financing up 5% YTD at SAR 137bn  Increase cross sell focus to capture full value of relationships  Corporate financing market share up 40

23. Slide 23: Treasury

    Treasury ⎮Broaden and deepen liquidity access while sustaining revenues Strategic Focus Area 9M 2019 Update  Increase recurring revenues  Treasury Commission income +14% YoY  Optimize investment portfolio to enhance quality, liquidity and returns  Treasury NOR stable YoY  Expand continental hub

24. Slide 24: Capital Markets

    Capital Markets ⎮KSA’s leading investment bank and asset manager; well positioned to capture future growth Strategic Focus Area 9M 2019 Update  Sustain and grow market leadership through product innovation  Higher 9M 2019 net income driven by a 10% YoY improvement in operating expenses  Grow recu

25. Slide 25: International

    International ⎮Executing of our transformation program to manage asset quality and enhance governance for sustainable net income growth is ongoing Strategic Focus Area 9M 2019 Update  Resume branch expansion, expand digital channels  Strong liquidity position, outperforming the sector in deposit g

26. Slide 26: Financial Results Highlights

    Financial Results Highlights 3Q 2019 Results

27. Slide 27: 3Q 2019 Results Highlights

    Financial Results Update ⎮3Q 2019 Results Highlights YoY Net Income after Zakat and Income Tax attributed to Equity  16% net income after Zakat & income tax growth Holders (SARbn) 4 0.56 0.09 0.28 8.01  3% NSCI growth 4 3 6.89 0.28 Income  16% increase in fee and other income 3 2 (0.10) Statement

28. Slide 28: Income Statement

    Income Statement ⎮20% Higher 3Q 2019 net income after Zakat & income tax YoY, derived from higher operating income and lower Zakat and tax Profitability Trends SAR (mn) 3Q 2019 2Q 2019 3Q 2018 YoY % change 9M 2019 9M 2018 YoY % change Net special commission income 3,682 3,669 3,637 +1% 10,912 10,629

29. Slide 29: Balance Sheet

    Balance Sheet ⎮10% YTD increase in total assets on the back of growth in Financing and Investments Balance Sheet SAR (mn) 3Q 2019 2Q 2019 3Q 2018 YoY % change FY 2018 YTD % change Cash & banks 52,521 45,621 54,714 -4% 48,479 +8% Investments, net 132,467 126,630 116,504 +14% 118,090 +12% Financing an

30. Slide 30: Segmental Information (1/3)

    Segmental Information (1/3) ⎮3Q 2019 Total net income before Zakat and income tax growth in all segments, except International which was impacted by higher risk cost, and Treasury due to lower income and release of excess provisions in 3Q 2018 9M 19 Net Income Before Zakat & Income Tax Movement 3Q 1

31. Slide 31: Segmental Information (2/3)

    Segmental Information (2/3) ⎮3Q 2019 Total operating income growth mainly from Retail segment 9M 19 Total Operating Income Movement (SARmn) 3Q 19 Total Operating Income Movement (SARmn) 346 9 4,000 1,044 3 1,200 5,009 3,500 15,017 1,000 4,732 (27) (33) (18) 3,000 14,171 (13) (7) (181) 800 2,500 2,00

32. Slide 32: Segmental Information (3/3)

    Segmental Information (3/3) ⎮3Q 2019 total assets growth in all segments, except International which was impacted by FX rate Total Assets (SARbn) Financing and Advances, net (SARbn) +10% +6% 900 500 800 700 400 479 498 33 265 276 12 281 12 600 453 33 33 10 300 20 500 2 178 2 21 19 400 150 2 165 135

33. Slide 33: Outlook

    Outlook ⎮Improved macroeconomic environment expected to drive growth 2019 Macroeconomic FY 2018 9M 2019 FY 2019 FY 2019 Outlook Reported Reported Guidance Outlook  Average Arabian light oil price of Balance Financing Sheet +6% +6% 4% - 6% Within guidance USD 65 per barrel growth  3-4 25bps US Fed

34. Slide 34: Financial Results Details

    Financial Results Details 3Q 2019 Results

35. Slide 35: Operating Income Highlights

    Operating Income Highlights ⎮Higher 3Q 2019 total operating income driven by fees and other income Total Operating Income (SARbn) Management Commentary 10 25 +6%  9M 2019 Total operating income increased 6% YoY from a 3% 9 +6% improvement in net special commission income and 125% higher 8 15.02 20

