Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q1 2023 Earnings Presentation
53 slides from Banque Saudi Fransi's earnings presentation, 2023
Slide 1: Banque Saudi Fransi Investor Presentation 1Q 2023
3 Column Slides Banque Saudi Fransi Investor Presentation 1Q 2023
Slide 2: Contents
INVESTOR PRESENTATION 1Q 2023 Contents BSF Profile 3 Operating Environment 7 Strategy 11 Financial Performance 24 Outlook & Guidance 41 Segmental Performance 43 Performance Track Record 49 Appendix 52 Disclaimer 53
Slide 3: BSF Profile
INVESTOR PRESENTATION 1Q 2023 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) 1.2 82 3,065 +2.3% year-on-year +0 year-on-year +16.6% year-on-year 1Q 23 Operating Income Diversity (SAR Mn) 2,318 Headquartered in Riyadh:
Slide 5: Solid market parameters and credit ratings
PROFILE | SHARE PROFILE AND CREDIT RATINGS Solid market parameters and credit ratings Share Parameters 31 Mar 2023 Total Shareholder Return (TSR) 160 Closing price (SAR) 36.20 140 52 weeks range (SAR) 32.5 - 57.2 120 Shares issued (million) 1,205 100 80 60 Market capitalization (SARbn) 43.63 40 Mark
Slide 6: Experienced and dynamic executive management team
PROFILE | MANAGEMENT Experienced and dynamic executive management team Bader Alsalloom Ramzy Darwish Sander Aardoom Chief Executive Officer Chief Financial Officer Deputy Chief Financial Officer BSF: appointed Apr-21 BSF: appointed CFO Dec-22 Business Lease Group B.V.: CFO & Board Saudi Inve
Slide 7: Operating Environment
INVESTOR PRESENTATION 1Q 2023 Operating Environment
Slide 8: Macro-economic environment: rising rates, supportive domestic activity, moderating oil and stock prices
OPERATING ENVIRONMENT | ECONOMIC CONDITIONS The macro-economic environment is characterized by rising rates, supportive domestic activity and moderating oil and stock prices Brent Oil Price / Barrel (USD) Tadawul Index Oil prices rose to USD 120/bl in 2Q 2022, following Ukraine-Russia disruption,
Slide 9: Saudi Arabia's real GDP growth is forecast at 3.1% in 2023
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK Saudi Arabia’s real GDP growth is forecast at 3.1% in 2023 Real GDP growth (%) Brent Oil Price / Barrel (USD) Real GDP for Saudi Arabia is expected grow by 3.1% in 2023 following 8.7% expected growth in 2022. Interest rates arises are expected to tail off
Slide 10: The Saudi banking sector is well positioned for both resiliency and growth
OPERATING ENVIRONMENT | KSA BANKING SECTOR The Saudi banking sector is well positioned for both resiliency and growth Bank Credit (SAR Bn) Capitalization: T1|CAR (%) NPL Ratio (%) 2,411 18.4%|19.9% 1.8% +13% 20.3% 19.4% 20.3% 19.9% 19.9% 2,349 2,411 2.2% 2,059 2.0% 1.9% 1.9% 1,783 1.8% 1,443 1,552 1
Slide 11: Strategy
INVESTOR PRESENTATION 1Q 2023 Strategy
Slide 12: Refocusing and simplifying our existing strategy
STRATEGY | CONTEXT We are refocusing and simplifying our existing strategy for an evolving external environment and an optimized internal structure Rising rate environment Historic increase in levels of inflation Sudden rate declines Geopolitical tensions Covid-19 Recessionary fears In
Slide 13: Refocused strategy targets 10 vital initiatives
STRATEGY | SUMMARY Refocused strategy targets 10 vital initiatives, including planned completion of technology infrastructure upgrades and rebranding in 1H 2024 Wholesale Banking Private Banking Technology Expand FIG Expand Infrastructure & MNC product Upgrade Coverage suite 1H 2024 Priority Saudi F
Slide 14: Strategy driven by ambitious aspirations for market position, profitability and customer experience
STRATEGY | STRATEGIC FRAMEWORK Our strategy is driven by ambitious aspirations for market position, profitability and customer experience Strategic Goals Position: Profitability: Customer Experience: Be among the top players in our target segments Focus on profitability and return on capital Continu
Slide 15: Strategic initiatives built on core business strengths and opportunities
