Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — H1 2019 Earnings Presentation
48 slides from Al Rajhi Bank's earnings presentation, 2019
Slide 1: Al Rajhi Bank Investor Presentation 1H 2019 Results
Al Rajhi Bank Investor Presentation 1H 2019 Results The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1H 2019 Investor Presentation
Slide 2: Agenda
1 The World's Leading Islamic Bank ................................................................................. 03 41 2Q 2019 Financial Results Overview ................................................................................. 25 Islamic Banking, Everywhere .............................
Slide 3: The World's Leading Islamic Bank
Al Rajhi Bank The World's Leading Islamic Bank The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1H 2019 Investor Presentation
Slide 4: Islamic Banking, Everywhere
Al Rajhi Bank Islamic Banking, Everywhere At a glance Presence & Branches Kuwait Islamic Islamic NPB Deposits NPB Deposits Customers Jordan 551 5,142 100% 100% 94% 97% 10 2 Banking % of Total Deposits ATMs 9+ Branches 9+m million 97,445 236 Transactions NPS Digital:Manual Digital : Manual 551 Remitt
Slide 5: What makes us The Blue Chip Islamic Bank
Al Rajhi Bank What makes us "The Blue Chip Islamic Bank" Institutional Status - World's #1 Islamic Bank (by Assets; SAR bn) Large and Growing Market Cap (in SAR bn) 400 365 142 350 160 30 0 140 250 228 215 120 103 105 100 85 200 158 128 80 150 60 100 40 20 50 0 0 RAJHI DIB KFH QIB ADIB 2015 2016 201
Slide 6: Robust balance sheet with 97% non-profit-bearing deposits
Al Rajhi Bank, The Blue Chip Islamic Bank Robust balance sheet with 97% non-profit-bearing deposits at 2Q 2019 Total Assets (SARbn) Capital Ratios (%) 800 23.3% 0 700 0 22.0% 600 +4.9% 0 20.8% 500 20.2% 343.1 364.3 22.2% 0 400 315.6 339.7 0 300 0 20.9% 200 0 19.7% 19.1% 100 0 0 0 2015 2016 2017 2018
Slide 7: Outstanding foundation and strong returns
Al Rajhi Bank, The Blue Chip Islamic Bank Outstanding foundation and strong returns Return on Equity (%) Return on Assets (%) 16.65% 17.24% 19.82% 20.00 % 2.49% 2.68% 2.94% 3.0 0% 0.2 16.11% 18. 00% 0.0 3 2.29% 2.50 % 16.0 0% 0.0 25 0.15 14.0 0% 2.00% 0.0 2 12.00% 0.1 7.56% 10.0 0% 0.0 15 1.12% 1.50
Slide 8: Top 10 Facts about Al Rajhi Bank
Top 10 Facts about Al Rajhi Bank 1 Largest Islamic Bank worldwide 61 #1 Bank in KSA (by Assets & Market Cap) (by number of customers) 2 #1 Retail Bank in Middle East 27 #1 Distribution network in Middle East (Retail Deposits & Income) (by # of Branches, POS, ATMs, Remittance Centers) 3 One of the hi
Slide 9: What sets Al Rajhi Bank apart
What sets Al Rajhi Bank apart ARB has the largest retail banking business in the Middle East Market Share - Current Accounts Market Share - Deposits +190bps +170bps 0 0 0 25.8% 26.5% 0 24.6% 25.1% 25.1% 17.1% 17.3% 0 16.3% 0 0 9+ Million 0 15.6% 16.2% 0 Customers 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18
Slide 10: 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 Market Share - ATMs 0 0 +30bps 0 +340bps 0 26.8% 27.3% 0 26.4% 26.4% 26.6% 26.5% 26.7% 25.0% 26.2% 23.9% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18
Slide 11: ARB has a unique franchise
ARB has a unique franchise We capture high market share across key products #1 in Personal Loans #1 in Auto Loans Market Share - Personal Loans Market Share - Auto Loans 1 -300bps 1 -100bps 1 40.6% 40.4% 39.6% 50.6% 52.7% 52.7% 51.3% 1 38.7% 37.6% 1 49.6% 0 1 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 1
Slide 12: ARB Market Performance