36. Slide 36: Net special commission income trends

    Net special commission income ⎮3Q 2019 net special commission income grew by 1% YoY, despite 17% increase in special commission trends expenses Management Commentary Net Special Commission Income YoY % YoY %  9M 2019 NSCI improved by 3% on higher SCI (+9%), SAR (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019

37. Slide 37: Fee and other income trends

    Fee and other income trends ⎮3Q 2019 fess and other income grew by 21% YoY due to higher investment income Fees from Banking services Management Commentary YoY % YoY % SAR (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019 9M 2018  9M 2019 Fee and other income increased by change change 16% YoY due to 125% growt

38. Slide 38: Expense highlights

    Expense highlights ⎮Digitization, productivity enhancement and optimization delivered further expense savings in 3Q 2019 Operating Expenses (SARmn) 9,000 Management Commentary 8,000 -2%  9M 2019 Expenses declined by 2% YoY, 3,000 -1% 7,000 4,972 4,878 2,500 6,000  9M 2019 Cost to income ratio was

39. Slide 39: Asset highlights and composition

    Asset highlights and composition ⎮10% growth in balance sheet as a result of increase in financing and investments. Total Assets (SARbn) Management Commentary 1,000  Total assets increased 10% due to increase in financing and investments. 900 +10%  6% Financing increase driven by 7% increase in do

40. Slide 40: Financing and advances

    Financing and advances ⎮Financing growth driven by Consumer and Corporate segments Financing and Advances, net (SARbn) Management Commentary 500 +6%  Domestically, financing grew for the Consumer (+9%), Corporate (+5%) 450 400 and other segments (+24%) from 4Q 2018. 265 276 281 12 12 350 300 10  G

41. Slide 41: Financing and advances credit quality (1/2)

    Financing and advances credit ⎮YTD NPLs increased by 3%, particularly from the Commerce sector, partly offset from by lower NPLs quality (1/2) in the Building & Construction sector. Overall cost of risk remained low at 55bps NPL (SARbn) Movement NPLs by Economic Sector (SARbn) 9 +3% 1 0.06 0.02 0.01

42. Slide 42: Financing and advances credit quality (2/2)

    Financing and advances credit ⎮Stable NPL ratio and CoR, though 9% decline in NPL coverage driven by International segment quality (2/2) NPL Ratios (%) NPL Coverage Ratios (%) 9.2% 0 2 2 170% 164% 164% 173% 0 157% 5.5% 5.5% 2 0 4.8% 5.2% 2 1 154% 145% 145% 1.9% 1.9% 142% 0 1 1.8% 1.8% 1.8% 1 133% 0

43. Slide 43: Domestic financing and advances credit quality

    Domestic financing and advances ⎮Corporate NPL ratio has improved while consumer and credit card NPL ratio remained stable credit quality NPL Ratios (%) NPL Coverage Ratios (%) 0 2.5% 2.5% 2.4% 2.3% 3 305% 2.1% 279% 0 3 264% 257% 258% 0 0 2 0 2 0 1 0 0.5% 0.6% 0.5% 0.6% 0.6% (0) 1 149% 136% 141% 142

44. Slide 44: Investments trends and composition

    Investments trends and ⎮Investments increased 12% and quality remains strong; ~88% of the investment portfolio is composition investment grade including Saudi Government securities Investments (SARbn) Management Commentary +12%  The investment portfolio is built on high quality securities with ~88%

45. Slide 45: Liabilities trends and composition

    Liabilities trends and composition ⎮Higher total liability base from bank placements and customers’ deposits Total Liabilities (SARbn) Management Commentary 800 +11%  11% Increase in total liabilities mainly from due to banks and time deposits as a result of the change in funding mix and other labi

46. Slide 46: Liquidity

    Liquidity ⎮NCB maintained a strong liquidity profile HQLA and Average Liquidity Coverage (SARbn/%) Management Commentary 184.4% 183.9% 185.5% 200.0%  As at 3Q 2019, the financing to customers’ deposit ratio was 82% and 200 176.0% 173.2% 190.0% 180.0% comfortably below the regulatory guidelines. 170

