Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q4 2021 Earnings Presentation
46 slides from Banque Saudi Fransi's earnings presentation, 2022
Slide 1: Banque Saudi Fransi Investor Presentation 4Q 2021
3 Column Slides Banque Saudi Fransi Investor Presentation 4Q 2021
Slide 2: Contents
INVESTOR PRESENTATION 4Q 2021 Contents BSF Profile 3 Operating Environment 6 Strategy 10 Financial Performance 16 Outlook & Guidance 31 Segmental Performance 33 Performance Track Record 39 Appendix 42
Slide 3: BSF Profile
INVESTOR PRESENTATION 4Q 2021 BSF Profile
Slide 4: Leading banking group in Saudi Arabia with a strong focus on domestic operations
PROFILE | PRESENCE We are a leading banking group in Saudi Arabia with a strong focus on domestic operations Retail Clients Branches Employees (Million) 1.1 85 2,644 p +5.2% year-on-year q -2 year-on-year q -8.2% year-on-year FY21 Operating Income Diversity (SAR Mn) 7,188 Headquartered in Riyadh: Su
Slide 5: Solid market parameters and stable credit ratings
PROFILE | SHARE PROFILE AND CREDIT RATINGS Solid market parameters and stable credit ratings Share Parameters 31 Dec 2021 Total Shareholder Return (TSR) 100 Closing price (SAR) 47.25 80 52 weeks range (SAR) 27.8 - 49.9 Shares issued (million) 1,205 60 40 Market capitalization (SARbn) 56.95 20 Market
Slide 6: Operating Environment
INVESTOR PRESENTATION 4Q 2021 Operating Environment
Slide 7: Financial markets and economic activity recovered following Covid-19 disruption during 2020
OPERATING ENVIRONMENT | COVID-19 DISRUPTION Financial markets and economic activity recovered following Covid-19 disruption during 2020 Brent Oil Price / Barrel (USD) Tadawul Index ▪ Oil prices dropped sharply in 1Q 2020 as the Covid-19 pandemic spread, with a recovery to USD 77/bl by 4Q 2021. 77 11
Slide 8: GDP for Saudi Arabia is expected to recover to +2.8% growth in 2021
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK GDP for Saudi Arabia is expected to recover to +2.8% growth in 2021 Real GDP growth (%) Brent Oil Price / Barrel (USD) ▪ GDP for Saudi Arabia is expected to recover to positive 2.8% GDP growth in 2021 following a contraction of 4.1% in 2020 resulting from the
Slide 9: The Saudi banking sector is well positioned for resiliency and growth
OPERATING ENVIRONMENT | KSA BANKING SECTOR The Saudi banking sector is well positioned for resiliency and growth Bank Credit (SAR Bn) Capitalization: T1|CAR (%) NPL Ratio (%) 18.3%|19.5% 2.0% +8% 19.5% 20.4% 20.3% 19.4% 20.3% 19.5% 2,059 1,783 2.2% 1,419 1,405 1,443 1,552 2.0% 2.0% 17.5% 18.3% 18.5%
Slide 10: Strategy
INVESTOR PRESENTATION 4Q 2021 Strategy
Slide 11: In 2018 we redefined our purpose to build a dynamic, energized and modern culture
STRATEGY | MISSION AND VAUES In 2018 we redefined our purpose to build a dynamic, energized and modern culture… OUR MISSION OUR VALUES To become the TRUE TO OURSELVES, ALWAYS most modern, We are honest with one another, even at the risk of temporary disharmony. It is never personal. innovative and U
Slide 12: Cohesive, best-in-class executive management team
STRATEGY | MANAGEMENT TEAM …and set out to build a cohesive, best-in-class executive management team… Rayan Mohammed Fayez Mazen Azoony Mutasim Mufti Managing Director & Chief Executive Acting Chief Financial Officer Acting Chief Risk Officer Officer ▪ BSF: appointed Jun-2021 ▪ BSF: appointed Acting
Slide 13: 5-year strategic plan called 'LEAP'
STRATEGY | 5-YEAR STRATEGIC PLAN …who implemented a comprehensive 5-year strategic plan called ‘LEAP’ to modernize and re-imagine the bank 2018 2023 POSITIONED TO ‘LEAP’ Baseline Aspiration STRATEGIC PILLARS ASSET MARKET SHARE ASSET MARKET SHARE 8.3% Solidify our Scale up in 10% leadership position
Slide 14: We are clearly focused on delivering strategic outcomes
STRATEGY | 5-YEAR STRATEGIC PLAN We are clearly focused on delivering strategic outcomes STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder return (TSR) Return on average equity (ROAE) Basic earnings per share(EPS) Dividends per share (DPS) Generate top-q
Slide 15: Positive trends in strategic outcomes during 2021
STRATEGY | 2021 PROGRESS | STRATEGIC OUTCOMES Positive trends in strategic outcomes during 2021 STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder return (TSR) Return on average equity (ROAE) Basic earnings per share(EPS) Dividends per share (DPS) TSR ROA
Slide 16: Financial Performance
INVESTOR PRESENTATION 4Q 2021 Financial Performance
Slide 17: Solid balance sheet growth and strong recovery in net income
FINANCIAL PERFORMANCE | HIGHLIGHTS Solid balance sheet growth and strong recovery in net income BALANCE SHEET Loans & Advances Investments Non Interest Bearing Deposits ▪ High quality loan growth of 13% driven by 12% commercial loan growth and 28% growth in mortgages YoY. 147.8 p +13% year-on-year 4
