Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q1 2020 Earnings Presentation
45 slides from Banque Saudi Fransi's earnings presentation, 2020
Slide 1: Banque Saudi Fransi Investor Presentation 1Q 2020
3 Column Slides Banque Saudi Fransi Investor Presentation 1Q 2020
Slide 2: Contents
INVESTOR PRESENTATION 1Q 2020 Contents BSF Profile 3 Operating Environment 6 Strategy 12 Financial Performance 19 Outlook & Guidance 34 Segmental Performance 36 Performance Track Record 42
Slide 3: BSF Profile
INVESTOR PRESENTATION 1Q 2020 BSF Profile
Slide 4: Leading banking group in Saudi Arabia with domestic focus
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 87 2,972 +1.3% year-to-date +0 year-to-date -0.9% year-to-date FY19 Operating Income Diversity (SAR Mn) 6,873 Headquartered in Riyadh: Su
Slide 5: Market parameters impacted by Covid-19, credit ratings remain solid
PROFILE | SHARE PROFILE AND CREDIT RATINGS Market parameters impacted by Covid-19 disruption, but credit ratings remain solid Share Parameters 31 Mar 2020 Total Shareholder Return (TSR) 50 Closing price (SAR) 25.85 40 52 weeks range (SAR) 22.3 - 43.7 30 Shares issued (million) 1,205 20 10 Market cap
Slide 6: Operating Environment
INVESTOR PRESENTATION 1Q 2020 Operating Environment
Slide 7: Covid-19 has severely disrupted financial markets and economic activity
OPERATING ENVIRONMENT | COVID-19 DISRUPTION Covid-19 has severely disrupted financial markets and economic activity Brent Oil Price / Barrel (USD) Tadawul Index Oil prices dropped sharply in 1Q 2020 as the Covid-19 pandemic has spread, despite the recent OPEC+ production cut agreement. 19 6,505
Slide 8: Saudi Arabia responded strongly to contain the pandemic and support economy
OPERATING ENVIRONMENT | SAUDI ARABIA’S RESPONSE TO COVID-19 Saudi Arabia has 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: SAMA Programs Other Measures - D
Slide 9: Economic outlook for 2020 is uncertain
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK Nevertheless, the economic outlook for 2020 is uncertain Real GDP growth (%) Brent Oil Price Average / Barrel (USD) GDP for Saudi Arabia is expected to contract by -2.3% in 2020 (IMF) due to the deterioration of the global economic outlook, resulting from -
Slide 10: Saudi banking sector well positioned to absorb the impact
OPERATING ENVIRONMENT | KSA BANKING SECTOR In this challenging environment, the Saudi banking sector is well positioned to absorb the impact Bank Credit (SAR Bn) Capitalization: T1|CAR (%) NPL Ratio (%) 1,634 18.0%|19.3% 1.9% +12% 19.5% 20.4% 20.3% 19.3% 18.1% 1,501 1,552 1,634 2.0% 1,461 1,477 1.9%
Slide 11: BSF's response to Covid-19
OPERATING ENVIRONMENT | BSF RESPONSE TO COVID-19 BSF’s response to Covid-19 has been effective and executed against a robust plan Putting the safety of our people first Supporting customers Digital enablement Initiated and expanded flexible and remote Waived payments on mortgages and personal
Slide 12: Strategy
INVESTOR PRESENTATION 1Q 2020 Strategy
Slide 13: Mission and values
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 14: Executive management team
STRATEGY | MANAGEMENT TEAM …and set out to build a cohesive, best-in-class executive management team… Rayan Mohammed Fayez Abdullah Alkhalifa Ravishanker Visvanathan Managing Director & Chief Chief Financial Officer Chief Risk Officer Executive Officer Mazen Altamimi Mohammed Abdulrahman Abdulmohsen
Slide 15: 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 MARKET SHARE* MARKET SHARE 8.3% Solidify our Scale up in 10% leadership position in Retail B
Slide 16: 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 on average equity Basic earnings per Dividends per share (DPS) return (TSR) (ROAE) share(EPS) Generate top-q
Slide 17: 2019 progress across strategic outcomes
STRATEGY | 2019 PROGRESS | STRATEGIC OUTCOMES As a result of progress made on strategy implementation, 2019 saw improvements across all strategic outcomes STRATEGIC OUTCOME Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder Return on average equity Basic earnings per share
