Al Rajhi Bank Investor Presentation

Transcription

1 Al Rajhi Bank Investor Presentation 2Q 218 Results The Blue Chip Islamic Bank Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank

2 Table of Contents 1... The World's Leading Islamic Bank Q 218 Financial Results Overview Islamic Banking, Everywhere 4 Key... Messages Al Rajhi Bank Track Record 5 Net... Income Trends 27 The... Blue Chip Islamic Bank 6 Progress... Against Guidance 28 Top... 1 Facts 9 Operating... Income 29 Market... Shares 1 Expenses Al... Rajhi Bank Market Performance 12 Assets,... Financing & Asset Quality 32 Awards,... Values and Social Responsibility 14 Funding... & Liquidity 35 Capitalisation Al Rajhi Bank Strategy Operating Results 38 Vision Strategy... Overview - ABCDE 19 5 Appendix Additional... Information & Disclaimer 46 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 2

3 Al Rajhi Bank The World's Leading Islamic Bank The Blue Chip Islamic Bank Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 3

4 Al Rajhi Bank Islamic Banking, Everywhere At a glance Presence & Branches 1% 94% Banking 95% 44/1/ Islamic Transactions in KSA 9+m ::47 51 NPB Deposits % of Total Deposits Digital:Manual : Ratio Customers 9+ million Jordan 1 Kuwait 552 Saudi Arabia 18 Malaysia Branches 76,244 POS 4,884 ATMs 234 Remittance Centers Largest network in Saudi Arabia FY217 Strategic Highlights FY217 Financial Highlights Transactions/mth 7+M 137 million Digital Customers M million Training Days 65 thousand Volunteering Hrs K thousand Group Group Net Income Retail Net Income p +12% p +13% Retail Banking 9% Transformation Projects Completed Delivered enhanced mobile and desktop functionality Strong increase in overall employee engagement 4% Financing Growth 23.3% CAR.2% Cost of Funds Corporate Corporate Banking Net Income p +97% Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 4

5 % 1 7. % 1 6.% 1 5. % 1 4.% 1 3. % 1 2.% 1.% 8. % 6. % 4. % 2.%. % -2.% 7.% 6. % 5.% 4. % 3.% 2.% 1.%. % Al Rajhi Bank's Track Record Extremely resilient performance against economic and banking sector headwinds Weathering the oil price decline ARB continued to finance in a tough economic climate % 16.7% 17.2% 9.8% 7.% % 2.2% 3.8% Brent Crude (USD/ bbl) RAJHI ROE (%) Source: EIA, RAJHI Financials Commentary Following the protracted low-oil-price environment between 214 and 217, the banking sector witnessed declining advances and deposits Saudi Arabia's real GDP contracted.7 % in 217 compared with a rise of 1.7 % the previous year In July 218, the IMF raised its estimate for Saudi Arabia s GDP in 218E to 1.9 %, in light of higher oil prices, renewed fiscal stimulus and strong global demand -.9% FY 15 FY 16 FY 17 Sector Loan Growth (incl. RAJHI) RAJHI Loan Growth...and was able to generate strong deposit growth 1.9%.7% Source: SAMA; RAJHI Financials.8% 5.7%.1% FY 15 FY 16 FY 17 Sector Deposit Growth (incl. RAJHI).2% RAJHI Deposit Growth Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 5

6 % 7 % 6% 5% 4% 3 % 2% 1 % % 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) RAJHI KFH DIB QIB ADIB Q 218 Source: Bank Financial Statements, FY 217 Source: Tadawul Low Volatility (9D) Low Bid / Ask Spread (bps) High Stock Turnover Velocity (%) % % /12/17 31/1/18 28/2/18 31/3/18 3/4/18 31/5/18 3/6/18 31/12/17 31/1/18 28/2/18 31/3/18 3/4/18 31/5/18 3/6/18 Source: Bloomberg Source: Bloomberg Source: Tadawul Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 45%

7 Al Rajhi Bank, The Blue Chip Islamic Bank Robust balance sheet with 95% non-profit-bearing deposits Total Assets (SARbn) Capital Ratios (%) % % 19.7% 22.% 2.9% 23.3% 22.2% 22.3% 21.2% Q Q 18 T1 ratio TC ratio Total Liabilities (SARbn) % Total Liabilities Mix By Type (SARbn) 296 Other SAR 11bn Deposits SAR 28bn Q 18 Banks SAR 4bn Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 7

