Al Rajhi Bank · TADAWUL:1120

Al Rajhi Bank — FY2019 Earnings Presentation

55 slides from Al Rajhi Bank's earnings presentation, 2020

  1. Slide 1: Al Rajhi Bank Investor Presentation FY 2019 Results

    Al Rajhi Bank Investor Presentation FY 2019 Results The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank FY 2019 Investor Presentation

  2. Slide 2: Contents

    1 ................................................................................. The World's Leading Islamic Bank 03 41 ................................................................................. FY 2019 Financial Results Overview 24 Key Messages 25 .........................................

  3. 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 FY 2019 Investor Presentation

  4. Slide 4: Islamic Banking, Everywhere

    Al Rajhi Bank Islamic Banking, Everywhere At a glance Presence & Branches Islamic Kuwait Islamic NPB Deposits NPB Deposits Customers Jordan 544 5,215 100% 93% 94% 10 2 100% Banking % of Total Deposits 9+m 9+ Branches ATMs million 115,243 231 NPS Digital: Manual Islamic Transactions 544 Remittance 1/

  5. 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) 384 450 400 180 163 350 160 142 237 238 105 30 0 140 103 85 120 250 168 100 127 200 80 150 60 100 40 50 20 0 0 RAJHI DIB KFH QIB ADIB 2

  6. Slide 6: Robust balance sheet with 93% non-profit-bearing deposits

    Al Rajhi Bank, The Blue Chip Islamic Bank Robust balance sheet with 93% non-profit-bearing deposits at 2019 Total Assets (SARbn) Capital Ratios (%) 900 23.3% 800 0 22.0% 700 0 600 +13.1% 0 20.1% 19.9% 500 364 384 22.2% 0 400 340 343 0 20.9% 300 0 200 19.0% 0 100 0 18.8% 0 0 2016 2017 2018 2019 2016

  7. 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 (%) 19.82% 20.49% 2.94% 2.76% 2.49% 2.68% 16.65% 17.24% 1.04% 7.01% 2016 2017 2018 2019 2016 2017 2018 2019 ROE Before Zakat ROE After Zakat ROA Before Zakat ROA After Zakat Net

  8. 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

  9. 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 0 +10bps +100bps 0 0 9+ Million 25.1% 25.1% 24.8% 25.2% 17.1% 17.3% 0 0 0 16.3% 16.2% 0 0 0 Customers 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 FY 16 FY 17 F

  10. 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 -20bps +260bps 0 0 0 0 26.6% 26.8% 27.6% 0 0 0 26.4% 26.5% 26.2% 0 25.0% 26.2% 0 0 0 0 0 0 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 FY 16 FY 1

  11. 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 -270bps 1 -590bps 1 40.4% 52.7% 52.7% 51.3% 39.6% 38.7% 37.7% 46.8% 1 1 1 0 0 0 0 0 0 0 0 0 0 FY 16 FY 17 FY 18 FY 19 FY 16 FY 1

  12. 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) 31 Dec 19 RAJHI NCB RIYAC TASI Key Metrics 220 Closing Price SAR 65.4 200 Market Cap SAR 163.5 bn RAJHI, 196 Market Cap / % Industry 23.69% 1

  13. Slide 13: Market cap and liquidity ensures high index weighting

    Market Performance Market cap and liquidity ensures high index weighting Highlights ARB has the highest weight in the MSCI GCC Index...  In 2019, Alrajhi is the highest weight in TASI (12.4%). Index Float Adj # Top 10 Constituents Country Weight Sector  Most active stock by number of transaction (

  14. 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 2016, 2017, 2018)  Most Innovative Bank in KSA  Best Retail Bank in KSA  Strongest Islamic Retail Bank in the World Best Financial

  15. 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

  16. Slide 16: ESG Highlights

    ESG Highlights As of 2019 32% 94 40% SAR 384bn of loans and SAR 1.1 bn Social 1,198 growth in project finance responsibility Sharia Board female Total Assets Zakat paid integrate ESG programs in Resolutions employees factors 29 cities since 2015 ISO Green 11.3bn SAR Certification SAR3.1 bn 16,265 13

