Al Rajhi Bank · TADAWUL:1120
Al Rajhi Bank — Debt Investor Presentation (March 2023)
40 slides from Al Rajhi Bank's debt investor presentation, March 2023
Slide 1: Al Rajhi Bank Investor Presentation
Al Rajhi Bank Investor Presentation Senior Unsecured Sustainable Sukuk March 2023 March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 2: Disclaimer
Disclaimer You must read the following before continuing. The following applies to this document, any oral presentations of the information in this document by Al Rajhi Banking and Investment Corporation (the “Company”) or any person on behalf of the Company, and any question and answer session that
Slide 3: Investor Presentation
Investor Presentation 05 Executive Summary 09 Al Rajhi Bank Overview 15 KSA’s Macroeconomic Environment 18 Financial Update 25 ESG Framework 31 Transaction Overview 34 Appendix A March 2023 Senior Unsecured Sustainable Sukuk Presentation 3
Slide 4: Executive Summary
Executive Summary March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 5: Transaction Summary and Issuance Rationale
Executive Summary | Transaction Summary and Issuance Rationale Senior Unsecured Sustainable Sukuk Issuance Regulation S Only USD – Denominated Transaction Summary Benchmark Size Fixed rate Proceeds to be applied to finance and/or refinance, in whole or in part, eligible Sustainable proje
Slide 6: The Unique Al Rajhi Bank Story (1/2)
Investment Highlights | The Unique Al Rajhi Bank Story (1/2) 1 World’s Largest Islamic Bank Al Rajhi Bank is the largest Islamic bank in the world by total assets and market capitalisation. It also ranks #161 among global banks, by market capitalisation 2 Dominant Islamic and Domestic Retail Franchi
Slide 7: The Unique Al Rajhi Bank Story (2/2)
Investment Highlights | The Unique Al Rajhi Bank Story (2/2) 5 Solid capital position Tier 1 ratio and Total capital ratio at 20.3%1 and 21.4%1 respectively, comfortably above the local regulatory requirement (11.0% Pillar I CAR) 6 Resilient Asset Quality supported by exceptional Performance of Reta
Slide 8: Al Rajhi Bank Overview
Al Rajhi Bank Overview March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 9: Key Highlights as of FY 22
Al Rajhi Bank | Key Highlights as of FY 22 Al Rajhi Bank at a Glance Presence & Branches Market Shares Customers Jordan Kuwait Corporate Personal 516 4,727 11.9% 44.3% 100% 64% 10 2 Loans Loans Branches ATMs Islamic Products Non-profit Bearing 13.3 and Services Deposits million Demand 25.2% 42.9% Mo
Slide 10: Credit Ratings & Agency Views
Credit Ratings & Agency Views S&P Fitch Moody’s Long term BBB+ A- A1 Short term A-2 F-2 P-1 Outlook Positive Stable Stable ‘ARB is likely to continue outperforming the ‘ARB is the second-largest bank in Saudi Arabia ‘Dominant Islamic retail franchise, which drives market in terms of profitabil
Slide 11: Building the Bank of the Future: Strategy Implementation
We are building the “Bank of the Future” | Strong Focus on Implementing our Strategy 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 Become Leading Fi
Slide 12: Good progress made on strategy implementation
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 13: ESG Highlights | FY 2022
ESG Highlights | FY 2022 Renovation USD 1.2bn 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 M
Slide 14: KSA's Macroeconomic Environment
KSA’s Macroeconomic Environment March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 15: KSA Economic Outlook
KSA Economic Outlook | Economic conditions remain positive for the Kingdom Highlights GDP Growth/Brent Oil Price 99.0 — GDP grew by 8.7% in 2022 driven by higher oil prices and recovery 83.1 100.0 77.6 7.2 70.9 in non-oil activities 64.4 80.0 5.2 8.7 41.7 60.0 3.2 — IMF revised down Saudi’s GDP grow
Slide 16: Banking Sector Highlights