ARB Market Performance Al Rajhi Bank maintained its momentum and outperformed its peer group Share Price Performance Top 3 KSA Banks (Monthly; Rebased to 100) 30 June 19 RAJHI NCB RIYAC TASI Key Metrics 220 RAJHI, 208 Closing Price SAR 69.70 200 Market Cap SAR 174.25 bn Market Cap / % Industry 23.23
Slide 13: Market Performance
Market Performance Market cap and liquidity ensures high index weighting ARB has the highest weight in the MSCI GCC Index... …and is included in MSCI EM Index Index RAJHI ATVR* vs. MSCI Minimum Requirement (>15%) Float Adj # Top 10 Constituents Country Weight Sector Mkt Cap (%) 129% 117% 1 Al Rajhi
Slide 14: Awards
Awards Recent international recognition Global Awards Regional Awards Best Bank in GCC Best Bank in Saudi Arabia Fastest Growing Bank in KSA (3 consecutive years) Most Innovative Bank in KSA Best Retail Bank in KSA Strongest Islamic Retail Bank in the World Best Financial Institution in Sa
Slide 15: Our Values
Our Values Modesty Humility in everything we do Integrity & Openness and highest standards of Nurturing imagination and fostering Transparency corporate & personal ethics Innovativeness creativity Passion to A strong commitment to anticipate and Defining, differentiating and reinforcing Serve Our Me
Slide 16: Al Rajhi Bank's Social Responsibilities
Al Rajhi Bank's Social Responsibilities Our responsibility to our community has always been at the forefront of what we do Focus areas Examples 101 programs conducted 21 cities Participation 8,815 volunteering hours clocked in 1H 2019 CSR People In Need, Volunteering, Financial Strategic Literacy an
Slide 17: Saudi Arabia's Macro-Economic Environment
Saudi Arabia’s Macro-Economic Environment Supportive of Growth The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1H 2019 Investor Presentation
Slide 18: Macro Environment
Macro Environment Expected continued improvement in economic growth KSA GDP Growth is Expected to Improve, in part from …as well as expansionary fiscal policy… more supporting oil prices… 57.36 5 70 52.32 54.13 1120 1130 1,001 1,030 60 1,200 4 43.64 936 963 50 898 893 860 1,00 0 3 40 613 622 800 2 3
Slide 19: Macro Environment
Macro Environment Supportive of Banking Sector …and moderate pick up in bank deposits amid balance Moderate pickup in sector loan growth… sheet optimisation in rising rate environment 1,3 80 9.5% 12.0% 1,6 80 2.6% 3.0 % 1,6 60 1,3 60 1.9% 10.0 % 2.5% 1,6 40 1,3 40 8.0 % 1,327 1,6 20 2.0% 1,619 1,3 2
Slide 20: Al Rajhi Bank Strategy 2020
Al Rajhi Bank Strategy 2020 ABCDE 'Back to Basics' The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1H 2019 Investor Presentation
Slide 21: Saudi Arabia Vision 2030
Saudi Arabia Vision 2030 Key objectives A Vibrant Society A Thriving Economy An Ambitious Nation Lower unemployment Rise in Global Competitiveness Increase Umrah capacity from 8 to 30M Increase non-oil government revenue from 11.6% to 7% Index from 25 to top 10 from SAR 163B to 1T Double t
Slide 22: Financial Sector Development Program
Financial Sector Development Program Creating a thriving financial sector that serves as key enabler for Vision 2030 objectives 2020 metrics & targets Enable financial Promote and enable financial institutions to support Ensure the formation of an advanced capital market planning private sector grow
Slide 23: Key initiatives 2017-2020
Strategy Overview ABCDE 'Back to Basics' strategy already delivers results A B C D E Accelerate Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence A B C D E Grow mortgage, private Update value Smartly expand channels World-class sector, affluent, ladies & Engaged
Slide 24: Strategy Update
