Investor Relations Presentation Q3 2017

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Hilary Turner
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1 Investor Relations Presentation Q3 2017

2 Table of Content 1 KSA Fact Sheet 3 2 Saudi Arabia 2030 Vision 4 3 Al Rajhi at a Glance 5 4 Recent International Recognition 6 5 Al Rajhi 2020 Strategy 7 6 Al Rajhi s Stock Performance 8 7 Presence & Business Segments 9 8 Al Rajhi Position within the main Saudi Banks 10 9 Sustainable Growth in Our Financial Position The Financial Performance Al Rajhi s Market Shares High NPL Coverage & Low NPL Ratio Al Rajhi Bank Strengths Outstanding Key Profitability Ratios Capital Strengths & Risk Management Al Rajhi Bank Rating Balance Sheet Summary Statement of Income Summary 20 2

3 KSA Fact Sheet Saudi Arabia holds one-fith of the world s proven oil reserves It is the world s largest producer and exporter of petroleum The Kingdom is a member of the Group of Twenty (G20) GDP of USD billion in 2016 It is estimated to grow by 0.1% in real terms in 2017 The non-oil GDP accounts for 55% of the real total GDP 49% of the Saudi population of 20.4 million is under the age of 25, with a young population entering the workforce for the first time The monetary policy in Saudi Arabia exhibits a high degree of stability and predictability Government surplus supports extensive infrastructure spending Measures are underway to further liberalise foreign investor access to the KSA, integrating the Kingdom with the global economy and opening new opportunities for business 3

Saudi Arabia 2030 Vision A Vibrant Society A Thriving Economy An Ambitious Nation Increase Umrah capacity from 8 to 30M Double the number of UNESCO World Heritage sites Have 3 Saudi cities in top 100

9% to 6% Increase ratio of individuals exercising from 13% to 40% of population Raise position from 26 to 10 Social Capital Index Increase avg. life expect.

4 Saudi Arabia 2030 Vision A Vibrant Society A Thriving Economy An Ambitious Nation Increase Umrah capacity from 8 to 30M Double the number of UNESCO World Heritage sites Have 3 Saudi cities in top 100 globally Increase household entertainment spending from 2.9% to 6% Increase ratio of individuals exercising from 13% to 40% of population Raise position from 26 to 10 Social Capital Index Increase avg. life expect. from 74 to 80 Increase home ownership from 47% to 55% ( ), 850k new housing units Increase RE financing contribution to non-oil GDP from 8% to 15% ( ) Lower unemployment from 11.6% to 7% Increase SME contribution to GDP from 20% to 35% Increase women s participation in workforce from 22% to 30% Move from 19 th largest economy to top 15 globally Increase oil & gas localization from 40% to 75% Increase PIF s assets from SAR 600B to SAR 7T Rise in Global Competitiveness Index from 25 to top 10 Increase FDI from 3.8% to 5.7% Increase private sector contribution to GDP from 40% to 65% Rise in Logistics Performance Index from 49 to 25 Raise non-oil exports from 16% of GDP to 50% Increase non-oil government revenue from SAR 163B to 1T Rise in Government Effectiveness Index from 80 to 20 Rise in E-Government Survey Index from 36 to top 5 Raise in household savings from 6% to 10% of total income Raise non-profit s contribution to GDP from 1% to 5% Rally 1M volunteers p.a. from 11K now 4

5 Al Rajhi at a Glance The Largest Customer Base in KSA The Largest Network in the Middle East 4 of every 10 transactions in KSA #1 Bank for Remittance in the region 9 million 569 Branches 4,745 ATMs 73,812 POS 70 million+ Transactions processed per month 21 million+ Remittances Liquid and Low cost of funds Strong capital ratios Well positioned Brand 9٤% Non-Commission Bearing Deposits to Total Deposits CAR (Tier I + II): 21.93% Islamic, Everywhere 5

Recent International Recognition Global Awards Regional Awards Best Bank in Saudi Arabia Best Financial Institution in Saudi Arabia - Best Bank in GCC - Fastest Growing Bank in KSA - Most Innovative