47. Slide 47: Capital

    Capital ⎮Capital position comfortably above regulatory minima Capitalisation (SARbn) Pillar I Risk Weighted Assets (SARbn) Capital Ratios (%) 140 0 20.6% -4% 700.00 +10% 0 20.0% 120 19.3% 18.7% 600.00 0 100 74 72 72 397 18.0% 3 500.00 360 385 16 0 8 3 17 13 80 0 18.5% 18.4% 400.00 60 7 7 7 300.00 35

48. Slide 48: Segmental Review

    Segmental Review 3Q 2019 Results

49. Slide 49: NCB Bank (standalone)

    NCB Bank (standalone) ⎮Strong 38% 3Q 2019 net income after Zakat growth resulting from operating income growth and lower zakat Financing and Advances, net (SARbn) Summary Financial Performance YoY % YoY % +7% SAR (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019 9M 2018 450 change change 400 Total assets 470,486

50. Slide 50: Retail Banking

    Retail Banking ⎮Higher 3Q 2019 net income before Zakat from higher operating income Financing & Advances, net (SARbn) Summary Financial Performance YoY % YoY % 200 +9% SAR (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019 9M 2018 change change 150 110 112 Total assets 143,798 140,831 134,744 +7% 143,798 134,744

51. Slide 51: Corporate Banking

    Corporate Banking ⎮3Q 2019 growth in net income before Zakat from lower impairment charge Financing & Advances, net (SARbn) Summary Financial Performance 250 +5% YoY % YoY % SAR (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019 9M 2018 change change 200 131 135 137 Total assets 140,700 138,213 136,541 +3% 140,70

52. Slide 52: Treasury

    Treasury ⎮3Q 2019 net income before Zakat eased due to lower operating income and release of impairment provisions in 3Q 2018 Investments, net (SARbn) Summary Financial Performance +12% YoY % YoY % SAR (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019 9M 2018 200 change change 127 132 Total assets 178,300 165,26

53. Slide 53: Capital Markets

    Capital Markets ⎮Higher 3Q 2019 net income growth, driven by higher operating income and lower operating expenses Assets Under Management (SARbn) Summary Financial Performance -0% YoY % YoY % 250 SAR (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019 9M 2018 change change 200 144 152 143 Client assets under manag

54. Slide 54: International (in TRY)

    International (in TRY) ⎮3Q 2019 net income decreased by 140% YoY, due to elevated NPL inflow and impairment charge Financing & Advances, net (TRYbn) Summary Financial Performance YoY % YoY % 16 TRY (mn) 3Q 2019 2Q 2019 3Q 2018 9M 2019 9M 2018 change change 14 -4% Total assets 50,203 50,309 49,901 +1

55. Slide 55: Key Performance Indicators

    Key Performance Indicators 55

56. Slide 56: Key Performance Indicators: strong financial position

    NCB has a strong ⎮Key Performance Indicators financial position Total Assets (SARbn) Total Equity (SARbn) +1% 120 800 +9% 700 100 600 435 449 443 445 453 80 60 64 66 500 56 60 47 400 300 40 200 20 100 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Capital Ratios (%) Liquidity Ratios (%) 20.6%

57. Slide 57: Key Performance Indicators: strong performance track record

    NCB has a strong performance ⎮Key Performance Indicators track record Total Operating Income (SARbn) Net Income Attributed To Equity Holders* (SARbn) 35 +4% 18 30 16 +3% 14 25 17.5 18.6 18.3 18.9 9.8 9.6 16.2 12 8.7 9.1 9.3 20 4.9 5.1 4.7 4.6 10 15 4.8 8 6 14.4 10 11.4 12.6 13.5 13.7 4 5 2 0 0 2014

58. Slide 58: Additional Information

    Additional Information 3Q 2019 Results

59. Slide 59: NCB welcomes your feedback and inquiries

    Additional Information ⎮NCB welcomes your feedback and inquiries Contact Us More Information The National Commercial Bank Visit: http://www.alahli.com/en-us/Investor_Relation P.O. Box 3555 to access NCB’s current and previous Investor Publications including: 21481 Jeddah, Kingdom of Saudi Arabia  F

60. Slide 60: Disclaimer

    Disclaimer The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background information about the activities of NCB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by NC

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