Banque Saudi Fransi · TADAWUL:1050

Banque Saudi Fransi — FY2020 Earnings Presentation

45 slides from Banque Saudi Fransi's earnings presentation, 2021

  1. Slide 1: Banque Saudi Fransi Investor Presentation 4Q/FY 2020

    3 Column Slides Banque Saudi Fransi Investor Presentation 4Q/FY 2020

  2. Slide 2: Contents

    INVESTOR PRESENTATION 4Q/FY 2020 Contents BSF Profile 3 Operating Environment 6 Strategy 12 Financial Performance 19 Outlook & Guidance 34 Segmental Performance 36 Performance Track Record 42

  3. Slide 3: BSF Profile

    INVESTOR PRESENTATION 4Q/FY 2020 BSF Profile

  4. Slide 4: We are a leading banking group in Saudi Arabia with a strong domestic focus

    PROFILE | PRESENCE We are a leading banking group in Saudi Arabia with a strong focus on domestic operations Retail Clients Branches Employees (Million) 1.1 87 2,881  +4.3% year-to-date  +0 year-to-date  -4.0% year-to-date FY20 Operating Income Diversity (SAR Mn) 7,045 Headquartered in Riyadh: Su

  5. Slide 5: Market parameters impacted by Covid-19 disruption, but credit ratings remain solid

    PROFILE | SHARE PROFILE AND CREDIT RATINGS Market parameters impacted by Covid-19 disruption, but credit ratings remain solid Share Parameters 31 Dec 2020 Total Shareholder Return (TSR) 50 Closing price (SAR) 31.60 40 52 weeks range (SAR) 22.3 - 39.5 30 Shares issued (million) 1,205 20 10 Market cap

  6. Slide 6: Operating Environment

    INVESTOR PRESENTATION 4Q/FY 2020 Operating Environment

  7. Slide 7: Covid-19 severely disrupted financial markets and economic activity in 1Q 2020

    OPERATING ENVIRONMENT | COVID-19 DISRUPTION Covid-19 severely disrupted financial markets and economic activity in 1Q 2020, but moderated thereafter Brent Oil Price / Barrel (USD) Tadawul Index  Oil prices dropped sharply in 1Q 2020 as the Covid-19 pandemic spread, with a moderate recovery to USD 5

  8. Slide 8: Saudi Arabia responded strongly to contain the pandemic and support the economy

    OPERATING ENVIRONMENT | SAUDI ARABIA’S RESPONSE TO COVID-19 Saudi Arabia responded strongly to contain the pandemic and support the economy Social measures and local cases Support and stimulus programs  The KSA government acted decisively and quickly to suspend to curtail, inter alia, domestic and

  9. Slide 9: GDP for Saudi Arabia expected to contract in 2020, recover in 2021

    OPERATING ENVIRONMENT | ECONOMIC OUTLOOK GDP for Saudi Arabia is expected to contract by -5.4% in 2020, but recover to +3.1% growth in 2021 Real GDP growth (%) Brent Oil Price Average / Barrel (USD)  GDP for Saudi Arabia is expected to contract by -5.4% in 2020 (IMF) due to the deterioration of the

  10. Slide 10: The Saudi banking sector is well positioned to absorb the impact of Covid-19

    OPERATING ENVIRONMENT | KSA BANKING SECTOR The Saudi banking sector is well positioned to absorb the impact of Covid-19 Bank Credit (SAR Bn) Capitalization: T1|CAR (%) NPL Ratio (%) 1,783 18.1%|19.6% 2.2% +15% 19.5% 20.4% 20.3% 19.4% 19.6% 18.1% 2.2% 1,633 1,672 1,731 1,783 2.0% 1,461 1,477 1,501 1,

  11. Slide 11: BSF's response to Covid-19 was effective and executed against a robust plan

    OPERATING ENVIRONMENT | BSF RESPONSE TO COVID-19 BSF’s response to Covid-19 was effective and executed against a robust plan Putting the safety of our people first Supporting customers Digital enablement  Initiated and expanded flexible and remote  Waived payments on mortgages and personal  Publi