  17. 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 FY 2019 Investor Presentation

  18. Slide 18: Macro Environment: Expected continued improvement in economic growth

    Macro Environment Expected continued improvement in economic growth The declining demand of oil from China and the negative impact of …which, as a result, would carry out additional government Covid19 are expected to weigh on the GDP growth… support 71.19 1,200 1,001 1,030 1,048 1,020 64.36 936 917

  19. Slide 19: Macro Environment: Supportive of Banking Sector

    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 1,6 00 14.2% 16.0 % 1,850 7.3% 8.0 % 9.5% 14.0 % 1,550 7.0 % 1,800 12.0% 1,500 6.0 % 10.0 % 1,7 50 1,4 50 2.9% 2.5%

  20. Slide 20: Al Rajhi Bank Strategy 2020

    Al Rajhi Bank Strategy 2020 The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank FY 2019 Investor Presentation

  21. 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

  22. 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

  23. Slide 23: Strategy Update

    Strategy Update ABCDE ‘Back to Basics’ strategy delivered strong results in FY 2019 A B C D E Accelerated Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence 13% YoY operating income 13 new products launched to Al Rajhi Bank Academy 115 K POS 253 Bots growth cater

  24. Slide 24: Financial Results

    Financial Results Overview & Trends The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank FY 2019 Investor Presentation

  25. Slide 25: Key Messages

    Key Messages Solid FY 2019 Performance Net Income after Zakat up 169.6% YoY Deposits up 6.3%, Financing up by 7.7% Liquidity remained healthy Net Income (SARmn) 20,0 00 Total Customers' Deposits (SARbn) Capital Adequacy Ratio (%) 500 +6.3% 18,000 +169.6% 20.1% 19.9% 0 312 16,000 294 400 22 10,159 0

  26. Slide 26: Progress against guidance and outlook

    Progress against guidance and outlook Financing & income growth in line with FY 2019 guidance FY 2018 Actual FY 2019 Guidance FY 2019 Actual FY 2020 Guidance Balance Mid single digit Mid single digit Financing, Net (SAR bn) 231.8 249.7 (+7.7%) Sheet growth growth Net Profit Margin 4.75% +35 to +45 b

  27. Slide 27: Operating Income Trends (1)

    Operating Income Trends (1) FY2019 income growth of 12.5% from financing & investment income (+13.1%) Highlights Total Operating Income (SARmn)  Solid growth of (+12.5%) YoY driven by yield income mainly from Retail 7,0 00 +11.0% Banking. 4,861 4,981 5,003 6,000  On a segmental basis, growth was d

  28. Slide 28: Operating Income Trends (2)

    Operating Income Trends (2) Stronger YoY financing margin & good banking fee income growth Net profit margin (%) Highlights  Net profit margin growth of (+47bps) YoY reaching (+5.22%) at the +47bps +33bps 5.22% 0 end of year. 4.75% 4.35% 4.42% 0  Fees growth of (+4.8%) driven by Digital channels.

  29. Slide 29: Net Income Trends

    Net Income Trends FY 2019 profit growth of 11.7% from solid yield income growth Highlights Net Income Before Zakat Growth Drivers By Segment (SARmn)  yield income growth of (+13.4%) mainly driven by mortgage book 10,000 9,000 +11.7% growth. 8,000 7,000  Non-yield (+7.9%) related income improvement

  30. Slide 30: Expenses Trends

    Expenses Trends YoY expense growth of 13% driven by IT & Digital projects Highlights Operating Expenses (SARmn)  Operating expenses grew by (+13%) for the full year period; and (+22%) +22.0% 3,000 in Q4 YoY. 2,500 1,908  Higher IT related expenses primarily due to digital infrastructure and 1,564

