Saudi National Bank · TADAWUL:1180
Saudi National Bank — The National Commercial Bank — Q2 2019 Earnings Presentation
60 slides from Saudi National Bank's earnings presentation, 2019
Slide 1: Investor Presentation 2Q 2019 Results
The National Commercial Bank Investor — Presentation 20 2019 Results,
Slide 2: Investor Presentation contents
Investor== Page Presentauio 3 NCB - The leading KSA Bank Page 28 Financial Results Highlights Page 36 Additional Information Page 1 Grow with KSA Grow with NCB Page o Financial Results Details Page ifs) Strategt Overvie J WwW Page 49 Segmental Overview NCB wal ad
Slide 3: The Leading KSA Bank
The Leading 4 KSA Bank | | 20 2019 Results = | Las
Slide 4: NCB overview and vision
NCB‘generated: SAR 1075n of Net ft and ineoine. tax,-the -highes® irmits historg-a “thehighest amojig Saudi banks for_bhe sixth 2 NCB Investor Relations | 2Q 2019 Investor Presentation VIEW NCB's vision is to be the premier financial services group in the region. To achieve this, five strategic aspi
Slide 5: NCB is the leading banking group in Saudi Arabia
NCB is the leading banking group in Saudi Arabia NCB Snapshot (2Q 2019) 7m 12,749 Clients Employees* International Established in 1953; IPO in 2014 479bn Assets 167bn Market Cap 327bn Deposits Wholesale branches in Bahrain & Singapore | Offices in Seoul & Shanghai | Capital Markets Subsidiary in Tur
Slide 6: NCB has a well-diversified business model
NCB has a well-diversified business model Total operating income contribution TREASURY SAR 16.7bn 88% CORPORATE NCB International (TFKB) ___ Capital Markets (NCBC) RETAIL NCB Investor Relations | 2Q 2019 Investor Presentation 6 N CB vl YY
Slide 7: NCB has a strong market and financial position
NCB is the leading banking group in Saudi Arabia | NCB has a strong market and financial position (FY 2018) Market Position Financial Position Overall banking Assets #1 Assets #1 #4 Corporate banking Financing #1 Financing #1 #4 Retail banking Financing #2 Deposits #1 #3 Treasury Investments #1 Inve
Slide 8: NCB Group listed on Tadawul in November 2014
NCB Group listed on Tadawul in November 2014 Ranked third in Tadawul, S&P Pan Arab and MSCI Indices with significant weightings MSCI Saudi Arabia Index Weighting (%) Closing Price (SAR) 55.60 52 week range (SAR) 38-64 Saudi Basic Industries Corporation 22.84 1462 Shee ed {mn} 3000 Al Rajhi Banking &
Slide 9: Grow with KSA, Grow with NCB
Grow with KSA Grow with NCB 2Q 2019 Results
Slide 10: Record Saudi Budget in 2019
Record Saudi Budget in 2019 Oil Production 1.044 972 Government Revenue (SARbn) Fiscal expansionary policy to underpin economic growth Government Expenditure (SARbn) 1.110 1.106 1.079 895 . 978 930 830 2014 2015 2016 2017 2018 2019F 2014 2015 2016 2017 2018 2019F 2014 2015 2016 2017 2018 2019F Se Pr
Slide 11: Economic growth momentum continues
Economic growth momentum continues Real GDP 37% 41% Zs 0.1% 2014 2015 2016 2017 2018 2019F mmm Oil Sector mms Non-oil Private mmm [mport Duties —o—Real GDP Monetary Supply growth Twin Balances (%) Non-Oil GDP pickup expected, supported by progress of ongoing Government Vision Realization Programs Re
Slide 12: Saudi banking sector growth capacity
Saudi banking sector growth Lending capacity enables KSA banks to capture capacity opportunities as fiscal policy offsets monetary drag from rising interest rates Bank Lending (SARbn) Bank Deposits (SARbn) 116% 8.9% 29% 28% 3.1% 12.4% 10% 1400 1387 1426 aa 1576 \1605 16171619 16611629 2014 2015 2016
Slide 13: Saudi banking sector resilience
Saudi banking sector Strong capitalization, high credit quality, adequate resilience coverage and a prudent regulatory environment expected to sustain banking sector profitability NPL & Coverage Ratios (%) Tier 1 Capital Adequacy Ratio (%) 183% 178% 172% 245% 121% 145% 16.2% 16.2% 124% 112% 113% ° —
Slide 14: Saudi Arabia population data
*Data As of 2018, Total Population: 20,768,627 • • • •
Slide 15: Vision 2030 Financial Sector Development Program
Vision 2030 Financial Sector Development Program (FSDP} VISION G_J9J Vision 2030 Objectives Directly Related to the FSDP Enabling financial institutions to support private sector growth Developing an advanced capital market Promoting and enabling financial planning NCB Investor Relations | 2Q 2019 I
Slide 16: Vision 2030 and the National Agenda
