Investor Relations Presentation Q3 2017
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 11 10 The Financial Performance 12 11 Al Rajhi s Market Shares 13 12 High NPL Coverage & Low NPL Ratio 14 13 Al Rajhi Bank Strengths 15 14 Outstanding Key Profitability Ratios 16 15 Capital Strengths & Risk Management 17 16 Al Rajhi Bank Rating 18 17 Balance Sheet Summary 19 18 Statement of Income Summary 20 2
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 646.4 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 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% (2015-20), 850k new housing units Increase RE financing contribution to non-oil GDP from 8% to 15% (2015-20) 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
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 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
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
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 20.91 8.83 Financials SAUDI BASIC IND CORP SA 19.86 8.39 Materials NATIONAL COMM BANK SA 10.11 4.27 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 8.45 7.92 7.71 7.35 7.24 6.62 3.57 Telecom Ser 3.34 Real Estate 3.25 Financials 3.10 Financials 3.06 Telecom Ser 2.80 Cons Staples 6.51 2.75 Financials Closing Price (SAR) 65.92 Book Value (SAR) 32.99 P/B 2.00x EPS (SAR) 5.21 P/E 12.66x Issued Shares (Mn.) 1,625.00 Market Cap (Bn.) 107.12 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 102.68 43.35 Al Rajhi s Closing Prices (SAR) Source: MSCI GCC COUNTRIES INDEX (USD) Oct 2017 EPS & Cash Dividends 4.58 4.21 4.39 5.00 2.50 1.75 2.25 2.71 1.50 1.50 ٢٠١٣ ٢٠١٤ ٢٠١٥ ٢٠١٦ H1 2017 EPS (SAR) Dividends Per Stock (SAR) 75 Market: +29.5% 70 SAR 65.92 +27.8% 65 SAR 51.6 60 55 50 45 40 September 29, 2016 February 26, 2016 July 26, 2017 From Sep 29, 2016 to Sep 28, 2017 (Stock Exchange working days) 8
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
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
Sustainable Growth in Our Financial Position Assets Loans Deposits SAR Bn. SAR Bn. SAR Bn. CAGR 6.2 % 316 340 338 CAGR 6.9 % 210 225 233 CAGR 5.4 % 273 270 308 206 256 258 267 280 172 187 221 232 2012 2013 2014 2015 2016 Q3 2017 2012 2013 2014 2015 2016 Q3 2017 2012 2013 2014 2015 2016 Q3 2017 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
The Financial Performance Income & Operating Costs Net Income SAR Mn. SAR Mn. Income Cost 8,126 27.0% 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 4,949 32.9% 11,706 3,851 7,885 7,438 6,836 7,130 6,668 2012 201٣ 201٤ 201٥ 2016 9M-2017 2012 2013 2014 2015 2016 9M 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
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
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% 2012 2013 2014 2015 2016 Q3-2017 2012 2013 2014 2015 2016 Q3-2017 NPL Coverage % NPL % Continuous improvement in bank s assets quality. Build up of strong NPL Coverage to sustain our future growth. 14
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
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% 2013 2014 2015 2016 Q3-2017 2013 2014 2015 2016 Q3-2017 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% 2013 2014 2015 2016 Q3-2017 2013 2014 2015 2016 Q3-2017 16
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% 2013 2014 2015 2016 Q3-2017 2013 2014 2015 2016 Q3-2017 Liquidity Coverage Ratio % (LCR%) Cost of Risks% (COR%) 157% 157% 210% 233% 221% 1.28% 1.15% 0.92% 0.96% 0.67% 2013 2014 2015 2016 Q3-2017 2013 2014 2015 2016 Q3-2017 17
Al Rajhi is rated by all major Rating Agencies 2013 2014 2015 2016 2017 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
Balance Sheet Summary SAR - Millions Q3 2017 FY 2016 Growth % Q3 2016 Growth % Due From Banks & Other Financial Institutions 21,228 26,579-20.1% 16,840 26.1% Investments 35,692 34,033 4.9% 33,753 5.7% Financing, net 233,181 224,994 3.6% 225,863 3.2% Total Assets 338,030 339,712-0.5% 330,516 2.3% Due to Banks & Other Financial Institutions 7,043 8,917-21.0% 2,004 251.6% Customers' Deposits 270,102 272,593-0.9% 272,600-0.9% - Non-Profit Bearing Deposits 253,533 250,948 1.0% 250,257 1.3% - Profit Bearing Deposits 16,569 21,646-23.5% 22,343-25.8% Total Shareholders' Equity 53,376 51,947 2.8% 49,783 7.2% 19
Statement of Income Summary SAR - Millions Income Statement 9M 2017 9M 2016 Variance % Net Yield Income 8,872 8,302 6.9% Fees from Banking Services 2,012 2,370-15.1% Exchange & Other Income 822 857-4.0% Total Operating Income 11,706 11,529 1.5% Total Operating Expenses 3,851 3,750 2.7% Income Before Provisions 7,855 7,779 1.0% Net Impairment Charges 1,188 1,700-30.1% Net Income for the Period 6,668 6,079 9.7% 20
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