STRATEGY | STRATEGIC PILLARS Strategic initiatives are built on our core business strengths and opportunities Wholesale Banking Personal Banking Private Banking Saudi Fransi Leasing Saudi Fransi Capital Strategic Goals Strong corporate relationships Solid positioning & strong Leading market po
Slide 16: Strategic Pillar: Wholesale Banking
STRATEGY | STRATEGIC PILLARS Strategic Pillar: Wholesale Banking Strategy Objectives Our Strengths Our Opportunities Strengthen position as a premier Strong & deep relationships with corporates Vision 2030 opportunities wholesale bank, boosting fee income Corporate & project finance DNA Addr
Slide 17: Strategic Pillar: Personal Banking
STRATEGY | STRATEGIC PILLARS Strategic Pillar: Personal Banking Strategy Objectives Our Strengths Our Opportunities Focusing on affluent customers through Solid positioning & strong brand in affluent Opportunity to become bank of choice in segment attractive affluent market improved segmentation
Slide 18: Strategic Pillar: Private Banking
STRATEGY | STRATEGIC PILLARS Strategic Pillar: Private Banking Strategy Objectives Our Strengths Our Opportunities Reinforcing market leadership by Leading market position & core strength of the Strong market growth within our key segment bank Multi-family office and geographic expansion of en
Slide 19: Strategic Pillar: Saudi Fransi Leasing
STRATEGY | STRATEGIC PILLARS Strategic Pillar: Saudi Fransi Leasing Strategy Objectives Our Strengths Our Opportunities Embracing digitalization, broadening Strong customer journeys for clients supported The PF, home loan, and micro-finance space still by close relationship with BSF Group an ear
Slide 20: Strategic Pillar: Saudi Fransi Capital
STRATEGY | STRATEGIC PILLARS Strategic Pillar: Saudi Fransi Capital Strategy Objectives Our Strengths Our Opportunities Focusing on collaboration to provide a Strong technical talent Capitalize on KSA’s growing financial and capital Institutional pedigree linked to excellence and markets stron
Slide 21: Strategic Enablers: Risk, Customer Experience & Brand
STRATEGY | STRATEGIC ENABLERS Strategic Enablers: Risk, Customer Experience & Brand Risk Customer Experience & Brand Drive business growth proactively and risk-smart, slashing cost of Elevate customer experience to foster trust and loyalty, boosting credit and unlocking efficient credit approval and
Slide 22: Strategic Enablers: Technology & Digital
STRATEGY | STRATEGIC ENABLERS Strategic Enablers: Technology & Digital Technology Digital 2.0 The long-running projects, aimed at enhancing core tech Driving BSF’s ambition to become the most modern, innovative and infrastructure for BSF, are set to conclude in 1H 2024, propelling experience-focused
Slide 23: Strategic Enablers: Treasury, Organizational Effectiveness & People
STRATEGY | STRATEGIC ENABLERS Strategic Enablers: Treasury, Organizational Effectiveness & People Treasury Organizational Effectiveness & People Fuel the bank's growth and help business lines optimize their Revamp organization, enhance processes, refresh authority funding costs. delegation, align HR
Slide 24: Financial Performance
INVESTOR PRESENTATION 1Q 2023 Financial Performance
Slide 25: Improved profitability from NIM expansion and balanced asset growth
FINANCIAL PERFORMANCE | HIGHLIGHTS Improved profitability from NIM expansion and balanced asset growth BALANCE SHEET Loans & Advances Investments Customers' Deposits High quality loan growth of 8% YoY driven by 8% commercial and 6% consumer lending growth. 164.8 +8% year-on-year 44.8 +4% year-
Slide 26: Balance sheet growth driven by lending and SAMA placements, funded by IBD growth
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Balance sheet growth driven by lending and SAMA placements, funded by IBD growth Growth in total assets of 4% YTD, mainly driven by healthy 4% loan growth and increased Total Assets Movement (SAR Bn) placements with SAMA. Liabilities grew by 4% du