  31. Slide 31: Assets

    Assets Total assets increased by 5.5% YTD Highlights Total Assets Mix By Type (SARbn) Other Assets, Net  Total assets increased by 5.5% YTD as an increase in financing SAR 16bn (+7.7%), investments (+8.8%). 4% Cash & Balances with SAMA  Net financing grew by (+7.7%) in 2019 contributed by strong r

  32. Slide 32: Financing

    Financing Financing (+7.7%) YoY dominated by retail, Mortgage is the champion Highlights Financing, Net Mix By Segment Retail Financing, Net Mix By (SARbn) Type (SARbn) Mortgage  Financing is dominated by retail (75%) followed by corporate Corporate SAR 55bn SAR 56bn (23%). 23% 30%  Retail financi

  33. Slide 33: Funding & Liquidity Trends (1)

    Funding & Liquidity Trends (1) Liquidity and funding remain comfortably within regulatory requirements Highlights Total Liabilities Mix By Type (SARbn) Other SAR 18bn  Liquidity remained healthy during 2019 and comfortably within 5% Banks regulatory guidelines SAR 2bn 1%  HQLA increased by 2% duri

  34. Slide 34: Funding & Liquidity Trends (2)

    Funding & Liquidity Trends (2) Continued growth in non-profit bearing deposits Highlights Total Customers' Deposits Mix Total Customers' Deposits Mix By Type (SARbn) Time By Segment (SARbn)  Strong stable funding with 91% of liabilities sourced from SAR 22bn Corporate SAR 14bn customers’ deposits,

  35. Slide 35: Asset Quality Trends (1)

    Asset Quality Trends (1) Cost of Risk remains stable Highlights Impairment Charge Drivers By Segment (SARmn)  Provision increased by (SAR 331 mn) YoY in Q4, driven by enhanced 3,500 +15.8% provisioning for mortgage financing book, and higher provision level for 3,000 select corporate clients. 536 0

  36. Slide 36: Asset Quality Trends (2)

    Asset Quality Trends (2) Asset quality remains solid Highlights NPL coverage ratio  NPL ratio remains stable at (0.9%) despite slight increase in Corporate NPL ratio. 4 4  Coverage ratio remains above (300%), well above the industry average. 3 342% 314% 303% 3 2 2 231% 1 1 0 2016 2017 2018 2019 NP

  37. Slide 37: Capitalisation Trends

    Capitalisation Trends Rising profitability drives total capital higher Highlights Total Capital (SARbn) 120  Total Capital increased by 5.9% on rising profitability. +5.9% 100  Capitalization remains strong with CAR of 19.9% and CET1 of 80 18.8% as at Full Year 2019. 60 51.1 52.1 54.1 2.8 2.9 2.9

  38. Slide 38: Return Metrics

    Return Metrics Full year, leading to further improvement of our return profile Return on Equity (%) Return on Assets (%) 2.94% 19.82% 20.49% 2.76% 2.68% 16.11% 17.24% 2.29% 2.49% 16.65% 7.01% 1.04% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 ROE Before Zakat ROE After Zakat ROA Before Zakat RO

  39. Slide 39: Operating Results

    Operating Results FY 2019 Performance The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank FY 2019 Investor Presentation

  40. Slide 40: Retail Banking

    Retail Banking 11% increase in profit on strong operating income performance Highlights YoY SAR (mn) FY 2019 FY 2018 %  Retail Banking FY2019 net income increased by 11% YoY, Net financing & investment income 12,326 10,574 +16.6% reflecting strong operating income performance. Fee and other income

  41. Slide 41: Corporate Banking

    Corporate Banking Strong top line and lower impairment charge lead to 28% profit growth Highlights YoY SAR (mn) FY 2019 FY 2018 %  Corporate Banking FY2019 net income grew 28% YoY as a result Net financing & investment income 2,085 1,950 +6.9% of higher income & fees, improved operating efficiency

  42. Slide 42: Treasury

    Treasury Strong profit growth from increased investment portfolio Highlights YoY SAR (mn) FY 2019 FY 2018 %  Treasury FY2019 net income rose 6.8% YoY driven by inverse Net financing & investment income 1,993 1,946 +2.4% impairment charge of 2 mln, and 1.9% total operating income Fee and other incom