Banking Sector Highlights | Banking system loans growth was broad based Recent Developments SAMA LDR (%) & Bank Loans and Deposits (SARmn) 79.5% 81.5% 77.4% 77.1% 75.0% — Strong loan growth in the banking system during 2022 despite the slower 80.0% 2,349 2,295 2,600 deposits growth 2,400 70.0% 2,059
Slide 17: Financial Update
Financial Update March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 18: Strong set of results in 2022
ARB had a strong set of results in 2022 | Results are in line with or ahead of expectations 25.5% Growth in financing driven by all lines 19.0% Growth in liabilities LDR below regulatory minima of business 22% YoY Balance Net Financing Total Liabilities Loan to Deposit Ratio Sheet Growth 452.8bn +25
Slide 19: Financing growth driven by all lines of business
Financing | Financing growth driven by all lines of business Financing, Net (SARbn) FY 22 – Financing, Net FY 22 – Retail Financing Mix By Segment (SARbn) Mix By Segment (SARbn) +25.5% Corporate Auto loans SME SAR 111bn Mortgage SAR 19bn 557.5 568.3 SAR 26bn 23.3 25.5 20% SAR 222bn 4% 452.8 1.1 1.5
Slide 20: Funding | Stable funding mix
Funding | Balance sheet shows relatively stable funding mix Total Liabilities (SARbn) 4Q 22 - Total Customers' Deposits 4Q 22 - Total Liabilities Mix By Type (SARbn) Mix By Segment (SARbn) +19.0% Customers’ Time Other Customer Treasury 654.5 662.1 Investments Accounts SAR 89bn 556.4 26.9 26.4 SAR 20
Slide 21: Profitability
Profitability | High profitability maintained despite rising cost of funds and decreasing net profit margin Total Operating Income (SARmn) Cost of Funds (%)1 +6.0% 0.97% 0.50% 0.68% 0.22% 0.39% 7,206 7,264 7,148 6,957 6,855 Net Profit Margin (%)2 4.21% 3.80% 3.76% 3.66% 3.55% 4Q 21 1Q 22 2Q 22 3Q 22
Slide 22: Asset Quality
Asset Quality | Asset quality remains healthy with strong NPL coverage Cost of Risk(%)1 Movement in NPL (SARmn) 3,500 3,000 +2.5% 2,500 396 3,010 3,085 2,000 0.60% 0.48% (322) 0.47% 1,500 0.43% 0.39% 1,000 500 0 FY 21 1Q 22 1H 22 9M 22 FY 22 4Q 21 Retail Non-Retail 4Q 22 NPL Ratio(%)2 NPL Coverage R
Slide 23: Capitalization, Liquidity & Investments
Capitalization, Liquidity & Investments | Capital and liquidity positions healthy and efficient to continue to support financing growth RWA (SARbn) LCR (%) +17.0% 124.2% 125.8% 121.0% 121.0% 121.2% 479.2 498.0 425.6 42.3 37.8 37.8 1.1 1.6 2.4 NSFR (%) 440.3 454.0 113.9% 110.0% 109.7% 110.0% 110.0% 3
Slide 24: ESG Framework
ESG Framework March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 25: Al Rajhi Bank's Sustainability Approach
Al Rajhi Bank’s Sustainability Approach • Al Rajhi’s ESG approach is led by its fundamental focus as a Sustainable provider of Shariah-led Islamic finance, which has social ESG Pillars Development Goals The Bank’s Contribution responsibility at its core. Environment SDG 7 – Affordable and clean • Ma
Slide 26: Sustainability Approach in Action
Al Rajhi Bank’s Sustainability Approach in Action Driving Social Empowerment Supporting the Energy Transition Kafalah Program participant: Al Rajhi works closely with the Renewable Energy Project Development Office (REDPO) and National Renewable Energy Program (NREP) • Established by the Ministry of
Slide 27: Sustainable Finance Framework
Al Rajhi Bank’s Sustainable Finance Framework ARB’s Sustainable Financing Framework is aligned with the International Capital Market Association (ICMA) Green Bond Principles (GBP) 2021, Social Bond Principles (SBP) 2021, and Sustainability Bond Guidelines (SBG) 2021 and Loan Market Association (LMA)
Slide 28: Use of Proceeds Summary
Use of Proceeds Summary Green Project Categories Social Project Categories Production, transmission and storage of energy from Solar (PV and CSP, min. 85% Employment Target solar), Wind, Biofuels (waste sources e.g. used cooking oil), Biomass (Sustainable Loans to Micro, Small generation, and Popula