  12. Slide 12: Strategy

    INVESTOR PRESENTATION 4Q/FY 2020 Strategy

  13. Slide 13: In 2018 we redefined our purpose to build a dynamic, energized and modern culture

    STRATEGY | MISSION AND VAUES In 2018 we redefined our purpose to build a dynamic, energized and modern culture… OUR MISSION OUR VALUES To become the TRUE TO OURSELVES, ALWAYS most modern, We are honest with one another, even at the risk of temporary disharmony. It is never personal. innovative and U

  14. Slide 14: Building a cohesive, best-in-class executive management team

    STRATEGY | MANAGEMENT TEAM …and set out to build a cohesive, best-in-class executive management team… Rayan Mohammed Fayez Ravishanker Visvanathan Managing Director & Chief Chief Risk Officer Executive Officer  BSF: appointed CRO Dec-17  BSF: CEO since Feb-18  5 years in senior risk roles  Savol

  15. Slide 15: 5-year strategic plan called 'LEAP'

    STRATEGY | 5-YEAR STRATEGIC PLAN …who implemented a comprehensive 5-year strategic plan called ‘LEAP’ to modernize and re-imagine the bank 2018 2023 POSITIONED TO ‘LEAP’ Baseline Aspiration STRATEGIC PILLARS ASSET MARKET SHARE ASSET MARKET SHARE 8.3% Solidify our Scale up in 10% leadership position

  16. Slide 16: We are clearly focused on delivering strategic outcomes

    STRATEGY | 5-YEAR STRATEGIC PLAN We are clearly focused on delivering strategic outcomes STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder Return on average equity Basic earnings per Dividends per share (DPS) return (TSR) (ROAE) share(EPS) Generate top-q

  17. Slide 17: 2020 saw declines in financial KPIs from an elevated risk cost

    STRATEGY | 2019 PROGRESS | STRATEGIC OUTCOMES Despite strong progress made on strategy implementation, 2020 saw declines in financial KPIs from an elevated risk cost STRATEGIC OUTCOME Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder Return on average equity Basic earnings

  18. Slide 18: Strategic initiatives update

    STRATEGY | UPDATE 26 initiatives completed in 2020, and 51 expected to be finalized from 2021 to 2023; 18 initiatives are on-hold as of December 2020, and will be reopened in 2021 Initiatives 2020 Progress 2021 Direction Completed  Corporate Digital Platform implementation Corporate  Corporate Dig

  19. Slide 19: Financial Performance

    INVESTOR PRESENTATION 4Q/FY 2020 Financial Performance

  20. Slide 20: Balance sheet grew solidly, net income declined on higher impairments

    FINANCIAL PERFORMANCE | HIGHLIGHTS While our balance sheet witnessed solid growth, net income declined on higher impairments BALANCE SHEET Loans & Advances Investments Non Interest Bearing Deposits  High quality loan growth of 3.8% driven by 54% growth in mortgages. 130.6 +3.8% year-on-year 37.7 

  21. Slide 21: Solid balance sheet growth from lending and investments

    FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Solid balance sheet growth from lending and investments Total Assets Movement (SAR Bn)  Growth in total assets of 9% YoY driven by 4% loan growth and strong growth of 20% in investments.  Liabilities grew by 7% during 2020 from increased interbank f

  22. Slide 22: Net income declined 50% year-on-year due to prudent provisioning

    FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income declined 50% year-on-year due to prudent and pro-active provisioning in the current environment Net Income After Zakat & Tax Movement (SAR Mn)  Net income for FY 2020 declined 50% YoY to SAR 1,546mn as 3% income growth was more than off