6 Recent International Recognition Global Awards Regional Awards Best Bank in Saudi Arabia Best Financial Institution in Saudi Arabia - Best Bank in GCC - Fastest Growing Bank in KSA - Most Innovative Bank in KSA 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 6

7 Al Rajhi 2020 Strategy Accelerate Growth A E Execution Excellence Deliver Exceed Industry Become Employer of Choice B C D Digital Leadership Higher Engagement Best-in Class Customer Focus Most Recommended 7

8 Al Rajhi s Stock Performance Al Rajhi is the largest constituent in MSCI GCC Index Stock Performance - Sep 28, 2017 TOP 10 CONSTITUENTS Float Adj Country Mkt Cap (USD Billions) Index Wt. (%) Sector AL RAJHI BANKING & INV SA Financials SAUDI BASIC IND CORP SA Materials NATIONAL COMM BANK SA Financials EMIRATES TELECOM CORP EMAAR PROPRTIES QATAR NATIONAL BANK AE AE QA NATIONAL BANK OF KUWAIT KW SAUDI TELECOM ALMARAI CO SAMBA FINANCIAL GROUP SA SA SA Telecom Ser 3.34 Real Estate 3.25 Financials 3.10 Financials 3.06 Telecom Ser 2.80 Cons Staples Financials Closing Price (SAR) Book Value (SAR) P/B 2.00x EPS (SAR) 5.21 P/E 12.66x Issued Shares (Mn.) 1, Market Cap (Bn.) Market Cap to total industry% 23.05% Market Cap to total Stock Market% Source: Tadawul.com.sa. The ratios calculations are based on the last 4 quarters. 6.22% Total Al Rajhi s Closing Prices (SAR) Source: MSCI GCC COUNTRIES INDEX (USD) Oct 2017 EPS & Cash Dividends ٢٠١٣ ٢٠١٤ ٢٠١٥ ٢٠١٦ H EPS (SAR) Dividends Per Stock (SAR) 75 Market: +29.5% 70 SAR % 65 SAR September 29, 2016 February 26, 2016 July 26, 2017 From Sep 29, 2016 to Sep 28, 2017 (Stock Exchange working days) 8

9 Presence & Business Segments Jordan (7) Kuwait (٢) Segments Contributions To The Operating Income* Corporate Treasury 15% 9% Investment 3% (Number of Branches) Saudi Arabia (569) Malaysia (١٩) Retail 73% * For the Period 6M 2017 Retail Banking Personal Finance Auto Finance/Leasing Home Finance Cards Corporate Transactional Banking Trade Finance Cash Management SME Treasury Treasury services Financial Institutions International investment portfolios Brokerage Asset Management Advisory & Structuring Insurance- Al Rajhi Takaful Auto Life Medical 9

10 Al Rajhi Position within the main Saudi Banks (As at September 17) SAR Bn Assets SAR Bn Loans ١ ٤٤٥ ٢ ٣٣٨ ٣ ٤ ٥ ٢٢٩ ٢١٨ ٢٠٢ ١ ٢٥٧ ٢ ٢٣٣ ٥ ١٢١ ٣ ١٤٢ ٤ ١٢٩ SAR Bn Current Accounts SAR Bn Retail Loans ٢ ٢٣٢ ١ ٢٤٨ ٣ ٥ ٤ ١٠٠ ٧٤ ٨٣ ٢ 89 ١ 164 ٤ 19 ٣ 41 ٥ 12 10

11 Sustainable Growth in Our Financial Position Assets Loans Deposits SAR Bn. SAR Bn. SAR Bn. CAGR 6.2 % CAGR 6.9 % CAGR 5.4 % Q Q Q Sustainable growth in Assets, driven by growth in Financing & investment book Growth in Loans, with improved asset quality. Balance sheet growth supported by sustainable growth in customer deposits. 11