8 Al Rajhi Bank, The Blue Chip Islamic Bank Outstanding foundation and strong returns ROE (%) ROA (%) +59bps +54bps +177bps 16.11% 16.7% 17.24% 19.1% 2.29% +2bps 2.49% +19bps 2.68% +18bps 2.86% H H 18 Net Profit Margin (%) Cost Of Funds (%) 3.61% +28bps +19bps +13bps 3.89% 4.8% 4.21% +8bps +bps.19%.2% -3bps.17%.11% H H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 8

9 Top 1 Facts about Al Rajhi Bank 1 Largest Islamic Bank worldwide (by Assets & Market Cap) 61 #1 Bank in KSA (by number of customers) 2 #1 Retail Bank in Middle East (Retail Deposits & Income) 27 #1 Distribution network in Middle East (by # of Branches, POS, ATMs, Remittance Centers) 3 One of the highest NPB deposit ratios (95%) 83 #1 Banking transactions in KSA (4 of 1 transactions in KSA; 7mn per month) 4 #1 Bank capitalisation in GCC (22.3% Total Capital ratio) 94 #1 Bank for remittances in Middle East (by payment value) 5 #1 Brokerage in KSA (2.5% market share at 1H 218 ) 1 5 #1 Bank brand in KSA (Brand Power Score) Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 9

10 What sets Al Rajhi Bank apart ARB has the largest retail banking business in the Middle East Market Share - Current Accounts Market Share - Deposits +11bps +14bps 23.2% 23.7% 23.7% 24.3% 9+ Million 15.5% 16.3% 16.4% 16.9% Customers FY 15 FY 16 FY 17 2Q 18 FY 15 FY 16 FY 17 2Q 18 # 1 in Saudi Arabia #1 in Saudi Arabia #2 in Saudi Arabia Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 1

11 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 -17bps +19bps 4.6% 4.4% 39.6% 38.9% 5.6% 52.7% 52.7% 52.5% FY 15 FY 16 FY 17 2Q 18 FY 15 FY 16 FY 17 2Q 18 #1 in Mortgages Challenger Position in Corporate Loans Market Share - Mortgages Market Share - Corporate Loans 2.6% 21.6% +6bps 25.4% 26.6% 6.3% 7.1% +9bps 7.7% 7.2% FY 15 FY 16 FY 17 2Q 18 FY 15 FY 16 FY 17 2Q 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 11

12 ARB Market Performance Al Rajhi Bank maintained its momentum and outperformed its peer group Share Price Performance Top 3 KSA Banks (Monthly; Rebased to 1) 3 June RAJHI NCB RIYAD TASI RAJHI, 168 Key Metrics Closing Price SAR 86.3 Market Cap SAR 14.2 bn Market Cap / % Industry 23.5% 14 NCB, 133 Market Cap / % Tadawul 7.7% Shares outstanding bn 12 9D Volatility 19.41% Price / Earnings x 1 8 TASI, 1 RIYAD, 96 Price / Book 2.78 x Dividend Yield 5.21% 6 3 June 18 Return on Equity 19.1% 4 Return on Assets 2.86% 31/12/14 3/6/15 31/12/15 3/6/16 31/12/16 3/6/17 31/12/17 3/6/18 YoY Growth per share Operating Income 9.6% Al Rajhi Bank NCB Riyad Bank Kuwait Dubai Islamic Finance House Bank Qatar Islamic Bank Abu Dhabi Islamic Bank Rebased to Earnings 12.47% Total Return 3.18% Sources: Bloomberg; Tadawul; RAJHI Financials As of 3 June SAR 48.6 SAR SAR 515 KWD 4.9 AED 17 QAR 3.88 AED Source: Stock Exchanges Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 12