Vision 2030 Saudi Arabia continues to drive economic growth through it’s comprehensive Vision 2030 program and NCB is fully committed to the success of The National Agenda An Ambitiot National Transformation Program Fiscal Balance Program PIF Program Financial Sector Development Program Privatizatio
Slide 17: Strategy
Strategy
Slide 18: NCB's 2019 Strategy Framework
NCB's 2019 Strategy Framework _. ; | Sustaining Leadership Expand Retail Market Consolidate Corporate Sustain Treasury Grow Value contribution Share Leadership Revenues & Diversify of Capital Markets & Funding International Subsidiaries Current accounts Vision 2030 Targeted Sectors Investment return
Slide 19: Lean distribution
Lean distribution We will continue to expand with lean distribution in Saudi Arabia by adopting a smaller branch format and implementing extensive digitization Strategic Focus Areas * Continue to expand the network in strategic locations to acquire new customers and expand market share + Expand with
Slide 20: Digitization
Digitization $ Continue to migrate to digital, drive up digital sales and improve = operational excellence to deliver superior customer experiences Strategic Focus Areas 1H 2019 Update * Mobile first - anytime, anywhere * 2Million active customers with 55% active digital user + Leverage advanced dat
Slide 21: Retail Banking
Retail Banking C a we . . We are positioning the retail business to expand market share Strategic Focus Areas 1H 2019 Update * Grow core deposits * Retail Financing up 6% YTD at SAR 110bn * Grow Lending Market Share; focus on mortgages and Credit Card * 21% Mortgage growth YTD at SAR 29bn * Expand b
Slide 22: Corporate Banking
Corporate Banking fen Grow selectively and increase risk-adjusted returns Strategic Focus Areas 1H 2019 Update * Grow lending in V2030 targeted sectors * Corporate Financing up 3% YTD at SAR 135bn * Increase cross sell focus to capture full value of relationships * Corporate Cost of Risk improved to
Slide 23: Treasury
Treasury Strategic Focus Areas Broaden and deepen liquidity access while sustaining revenues 5 1H 2019 Update + Increase recurring revenues * Treasury Commission income +17% YoY + Optimize investment portfolio to enhance quality, liquidity and returns * Treasury NOR +1% YoY + Launch continental hubs
Slide 24: Capital Markets
Capital Markets Jtwls Wail KSA‘s leading investment bank and asset NCB Capital manager; well positioned to capture future growth Strategic Focus Areas 1H 2019 Update * Sustain and grow market leadership through product innovation * Continued focus on recurring revenues with a 6% YTD * Grow recurring
Slide 25: International
International Strategic Focus Areas Turkiye os Finans © « Resume branch expansion, expand digital channels + Sustainable, healthy and lucrative asset growth * Strengthen underwriting and collection performance + Increase automation and drive capacity optimization + Instill NCB's principles (Customer
Slide 26: Results Highlights 2Q 2019
mlatelalete) Results Highlights 20.2019 RestitGamy 7 ‘ FE rane
Slide 27: Financial Results 2Q 2019 Update
Financial Results 42019 Resul Update esults Net Income after Zakat and Income Tax attributed To Equity = 15% net income after Zakat growth Holders (SARbn) 024 0330.08 010 546 = 3% NSCI growth 477 oes i me mm Income ~ (0.05) = 13% increase in fee and other income | : Statement = 2% lower operating ex
Slide 28: Income Statement
Income Statement — Higher 2Q 2019 net income derived from higher operating income and lower Zakat and Tax Profitability Trends SAR (mn) 20 2019 10 2019 2a2oie YON % 1H 2019 tH2018 YOY % change change Net special commission income 3.669 3,562 3,573 43% 7.231 6.992 43% Fee and other income : : 1386 13
Slide 29: Balance Sheet
Balance Sheet 6% YTD increase in total assets on the back of growth in Financing and Investments Balance Sheet SAR (mn) za2019 = 102019» 202018. | YY % ey agg = YTD % change change Cash & Banks 45,621 45,728 53,861 -15% 48,479 -6% Investments, net 126.630 123,419 114,978 +10% 118.090 +7% Financing a
Slide 30: Segmental Information (1/3)
Segmental Information (1/3) 2Q 2019 Total net income before Zakat and Tax growth in all segments, except International which was impacted by lower TRL / SAR FX rate. 1H 19 Net Income Before Zakat & Income Tax Movement 2Q 19 Net Income Before Zakat & Income Tax Movement (SARmn) (SARMA) gy 67 98 v 6.2
Slide 31: Segmental Information (2/3)
