Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — H1 2024 Earnings Presentation
67 slides from Banque Saudi Fransi's earnings presentation, 2024
Slide 1: BSF 1H 2024 Investor Presentation
BSF 1H 2024 Investor Presentation 1H 2024
Slide 2: Contents
Contents 03 BSF Profile 10 Operating Environment 13 Strategy 23 ESG Update 29 Financial Performance 53 Outlook & Guidance 56 Segmental Performance 62 Performance Track Record 65 Appendix BSF Investor Presentation | 1H 2024 2
Slide 3: BSF Profile
BSF Profile Investor Presentation 1H 2024
Slide 4: BSF has a solid investment profile and clearly articulated strategy
BSF has a solid investment profile and clearly articulated strategy Leading banking group in Saudi Arabia with a strong focus on domestic operations 1. Domestically systemic important bank (“D-SIB”) with total assets of SAR 288.8bn and market capitalization of SAR 42.7bn Universal Bank model with fu
Slide 5: We are a leading banking group in Saudi Arabia with a strong focus on domestic operations
We are a leading banking group in Saudi Arabia with a strong focus on domestic operations BSF is the successor to Banque de Headquartered in Riyadh: Subsidiaries in KSA: l’Indochine (est. 1949) Branches 82 branches across the Kingdom BSF Capital 82 BSF was then established by Royal Domestically
Slide 6: A diversified business model and a wide range of product capabilities
A diversified business model and a wide range of product capabilities Corporate Retail Investment Banking Treasury and Brokerage One of the largest providers of A wide network of branches, A leader in investment banking, Diverse client services, market corporate banking services in ATMs, digital pla
Slide 7: Focus on consistent delivery of shareholder returns over the years
Focus on consistent delivery of shareholder returns over the years Shareholder Foreign Ownership ROAE (%) Composition* 11.0% 1,205 10.6% 9.2% 8.8% (Mn Shares) 2021 2022 2023 1H 24 Kingdom Foreign Holdings 10.4% 16.2% Dividends Per Share (SAR) Dividend payout ratio 59% 59% 55% 55% 1.95 1.65 1.50 Othe
Slide 8: Solid market parameters and share price performance
Solid market parameters and share price performance Share Price Performance vs. Tadawul (%) Market Capitalization BSF Share Price 25 (SAR Bn) (SAR) 20 42.7 35.4 15 10 Tadawul, 11.5 5 0 Tadawul Banks, -0.4 -5 -10 BSF, -12.8 -15 4.95% of KSA banking sector 52 weeks range [32.5 - 45.7] -20 -25 0.46% of
Slide 9: Experienced and dynamic executive management team
Experienced and dynamic executive management team Bader Alsalloom Ramzy Darwish Chief Executive Officer Chief Financial Officer • BSF: appointed Apr-21 • BSF: appointed CFO Dec-22 • Saudi Investment Bank: Deputy GM Corporate • SNB: 17 years where positions included Head of Banking 2 years Treasury,
Slide 10: Operating Environment
Operating Environment Investor Presentation 1H 2024
Slide 11: Saudi Arabia's real GDP growth is expected to improve at 1.7% in 2024
Saudi Arabia’s real GDP growth is expected to improve at 1.7% in 2024 Economic Outlook Real GDP Growth (%) Brent Avg Oil Price / Real GDP for Saudi Arabia is expected to increase by +1.7% in 2024 following 0.8% 7.5% Barrel (USD) contraction in 2023 due to lower oil production. 4.7% 99.0 Interest
Slide 12: The Saudi banking sector is well positioned for both resiliency and growth
The Saudi banking sector is well positioned for both resiliency and growth Bank Credit (SAR Bn) Capitalization (%) NPL Ratio (%) +13% CAGR 20.3% 19.9% 19.9% 20.1% 19.6% 2.2% 2,584 2,752 2,349 1.9% 2,059 1.8% 1,783 18.7% 18.6% 18.2% 18.4% 18.1% 1.5% 1.4% +16% +14% +10% +7% 2020 2021 2022 2023 1Q 24 2
Slide 13: Strategy
Strategy Investor Presentation 1H 2024
Slide 14: In early 2023 we refocused and simplified our strategy to 10 vital initiatives
In early 2023 we refocused and simplified our existing strategy to 10 vital initiatives for an evolving external environment and internal structure 1H 2024 Priority Wholesale Banking Personal Banking Personal Banking Private Banking Private Banking Technology Expand FIG & MNC Scale Up in Affluent Ex
Slide 15: Our strategy is driven by ambitious aspirations for market position, profitability and customer experience