13 Market Performance Strong index representation (TASI 2 nd ) and liquidity (4 th ) ARB has the highest weight in the MSCI GCC Index... # Top 1 Constituents Country Float Adj Mkt Cap ARB has consistently strong trading volumes... Index Weight (%) Sector 1 Al Rajhi Bank KSA % Financials 2 Sabic KSA % Materials 3 Qatar National Bank QAT % Financials 4 National Commercial Bank KSA % Financials 5 Saudi Telecom KSA % Telecoms 6 SAMBA Financial Group KSA % Financials 7 Emirates Telecom Corp UAE % Telecoms 8 National Bank of Kuwait KUW % Financials 9 Alinma Bank KSA % Financials 1 Saudi Arabian Mining KSA % Materials Source: MSCI Fact Sheet; 3 June % and is "certain" to be included in MSCI EM Index RAJHI ATVR* vs. MSCI Minimum Requirement (>15%) 77% 58% 79% 79% RAJHI 3M ATVR* MSCI Minimum Source: MSCI; *3M AVTR is MSCI s measure of annualised median trading value of FOL & Free Float adjusted market capitalisation over the last 3 months, which is required to be >15% for MSCI index inclusion...and room for foreign ownership 95% 123% Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 75% 15% Cumulative Monthly Trading Volumes (mn) % 6.14% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec RAJHI Foreign Ownership Source: Tadawul, 3 June 218 RAJHI Foreign Ownership Limit Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 13

14 Awards Recent international recognition Global Awards Regional Awards Best Bank in Saudi Arabia Best Bank in GCC Fastest Growing Bank in KSA Most Innovative Bank in KSA Best Retail Bank in KSA Best Financial Institution in Saudi Arabia Largest Bank in the world in terms of Sharia Assets Strongest Islamic Retail Bank in the World Strongest Islamic Retail Bank in the GCC Strongest Islamic Retail Bank in the MEA Best Bank in Saudi Arabia Bank of the year 217 SAUDI ARABIA Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 14

15 Our Values Modesty Humility in everything we do Integrity & Transparency Openness and highest standards of corporate & personal ethics Innovativeness Nurturing imagination and fostering creativity Passion to Serve Our Customers A strong commitment to anticipate and address customer needs Meritocracy Defining, differentiating and reinforcing excellence in people Solution Oriented Helping our customers achieve their objectives Care for Society Contributing towards a better tomorrow Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 15

16 Al Rajhi Bank's Social Responsibilities Our responsibility to our community has always been at the forefront of what we do Focus areas Examples Participation 11 programs conducted 21 cities 7269 volunteering hours clocked in 1H 218 CSR Strategic Focus People In Need, Volunteering, Financial Literacy and International Days Direction for 22 To enhance the staff participation in volunteering by targeting cumulative 5K hours by 22 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 16

17 Al Rajhi Bank Strategy 22 ABCDE 'Back to Basics' The Blue Chip Islamic Bank Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 17

18 Saudi Arabia Vision 23 Key objectives A Vibrant Society A Thriving Economy An Ambitious Nation Increase Umrah capacity from 8 to 3M Double the number of UNESCO World Heritage sites Have 3 Saudi cities in top 1 globally Lower unemployment from 11.6% to 7% Increase SME contribution to GDP from 2% to 35% Increase women s participation in workforce from 22% to 3% Rise in Global Competitiveness Index from 25 to top 1 Increase FDI from 3.8% to 5.7% Increase private sector contribution to GDP from 4% to 65% Increase non-oil government revenue from SAR 163B to 1T Rise in Government Effectiveness Index from 8 to 2 Increase household entertainment spending from 2.9% to 6% Increase ratio of individuals exercising from 13% to 4% of population Raise position from 26 to 1 in Social Capital Index Move from 19th largest economy to top 15 globally Increase oil & gas localization from 4% to 75% Increase PIF s assets from SAR 6B to SAR 7T Rise in Logistics Performance Index from 49 to 25 Raise non-oil exports from 16% of GDP to 5% Rise in E-Government Survey Index from 36 to top 5 Raise in household savings from 6% to 1% of total income Increase avg. life expect. from 74 to 8 Increase home ownership from 47% to 6% (215-2), 85k new housing units Raise non-profit s contribution to GDP from 1% to 5% Increase RE financing contribution to non-oil GDP from 8% to 15% (215-2) Rally 1M volunteers p.a. from 11K now Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 18