12 The Financial Performance Income & Operating Costs Net Income SAR Mn. SAR Mn. Income Cost 8, % 29.3% 33.1% 33.9% ١٣,٩٨3 ١٣,٨٤5 ١٣,٦٦7 ١٣,٧٤6 ٣,٧٧9 ٤,٠٥7 ٤,٥١9 ٤,٦٥8 32.4% 15,284 4, % 11,706 3,851 7,885 7,438 6,836 7,130 6, ٣ 201٤ 201٥ M M 2017 Very low cost to Income ratio driven by efficiency in managing the resources and leveraging the Bank s economies of scale. Improvement in Net Income driven by growth in Operating Income and enhanced operating efficiency. 12

13 Al Rajhi s Market Shares Assets 84.7% 15.3% Deposit 83.6% 16.4% Current Accounts 76.1% 23.9% Personal Loans 60.0% 40.0% Mortgages Loans 76.3% 23.7% Auto Loans Corporate Loans Branches ATMs POSs 47.7% 52.3% 92.1% 7.9% 73.2% 26.8% 73.9% 26.1% 75.7% 24.3% AL Rajhi Competition 13

14 High NPL Coverage & Low NPL Ratio 360% 326% 2.1% 2.0o% 310% 260% 231% 1.9% 1.7% 1.5% 1.3% 1.57% 1.51% 1.24% 210% 160% 137% 196% 144% 177% 1.1% 0.9% 0.7% 1.26% 0.73% 110% 0.5% Q Q NPL Coverage % NPL % Continuous improvement in bank s assets quality. Build up of strong NPL Coverage to sustain our future growth. 14

15 Al Rajhi Bank Strengths ROA% above the market 2.62% 1.97% The highest Non-Commission Bearing Deposits % of Total Deposits within the market 93.9% 60.4% Al Rajhi Competition Al Rajhi Competition Net Commission Margin well above the market 4.04% 3.07% ROE% above the market 16.88% 13.10% Al Rajhi Competition Al Rajhi Competition 15

16 Outstanding Key Profitability Ratios ROA% The highest in the market ROE% The 2 nd highest in the market 2.72% 2.33% 2.29% 2.48% 2.62% 19.84% 17.01% 16.11% 16.49% 16.88% Q Q Net Commission Margin % The highest in the market Cost of Funds% The lowest in the market 4.05% 3.83% 3.63% 3.90% 4.04% 0.20% 0.16% 0.12% 0.22% 0.20% Q Q

17 Capital Strengths & Risk Management CAR (Tier I + II)% The highest in the market Loans/Deposits% (LDR%) 19.60% 19.59% 20.83% 21.98% 21.93% 80.7% 80.4% 81.5% 82.5% 86.3% Q Q Liquidity Coverage Ratio % (LCR%) Cost of Risks% (COR%) 157% 157% 210% 233% 221% 1.28% 1.15% 0.92% 0.96% 0.67% Q Q

18 Al Rajhi is rated by all major Rating Agencies Moody s A1 A1 A1 A1 A1 S&P A+ A+ A BBB+ BBB+ Fitch A+ A+ A+ A A- KSA Sovereign Moody's KSA Sovereign S&P Aa3 Aa3 Aa3 A1 AA- AA- A+ A- A1 A- Al Rajhi Bank s strong financial position and credit profile is endorsed by major Rating Agencies. Moody s rated Al Rajhi Bank in line with KSA sovereign. 18

19 Balance Sheet Summary SAR - Millions Q FY 2016 Growth % Q Growth % Due From Banks & Other Financial Institutions 21,228 26, % 16, % Investments 35,692 34, % 33, % Financing, net 233, , % 225, % Total Assets 338, , % 330, % Due to Banks & Other Financial Institutions 7,043 8, % 2, % Customers' Deposits 270, , % 272, % - Non-Profit Bearing Deposits 253, , % 250, % - Profit Bearing Deposits 16,569 21, % 22, % Total Shareholders' Equity 53,376 51, % 49, % 19

20 Statement of Income Summary SAR - Millions Income Statement 9M M 2016 Variance % Net Yield Income 8,872 8, % Fees from Banking Services 2,012 2, % Exchange & Other Income % Total Operating Income 11,706 11, % Total Operating Expenses 3,851 3, % Income Before Provisions 7,855 7, % Net Impairment Charges 1,188 1, % Net Income for the Period 6,668 6, % 20

21 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. 21

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