Slide 29: S&P Global Ratings Second Party Opinion
S&P Global Ratings Second Party Opinion Al Rajhi Bank has appointed S&P Global Ratings to assess this Sustainable Finance Framework and its alignment with the GBPs, SBPs, SBGs, GLPs and SLPs and issue a Second Party Opinion accordingly. Project Evaluation & Use of Proceeds Management of Proceeds Rep
Slide 30: Transaction Overview
Transaction Overview March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 31: Summary Terms & Conditions
Summary Terms & Conditions | Senior Unsecured Sustainable Sukuk Key Terms Description Obligor Al Rajhi Banking and Investment Corporation Issuer / Trustee Al Rajhi Sukuk Limited Sukuk Structure Wakala Murabaha Currency / Issue Size USD Benchmark Status Senior Unsecured Obligor Rating BBB
Slide 32: Sukuk Structure | Wakala Murabaha
Sukuk Structure | Wakala Murabaha Service Agency Agreement Purchase Undertaking / Master Purchase Agreement Sale Undertaking Bank Bank Bank (as Seller) (as Service Agent) (as Purchaser) Purchase Incentive Exercise Price Fee Price Initial Management Wakala Asset of Wakala Assets Portfolio Portfolio D
Slide 33: Appendix A
Appendix A March 2023 Senior Unsecured Sustainable Sukuk Presentation
Slide 34: Financial Summary | Balance Sheet trends
Financial Summary | Balance Sheet trends Balance Sheet (SARmn) 4Q 22 4Q 21 FY 22 FY 21 FY 20 FY 19 Cash & Balances 42,052 40,363 42,052 40,363 47,362 39,294 Investments, net 102,146 84,433 102,146 84,433 60,285 46,842 Financing and advances, net 568,338 452,831 568,338 452,831 315,712 249,682 Other
Slide 35: Financial Summary | Income Statement trends
Financial Summary | Income Statement trends Income Statement (SARmn) 4Q 22 4Q 21 FY 22 FY 21 FY 20 FY 19 Net financing and investment income 5,579 5,355 22,173 20,392 16,913 16,428 Fee from banking services, net 1,179 1,114 4,624 3,933 2,660 1,987 Exchange Income, net 298 218 1,162 788 784 774 Other
Slide 36: Peer Comparison | 1/4
Peer Comparison | 1/4 KSA Peers GCC Peers Market Capitalisation (SARbn) 294 202 147 156 134 90 77 97 59 44 36 25 2022 Total Assets (SARbn) 1,133 1,225 945 762 360 453 445 314 200 189 172 173 2022 Capital Adequacy Ratio 21.4 % 21.1 % 19.9 % 19.8 % 1.2% 19.9 % 20.3 % 19.0 % 19.6 % 0.8% 1.1% 0.7% 3.0%
Slide 37: Peer Comparison | 2/4
Peer Comparison | 2/4 KSA Peers GCC Peers 2022 Net Financing and Advances (SARbn) 832 568 545 469 242 231 257 183 146 123 121 110 2022 Deposits (SARbn) 867 715 565 568 240 214 275 247 145 126 141 100 2022 Loan–to-Deposit Ratio1 85.9% under SAMA calculation 121.1% 100.6% 96.0% 101.0% 100.9% 95.9% 104
Slide 38: Peer Comparison | 3/4
Peer Comparison | 3/4 KSA Peers GCC Peers 2022 Net Profit Margin1 3.55% 3.50% 3.50% 3.87% 3.30% 3.05% 3.43% 2.84% 2.71% 2.30% 2.24% 1.48% 2022 RoE2 22.7 % 19.8 % 16.2 % 17.4 % 12.4 % 14.4 % 13.7 % 12.6 % 13.6 % 9.1 % 9.4 % 5.6 % 20223 Share of Current and Savings Account Deposits on Total Deposits 7
Slide 39: Peer Comparison | 4/4
Peer Comparison | 4/4 KSA Peers GCC Peers NPL Ratio (2022)1 & NPL Coverage Ratio 260% 127% 112% 140% 136% 98% 99% 327% 267% 95% 85% 46% 7.7% 6.0% 3.9% 2.3% 2.9% 1.6% 1.7% 1.9% 1.4% 1.4% 1.5% 0.5% xx % NPL Coverage (2022), %2 Cost Of Risk (2022) 1.35% 1.08% 0.87% 0.92% 0.62% 0.64% 0.39% 0.46% 0.33% 0
Slide 40: Additional Information | Contact investor relations
Additional Information | Contact investor relations for more information Rayan Alshuaibi Head of Investor Relations +966 (11) 828 1972 alshuaibirs@alrajhibank.com.sa Abdulrahman Alyami Assistant Manager Investor Relations +966 (11) 828 3586 AlyamiAH@alrajhibank.com.sa Visit our website (here) for mo
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