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 Focus on profitability and return on Continued commitment to target segments (Top 3 Market Share) capi
Slide 16: Strategy execution progressing well across the various business pillars
Strategy execution progressing well across the various business pillars Wholesale Banking Personal Banking Private Banking Strategic Goals Solidify market position Leverage segmentation Reinforce market and synergies leadership Focused Initiatives GTS revamp Scale up affluent Broaden product suite E
Slide 17: Strategy execution progressing well: JB and BSF Capital
Strategy execution progressing well across the various business pillars JB BSF Capital Strategic Goals Expand in new market Seize existing segments opportunities and grow Focused Initiatives Digital acceleration Synergize wealth mgmt. Product diversification Broaden advisory Brand repositioning Attr
Slide 18: In 2023 we successfully realized two pivotal strategic milestones
In 2023 we successfully realized two pivotal strategic milestones JB New Brand Sur Multifamily Office JB, formerly known as SFL, has strategically This strategic realignment was Introducing the Sur Multifamily Office, 100% subsidiary of BSF to cater the needs pivoted to diversify its offerings, targ
Slide 19: Good progress in the implementation of the four key strategic programs
Good progress in the implementation of the four key strategic programs across the IT & Technology and rebranding priorities Description Key Highlights 2024 Progress & Beyond New corporate platform Phase I Backend: design, development Finalize the plan to assess the impact Technology Infrastructu
Slide 20: BSF has now successfully deployed 4 releases in production
BSF has now successfully deployed 4 releases in production, each more complex than the previous one Release 1 Release 2.1 Release 2.2A Release 2.2B Release 3 Retail loans & Retail loans Payment Processing: Corporate and Corporate Loans limits origination SWIFT Retail Accounts Corporate &
Slide 21: CBS is a critical program for BSF's digital transformation and ambition realization
CBS is a critical program for BSF’s digital transformation and ambition realization Enhanced offering & Customer experience The advantages already realized services Latest innovations & products Full digitalization of products & Future-proofing BSF tech landscape Anticipating client needs with s
Slide 22: We have successfully launched BSF's new Brand on the 2nd of May
We have successfully launched BSF’s new Brand on the 2nd of May Why is the Brand changing? Competitive Advantage: aiming for leadership and Strategic profitability in focused market segments Our heritage has instilled The BSF acronym signals Enablement Simplification and Digitization: consistent mas
Slide 23: ESG Update
ESG Update Investor Presentation 1H 2024
Slide 24: ESG is woven into our strategic fabric
ESG is woven into our strategic fabric, driving with our business objectives while nurturing our environment, society, and governance ESG is Part of BSF DNA BSF’s Recent ESG Highlights BSF’s ESG Pillars are born from within BSF’s corporate mission and values Environmental Social Governance 17.9% red
Slide 25: Significance to stakeholders: materiality matrix
We have identified and prioritized 15 sustainability-related material issues that have a substantial impact on our strategic objectives and are deemed crucial by our stakeholders Such issues have been depicted in our materiality matrix, which is built upon a Materiality Matrix 1 Governance, accounta
Slide 26: BSF has implemented a comprehensive ESG governance and policy framework with Board oversight
BSF has implemented a comprehensive ESG governance and policy framework with Board oversight Nomination & BSF Board of Executive Board Strategy Board Risk Audit Committee Renumeration Directors Committee Committee Committee Committee Abdullatif Rayan Bader ESG Board Committee: Alothman Fayez Al Issa
Slide 27: Charting The Course Of Excellence: Our ESG journey
Charting The Course Of Excellence: Our ESG journey from a strong foundations to future innovation Established the ESG Published the Published the Published the Policy Framework Inaugural 2020 2021 ESG Report 2022 ESG Report ESG Report Implemented the ESG Governance Model BSF Investor Presentation |