19 Strategy Overview ABCDE 'Back to Basics' strategy already delivers results A B C D E Accelerate Growth Become Employer of Choice Customer Focus Digital Leadership Execution Excellence A B C D E Key initiatives Grow mortgage, private sector, affluent, ladies & Tahweel Enhance SME & Corporate capabilities Enhance International presence Improve yields Engaged workforce Expand development & training programs Strengthen diversity Enhance employee value proposition Update value propositions Empower frontline Align organization to customer advocacy Install and embed NPS across the bank Smartly expand channels & formats Digitize customer journeys Migrate customers to self service channels Innovate in payments World-class compliance Enhance IT infrastructure Centralize and automate operations Strengthen risk infrastructure Exceed Industry Higher Engagement Most Recommended Best-In-Class Deliver Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 19

20 Accelerate Growth Key Initiatives Criticality Initiative Progress to date Examples: 217 2Q 218 A Grow mortgages, private sector, affluent, ladies & Tahweel (remittances) 23% +5 PP 28% Increase branches with ladies' sections A Enhance SME & Corporate capabilities Diversified Channels 1+ RMs 2 Branches 3+ CDMs ecorp etrade Net Profit Margin (%) A Improve yields 3.61% 3.89% 4.8% 4.21% H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 2

21 Become Employer of Choice Key Initiatives Criticality Initiative Progress to date Examples: B Engaged workforce Positive NPS among employees B Expand development & training programs Al Rajhi Bank Academy School of Banking Graduate Development Program B Strengthen diversity Higher percentage of women B Enhance employee value proposition Living Al Rajhi Bank's Values Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 21

22 Customer Focus Al Rajhi Bank has significantly improved its NPS score NPS 14% 21% 34% 41% 55% 5% 6% 64% Promoters 4% 41% 21% 14% 13% 29% 26% 23% Passives Detractors Q2 218 Base 3,554 4,587 31,58 6,784 Q : Based on your experience with your main bank, how likely are you to recommend it to a friend, relative or colleague, on a scale from to 1? Source : Online Top Down NPS Study commissioned by Al Rajhi Bank Data Collection Period Q2 218 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 22

23 Digital Leadership Key Initiatives Criticality Initiative Progress to date Examples: D Smartly expand channels & formats Digital : Manual Ratio 44:56 53: Q 218 D Digitize customer journeys D Migrate customers to self-service channels D Innovate in payments Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 23

24 Execution Excellence Key Initiatives Criticality Initiative Progress to date Examples: E World-class compliance Maintain world-class compliance E Enhance IT infrastructure IT Transformation Systems Risks Finance E Centralize and automate operations Increase operational efficiency [Robotics, managed services] E Strengthen risk infrastructure IT Risk Operational Risk Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 24

25 Financial Results Overview & Trends The Blue Chip Islamic Bank Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 25

26 8, 7, 6, 5, 4, 3, 2, 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, (1 ) (1 ) (2) (2) Key Messages Solid 1H 218 performance Net Income up 12.5% YoY Net Income (SARmn) +12.5% 4,43 4,951 Deposits up 2.7% YTD, Financing subdued Total Customers' Deposits (SARbn) +2.7% Liquidity remained healthy, CAR temporarily declined Capital Adequacy Ratio (%) 23.3% 22.3% 1H 17 1H 18 Pre-Provision Profit (SARmn) +1.7% 5,18 5,735 4Q 17 2Q 18 Financing, Net (SARbn) -2.% Liquidity Ratios (%) 4Q 17 2Q % 28% 86% 82% 1H 17 1H % Profit growth from solid 9.1% income growth, improved operating efficiency and stable credit cost of risk Profit growth driven by strong Retail Banking performance (+23.3%) 4Q 17 2Q % deposit growth YTD from non-profit bearing deposits which now account for 95% Financing activity remained subdued but is expected to improve during 2H 218 4Q 17 2Q 18 Loan to Deposit Ratio CAR declined by 13 bps YTD due to dividend payment and 1 st time IFRS 9 adoption impact in 1Q218 Liquidity remained healthy LCR Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 26

