Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q3 2023 Earnings Presentation
28 slides from Al Rajhi Bank's earnings presentation, 2023
Slide 1: Al Rajhi Bank Results Presentation
Al Rajhi Bank Results Presentation 3Q 2023 Earnings Conference Call and Webcast
Slide 2: 3Q 2023 Earnings Call
3Q 2023 Earnings Call 03 3Q 2023 Results Summary 04 Bank Of The Future – Strategy update 05 3Q 2023 Financial Highlights 17 FY 2023 Guidance 21 ESG Highlights 23 KSA’s Macro-Economic Environment 26 IR Contact Information 3Q2023 Results Presentation 2
Slide 3: First Nine Months 2023 Results Summary
First Nine Months 2023 Results Summary | Results are in line with expectations 4.0% YTD Growth in financing portfolio 5.7% Growth in liabilities LDR below regulatory minima 5.2% YTD Balance Net Financing Total Liabilities Loan to Deposit Ratio Sheet Growth 568.3bn +4.0% 590.8bn 661.4bn +5.7% 699.2bn
Slide 4: Bank of the Future – Strategy update
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: 3Q 2023 Financial Highlights
3Q 2023 Financial Highlights
Slide 6: Balance Sheet Trends (1)
Balance Sheet Trends (1) | Balance sheet growth of 5% YTD driven by Financing and Investments Total Assets (SARbn) SAR (mn) 3Q 23 2Q 23 QoQ 4Q 22 YTD +8.3% Cash & balances with SAMA 43,838 46,020 -5% 42,052 +4% 1,000 785 801 Due from banks & other FI 8,128 10,983 -26% 25,656 -68% 900 762 776 800 740
Slide 7: Balance Sheet Trends (2)
Balance Sheet Trends (2) | Financing growth driven by mortgage and corporate Financing, Net (SARbn) Movement in Financing (SARbn) +6.0% +4.0% 800 500 590.8 700 557.5 568.3 29.6 4.1 0.7 590.8 400 600 23.3 25.5 568.3 6.9 22.4 1.5 2.2 107.9 1.1 111.3 133.7 500 300 (11.6) 400 200 300 200 425.2 430.0 425
Slide 8: Net Income Trends
Net Income Trends | net profit lower by 2.3% for the first nine months of 2023 Net Income For The Period After Zakat (SARmn) SAR (mn) 9M 23 9M 22 YoY 3Q 23 3Q 22 YoY -4.6% 6,000 Net financing & investment income 15,720 16,594 -5% 5,401 5,687 -5% Fee from banking services, net 3,238 3,445 -6% 899 1,1
Slide 9: Operating Income Trends
Operating Income Trends | Lower operating income driven by higher cost of funding Total Operating Income (SARmn) Total Operating Income Growth Drivers By Type (SARmn) 10,000 -4.6% 25,000 -3.9% 7,206 7,264 6,873 21,311 6,781 6,827 8,000 191 20,481 20,000 61 6,000 15,000 (874) (208) 4,000 10,000 2,000
Slide 10: Expenses Trends
Expenses Trends | Cost efficiencies remains solid Operating Expenses (SARmn) Operating Expenses Growth Drivers By Type (SARmn) -0.1% 3,000 5,000 +0.9% 2,500 2,001 4,000 91 172 2,000 1,861 1,800 1,840 1,860 5,450 5,500 3,000 1,500 (213) 2,000 1,000 1,000 500 0 0 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 9M 22 Sa
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 (%) 850 750 -22.6% 0 650 0 490 0.43% 550 0.39% 359 360 379 0 353 450 0.25% 0.25% 0.25% 350 0 250 0 150 50 (0) 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 9M 22 FY 22 1Q 23 1H 23 9M
Slide 12: Asset Quality Trends (1)