Slide 18: Solid balance sheet growth from lending and investments
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Solid balance sheet growth from lending and investments Total Assets Movement (SAR Bn) ▪ Growth in total assets of 11% YoY driven by healthy 13% loan growth and strong growth of 16% in investments. ▪ Liabilities grew by 13% during 2021 YoY from 12% de
Slide 19: Net income improved 123% year-on-year due to lower provisions
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income improved 123% year-on-year due to lower provisions Net Income After Zakat & Tax Movement (SAR Mn) ▪ Net income for 2021 grew 123% YoY to SAR 3,450mn from 2% income growth and a 66% decline in impairments, partly offset by a 4% increase i
Slide 20: Healthy loan growth in 2021
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy loan growth in 2021 Total Loans & Advances (SAR Bn) Commercial Loans Movement (SAR Bn) Loans & Advances Composition (SAR Mn) 147.8 120.6 147,813 +12% Consumer +13% 18.4% Commercial 144.4 147.8 2.6 1.0 0.8 1.2 120.6 81.6% 130.6 3.4 27.0 27.2 4.6 22.8
Slide 21: Strong growth in investment portfolio from fixed rate bond holdings
FINANCIAL PERFORMANCE | INVESTMENTS Strong growth in investment portfolio from fixed rate bond holdings Investments Movement by Type (SAR Bn) Investments Composition by Type ▪ Investments rose 16% during 2021 as the (SAR Mn) bank increased fixed rate bond holdings in the corporate and financial sect
Slide 22: Strong 11% growth in NIBD deposits YoY
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Strong 11% growth in NIBD deposits YoY Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) ▪ Deposits grew 12% during 2021 from higher NIBDs and IBDs. ▪ NIBD’s grew 11% YoY from growth in both Retail (+13%) 142.0 142.0 and Corporate (+7%). ▪
Slide 23: NII growth of 3% as earning assets growth partly offset by margin contraction
FINANCIAL PERFORMANCE | NET INTEREST INCOME NII growth of 3% as earning assets growth partly offset by moderate margin contraction Net Interest Income Movement (SAR Mn) ▪ NII for 2021 grew 3% YoY to SAR 5,373mn as 11% growth in average earning assets was partly offset by a moderate 15bps margin cont
Slide 24: Yield pressure from lower rates partly offset by improved funding costs
FINANCIAL PERFORMANCE | NET INTEREST MARGIN Yield pressure from lower rates partly offset by improved funding costs Net Interest Margin Trend (%) Net Interest Margin Movement (%) ▪ The NIM decreased by 15bps YoY to 2.85% in 2021. ▪ The margin was supported by improved 2.85% 2.85% funding costs YoY,
Slide 25: BSF is positively positioned for a rising rate environment
FINANCIAL PERFORMANCE | RATE SENSITIVITY BSF is positively positioned for a rising rate environment Exposure to Interest Rate Risk (SAR Bn) • BSF estimates one-year NIM sensitivity of 100bps rate rise at +30bps or +SAR 577mn in net interest income. • This is based on the positive total interest rate
Slide 26: Non-interest income grew 1% from improved brokerage and lending
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income grew 1% from improved brokerage and lending, partly offset by lower exchange and other income ▪ Non-interest income for 2021 grew 1% YoY at SAR 1,814mn from improved net fee & Non-Interest Income Movement (SAR Mn) commission income, par
Slide 27: Higher operating expenses due increase in VAT rate
FINANCIAL PERFORMANCE | OPERATING EXPENSES Higher operating expenses due increase in VAT rate Operating Expenses Movement (SAR Mn) ▪ Operating expenses increased 4% YoY to SAR 2,447mn in 2021 due to increased rate of VAT in Saudi Arabia from 5% to 15%. ▪ The cost to income ratio increased modestly t
Slide 28: Moderation in impairment charge and cost of risk from peak in 4Q 2020
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Moderation in impairment charge and cost of risk from peak in 4Q 2020 Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 45 45 0.71% 0.79% q -158 bps year-on-year -95% 2.07% -95% 872 872 1.52% 751 1.91% 650 18 Consum
Slide 29: NPL ratio moderated during 2021 and NPL coverage broadly stable YoY
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL ratio moderated during 2021 and NPL coverage broadly stable YoY Non Performing Loans & Advances Allowance For Impairment NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) (SAR Bn) 3.9 4.7 2.53% 2.95% 2.9% q -21 bps year-on-year +2% +1% 2.78% 3.8 3.8 3.9 5.1 4
Slide 30: Capital ratios broadly stable during 2021
FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios broadly stable during 2021 Total Capital (SAR Bn) RWA (SAR Bn) ▪ Total capital increased by SAR 2.2bn (+6% YoY) during 2021 from net income generation, partly offset by dividend payments. 42.6 202.2 ▪ RWAs increased 8% during 2021 to SAR 202.2bn.