27 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 Net Income Trends 1H 218 profit growth of 12.5% YoY from solid income growth Commentary Net income for 1H 218 increased 12.5% YoY to SAR 4,951 million mainly driven by 9.1% total operating income growth from both yield (+8.8%) and non-yield (+9.9%) improvements, partly offset by increased expenses (+5.7%) On a segmental basis, net income growth was driven by 23.3% Retail Banking and 2.7% Treasury growth, partly offset by a 25.8% decline in Corporate net income from higher credit costs, due to lower recoveries in 1H 218 Dividend for 1H 218 increased by 33.3% to SAR 3,25 million, with DPS of SAR 2. representing 66% of earnings Net Income For The Period (SARmn) Net Income Growth Drivers By Segment (SARmn) 4,5 4, 3,5 3, 2,5 2, 1,5 1, % ,43 (247) 1H 17 Retail Corporate Treasury Investment services & brokerage Net Income Growth Drivers By Type (SARmn) 4,951 1H % 2, % 2,221 2,182 2,265 2,453 2,383 2,569 2, 1, ,951 1, 5 4,43 (146) (6) 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 Yield Expenses 1H 17 Yield Non- Impairments 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 27

28 Progress against guidance Financing & income growth, efficiency and cost of risk in line with FY 218 guidance Financing, Net (SARbn) Net Profit Margin (%) Guidance Range +3 to +5% % 234-2% bps +13bps 3.89% 4.8% 4.21% Guidance Range +1 to 2 bps Q Guidance Range FY 16 FY 17 1H 18 Cost To Income Ratio (%) Cost Of Risk (%).92% 32.6% +29bps 32.9% -92bps -26bps Guidance Range.6% to.8% Target Below 32% 32.% +bps.66%.66% FY 16 FY 17 1H 18 FY 16 FY 17 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 28

29 6, 5, 4, 3, 2, 1, Operating Income Trends 1H 218 income growth of 9.1% from financing (+8.8%) and fees & other income (+9.9%) Total Operating Income (SARmn) +1.6% Total Operating Income Mix By Segment (SARmn) Investment services & brokerage SAR 135mn 3,853 3,877 3,976 4,198 4,142 4,288 Treasury SAR 94mn 4,288 Corporate SAR 497mn Retail SAR 2,751mn 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 Total Operating Income Growth Drivers by Type (SARmn) Total Operating Income Growth Drivers By Segment (SARmn) 3, 3, 2,5 2, 1,5 1, 7, % 188 8,43 2,5 2, 1,5 1, 7, % , H 17 Net financing & investment income Fees & other income 1H 18 1H 17 Retail Corporate Treasury Investment services & brokerage 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 29

30 Operating Income Trends Improved YoY financing margin & strong banking fee income growth Commentary Net Profit Margin (%) 1H 218 net financing and investment income grew 8.8% YoY due to improved financing margins on stable average profit-bearing assets The net profit margin improved by 23bps YoY to 4.21% as both financing yields (+19bps) and cost of funding improved (+4bps) 3.61% 3.89% 4.8% 4.21% Fee and other income grew 9.9% YoY, mainly from strong 2.% growth in fees from banking services driven by processing fees and credit card fees FY 15 FY 16 FY 17 1H 18 Fee From Banking Services Growth Drivers By Type (SARmn) Net Profit Margin Drivers 1,6 1,4 +2.% +23bps 1,2 1, 8 6 1, (43) 37 (4) 1, %.19%.4% 4.21% 4 2 1H 17 Processing fees Credit cards Payment services Brokerage Other 1H 18 1H 17 Financing & Investment Yield Cost of Funds 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 3

31 2,5 2, 1,5 1, 5 Expenses Trends 1H 218 expense growth of 5.7% YoY, but efficiency improved 12 bps on positive "jaws" Operating Expenses (SARmn) +5.9% Operating Expenses Mix By Segment (SARmn) Investment services & brokerage SAR 73mn +7.4% Treasury SAR 249mn 1,26 1,29 1,31 1,385 1,39 1,386 2,695 Corporate SAR 171mn Retail SAR 2,23mn 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 Cost To Income Ratio Trend (%) Operating Expenses Growth Drivers By Type (SARmn) 9 +58bps -55bps +27bps -139bps +71bps 32.7% 33.3% 32.7% 33.% 31.6% 32.3% ,55 (2) % (4) 148 2, Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 1H 17 Salaries & employees' benefits Rent & premises Depreciation Other G&A expenses 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 31