Slide 18: Strategic initiatives reassessed in light of Covid-19
STRATEGY | COVID-19 IMPLICATIONS Strategic initiatives are continuously re-assessed in light of Covid-19, and we are taking a balanced approach to defensive and offensive action Initiatives 2020 Direction Completed Corporate Digital Platform implementation Corporate Banking 6/14 Finalize CRM, NP
Slide 19: Financial Performance
INVESTOR PRESENTATION 1Q 2020 Financial Performance
Slide 20: Net income declined on Covid-19 impairments
FINANCIAL PERFORMANCE | HIGHLIGHTS Net income declined on Covid-19 impairments BALANCE SHEET Loans & Advances Investments Non Interest Bearing Deposits Strong loan growth Strong deposit growth from flight to 134.9 +7.3% year-to-date 33.9 +7.9% year-to-date 83.7 +15.1% year-to-date quality a
Slide 21: Strong balance sheet growth
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Strong balance sheet growth Total Assets Movement (SAR Bn) Growth in total assets of 12% QoQ driven by strong 7% loan growth during 1Q 2020. Balance sheet growth funded by strong 10% QoQ growth in deposits, due 199.2 to liquidity enhancement by cu
Slide 22: Net income declined year-on-year on higher credit and operating costs
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income declined year-on-year as growth in income was offset by higher credit and operating costs Net Income After Zakat & Tax Movement (SAR Mn) Net income declined 26% YoY to SAR 682mn as 2% income growth was more than offset by 14% increase
Slide 23: Strong loan growth in 1Q 2020
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Strong loan growth in 1Q 2020 Total Loans & Advances (SAR Bn) Commercial Loans Movement (SAR Bn) Commercial Loans Composition (SAR Mn) 134.9 115.7 115,664 Other +11% +7% 21.2% 125.7 134.9 1.6 1.6 115.7 Commerce 121.3 1.6 1.6 Transport 2.2 & comms 22.8% 17.9
Slide 24: Growth in investment portfolio from Saudi Government bonds
FINANCIAL PERFORMANCE | INVESTMENTS Strong growth in investment portfolio from increased Saudi Government bond holdings Investments Movement by Type (SAR Bn) Investments Composition by Type Investments rose 8% during 1Q (SAR Mn) 2020 as the bank increased Saudi Government bond 33.9 33,940 holdings
Slide 25: Strong deposit growth as corporates shore up liquidity
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Strong deposit growth corporate customers shore up liquidity in response to Covid-19 disruption Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) Deposits grew 10% during 1Q 2020 in both NIBDs (+15%) and IBDs (+5%). Growth was mainly d
Slide 26: Moderate growth in NII from improved funding costs
FINANCIAL PERFORMANCE | NET INTEREST INCOME Moderate growth in NII from improved funding costs Net Interest Income Movement (SAR Mn) NII improved modestly by 1% YoY to SAR 1,287mn in 1Q 2020. Growth was driven by a 28% improvement in 1,287 funding costs, which more than offset an 8% decline in i
Slide 27: Margin improvement due to improved balance sheet mix
FINANCIAL PERFORMANCE | NET INTEREST MARGIN Margin improvement despite lower rate environment due to improved balance sheet mix Net Interest Margin Trend (%) Net Interest Margin Movement (SAR Bn) The NIM improved 13bps YoY and declined 3bps from FY 2019 to 3.01% for 1Q 2020. 3.01% 3.01% The YoY
Slide 28: Lower fee income, growth in other income from one-off gain
FINANCIAL PERFORMANCE | FEE & OTHER INCOME Lower banking-related fee income reflective of market conditions, but growth in other income from one-off gain Fee & Other Income Movement (SAR Mn) Fee & other income improved 4% YoY to SAR 470mn as higher other operating income more than offset lower ban
Slide 29: Higher operating expenses from salary increments
FINANCIAL PERFORMANCE | OPERATING EXPENSES Higher operating expenses from salary increments and improvements of talent pool Operating Expenses Movement (SAR Mn) Operating expenses increased 14% YoY to SAR 559mn in 1Q 2020, due to one-off accrual reversal in 1Q 2019 of SAR 37mn. Excluding one-off
Slide 30: Higher impairment charge and cost of risk