Slide 28: BSF achieves remarkable progress in boosting ESG ratings
BSF achieves remarkable progress in boosting ESG ratings Sustainalytics ESG Risk Rating Score S&P Global ESG S&P Global ESG Score by Sustainalytics Rating Leading all Saudi banks 21.2 30.0 with the ESG Risk Rating The highest score among Score of 21.2 Saudi banks in the S&P Global ESG Rating for
Slide 29: Financial Performance
Financial Performance Investor Presentation 1H 2024
Slide 30: Strong balance sheet momentum and 6% net income growth YoY
Strong balance sheet momentum and 6% net income growth YoY Balance Sheet Loans & Investments Customers' Strong loan growth of 16% YoY, Advances Deposits driven by equal growth in 197.2 55.5 196.2 commercial and consumer loans. Investments increased 13% YoY to manage IR risk while capturing highe
Slide 31: Improved credit quality with comfortable capital and liquidity
Improved credit quality with comfortable capital and liquidity Asset Quality NPL Ratio NPL Cost of Risk Lower NPL ratio mainly from Coverage write-offs and improving 0.94% 161.9% 0.60% coverage ratio. Decreased COR in the commercial book. -148bps year-on-year +28.6ppts year-on-year -48bps
Slide 32: Balance sheet growth driven by lending, investments and due from banks
Balance sheet growth driven by lending, investments and due from banks Balance Sheet Total Assets Movement YTD (SAR Bn) Growth in total assets of 14% YTD, mainly driven by 10% loan growth, further aided by an +14% increase in due from banks and investments. The investment portfolio expanded by 1
Slide 33: Net income grew 6% YoY from lower impairments, partially offset by higher costs
Net income grew 6% YoY from lower impairments, partially offset by higher costs Income Statement Net Income Movement YoY (SAR Mn) Net income for 1H 2024 grew 6% YoY to SAR 2,279mn from a 34% decline in the impairment +6% charge, partly offset by 10% growth in operating expenses. Total operating
Slide 34: Balanced 10% YTD loan growth from both commercial and consumer sectors
Balanced 10% YTD loan growth from both commercial and consumer sectors Loans & Advances Loans & Advances (SAR Bn) Composition Total loans & advances grew 10% during 1H 2024 from both consumer and commercial 197.2 lending growth. Commercial Commercial loans grew 10% during 1H 2024, with notable i
Slide 35: Well-diversified portfolio in both commercial and consumer sectors
Well-diversified portfolio in both commercial and consumer sectors Commercial Loans Movement YTD (SAR Bn) Commercial Loans Composition 162.1 +10% Other 20.2% 1.7 0.6 162.1 Contracting 2.7 1.8 10.1% 8.3 147.0 Utilities 10.3% (SAR Bn) Manufacturing +22% +13% +13% +7% +1% Commerce 14.2% 28.4% Services
Slide 36: 15% Increase in the investment portfolio in 1H 2024
15% Increase in the investment portfolio in 1H 2024 Investments Investments Composition by Category (SAR Bn) 55.5 Investments increased 15% YTD to manage interest rate risk while capturing higher yields. FVSI - Debt/equity Amortized cost instruments 49.9% The investment portfolio is of high qual
Slide 37: High-quality investment portfolio
High-quality investment portfolio Investments Composition by Type Investments Composition by Sector (SAR Bn) 55.5 Fixed-rate - 50.3 Financials 16.7% (SAR Bn) Equities 0.7% Floating-rate - 4.9 Government - 40.8 Corporate Government Floating-rate Equities - 0.4 9.8% 73.5% Financials - 9.2 Fixed-rate 8
Slide 38: 14% YTD growth in deposits in 1H 2024 mainly from increased IBDs
14% YTD growth in deposits in 1H 2024 mainly from increased IBDs Customers’ Deposits Customers' Deposits (SAR Bn) Deposits grew 14% during 1H 2024 primarily from increased IBDs. +14% NIBD’s increased 4% YTD and IBD’s increased 23% YTD, mainly from corporate deposits. 196.2 161.2 166.4 172.2 174.
Slide 39: Growth of deposits was supported by the corporate segment in 1H 2024
Growth of deposits was supported by the corporate segment in 1H 2024 Customers' Deposits Movement YTD (SAR Bn) IBD (SAR Bn) +14% +23% 32.0 (8.0) 112.2 196.2 91.1 91.6 65.5 73.4 172.2 97.1 68.6 75.0 49.2 56.1 +31% -11% +12% +24% 22.5 +1% +22% 16.2 17.3 16.6 15.2 4Q 23 Corporate Retail 2Q 24 2Q 23 3Q
Slide 40: Efficient and diversified funding structure to support growth