32 Assets Slight 1.6% increase YTD in total assets Commentary Total Assets Mix By Type (SARbn) Total assets increased by 1.6% YTD as an increase in investments (+32.4%) and interbank balances (+98.1%) were offset by a decline in net financing (-2.%) and lower cash and balances with SAMA and other central banks (-26.7%) Other Assets, Net SAR 15bn 4% Cash & Balances with SAMA SAR 35bn 1% Financing, Net SAR 229bn 66% Due from banks & Other financial institutions SAR 21bn 6% Investments, Net SAR 48bn 14% Total Assets (SARbn) Asset Drivers By Type (SARmn) % % (12.9) (4.6) 2 4Q 17 1Q 18 2Q 18 4Q 17 Cash & SAMA Interbank Investments, Net Financing, Net Other Assets, Net 2Q 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 32

33 Financing Financing dominated by retail Financing, Net Mix By Segment (SARbn) Retail Financing, Net Mix By Type (SARbn) Corporate SAR 58bn 25% Mortgage SAR 3bn 18% SME SAR 3bn 1% Auto Loans SAR 21bn 13% Retail SAR 167bn 72% Financial institutions SAR 4bn 2% Personal SAR 114bn 68% Credit Cards SAR 2bn 1% Commentary Financing dominated by retail (72%) followed by corporate (25%) while SME and financial institutions are minimal Retail financing is primarily made up of personal (68%) and mortgage (18%) Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 33

34 Asset Quality Trends 1H 218 cost of credit stable Total Impairment Charge (SARmn) Impairment Charge Drivers By Segment (SARmn) 1, , ,4 1,2 1, 8 (322) Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 1H 17 Retail Corporate Treasury Investment services & brokerage 1H 18 NPL Ratio Trend (%) NPL Coverage Trend (%) Cost of Risk Trend (%) -62% 1.1% -26bps -3bps +2bps -2bps +9bps.75%.73%.74%.72%.81% +1% -12% +169% +6% 256% 317% 326% 314% 483% 421% +1bps -8bps +16bps +5bps -2bps.63%.68%.69%.76%.6%.56% 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 34

35 Funding & Liquidity Trends All regulatory requirements are managed comfortably within guidelines Commentary Liquidity remained healthy during 2Q 218 and comfortably within regulatory guidelines HQLA decreased by 1.5% during the quarter, mainly from a 72.% drop in cash and balances with SAMA and other Central Banks. As a result, LCR declined to 28% Total Liabilities Mix By Type (SARbn) Other SAR 11bn 4% Banks SAR 4bn 1% The loan to deposit ratio improved by 4ppt during 1H 218 to 82% as deposits grew 2.7% while net financing declined 2.% from 31 December 217 Customers' Deposits SAR 28bn 95% HQLA (SARbn) Liquidity Ratios (%) 214% 22% 18% 199% 219% 28% % 82% 86% 86% 81% 82% 4Q 17 1Q 18 2Q 18 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 Loan to Deposit Ratio LCR Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 35

36 Funding & Liquidity Trends Continued growth in non-profit bearing deposits Commentary Strong stable funding with 95% of liabilities sourced from customers deposits, of which 95% are non-profit bearing Customers deposits grew 2.7% from 31 December 217, principally from non-profit bearing demand deposits Total Customers' Deposits Mix By Type (SARbn) Time SAR 15bn 5% Other SAR 4bn 2% Total Customers' Deposits Mix By Segment (SARbn) Corporate SAR 29bn 1% SME SAR 2bn 1% Demand SAR 261bn 93% Retail SAR 249bn 89% Total Customers' Deposits (SARbn) Total Customers' Deposits Drivers (SARmn) +2.7% % (1.3) (1.) Q 17 1Q 18 2Q 18 Demand Other customer accounts Customers' time investments 4Q 17 Demand Time Other 2Q 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 36

37 Capitalisation Trends Strong capitalization despite dividend payment & one-off IFRS 9 impact Total Capital (SARbn) Commentary -5.1% Capital ratios declined by approximately 1.% from 31 December 217 as the dividend payment of SAR 4.1 billion for 2H 217 and the first time adoption impact of IFRS 9 on retained earnings and other reserves of SAR 2.9 billion more than offset net income generation of SAR 4,951 million Capitalization nevertheless remained extremely strong with CAR of 22.3% and CET1 of 21.2% as at 3 June 218 4Q 17 1Q 18 2Q 18 Common equity tier 1 capital (CET1) Tier 2 capital (T2) Risk Weighted Assets (SARbn) Capital Ratios (%) -.7% % 2.1% 22.1% 21.9% 23.3% 21.% 2.8% 22.2% 21.5% 2.4% 22.3% 21.2% 4Q 17 1Q 18 2Q 18 Credit risk Market risk Operational risk 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 CET1 ratio TC ratio Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 37