Slide 31: Liquidity remains strong and comfortably within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR Average (%) HQLA (SAR Bn) ▪ NSFR was stable YoY at 118%. ▪ LCR declined by 20ppts during 2021 due to more efficient utilization of excess liquidity but remains at a comfortable 179% 39.7 level of
Slide 32: Outlook and Guidance
INVESTOR PRESENTATION 4Q 2021 Outlook and Guidance
Slide 33: Healthy outlook for 2022 on expected solid loan growth and NIM expansion
GUIDANCE & OUTLOOK | GUIDANCE Healthy outlook for 2022 on expected solid loan growth and NIM expansion 2021 Outlook as at 3Q 2021 Outcome 2022 Guidance Loans & Advances ▪ 2021 growth of 13%. SAR Billion 147.8 130.6 LOANS & ▪ Balanced growth of ADVANCES, NET consumer and commercial lending Low double
Slide 34: Segmental Performance
INVESTOR PRESENTATION 4Q 2021 Segmental Performance
Slide 35: Healthy profit growth in all segments except for Treasury
SEGMENTAL PERFORMANCE | SUMMARY Healthy profit growth in all segments expect for Treasury Operating Income Movement (SAR Mn) Net Income Before Zakat & Tax Movement (SAR Mn) 7,188 3,837 +2% +91% 1,566 125 3,837 7,045 113 20 98 7,188 2,010 192 (55) (87) Operating income Retail Corporate Treasury Inves
Slide 36: Retail: growth in profits driven by higher income and lower impairments
SEGMENTAL PERFORMANCE | RETAIL Growth in profits driven by higher income and lower impairments Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 529 477 388 +4.0% p year-on-year SAR Million +57% +4% 457 472 477 179 529 Fee & other income 92 83
Slide 37: Lower impairments drive improvement in Corporate profitability
SEGMENTAL PERFORMANCE | CORPORATE Lower impairments drive improvement in Corporate profitability Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,462 711 573 +9.2% p year-on-year +1503% SAR Million +2% 1,587 1,462 803 697 711 ` Fee & other
Slide 38: Treasury: decline in profit driven by lower fee and other income
SEGMENTAL PERFORMANCE | TREASURY Decline in profit driven by lower fee and other income and higher expenses Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,588 432 348 -6.4% q year-on-year SAR Million -3% -15% 507 529 432 1,644 Fee & other
Slide 39: Investment banking: higher brokerage and asset management income
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Profitability improvement from higher brokerage & asset management income Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 258 104 23 +101.5% p year-on-year SAR Million +94% -10% 116 11
Slide 40: Performance Track Record
INVESTOR PRESENTATION 4Q 2021 Performance Track Record
Slide 41: Balance Sheet Metrics
PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 147.8 215.8 142.0 21.09% +5% +3% -2% 21.57% 21.09% 19.39% 19.77% 19.20% 147.8 215.8 151.0 148.4 142.0 121.9 120.6 125.7 130.6 192.9 190.3 178.1 194.1 132.8 127.1 20.56%
Slide 42: Income Statement Metrics
PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 7,188 2.85% 34.0% 0.71% 2.07% +2% 3.04% 3.00% 2.85% 2.85% 36.3% 33.7% 33.3% 33.6% 34.0% 6,576 6,799 6,873 7,045 7,188 2.50% 0.72% 0.79% 0.71% +2% 0.38% YoY 20
Slide 43: Appendix
INVESTOR PRESENTATION 4Q 2021 Appendix
Slide 44: Saudi Arabia responded strongly to contain the pandemic and support the economy
OPERATING ENVIRONMENT | SAUDI ARABIA’S RESPONSE TO COVID-19 Saudi Arabia responded strongly to contain the pandemic and support the economy Social measures and local cases Support and stimulus programs ▪ The KSA government acted decisively and quickly to suspend to curtail, inter alia, d omestic and
Slide 45: BSF's response to Covid-19 was effective and executed against a robust plan
OPERATING ENVIRONMENT | BSF RESPONSE TO COVID-19 BSF’s response to Covid-19 was effective and executed against a robust plan Putting the safety of our people first Supporting customers Digital enablement ▪ Initiated and expanded flexible and remote working ▪ Waived payments on mortgages and personal
Slide 46: Disclaimer
INVESTOR PRESENTATION 4Q 2021 Disclaimer This presentation is being provided to you for general information purposes. The information contained in the presentation has been obtained from sources believed by Banque Saudi Fransi (“BSF") to be up to date, correct and reliable, but BSF does not make any