Segmental Information (2/3) 2Q 2019 Total operating income growth mainly from Retail, Treasury and Capital market segments. 1H 19 Total Operating Income Movement (SARmn) 2Q 19 Total Operating Income Movement (SARmn) 25 164 40 698 13 10008 Oo 282 a O t 62 on —U (88) 9.440 4661 [| (29) 1H 18 Retail Co
Slide 32: Segmental Information (3/3)
Segmental Information (3/3) Total Assets (SARbn) 2Q 2019 total assets growth in all segments, except International which was impacted by FX rate Financing and Advances, net (SARbn) +6% 144% i 479 269 276 2 2 2 2 12 165 138 mRetaill 4018 1019 2019 40.18 1019 2019 mCorporate m Consumer and credit card
Slide 33: Outlook
Outlook 2019 Macroeconomic Outlook = Average Arabian light oil price of USD 65 per barrel = 1-2 25bps US Fed rate cuts in 2019 (revised from two 25bps rate hikes} = 2019's expansionary fiscal policy is expected to underpin GDP and Credit growth KSA 2019 Budget Projections = Real GDP growth is estima
Slide 34: Financial Results Details
. ancial - Results Details sean a
Slide 35: Operating Income
Operating Income Highlights Higher 2Q 2019 total operating income driven by net special commission income, fees and other income Total Operating Income Management Commentary (SARbn) + 1H 2019 Total operating income increased 6% YoY from a 3% 7 46% 5 improvement in net special commission income and h
Slide 36: Net special commission income trends
Net special commission income trends Management Commentary 2Q 2019 net special commission income grew by 3% YoY, despite 28% increase in special commission expenses Net Special Commission Income * 1H 2019 NSCI improved by 3% on higher — sap (mn) 202019 102019 202018 1°" * aH209 tH 2018 10Y SCI (+11%
Slide 37: Fee and other income trends
Fee and other income 2Q 2019 fess and other income grew by 27% YoY due to higher fee and investment trends Income Fees from Banking services Management Commentary , YoY % YoY % SAR (mn) 20.2019 102019 20 2018 denen 1H2019 1H 2018 aonan 1H 2019 Fee and other income increased by 13% YoY : : : 1 due to
Slide 38: Expense highlights
Expense highlights Digitization, productivity enhancement and optimization delivered further expense savings in 2Q 2019 Operating Expenses (SARmn) Management Commentary + 1H 2019 Expenses declined by 2% YoY. * 1H 2019 cost to income ratio was 32.86%, lower by 280bps compared to 1H 2018. * The cost b
Slide 39: Asset highlights and composition
Asset highlights and composition 6% growth in balance sheet as a result of increase in financing and investments. Total Assets (SARbn) | 46% | Management Commentary * Total assets increased 6% due to increase in financing and investments. * 4% financing increase driven by 5% increase in domestic fin
Slide 40: Financing and advances
Financing and advances Financing growth driven by Consumer and Other segments Financing and Advances, net (SARbn) 4d | Management Commentary + Domestically, financing grew for the Consumer (+6%), Corporate 269 276 (+3%] and other segment (+22%) from 4Q 2018. 2 12 * Growth in Corporate segment comes
Slide 41: Financing and advances credit quality
Financing and advances credit quality NPL (SARbn) 20 18 30 18 40 18 ‘mCorporate Consumer and credit card international wOthers Impairment Allowance (SARbn) 779 1019 2019 20 18 30 18 40 18 Corporate Consumer and credit card Olnternational mOthers NCB Investor Relations | 2Q 2019 Investor Presentation
Slide 42: Financing and advances credit quality (Continued)
Financing and | Stable NPL ratio and higher NPL coverage maintained advances credit quality (Continued) NPL Ratios (%) NPL Coverage Ratios (%] % 55% 51% , 55% 5.2% 185% 157% 164% 164% Own. --O--2 161% 154% OTT TTT Onn r nO 17% 18% 19% 18% 18% 142% 145% 145% fox Oe eerie) eo O- 5 9 16% 16% 15% %, 96%
Slide 43: Domestic financing and advances credit quality
Domestic financing Corporate NPL ratio have improved while consumer and credit card NPL ratio and advances credit | paintained quality NPL Ratios (%) NPL Coverage Ratios (%] 25% 25% p 8s 20% 24% 23% ; 305% oe —O 288% 279% 264% 257% o 7 4 ° 164% 5 05% 05% 06% 05% 0.6% oO 136% 141% 142% O —o—Corporate
Slide 44: Investments trends and composition
Investments trends and composition Investments increased 7% and quality remains strong; ~89% of the investment portfolio remains Saudi Government and investment grade Investments (SARbn) £ 47% } 118 123 127 Bo | a | | | 40 18 1019 2019 Equity instruments, Mutual Funds, Hedge Funds and Others Floatin