38 Operating Results 2Q 218 Performance The Blue Chip Islamic Bank Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 38

39 4, 3,5 3, 2,5 2, 1,5 1, 5 Retail Banking Strong 23.3% profit growth on solid operating income performance and improved COR Commentary Retail Banking 1H 218 net income grew 23.3% YoY as a solid operating income performance (+3.9%) was further boosted by a significant drop in the impairment charge (-4.5%). Total operating income grew 3.9% YoY mainly from fee income (+17.9%), driven by continued growth in assets (+1.6%) and liabilities (+6.% mainly from non-profit bearing deposit growth) The Retail impairment charge declined 4.5% YoY on improved collections and recoveries SAR (mn) 1H 218 1H 217 YoY % Net financing & investment income 4,794 4, % Fee and other income 1, % Total Operating Income 5,826 5, % Operating expenses 2,23 2, % Impairment charge % Net income (loss) 3,151 2, % Total assets 187, , % Total liabilities 261, , % Net Income (SARmn) Net Income Growth Drivers By Segment (SARmn) 1,436 1,119 1, % +11.4% 1,913 1,94 1,247 4, 3,5 3, 2,5 2, 1,5 2, % ,151 1, 5 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 1H 17 Other Income Expenses Financing Impairments 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 39

40 1, Corporate Banking Net income declined despite 4.9% operating income growth on higher credit charges Commentary Corporate Banking 1H 218 net income declined 25.8% YoY despite operating income growth due to a significant rise in credit costs Total operating income grew 4.9% YoY as financing income grew 3.6% while fee income grew by 8.7% YoY The Corporate impairment charge rose by SAR 32 million YoY to SAR 32 million in 1H 218 due to non-recurrence of certain recoveries SAR (mn) 1H 218 1H 217 YoY % Net financing & investment income % Fee and other income % Total Operating Income 1,184 1, % Operating expenses % Impairment charge 32 (18) % Net income (loss) % Total assets 6,59 66, % Total liabilities 2,249 41, % Net Income (SARmn) Net Income Growth Drivers By Segment (SARmn) +87.6% 2, -25.8% % ,5 1, (319) 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 1H 17 Other Income Expenses Financing Impairments 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 4

41 1,2 1, Treasury Strong profit growth from increased investment portfolio Commentary Treasury 1H 218 net income rose 2.7% YoY to SAR 889 million from 47.7% total operating income growth, partly offset by a SAR 29 million rise in operating expenses Total Treasury assets grew 5.% YoY on 52.6% growth in the investment portfolio which aided net financing and investment income growth of SAR 418 million to SAR 678 million SAR (mn) 1H 218 1H 217 YoY % Net financing & investment income % Fee and other income % Total Operating Income 1, % Operating expenses % Impairment charge % Net income (loss) % Total assets 97,569 92, % Total liabilities 13,65 4, % Net Income (SARmn) % +12.6% Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 Investments, Net Mix By Asset (SARbn) Saudi Government Sukuk SAR 12bn 25.9% Murabaha with Saudi Gov & SAMA SAR 27bn 57.1% Corporate Sukuk SAR 3bn 6.% International Sukuk SAR 2bn 3.5% Mutual Funds SAR 2bn 3.4% FI Sukuk SAR 1bn Investment in an associate SAR bn.3% 1.7% Equity investments SAR 1bn 2.1% Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 41

42 Investment Services & Brokerage 31.7% growth in profit driven by asset management business Commentary 1H 218 Net income for Investment Services & Brokerage improved 31.7% YoY to SAR 21 million principally from 24.7% operating income growth Total operating income growth was driven by improved fee income (+25.%), mainly in brokerage and asset management business Operating expenses rose by 9.% YoY to support the 24.7% growth in income SAR (mn) 1H 218 1H 217 YoY % Net financing & investment income % Fee and other income % Total Operating Income % Operating expenses % Net income (loss) % Total assets 3,148 2, % Total liabilities % Net Income (SARmn) Market Share - Al Rajhi Capital Brokerage (Value traded) -1.4% +47bps % % 14.8% 15.9% 19.% 19.6% 2.5% 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 FY 13 FY 14 FY 15 FY 16 FY 17 1H 18 Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 42

