Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Q3 2019 Earnings Presentation
56 slides from Al Rajhi Bank's earnings presentation, 2019
Slide 1: Al Rajhi Bank Investor Presentation 3Q 2019 Results
Al Rajhi Bank Investor Presentation 3Q 2019 Results The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 3Q 2019 Investor Presentation
Slide 2: Agenda
1 ................................................................................. The World's Leading Islamic Bank 03 41 ................................................................................. 3Q 2019 Financial Results Overview 25 Key Messages 26 .........................................
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 3Q 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 546 5,190 100% 97% 94% 10 2 100% Banking % of Total Deposits 9+m 9+ Branches ATMs million 106,080 232 Transactions NPS Digital:Manual Digital : Manual 546 Remit
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 85 158 100 200 128 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 3Q 2019 Total Assets (SARbn) Capital Ratios (%) 800 23.3% 700 0 22.0% 600 +4.9% 0 20.8% 20.2% 0 500 339.7 343.1 364.3 22.2% 0 400 315.6 0 300 0 20.9% 200 19.7% 19.1% 0 100 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% 2.49% 2.68% 2.94% 16.11% 20.00 % 3.0 0% 2.29% 0.2 0.0 3 18. 00% 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 0 +30bps +170bps 0 0 25.8% 24.9% 9+ Million 24.6% 25.1% 25.1% 17.1% 17.3% 0 0 0 15.6% 16.3% 16.2% 0 0 0 Customers 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18 3
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 +365bps 0 0 -4bps 0 27.6% 0 26.6% 26.2% 26.8% 0 0 26.4% 26.4% 26.5% 26.4% 0 23.9% 25.0% 0 0 0 0 0 0 0 0 0 0 0 0 FY 15 FY 16 FY 17 FY 18 3
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 -260bps 1 40.6% 40.4% 39.6% 38.7% 50.6% 52.7% 52.7% 51.3% 37.6% 48.0% 1 1 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 Sep 19 RAJHI NCB RIYAC TASI 220 Key Metrics Closing Price SAR 63.30 200 Market Cap SAR 158.25 bn RAJHI, 189 Market Cap / % Industry 24.7%
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% 119% 113% 1 Al R
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
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: ESG Highlights
ESG Highlights As of FY2018 unless stated otherwise 30% 75 64% SAR 368bn of loans and 890mn SAR Social 1,170 growth in project finance Zakat paid in responsibility Sharia Board female Total Assets integrate ESG 9M 2019 programs in Resolutions employees factors 22 cities since 2015 ISO Green 3.2bn 10
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 3Q 2019 Investor Presentation
Slide 18: Macro Environment
Macro Environment Expected continued improvement in economic growth KSA GDP Growth is Expected to Improve slightly, …as well as expansionary fiscal policy… reflecting current oil prices… 54.13 57.36 1,120 1,130 5 70 52.32 1,030 1,001 1,200 43.64 936 963 60 898 893 4 860 1,00 0 50 3 613 622 800 40 51
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 1.9% 1,3 60 10.0 % 2.5% 1,6 40 1,3 40 1,327 8.0 % 1,619 1,6 20 2.0% 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 3Q 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 9M 2019 A B C D E Accelerate Become Employer Customer Digital Execution Growth of Choice Focus Leadership Excellence 13% YoY operating income 13 new products launched to Al Rajhi Bank Academy 106 K POS 253 Bots growth cater
Slide 25: Financial Results Overview & Trends
Financial Results Overview & Trends The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 3Q 2019 Investor Presentation