  23. Slide 23: Good quality loan growth in 2020

    FINANCIAL PERFORMANCE | LOANS AND ADVANCES Good quality loan growth in 2020 Total Loans & Advances (SAR Bn) Commercial Loans Movement (SAR Bn) Loans & Advances Composition (SAR Mn) 130.6 107.8 130,565 Consumer +4% -0% 17.5% Commercial 125.7 134.4 130.6 0.9 82.5% 1.4 1.1 107.9 107.8 17.9 21.6 22.8 -0

  24. Slide 24: Strong growth in investment portfolio from Saudi Government bond holdings

    FINANCIAL PERFORMANCE | INVESTMENTS Strong growth in investment portfolio from increased Saudi Government bond holdings Investments Movement by Type (SAR Bn) Investments Composition by Type  Investments rose 20% during (SAR Mn) 2020 as the bank increased Saudi Government bond 37.7 37,679 holdings.

  25. Slide 25: Strong growth in NIBD deposits

    FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Strong growth in NIBD deposits Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn)  Deposits declined 4% during 2020 as strong growth in NIBDs (+18%) was offset by lower IBDs (-31%). 127.1 127.1  The decrease in IBDs was further aided by f

  26. Slide 26: Modest 1% NII growth as improved funding costs offset lower loan yields

    FINANCIAL PERFORMANCE | NET INTEREST INCOME Modest 1% NII growth as improved funding costs and benefit of hedging mostly offset by lower loan yields Net Interest Income Movement (SAR Mn)  NII grew 1% YoY to SAR 5,240mn in 2020 as a 15% decline in interest income was offset by a 52% improvement in f

  27. Slide 27: Net interest margin: improved mix and funding costs offset by lower rates

    FINANCIAL PERFORMANCE | NET INTEREST MARGIN Improved balance sheet mix and improved funding costs mostly offset by yield pressure from lower rates Net Interest Margin Trend (%) Net Interest Margin Movement (%)  The NIM decreased by 4bps YoY and 2bps QoQ to 3.00%.  The margin was supported by 3.00%

  28. Slide 28: Lower fee income offset by increase in other income

    FINANCIAL PERFORMANCE | NON-INTEREST INCOME Lower banking-related fee income reflective of market conditions, offset by increase in other income from one-off gain  Non-interest income for 2020 improved 8% YoY to SAR 1,804mn from Non-Interest Income Movement (SAR Mn) improved exchange, trading and o

  29. Slide 29: Higher operating expenses due to one-off accrual reversal in 2019

    FINANCIAL PERFORMANCE | OPERATING EXPENSES Higher operating expenses due to one-off accrual reversal in 2019 Operating Expenses Movement (SAR Mn)  Operating expenses increased 3% YoY to SAR 2,364mn in 2020, due to one-off accrual reversal in 2019 of SAR 74mn.  The cost to income ratio increased mo

  30. Slide 30: Rising impairment charge and cost of risk from higher commercial provisions

    FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Rising impairment charge and cost of risk from higher commercial provisions Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 872 872 2.07% 2.5%  +168 bps year-on-year +95% +95% 872 1.91% 751 18 872 2.07% 447 751 1

  31. Slide 31: Rise in NPLs from commercial book; NPL coverage improved

    FINANCIAL PERFORMANCE | CREDIT QUALITY Rise in NPLs from commercial book; NPL ratio increased 14bps YoY and NPL coverage improved 16.1ppts YoY Non Performing Loans & Allowance For Impairment NPL Ratio (%) Commercial NPL Ratio (%) Advances (SAR Bn) (SAR Bn) 3.8 4.7 2.78% 3.2%  +34 bps year-on-year +

  32. Slide 32: Capital ratios improved on Tier 1 Sukuk Issuance

    FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios improved on Tier 1 Sukuk Issuance Total Capital (SAR Bn) RWA (SAR Bn)  Total capital increased by SAR 6.1bn (+18% YoY) during 2020 from Tier 1 Sukuk issuance of SAR 5.0bn, net income generation of SAR 40.4 187.2 1.5bn, increased reserves of SAR