Strategy Update ABCDE 'Back to Basics' strategy delivered strong results in 1H 2019 A B C D E Accelerate Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence 12.7% YoY operating income 13 new products launched to Al Rajhi Bank Academy 97K POS 253 Bots growth cater
Slide 25: Financial Results
Financial Results Overview & Trends The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1H 2019 Investor Presentation
Slide 26: Key Messages
Key Messages Solid 1H 2019 Performance Net Income after Zakat up 8.3% YoY Deposits up 2.3%, Financing up by 2.9% Liquidity remained healthy Net Income (SARmn) Total Customers' Deposits (SARbn) Capital Adequacy Ratio (%) 500 14,000 12,00 0 400 +2.3% 0 20.2% 20.5% 10,000 294 301 10 0 +8.3% 30 0 19 0 5
Slide 27: Net Income Trends
Net Income Trends 1H 2019 profit growth of 8.3% from solid income growth Commentary Net Income Before Zakat Growth Drivers By Segment (SARmn) Previously Zakat was recognized in the statement of changes in 5,000 equity under retained earnings, during 2Q 2019 the accounting policy 4,500 +16.2% 4,000
Slide 28: Progress against guidance and outlook
Progress against guidance and outlook Financing & income growth, efficiency and cost of risk in line with FY 2019 guidance FY 2018 1H 2019 Actual FY 2019 Guidance Balance Mid single digit Financing, Net (SAR bn) 231 239 (+2.9%) Sheet growth Net Profit Margin 4.75% 5.20% (+45 bps) +30 to +40 bps Prof
Slide 29: Operating Income Trends
Operating Income Trends 1H 2019 income growth of 12.7% from financing and investment income(+14.5%) Total Operating Income (SARmn) Total Operating Income Mix By Segment (SARmn) Investment services & brokerag 120% SAR 111mn 6,000 +13.4% 100% 4,639 4,861 Treasury 4,288 4,383 4,506 4,142 5,00 0 80% SAR
Slide 30: Operating Income Trends
Operating Income Trends Stronger YoY financing margin & good banking fee income growth Net profit margin (%) Commentary 1H 2019 net financing and investment income grew 14.5% YoY due to +45bps 0 improved financing margins, further aided by 4.0% growth in average +33bps +43bps +7bps 5.20% profit-be
Slide 31: Expenses Trends
Expenses Trends YoY expense growth of 10.3%, but efficiency improved 240 bps on positive "jaws" Operating Expenses (SARmn) Operating Expenses Mix By Segment (SARmn) Investment services & brokerag 120% SAR 75mn 3,000 2,500 +16.1% 100% Treasury SAR 271mn 80% 1,609 2,00 0 Corporate 1,309 1,386 1,393 1,
Slide 32: Assets
Assets Slight 1.4% increase YTD in total assets Commentary Total Assets Mix By Type (SARbn) Other Assets, Net Total assets increased by 1.4% YTD as an increase in financing (+2.9%) SAR 17bn and investments (+6.5%) were offset by lower cash and balances with 4% Cash & Balances with SAMA and other c
Slide 33: Financing
Financing Financing dominated by retail Commentary Financing, Net Mix By Segment Retail Financing, Net Mix By (SARbn) Type (SARbn) Financing is dominated by retail (72%) followed by corporate (26%) Corporate Mortgage SAR 62bn SAR 41bn 26% 24% Retail financing is primarily compromised of personal
Slide 34: Asset Quality Trends (1)
Asset Quality Trends (1) Cost of Risk remains stable Total Impairment Charge (SARmn) Impairment Charge Drivers By Segment (SARmn) 1,200 900 80 0 223 784 1,000 700 0 775 800 600 450 417 (225) (7) 500 389 386 333 330 600 400 400 30 0 200 200 100 0 0 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 1H 18 Retail Cor
Slide 35: Asset Quality Trends (2)
Asset Quality Trends (2) Asset quality remains solid NPL Ratio Trends%) NPL coverage ratio 0 2.41% 4 0 1.88% 1.98% 1.92% 1.77% 4 0 1.30% 3 0.96% 0.94% 0.85% 342% 353% 0 0.82% 0.83% 3 314% 2 0.72% 0 0 2 231% 0 1 177% (0 ) 0.35% 0.36% 0.38% 0.34% 0.34% 0.35% 1 0 (0 ) 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 1