Slide 26: Key Messages
Key Messages Solid 9M 2019 Performance Net Income after Zakat up 9.7% YoY Deposits up 1.7%, Financing up by 5.4% Liquidity remained healthy Net Income (SARmn) Total Customers' Deposits (SARbn) Capital Adequacy Ratio (%) 500 14,000 +9.7% +1.7% 20.2% 19.5% 0 294 299 12,00 0 400 7,296 8,006 10 0 19 10,
Slide 27: Return Metrics
Return Metrics Excellent first 9 months of the year, leading to further improvement of our return profile Return on Equity (%) Return on Assets (%) 21.64% 2.94% 2.93% 0.25 25.0 0% 19.82% 2.68% 17.24% 2.29% 2.49% 16.11% 16.65% 0.2 20.00 % 0.15 15.00% 0.1 10.0 0% 0.0 5 7.56% 5.00% 1.12% 0 0.0 0% 2015
Slide 28: Net Income Trends
Net Income Trends 9M 2019 profit growth of 9.7% from solid income growth Commentary Net Income Before Zakat Growth Drivers By Segment (SARmn) Net income for 9M 2019 increased 9.7% YoY to SAR 8,006 million 8,000 mainly driven by 13.6% total operating income growth from yield 7,000 +18.2% (+14%) and
Slide 29: 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 9M 2019 Actual FY 2019 Guidance Balance Mid single digit Financing, Net (SAR bn) 231.8 244.6 (+5.4%) Sheet growth Net Profit Margin 4.75% 5.21% (+46 bps) +35 to +45 bps
Slide 30: Operating Income Trends
Operating Income Trends 9M 2019 income growth of 13.0% from financing & investment income (+14.2%) Total Operating Income (SARmn) Total Operating Income Mix By Segment (SARmn) Investment services & brokerage 120% SAR 98mn +13.6% 100% 6,000 4,861 4,981 Treasury 4,383 4,506 4,639 4,142 4,288 80% SAR 7
Slide 31: Operating Income Trends
Operating Income Trends Stronger YoY financing margin & good banking fee income growth Net profit margin (%) Commentary 9M 2019 net financing and investment income grew 14% YoY due to +46bps improved financing margins, further aided by 4% growth in average 0 +33bps +43bps +7bps 5.21% profit-bearin
Slide 32: Expenses Trends
Expenses Trends YoY expense growth of 9.5%, but efficiency improved 350 bps on positive "jaws" Operating Expenses (SARmn) Operating Expenses Mix By Segment (SARmn) Investment services & brokerage 120% SAR 111mn 3,000 +8.1% 100% Treasury SAR 339mn 2,500 80% 1,609 Corporate 2,00 0 1,386 1,393 1,403 1,
Slide 33: Assets
Assets Total assets slightly increased by 1.1% YTD Commentary Total Assets Mix By Type (SARbn) Other Assets, Net Total assets increased by 1.1% YTD as an increase in financing (+5.5%), SAR 16bn investments (+6.7%) and interbank balances (2.4%). However it was 4% Cash & Balances with offset by lowe
Slide 34: Financing
Financing Financing dominated by retail Commentary Financing, Net Mix By Segment Retail Financing, Net Mix By (SARbn) Type (SARbn) Corporate Mortgage Financing is dominated by retail (72%) followed by corporate (25%). SAR 62bn SAR 46bn 25% 26% Retail financing is primarily compromised of persona
Slide 35: Asset Quality Trends (1)
Asset Quality Trends (1) Cost of Risk remains stable Total Impairment Charge (SARmn) Impairment Charge Drivers By Segment (SARmn) 1,201 54 0 1,107 1,400 900 80 0 1,200 (132) (15) 700 1,000 450 600 417 389 386 800 333 330 332 500 400 600 30 0 400 200 200 100 0 0 1Q 18 2Q 18 3Q 18 4Q 18 1Q 19 2Q 19 3Q
Slide 36: Asset Quality Trends (2)
Asset Quality Trends (2) Asset quality remains solid NPL Ratio Trends (%) NPL coverage ratio 2.41% 2.16% 0 0 1.88% 1.92% 1.77% 4 1.50% 1.30% 4 0 0.96% 0.94% 0.85% 0.94% 3 0.82% 0.84% 342% 0 0.72% 314% 306% 3 0 2 231% 0 2 177% 0 0.35% 0.36% 0.35% 0.34% 0.34% 0.35% 0.36% 1 (0 ) 1 0 (0 ) 1Q 18 2Q 18 3Q
Slide 37: 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 3Q 2019 and comfortably within 5% regulatory guidelines Banks SAR 3bn HQLA increased by 2% during 9