Slide 45: Liabilities trends and composition
Liabilities trends and composition Total Liabilities (SARbn) Higher total liability base from bank placements and customers’ deposits * Management Commentary * 6 % increase in total liabilities mainly from Due to Bank as a result of the change in funding mix and other labilities. * CASA balances acc
Slide 46: Liquidity
Liquidity | NCB maintained a strong liquidity profile HQLA and Average Liquidity Coverage (SARbn/%) 219% 176.0% 183.9% 184.4% 185.5% O 99 98 97 98 92 20 18 30 18 40 18 1019 2019 mmm High quality liquid assets (HOLA) —O=Liquidity coverage ratio (LCR) Financing to Customer Deposit Ratio (%) Management
Slide 47: Capital
Capital Capital position comfortably above regulatory minima Capitalisation (SARbn) Pillar | Risk Weighted Assets (SARbn) Capital Ratios (%) 3% mm 204% 203% gy gy 20.6% 74 72 72 360 75885 Be me, wT wn 8 3 3 13 18.2% 181% 17g Or 162% 162% se gy 184% be 166% 165% 16.0% 40 18 1019 2019 40 18 1019 20:19
Slide 48: Segmental Review 2Q 2019 Results
Segmental Review 2Q 2019 Results mat —
Slide 49: NCB Bank (standalone)
NCB Bank (standalone) Strong 23% 2Q 2019 net income before Zakat growth resulting from operating income growth and lower zakat Financing and Advances, net (SARbn) ost 59 en 244 248 256 40 18 1019 2019 Customers’ Deposits (SARbn) +2% 299 288 304 40 18 1019 2019 NCB Investor Relations | 2Q 2019 Invest
Slide 50: Retail Banking
Retail Banking Higher 2Q 2019 net income before Zakat from higher operating Income Financing & Advances, net (SARbn) Summary Financial Performance 20 YoY % YoY % SAR (mn) 20 2019 1020192018 change 1H 2019 1H 2018 change ns nse ne: Total assets 140,831 137774 131531 +7% 140.831 131531 47% 104 106 110
Slide 51: Corporate Banking
Corporate Banking 2Q 2019 growth in net income before Zakat from lower impairment charge Financing & Advances, net (SARbn) 131 130 135 40 18 1019 2019 Customers’ Deposits (SARbn) : 58 48 48 | 40 18 1019 2019 NCB Investor Relations | 2Q 2019 Investor Presentation Summary Financial Performance SAR (mn
Slide 52: Treasury
Treasury Higher 2Q 2019 net income before Zakat driven by higher operating income and lower impairment Investments, net (SARbn) Summary Financial Performance YoY % YoY % 47% SAR (mn) 2Q 2019 1Q 2019 2Q 2018 change 1H 2019 1H 2018 change Total assets 165.266 159.027 153558 +8% 165.266 153558 +8% 118
Slide 53: Capital Markets NCB Capital
JtinlS wail Capital Markets NCB Capital Higher 2Q 2019 net income growth, driven by higher operating income and lower operating expenses Assets Under Management (SARbn) Summary Financial Performance , YoY % YoY % | 466% | SAR (mn) 202019 102019 20.2018 yrngg — TH2019.— TH 2018 ana 144 151 152 Client
Slide 54: International (foreign currency)
% in foreign currency +1% +5% 30.1 4Q 18 2Q 19 2Q 19 Reported Underlying Reported +23% +31% 34.0 • 2Q 19 2Q 19 Underlying Reported • •
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Slide 56: NCB has a strong financial position
NCB has a strong financial position Key KPIs Total Assets (SARbn) Total Equity (SARbn) 41% - +9% 435 449 443 445 453 56 60 64 66 47 2014 2015 2016 2017 2018 2014 2015 2016 207 2018 CAGR CAGR Capital Ratios (%) Liquidity Ratios (%) s00% 20.6% 1725% 73% — 1760% Be, w29%_o-——0-_—o 7.2% 17.2% 78.1% 80.3
Slide 57: NCB has a strong performance track record
NCB has a strong performance track record Key KPIs Total Operating Income (SARbn) Net Income Attributed To Equity Holders (SARbn) +4% 43% 18.3 18.9 87 91 93 98 96 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Net special commission income Fee and other income CAGR CAGR Net Special Commission Mar
Slide 58: Additional Information
Additional Information 2Q 2019 Results
Slide 59: Additional Information
Additional Information NCB welcomes your feedback and inquiries Contact Us More information National Commercial Bank Visit: http://wwwalahliicom/en-us/Investor Relation P.O. Box 3555 21481 Jeddah, Kingdom of Saudi Arabia to access NCB’s current and previous Investor Publications including: Financial
Slide 60: Disclaimer
Disclaimer The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background information about the activities of NCB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by NC
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