Asset Quality Trends (1) | Asset quality remains healthy with high NPL coverage Movement in NPL (SARmn) NPL Formation (SARmn) 3,000 +0.1% 5,000 +0.1% 2,500 3,586 342 3,590 4,000 3,586 2,287 3,590 2,000 3,000 1,500 (338) 2,000 1,000 1,000 (2,283) 500 0 0 4Q 22 Retail Non-Retail 3Q 23 4Q 22 Write off
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) 8,992 8,529 8,613 -4.2% 10,000 10,000 8,000 809 3,470 8,000 8,992 8,613 3,538 4,101 6,000 6,000 1,924 (1,188) 1,715 1,649 4,000 4,000 3,598 3,276 2,000 2,863 2,0
Slide 14: Liquidity Trends
Liquidity Trends | Liquidity remains comfortably within regulatory requirements HQLA (SARbn) Loan to Deposits Ratio (SAMA) (%) 180 +16.5% 1 Regulatory Maximum 90% 160 126.7 131.3 88.4% 87.8% 122.0 85.9% 1 118.1 140 120 112.7 81.9% 81.0% 1 100 1 80 60 1 40 1 20 0 0 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 3Q 22
Slide 15: Capitalization Trends
Capitalization Trends | Capital position well above regulatory minima RWA (SARbn) Total Capital (SARbn) 160 +8.4% +16.0% 700 140 519.4 600 479.2 498.0 38.4 106.6 107.9 42.3 120 500 37.8 93.0 1.6 7.6 100 5.7 5.9 400 1.1 80 5.5 300 473.3 60 440.3 454.0 100.9 102.0 200 40 87.5 100 20 0 0 3Q 22 4Q 22 3Q
Slide 16: Return Metrics
Return Metrics | Al Rajhi Bank’s returns remain industry-leading Return on RWA (%) Earnings per Share (SAR) 0 2 -7.8% 1 0 1.07 1.08 0.99 0.99 1 0 0.98 0 3.76% 3.71% 1 3.31% 3.31% 3.26% 1 0 1 0 0 0 0 0 0 9M 22 FY 22 1Q 23 1H 23 9M 23 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 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 down Saudi GDP growth forecasts to 0.8% in 2023 and revised up 2024 to 4.0% • Saudi economy grew by 1.2% in 2Q23, driven by 6.1% growth in non-oil activities and 4.3% contraction in oil activiti
Slide 19: FY 2023 Guidance
FY 2023 Guidance | Progressing in line with “Bank of The Future” strategy FY 2023 Guidance 9M 2023 Actual Guidance Revision Balance Sheet Financing Mid single digit +4.0% Mid single digit Net profit margin -40 bps to -50 bps -57 bps -45 bps to -55 bps Profitability Cost to income ratio Below 27.5% 2
Slide 20: Q&A
Q&A
Slide 21: ESG Highlights
ESG Highlights
Slide 22: ESG Highlights | 3Q 2023
ESG Highlights | 3Q 2023 Renovation USD 2.6 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 94.9 • GDP grew by 1.2% in 2Q 2023 driven by higher non-oil activities 7.2 84.1 100.0 70.9 5.2 64.4 80.0 • IMF revised down Saudi’s GDP growth forecasts to 0.8% for 2023 and 8.7 41.7
Slide 25: Banking Sector Highlights
Banking Sector Highlights | Banking system deposits growth is in line with loans growth in 8M 2023 Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARmn) 79.5% 81.5% 79.2% 77.1% 75.0% Deposits growth in the banking system during first eight months is in 2,800 • 80.0% 2,520 2,466 2,349 2,
Slide 26: IR Contact Information
IR Contact Information
Slide 27: Additional Information
Additional Information | Contact investor relations for more information Mr. Rayan Alshuaibi Mr. Safwan Alsulaimani +966 (11) 828 1972 +966 (11) 834 6626 alshuaibirs@alrajhibank.com.sa AlsulaimaniSA@alrajhibank.com.sa Mr. Abdulrahman Alyami Mr. Mohammed Alqahtani +966 (11) 828 3586 +966 (11) 828 192
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