Efficient and diversified funding structure to support growth Funding Structure Successful Track Record in Accessing BSF’s funding is largely comprised of customers’ deposits which represented 79% of total Local and International Capital Markets liabilities and 68% of total liabilities and equity
Slide 41: Strong credit ratings and stable maturity profile
Strong credit ratings and stable maturity profile Credit Ratings Standard & Poor's Maturity Profile (SAR Bn) Syndicated facilities Bonds A- Sukuk Tier 1 Sukuk Stable outlook 5.0 3.9 Moody's Fitch 0.9 3.4 3.2 A2 A- 0.5 5.0 2.1 2.6 3.4 2.6 2.1 0.2 0.4 0.2 Positive outlook Stable outlook 2025 202
Slide 42: Stable NII YoY as earning assets growth was offset by margin contraction
Stable NII YoY as earning assets growth was offset by margin contraction Net Interest Income Net Interest Income Movement YoY (SAR Mn) NII for 1H 2024 declined by 1% YoY to SAR 3,858mn, with 15% average earnings assets -1% growth offset by margin contraction. Interest income rose 28% YoY to SAR
Slide 43: YoY margin decline from shifting deposit mix towards IBDs
YoY margin decline from shifting deposit mix towards IBDs Net Interest Margin YTD NIM Trend Quarterly NIM Trend The NIM declined 52bps YoY to 3.10% due to increased costs on customers’ deposits, partly 6.35% 6.41% 6.50% 5.77% 5.91% 5.95% 6.17% 6.05% 6.35% offset by the higher yields on loans, inve
Slide 44: BSF has limited sensitivity to interest rate changes
BSF has limited sensitivity to interest rate changes NIM Sensitivity Balance Sheet Repricing Profile As of 31 December 2023, BSF estimates a 1-year NIM sensitivity of a 100bps rates change at as at 31 December 2023 (SAR Bn) ±3bps; this would translate into a SAR ±67mn NII delta. 157.1 130.9 The
Slide 45: Non-interest income increased 6% YoY
Non-interest income increased 6% YoY as higher net fee & commission income was partly offset by lower exchange income Non-Interest Income Non-interest Income (SAR Mn) Non-interest income for 1H 2024 increased 6% YoY to SAR 815mn on improved net fee & commission income and investment-related and tr
Slide 46: Fee & commission income increased 15% YoY
Fee & commission income increased 15% YoY, mainly from improved brokerage & asset management income Fee & Commission Income Fee & Commission Income (SAR Mn) Net fee & commission grew 15% to SAR 512mn in 1H 2024 due to higher brokerage & asset management income and trade finance, partially offset b
Slide 47: Operating expenses growth of 10% YoY
Operating expenses growth of 10% YoY mainly from higher employee-related expenses and G&A Operating Expenses Operating Expenses Cost Ratios (%) Operating expenses increased 10% YoY to SAR 1,582mn in 1H 2024 mainly due to increased (SAR Mn) employee-related costs, as well as higher G&A and deprecia
Slide 48: Cost of risk decreased by 48bps YoY to 0.60% for 1H 2024
Cost of risk decreased by 48bps YoY to 0.60% for 1H 2024 from lower commercial impairments Impairment Charge Cost of Credit Risk (%) Impairment Charge Impairment Charge The total impairment charge for 1H (SAR Mn) (SAR Mn) 2024 decreased by 34% YoY to SAR 1.07% -36% 550mn, mainly from lower 0.98% 0
Slide 49: Credit quality remains strong with further decline in commercial NPL ratio
Credit quality remains strong with further decline in commercial NPL ratio NPL Ratio NPL Ratio (%) Non Performing Loans Non Performing Loans The NPL ratio improved 12bps YTD & Advances (SAR Bn) & Advances (SAR Bn) to 0.94% as NPLs declined 2% on 2.42% -2% write-offs during 1Q 2024 in the commercia
Slide 50: NPL coverage improved 24.2ppts YTD to 161.9%
NPL coverage improved 24.2ppts YTD to 161.9% NPL Coverage NPL Coverage Ratio (%) Stage-Wise Provision Allowance for The NPL coverage ratio improved Coverage (%) Stage 3 Stage 2 Impairment (SAR Bn) by 24.2ppts YTD to 161.9%, Stage 1 +15% attributed to enhancements in 76.6% 73.4% 161.9% 65.2% 68.9%
Slide 51: Strong capital ratios
Strong capital ratios Capital Total Capital (SAR Bn) RWA (SAR Bn) Total capital (Tier 1 + Tier 2 +2% +11% regulatory capital) increased 2% YTD to SAR 44.6bn during 1H 2024 as net income generation was 43.4 42.1 43.6 44.5 44.6 246.7 217.3 219.3 223.0 234.3 partly offset by dividend payments. 1.5 1.