Slide 27: Net income grew 23% YoY from strong NII growth
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income grew 23% YoY from strong NII growth, partly offset by increased operating expenses and impairments Net Income Movement (SAR Mn) Net income for 1Q 2023 grew 23% YoY to SAR 1,076mn from 27% growth in operating income, partly offset by 18
Slide 28: Healthy and balanced 4% loan growth during 1Q 2023
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy and balanced 4% loan growth during 1Q 2023 Total Loans & Advances (SAR Bn) Commercial Loans Movement YTD (SAR Bn) Loans & Advances Composition (SAR Mn) 164.8 134.6 164,779 +8% +4% Consumer 18.3% Commercial 159.0 164.8 2.0 1.1 0.7 0.6 0.5 0.5 134.6 8
Slide 29: Modest 1% increase in the investment portfolio in 1Q 2023
FINANCIAL PERFORMANCE | INVESTMENTS Modest 1% increase in the investment portfolio in 1Q 2023 Investments Movement by Type (SAR Bn) Investments Composition by Type Investments increased 1% YTD reflecting (SAR Mn) increased investment in corporate, longer- term fixed-rate securities. 44.8 44,807
Slide 30: Healthy 6% growth in deposits YTD from increased IBDs
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Healthy 6% growth in deposits YTD from increased IBDs Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) Deposits grew 6% during 1Q 2023, mainly from IBDs. IBD increased 17% YTD from 32% growth in Corporate, partly offset by a 5% declin
Slide 31: NII growth of 36% from margin expansion and earning assets growth
FINANCIAL PERFORMANCE | NET INTEREST INCOME NII growth of 36% from margin expansion and earning assets growth Net Interest Income Movement (SAR Mn) NII for 1Q 2023 grew 36% YoY to SAR 1,924mn from margin expansion and 7% growth in (simple) average earning assets. 1,924 Interest income rose 92% Y
Slide 32: Improved loan yields from higher rate environment drive margin expansion
FINANCIAL PERFORMANCE | NET INTEREST MARGIN Improved loan yields from higher rate environment drive margin expansion YTD Net Interest Margin Trend (%) Net Interest Margin Movement (%) The NIM increased 79bps YoY due to improved loan yields, partly offset by the higher funding costs and the hedging
Slide 33: 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 as at 31 December 2022 (SAR Bn) • At 31 December 2022, BSF estimated a 1-year NIM sensitivity of a 100bps rates rise at 10bps; this would translate into SAR 219mn higher
Slide 34: Non-interest income declined 3% YoY
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income declined 3% YoY from lower trading and capital markets income Non-interest income for 1Q 2023 declined 3% YoY to SAR 394mn from lower trading and Non-Interest Income Movement (SAR Mn) capital markets income. Net fee & commission inc
Slide 35: Operating expenses growth of 18% from higher employee-related expenses
FINANCIAL PERFORMANCE | OPERATING EXPENSES Operating expenses growth of 18% from higher employee-related expenses Operating Expenses Movement (SAR Mn) Operating expenses increased 18% YoY to SAR 712mn in 1Q 2023 due to increased employee-related costs from higher utilization of FTE budgets and exc
Slide 36: Cost of risk increased by 53bps YoY to 1.16%
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Cost of risk increased by 53bps YoY to 1.16% for 1Q 2023 Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 406 406 1.16% 1.65% +87 bps year-on-year +68% +68% 1.16% 476 406 0.85% 476 0.74% 241 -15% 406 0.63% 0.68%
Slide 37: NPL ratio trend impacted by isolated pockets of Commercial book migration
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL ratio trend impacted by isolated pockets of Commercial book migration; underlying credit quality healthy Non Performing Loans & Advances Non Performing Loans & Advances (SAR NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) Bn) 4.4 4.4 2.59% 3.1% +28 bps ye
Slide 38: NPL coverage improved 0.5ppts YTD to 122.4%