  43. Slide 43: Investment Services & Brokerage

    Investment Services & Brokerage 20.1% drop in profit on lower fees Highlights YoY SAR (mn) FY 2019 FY 2018 %  FY 2019 Net income for Investment Services & Brokerage declined Net financing & investment income 24 16 +49.7% by 20.1% YoY to SAR 311 million principally from 13.7% operating Fee and other

  44. Slide 44: Appendix

    Appendix Additional Information The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank FY 2019 Investor Presentation

  45. 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

  46. Slide 46: Management Team

    Management Team International expertise combined with deep roots in Saudi Arabia Chief Executive Officer Chief Financial Officer Chief Operating Officer Waleed Al-Mogbel Abdulrahman Al Fadda Robin Jones Banking experience: 21 years Banking experience: 22 years Banking experience: 30 years Chief Risk

  47. Slide 47: Al Rajhi Bank ESG FY 2019

    Al Rajhi Bank ESG Investor Presentation FY 2019 The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank FY 2019 Investor Presentation

  48. Slide 48: ESG is part of Al Rajhi Bank's DNA

    ESG is part of Al Rajhi Bank's DNA Ethical values are central to Islamic Finance, UN SDGs and KSA Vision 2030 Protection of faith, ISLAMIC FINANCE Zakat, no usury, risk sharing, life, mind, wealth, anti-speculation, prohibited and human dignity PRINCIPLES sectors, sanctity of contracts Vibrant Socie

  49. Slide 49: Developments impacting Al Rajhi Bank's operating environment

    Developments impacting Al Rajhi Bank's operating environment Major factors integrated into our approach to ESG and our value creation model Major Factors 'ABCDE' Strategy Accelerate growth Client & Investor Demands Improve portfolios in key customer segments Environmental Geopolitics Become Employer

  50. Slide 50: ESG Highlights

    ESG Highlights As of 2019 32% 94 40% SAR 384bn of loans and SAR 1.1 bn Social 1,198 growth in project finance responsibility Sharia Board female Total Assets Zakat paid integrate ESG programs in Resolutions employees factors 29 cities since 2015 ISO Green 11.3bn SAR Certification SAR3.1 bn 16,265 13

  51. Slide 51: Placing customer relationships at the heart of ARB

    Placing customer relationships at the heart of ARB We achieved our target of becoming the most recommended bank in KSA #7 ARB NPS-Score in KSA #1 NPS-Score 14 21 34 42 43 47 49 49 55% 50% 60% 65% 66% 68% 69% 69% 4% 21% 14% 12% 11% 11% 10% 10% 41% 29% 26% 23% 23% 21% 21% 20% 2015 2016 2017 2018 Q1' 1

  52. Slide 52: Ensuring ARB staff are proud, valued and energized

    Ensuring ARB staff are proud, valued and energized The ARB employee engagement index (EEI) score is at its peak 27 ARB Employee Engagement Index 66 EEI Score = Highly Engaged + Engaged 27 46 53 59 62 60 66 15% 29% 34% 28% 12% 38% 39% 38% 12% 17% 14% 19% 21% 21% 37% 13% 23% 6% 6% 6% 7% 13% 12% 11% 11

  53. Slide 53: Conclusion and the way forward

    Conclusion and the way forward "We believe our future success is interlinked with the well-being of our stakeholders and the world around us." ESG Journey • Transparency on management of ESG issues • Relevant KPI disclosures as per GRI & SASB standards Governance • Target setting & Reporting • Open

  54. Slide 54: Additional Information

    Additional Information Contact investor relations for more information Mr. Amr M. Sager Head of Investor Relations Tel: +966 (11) 828 3536 Email: sagera@alrajhibank.com.sa Mr. Faisal F. Altimyat Senior Investor Relations Officer Tel: +966 (11) 828 1457 Email: altimyatff@alrajhibank.com.sa Al Rajhi B

  55. Slide 55: 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

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