Slide 52: Liquidity remains strong and comfortably within regulatory limits
Liquidity remains strong and comfortably within regulatory limits LTD Ratios (%) Headline LTD Ratio Liquidity Leverage Ratio (%) LTD SAMA ratio LCR moderated 9ppts to 187% during 1H 2024. NSFR was broadly stable YTD at 105.3% 105.0% 104.2% 106.1% 118% as of 30 June 2024. 13.8% 13.6% 100.5% 13.5%
Slide 53: Outlook & Guidance
Outlook & Guidance Investor Presentation 1H 2024
Slide 54: Saudi Arabia's real GDP and non-oil GDP growth are expected to improve
Saudi Arabia’s real GDP and non-oil GDP growth are expected to improve, while anticipating a higher-for-longer interest rate environment Metric 2023 Outcome 2024 Outlook Trend Saudi Arabia Real GDP Growth -0.8% +1.7% Real GDP Growth trend: 7.5% 1.7% 4.7% 4.0% #N/A -0.8% 2022 2023 2024E 2025E 2026E
Slide 55: BSF is upgrading the loan guidance and CoR, while moderating NIM, CIR and CET1 guidance
BSF is upgrading the loan guidance and CoR, while moderating the NIM, CIR, and CET1 guidance Metric 1H 2024 Outcome 2024 Guidance Revision 2024 Guidance Drivers Raised guidance reflects robust loan growth in Loans & Advances Growth +9.9% YTD Mid-teens revised up from low double-digits 1H 2024, cou
Slide 56: Segmental Performance
Segmental Performance Investor Presentation 1H 2024
Slide 57: Profitability driven by growth Corporate, partly offset by lower Treasury income
Profitability driven by growth Corporate, partly offset by lower Treasury income Operating Income Movement YoY (SAR Mn) Net Income Before Zakat Movement YoY (SAR Mn) +0% +6% 387 (809) 867 (830) 369 92 19 2,542 4,665 62 4,674 2,393 +22% +19% -115% +30% +10% +112% -153% +18% 1H 23 Retail Corporate Tre
Slide 58: Retail Segment: Higher profits YoY
Retail Segment: Higher profits YoY due to higher net interest income from NIM expansion and loan growth Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Net Income Before Income (SAR Mn) Zakat (SAR Mn) +10% 2Q 23 883 2Q 23 505 387 (18) (53) (225) 1,054 3Q 23 950 3Q 23 551 963 4Q 23 942
Slide 59: Corporate Segment: Increased profitability
Corporate Segment: Increased profitability from net interest income growth supported by decreased impairments Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Net Income Before Income (SAR Mn) Zakat (SAR Mn) +112% 1,644 2Q 23 1,024 2Q 23 392 524 348 39 (44) 3Q 23 1,137 3Q 23 609 777 4Q
Slide 60: Treasury Segment: Net income declined due to higher funding costs
Treasury Segment: Net income declined due to higher funding costs Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Net Income Before Income (SAR Mn) Zakat (SAR Mn) -153% 2Q 23 332 2Q 23 229 543 (792) 3Q 23 253 3Q 23 162 (17) (7) (13) (286) 4Q 23 54 -134% 4Q 23 (40) -189% -185% -6% +4% -
Slide 61: Investment Banking and Brokerage Segment: Profitability improvement YoY
Investment Banking and Brokerage Segment: Profitability improvement YoY as higher fees and NII were partly offset by higher expenses Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Net Income Before Income (SAR Mn) Zakat (SAR Mn) +18% 2Q 23 108 2Q 23 67 46 (42) 16 129 3Q 23 128 3Q 23 6
Slide 62: Performance Track Record
Performance Track Record Investor Presentation 1H 2024
Slide 63: Balance Sheet Metrics
Balance Sheet Metrics Loans & Advances Total Assets LCR (%) CAR (%) CAR (SAR Bn) (SAR Bn) T1 ratio 21.6% 324% 21.1% 2019 125.7 2019 178.1 19.9% 19.5% 19.2% 20.6% 2020 130.6 2020 194.1 19.9% 2021 147.8 +9% CAGR 2021 215.8 +9% CAGR 199% 196% 196% 18.9% 18.9% 179% 18.3% 2022 159.0 2022 232.1 2023 +13%
Slide 64: Income Statement Metrics
Income Statement Metrics Total Operating NIM (%) Cost to Income Ratio (%) Cost of Risk (%) Income (SAR Mn) 2.07% 2019 6,873 3.53% 34.3% 33.3% 33.6% 33.1% 32.4% 2020 7,045 3.04% 2.97% 3.02% 3.06% 2021 7,128 +8% CAGR 0.96% 0.79% 0.85% 0.67% 2022 8,017 2023 +16% QoQ 9,324 2019 2020 2021 2022 2023 2019
Slide 65: Appendix
Appendix Investor Presentation 1H 2024
Slide 66: Please contact the Investor Relations team for additional information
Please contact the Investor Relations team for additional information or download BSF’s IR App For more information, please contact us at: Access our IR website: BSF BSF IR Website P.O. Box 56006, Riyadh 11554 Kingdom of Saudi Arabia Find our financial disclosures: [email protected] Financial Disclosures BS
Slide 67: Disclaimer
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 BSF to be up to date, correct and reliable, but BSF does not make any representation or warranty, express or implied, with