Slide 38: 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 10bn SAR 25bn deposits, of w
Slide 39: Capitalisation Trends
Capitalisation Trends Rising profitability drives total capital higher Total Capital (SARbn) Commentary 120 Total capital increased by 1.4% on rising profitability. +1.4% 100 80 Capitalization remains strong with CAR of 19.5% and CET1 of 18.5% as at 30 September 2019. 60 51 53 52 40 3 3 3 20 49
Slide 40: Operating Results 3Q 2019 Performance
Operating Results 3Q 2019 Performance The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 3Q 2019 Investor Presentation
Slide 41: Retail Banking
Retail Banking 23% increase in profit on strong operating income performance Commentary YoY SAR (mn) 9M 2019 9M 2018 % Retail Banking 9M 2019 net income increased by 23% YoY, reflecting Net financing & investment income 9,133 7,791 +17.2% strong operating income performance. Fee and other income 9
Slide 42: Corporate Banking
Corporate Banking Strong top line and lower impairment charge lead to 24.1% profit growth Commentary YoY SAR (mn) 9M 2019 9M 2018 % Corporate Banking 9M 2019 net income grew 24.1% YoY as a result of Net financing & investment income 1,526 1,461 +4.4% higher income, improved operating efficiency an
Slide 43: Treasury
Treasury Strong profit growth from increased investment portfolio Commentary YoY SAR (mn) 9M 2019 9M 2018 % Treasury 9M 2019 net income rose 9.5% YoY from 5.3% total operating Net financing & investment income 1,493 1,405 +6.3% income growth. Fee and other income 698 675 +3.4% Total Treasury ass
Slide 44: Investment Services & Brokerage
Investment Services & Brokerage 28.2% drop in profit on lower fees Commentary YoY SAR (mn) 9M 2019 9M 2018 % 9M 2019 Net income for Investment Services & Brokerage declined Net financing & investment income 16 19 -16.1% 28.2% YoY to SAR 201 million principally from 20.1% operating income Fee and o
Slide 45: Appendix
Appendix Additional Information The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 3Q 2019 Investor Presentation
Slide 46: 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 47: 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 48: Al Rajhi Bank ESG June 2019
Al Rajhi Bank ESG Investor Presentation 30 June 2019 The Blue Chip Islamic Bank Al Rajhi Bank The Blue Chip Islamic Bank 3Q 2019 Investor Presentation
Slide 49: 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
Slide 50: 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
Slide 51: Sustainability Highlights
Sustainability Highlights As of FY2018 unless stated otherwise 30% 75 64% SAR 364bn of loans and SAR 575mn Social 1,170 growth in project finance Zakat paid in responsibility Sharia Board female Total Assets integrate ESG 1H2019 programs in Resolutions employees factors 22 cities since 2015 ISO Gree
Slide 52: 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 47 55% 50% 60% 65% 68% 4% 21% 14% 12% 11% 41% 29% 26% 23% 21% 2015 2016 2017 2018 1H 19 Base 3,554 4,587 31,058 23,788 7,342 We ask
Slide 53: 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
Slide 54: 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." - Steve Bertamini, CEO ESG Journey • Transparency on management of ESG issues • Relevant KPI disclosures as per GRI & SASB standards Governance • Target sett
Slide 55: 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 Mr. Faisal F. Altimyat Senior Investor Relations Officer Tel: +966 (11) 828 1457 Email: altimyatff@alrajhibank.com.sa Al Rajhi B
Slide 56: 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