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL coverage improved 0.5ppts YTD to 122.4% Allowance For Impairment (SAR Bn) Allowance For Impairment (SAR Bn) NPL Coverage Ratio (%) Commercial NPL Coverage (%) 5.4 5.4 122.4% 121% -6 ppts year-on-year +11% +11% 131.3% 5.0 5.4 5.2 5.2 5.4 126.5% 4.9 4.9 5.0
Slide 39: Capital ratios improved YTD from net income generation and lower operational risk RWAs
FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios improved YTD from net income generation and lower operational risk RWAs Total Capital (SAR Bn) RWA (SAR Bn) Total capital (Tier 1 + Tier 2 regulatory capital) increased 2% to SAR 43.5bn during 1Q 2023 from net income generation. 43.5 209.6 RW
Slide 40: Liquidity remains strong and comfortably within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR & NSFR (%) HQLA (SAR Bn) LCR improved by 4ppts during 1Q 2023 to 200%. NSFR moderated 3ppts to 119% as of 31 March 2023. The bank continues to manage the LTD ratio for optimum 200% 38.5 effi
Slide 41: Outlook and Guidance
INVESTOR PRESENTATION 1Q 2023 Outlook and Guidance
Slide 42: Improving profitability expected in 2023
FINANCIAL PERFORMANCE | GUIDANCE Improving profitability expected in 2023 from solid loan growth, continued NIM expansion, positive jaws and lower cost of risk Metric 1Q 2023 Outcome 2023 Guidance Revision Drivers Financing Growth Financing Growth Balanced growth of consumer and commercial LOANS & A
Slide 43: Segmental Performance
INVESTOR PRESENTATION 1Q 2023 Segmental Performance
Slide 44: Profitability driven by growth in Retail and Corporate
SEGMENTAL PERFORMANCE | SUMMARY Profitability driven by growth in Retail and Corporate, partly offset by lower Treasury and Investment Banking and Brokerage Operating Income Movement (SAR Mn) Net Income Before Zakat Movement (SAR Mn) 2,318 1,200 +27% +23% 323 2,317 317 63 338 1,200 1,821 975 (143) (
Slide 45: Retail: Higher profits YoY from higher net interest income
SEGMENTAL PERFORMANCE | RETAIL Higher profits YoY from higher net interest income Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 458 804 740 +79.8% year-on-year +225% +73% SAR Million 328 10 54 458 804 694 64 Fee & other income 466 48 (75) +16% 141 54
Slide 46: Corporate: Modest rise in profitability
SEGMENTAL PERFORMANCE | CORPORATE Modest rise in Corporate profitability as operating income growth partly offset by increased impairments Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,500 1,048 921 +47.5% year-on-year +3% +45% SAR Million 502 98 1
Slide 47: Treasury: Net income declined 29% YoY
SEGMENTAL PERFORMANCE | TREASURY Net income declined 29% YoY from lower interest income Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 315 370 230 -34.3% year-on-year -29% -28% SAR Million 445 513 6 315 372 370 6 163 Fee & other income (120) 179 140 (
Slide 48: Investment Banking and Brokerage: Profitability decline due to lower brokerage fees
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Profitability decline due to lower brokerage fees Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 43 96 33 +15.2% year-on-year -36% -19% SAR Million 67 4 119 120 96 43 Fee & other income 90 84 64
Slide 49: Performance Track Record
INVESTOR PRESENTATION 1Q 2023 Performance Track Record
Slide 50: Balance Sheet Metrics
PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 159.0 232.1 157.6 19.92% +7% +5% 21.57% 21.09% +2% 19.77% 19.92% 19.20% 147.8 159.0 215.8 232.1 148.4 157.6 20.56% 19.94% 130.6 190.3 194.1 132.8 142.0 18.32% 18.90% 12
Slide 51: Income Statement Metrics
PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 8,017 3.06% 33.1% 0.85% +4% 2.07% 3.04% 3.02% 3.06% 33.7% 33.3% 33.6% 34.3% 33.1% 2.85% 2.97% 8,017 6,799 6,873 7,045 7,128 0.79% 0.85% 0.72% 0.67% +12% YoY 2
Slide 52: Appendix
EARNINGS PRESENTATION 1Q 2023 Appendix
Slide 53: Disclaimer
INVESTOR PRESENTATION 1Q 2023 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