Slide 36: Funding & Liquidity Trends
Funding & Liquidity Trends Liquidity and funding remain comfortably within regulatory requirements Commentary Total Liabilities Mix By Type (SARbn) Other SAR 17bn Liquidity remained healthy during 2Q 2019 and comfortably within 5% regulatory guidelines Banks SAR 2bn HQLA increased by 5.8% during
Slide 37: Funding & Liquidity Trends
Funding & Liquidity Trends Continued growth in non-profit bearing deposits Commentary Total Customers' Deposits Mix Total Customers' Deposits Mix By Type (SARbn) By Segment (SARbn) Strong stable funding with 94% of liabilities sourced from customers’ Time Corporate SAR 29bn deposits, of which 97%
Slide 38: Capitalisation Trends
Capitalisation Trends Rising profitability drives total capital higher Total Capital (SARbn) Commentary 120 Total capital increased by 3.2% on rising profitability 100 +3.2% 80 Capitalization remains strong with CAR of 20.5% and CET1 of 19.5% as at 30 June 2019 60 51 54 53 40 3 3 3 20 49 51 50 0
Slide 39: Operating Results: 2Q 2019 Performance
Operating Results 2Q 2019 Performance The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1H 2019 Investor Presentation
Slide 40: Retail Banking
Retail Banking 15.7% increase in profit on strong operating income performance Commentary YoY SAR (mn) 1H 2019 1H 2018 % Retail Banking 1H 2019 net income increased by 15.7% YoY, reflecting Net financing & investment income 5,972 5,092 +17.3% strong operating income performance Fee and other incom
Slide 41: Corporate Banking
Corporate Banking Strong top line and lower impairment charge lead to 48.8% profit growth Commentary YoY SAR (mn) 1H 2019 1H 2018 % Corporate Banking 1H 2019 net income grew 48.8% YoY as a result of Net financing & investment income 1,012 988 +2.5% higher income, improved operating efficiency and
Slide 42: Treasury
Treasury Strong profit growth from increased investment portfolio Commentary YoY SAR (mn) 1H 2019 1H 2018 % Treasury 1H 2019 net income rose 5.7% YoY from 5.7% total operating Net financing & investment income 1,010 901 +12.1% income growth Fee and other income 425 457 -7.0% Total Treasury asset
Slide 43: Investment Services & Brokerage
Investment Services & Brokerage 30.7% drop in profit on lower fees Commentary YoY SAR (mn) 1H 2019 1H 2018 % 1H 2019 Net income for Investment Services & Brokerage declined Net financing & investment income 10 12 -17.5% 30.7% YoY to SAR 139 million principally from 21.9% operating income Fee and o
Slide 44: Appendix
Appendix Additional Information The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 1H 2019 Investor Presentation
Slide 45: Board of Directors
Board of Directors Members Chairman Abdullah bin Sulaiman Al Rajhi Salah bin Ali AbalKhail Non-Executive Non-Executive Vice Chairman Alaa bin Shakib Al Jabiri Bader bin Mohammed Al Rajhi Khaled bin Abdulrahman Al Qoaiz Independent Non-Executive Non-Executive Abdulaziz bin Khaled Al Ghefaily Ibrahim
Slide 46: Management Team
Management Team International expertise combined with deep roots in Saudi Arabia Chief Executive Officer Deputy Chief Executive Officer Chief Financial Officer Steve Bertamini Waleed Al-Mogbel Abdullah Alkhalifa Banking experience: 32 years Banking experience: 21 years Banking experience: 28 years C
Slide 47: Additional Information
Additional Information Contact investor relations for more information Mr. Amr M. Sager Head of Investor Relations Tel: +966 (11) 828 1985 Email: sagera@alrajhibank.com.sa Al Rajhi Bank The Blue Chip Islamic Bank 47 1H 2019 Investor Presentation
Slide 48: 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