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Higher impairment charge and cost of risk from higher commercial provisions, partly due to Covid-19 Impairment Charge (SAR Mn) Credit Losses (SAR Mn) Cost of Credit Risk (SAR Bn) Commercial COR 397 398 1.19% 1.4% +105 bps year-on-year +276% +176% 0.79% 447
Slide 31: Rise in NPLs from commercial book
FINANCIAL PERFORMANCE | CREDIT QUALITY Rise in NPLs from commercial book; NPL ratio increased 6bps and NPL coverage stable YTD Non Performing Loans & Allowance For Impairment NPL Ratio (%) Commercial NPL Ratio (%) Advances (SAR Bn) (SAR Bn) 3.8 4.1 2.70% 2.9% +10 bps year-to-date +11% -3% 3.8 4.2
Slide 32: Capital ratios declined, but remain comfortable
FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios declined, but remain comfortable Total Capital (SAR Bn) RWA (SAR Bn) Total capital increased by SAR 1.0bn (+3% QoQ) during 1Q 2020 from net income generation of SAR 0.7bn and increased 35.3 192.4 reserves of SAR 0.4bn. RWAs rose 8% QoQ to SAR
Slide 33: Liquidity remains very strong within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains very strong and comfortably within regulatory limits LCR (%) HQLA (SAR Bn) LCR declined 100ppts during 1Q 2020 due to a decline in HQLA of 14% from balance sheet optimization conducted in 4Q 2019 but 217.0% 34.4 remains comfortable at 217%. 446.8
Slide 34: Outlook and Guidance
INVESTOR PRESENTATION 1Q 2020 Outlook and Guidance
Slide 35: Covid-19 impact on outlook and guidance for NIM and COR
GUIDANCE & OUTLOOK | GUIDANCE Covid-19 disruption, lower oil prices and interest rates have impacted our outlook and guidance for NIM and COR Original Guidance 1Q 2020 Outcome 2020 Guidance 1Q 2020 growth of 7% YTD Loans & Advances Unchanged SAR Billion already close to original 125.7 125.7 LOANS
Slide 36: Segmental Performance
INVESTOR PRESENTATION 1Q 2020 Segmental Performance
Slide 37: Treasury profit growth, Corporate impacted by margins and impairments
SEGMENTAL PERFORMANCE | SUMMARY Healthy profit growth in Treasury, while Corporate impacted by lower margins and higher impairments Operating Income Movement (SAR Mn) Net Income Before Zakat & Tax Movement (SAR Mn) 1,757 801 +2% -29% 1,723 70 5 1,757 1,126 73 4 801 (0) (40) (0) (402) Operating incom
Slide 38: Retail: stable profits
SEGMENTAL PERFORMANCE | RETAIL Stable profits driven by flat income and improving cost of risk offsetting higher operating expenses Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 157 459 385 +2.2% year-on-year SAR Million -0% -0% 460 478
Slide 39: Corporate: decline in profitability
SEGMENTAL PERFORMANCE | CORPORATE Higher impairments and lower income drive decline in Corporate profitability Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 177 741 573 -3.5% year-on-year SAR Million -69% -5% 781 734 741 579 187 168 Fee
Slide 40: Treasury: strong profit growth
SEGMENTAL PERFORMANCE | TREASURY Strong profit growth driven by higher investment returns and increased fee income Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 431 475 315 +10.0% year-on-year SAR Million +20% +17% 475 3 431 405 415 29 4
Slide 41: Investment Banking and Brokerage: healthy profit growth
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Healthy profit growth from solid growth in asset management and brokerage revenue Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) 36 82 +11% +6% 78 78 82 33 6 36 62 63 68 +5% (1) QoQ (2) 16 15 14 Net inco
Slide 42: Performance Track Record
INVESTOR PRESENTATION 1Q 2020 Performance Track Record
Slide 43: Balance Sheet Metrics
PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 125.7 178.1 132.8 19.2% +0% -1% -2% 19.4% 19.8% 19.2% 17.8% 123.8 129.5 121.9 120.6 125.7 203.4 192.9 190.3 158.5 151.0 148.4 17.2% 183.7 178.1 141.9 132.8 18.3% 17.5%
Slide 44: Income Statement Metrics
PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 6,873 3.04% 33.3% 0.79% +2% 0.79% 0.72% 36.3% 0.59% 6,799 6,873 3.04% 33.6% 33.7% 6,291 6,400 6,576 2.85% 33.3% 33.3% 2.35% 2.38% 2.50% 0.38% +1% 0.15% YoY 20
Slide 45: Disclaimer
INVESTOR PRESENTATION 1Q 2020 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