43 Appendix Additional Information The Blue Chip Islamic Bank Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 43

44 Board of Directors Members Chairman Abdullah bin Sulaiman Al Rajhi Salah bin Ali AbalKhail Abdulaziz bin Khaled Al Ghefaily Bader bin Mohammed Al Rajhi Khaled bin Abdulrahman Al Qoaiz Alaa bin Shakib Al Jabiri Ibrahim F. Al-Ghofaily Ameen F. Al Shiddi Hamza O. Khushaim Raed A. Al-Tamimi Abdulatif A. Alseif Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 44

45 Management Team International expertise combined with deep roots in Saudi Arabia Chief Executive Officer Steve Bertamini Banking experience: 31 years Chief Financial Officer Abdullah Alkhalifa Banking experience: 27 years Chief Risk Officer Christopher Maclean Banking experience: 34 years Chief Operating Officer Waleed Al-Mogbel Banking experience: 2 years Chief Compliance Officer Abdullah Sulaiman Alnami Banking experience: 23 years Chief Governance & Legal Officer Omar Almudarra Banking experience: 18 years General Manager Retail Saleh Alzumaie Banking experience: 27 years General Manager Corporate Majid Algwaiz Banking experience: 23 years General Manager Treasury Abdulrahman Al Fadda Banking experience: 21 years General Manager Sharia Saleh Al-Haidan Banking experience: 15 years Chief Human Resources Officer Khalid Al Huzaim Banking experience: 18 years Chief Internal Audit Officer Mohamad Hawash Banking experience: 23 years Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 45

46 Additional Information Contact investor relations for more information Mr. Amr M. Sager Investor Relations Director Tel: +966 (11) Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 46

47 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 ON THIS DOCUMENT IS PROVIDED FOR GENERAL INFORMATION ONLY AND SHOULD NOT BE USED AS A BASIS FOR MAKING BUSINESS DECISIONS. ANY ADVICE OR INFORMATION RECEIVED VIA THIS DOCUMENT SHOULD NOT BE RELIED UPON WITHOUT CONSULTING PRIMARY OR MORE ACCURATE OR MORE UP-TO-DATE SOURCES OF INFORMATION OR SPECIFIC PROFESSIONAL ADVICE. YOU ARE RECOMMENDED TO OBTAIN SUCH PROFESSIONAL ADVICE WHERE APPROPRIATE. GEOGRAPHIC, POLITICAL, ECONOMIC, STATISTICAL, FINANCIAL AND EXCHANGE RATE DATA IS PRESENTED IN CERTAIN CASES IN APPROXIMATE OR SUMMARY OR SIMPLIFIED FORM AND MAY CHANGE OVER TIME. RELIANCE HAS BEEN PLACED BY THE EDITORS ON CERTAIN EXTERNAL STATISTICAL DATA WHICH, THOUGH BELIEVED TO BE CORRECT, MAY NOT IN FACT BE ACCURATE. ARB ACCEPTS NO LIABILITY FOR ANY LOSS OR DAMAGE ARISING DIRECTLY OR INDIRECTLY FROM ACTION TAKEN, OR NOT TAKEN, IN RELIANCE ON MATERIAL OR INFORMATION CONTAINED IN THIS DOCUMENT. IN PARTICULAR, NO WARRANTY IS GIVEN THAT ECONOMIC REPORTING INFORMATION MATERIAL OR DATA IS ACCURATE RELIABLE OR UP TO DATE. ARB ACCEPTS NO LIABILITY AND WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGE ARISING DIRECTLY OR INDI- RECTLY (INCLUDING SPECIAL, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE) FROM YOUR USE OF CONTENTS IN THE DOCUMENT, HOWSOEVER ARISING, AND INCLUDING ANY LOSS, DAMAGE OR EXPENSE ARISING FROM, BUT NOT LIMITED TO, ANY DEFECT, ERROR, IMPERFECTION, FAULT, MISTAKE OR INACCURACY WITH THIS DOCUMENT. Al Rajhi Bank 2Q 218 Investor Presentation The Blue Chip Islamic Bank 47