  33. Slide 33: Liquidity remains strong and comfortably within regulatory limits

    FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR Average (%) HQLA (SAR Bn)  LCR declined 125ppts during 2020 due to a decline in HQLA of 2% from balance sheet optimization, but remains comfortable at 199%. 199% 39.5  NSFR improved modestly by

  34. Slide 34: Outlook and Guidance

    INVESTOR PRESENTATION 4Q/FY 2020 Outlook and Guidance

  35. Slide 35: Improved outlook for 2021

    GUIDANCE & OUTLOOK | GUIDANCE Improved outlook for 2021 Previous 2020 Guidance 4Q 2020 Outcome 2021 Guidance  2020 growth of 4% YoY, Loans & Advances SAR Billion below guidance due to early 125.7 130.6 LOANS & repayments. Mid to ADVANCES, NET  Continued mortgage growth High single- digit 130.6 hig

  36. Slide 36: Segmental Performance

    INVESTOR PRESENTATION 4Q/FY 2020 Segmental Performance

  37. Slide 37: Healthy profit growth in Treasury, while Corporate impacted by higher impairments

    SEGMENTAL PERFORMANCE | SUMMARY Healthy profit growth in Treasury, while Corporate impacted by higher impairments Operating Income Movement (SAR Mn) Net Income Before Zakat & Tax Movement (SAR Mn) 7,045 2,010 +3% -44% 6,873 311 68 7,045 3,619 383 20 2,010 (74) (133) (165) (1,846) Operating income Re

  38. Slide 38: Retail: decline in profits driven by lower income and higher costs

    SEGMENTAL PERFORMANCE | RETAIL Decline in profits driven by lower income and higher operating costs Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 337 457 373  -6.7% year-on-year SAR Million -33% -5% 478 473 457 503 78 49 Fee & other incom

  39. Slide 39: Corporate: higher impairments and lower income drive decline

    SEGMENTAL PERFORMANCE | CORPORATE Higher impairments and lower income drive decline in Corporate profitability Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income -104 697 525  -7.3% year-on-year -106% SAR Million -5% 734 716 697 1,742 1 168 14

  40. Slide 40: Treasury: strong profit growth driven by increased income

    SEGMENTAL PERFORMANCE | TREASURY Strong profit growth driven by increased income Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,644 507 372  +20.2% year-on-year SAR Million +30% +22% 474 507 179 63 9 1,644 415 1,261 132 Fee & other incom

  41. Slide 41: Investment Banking and Brokerage: profitability improvement

    SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Profitability improvement from higher brokerage & asset management income Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) 133 116 +17% +49% 116 82 88 78 133 113 105 +32% (43) 63 77 QoQ (5) (13) 15 11 11 N

  42. Slide 42: Performance Track Record

    INVESTOR PRESENTATION 4Q/FY 2020 Performance Track Record

  43. Slide 43: Balance Sheet Metrics

    PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 130.6 194.1 127.1 21.56% +1% -1% -5% 21.56% 19.39% 19.77% 19.20% 129.5 125.7 130.6 203.4 192.9 190.3 194.1 158.5 151.0 148.4 121.9 120.6 178.1 132.8 17.78% 127.1 20.6%

  44. Slide 44: Income Statement Metrics

    PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 7,045 3.00% 33.6% 2.07% +2% 2.07% 3.04% 3.00% 2.85% 36.3% 6,400 6,576 6,799 6,873 7,045 2.50% 33.6% 33.7% 33.3% 33.6% 2.38% 0.72% 0.79% 0.59% +3% 0.38% YoY 20

  45. Slide 45: Disclaimer

    INVESTOR PRESENTATION 4Q/FY 2020 Disclaimer This presentation is being provided to you for general information purposes. The information contained in the presentation has been obtained from sources believed by Banque Saudi Fransi (“BSF") to be up to date, correct and reliable, but BSF does not make

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