Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — 9M 2024 Earnings Presentation
66 slides from Banque Saudi Fransi's earnings presentation, 2024
Slide 1: BSF 9M 2024 Investor Presentation
BSF 9M 2024 Investor Presentation 9M 2024
Slide 2: Contents
Contents 03 BSF Profile 10 Operating Environment 13 Strategy 23 ESG Update 29 Financial Performance 52 Outlook & Guidance 55 Segmental Performance 61 Performance Track Record 64 Appendix BSF Investor Presentation | 9M 2024 2
Slide 3: BSF Profile
BSF Profile Investor Presentation 9M 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 287.7bn and market capitalization of SAR 38.8bn Universal Bank model with ful
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 BSF was then established by Royal Decree 82 Domest
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, ATMs, A leader in investment banking, Diverse client services, market corporate banking services in the digital
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* 10.6% 10.7% 1,205 (Mn Shares) 8.8% 9.2% 2021 2022 2023 9M 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: Market parameters and share price performance
Market parameters and share price performance Market Capitalization BSF Share Price Share Price Performance vs. Tadawul (%) (SAR Bn) (SAR) 10 5 Tadawul, 1.6 38.8 32.2 0 -5 Tadawul Banks, -4.3 -10 -15 4.58% of KSA banking sector 52 weeks range [32.2 - 43.0] -20 BSF, -21.2 -25 0.42% of KSA stock marke
Slide 9: Experienced and dynamic executive management team
Experienced and dynamic executive management team Bader Alsalloom Ramzy Darwish Majed Alsadhan Chief Executive Officer Chief Strategy and Finance Officer Chief Wholesale Banking Officer • BSF: appointed Apr-21 • BSF: appointed CFO Dec-22 • BSF: appointed Head of WB Nov-22 • Saudi Investment Bank: De
Slide 10: Operating Environment
Operating Environment Investor Presentation 9M 2024
Slide 11: Saudi Arabia's real GDP growth is expected to improve to 1.5% in 2024 and 4.6% in 2025
Saudi Arabia’s real GDP growth is expected to improve to 1.5% in 2024 and 4.6% in 2025 Economic Outlook Real GDP Growth (%) Brent Avg Oil Price / Real GDP for Saudi Arabia is expected to increase by +1.5% in 2024 and +4.6% in 2025 following 0.8% 7.5% Barrel (USD) contraction in 2023 due to lower o
Slide 12: The Saudi banking sector is well positioned for both resilience and growth
The Saudi banking sector is well positioned for both resilience and growth Bank Credit (SAR Bn) Capitalization (%) NPL Ratio (%) +13% CAGR 20.3% 20.1% 19.9% 19.9% 2.2% 19.4% 2,853 2,584 2,349 1.9% 2,059 1.8% 1,783 18.7% 18.6% 18.2% 18.4% 17.9% 1.5% 1.3% +16% +14% +10% +10% 2020 2021 2022 2023 2Q 24
Slide 13: Strategy
Strategy Investor Presentation 9M 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 2024 Priority Wholesale Banking Personal Banking Personal Banking Private Banking Private Banking Technology Expand FIG & MNC Scale Up in Affluent Expan
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 target Focus on profitability and return on capital Continued commitment to leading segments (Top 3 Ma
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 and Reinforce market synergies leadership Focused Initiatives GTS revamp Scale up affluent Provide Broaden product
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 opportunities segments 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 pivoted This strategic realignment was underpinned by a Introducing the Sur Multifamily Office, 100% subsidiary of BSF to cater the needs to diversify it
Slide 19: Good progress in the implementation of the three key strategic programs
Good progress in the implementation of the three key strategic programs across the IT & Technology priorities Technology Infrastructure Upgrade Description Key Highlights 2024 Progress & Beyond Integrated New corporate platform Program is re-baselined and target go live Conclude testing for back
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 & limits Retail loans Payment Processing: Corporate and Corporate Loans Customer origination SWIFT Retail Accounts
Slide 21: CBS is a critical program for BSF's digital transformation
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 & services Future-proofing BSF tech landscape Anticipating client n
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 profitability in focused market segments Strategic Our heritage has instilled equitable The BSF acronym signals Simplification and Digitization: consistent mast
Slide 23: ESG Update
ESG Update Investor Presentation 9M 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 BSF developed a set of ESG KPIs associate
Slide 25: Significance to stakeholders
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 thorough materiality Materiality Matrix 1
Slide 26: 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 Fayez Bader Al ESG Board Committee: Alothman Memb
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 2021 Published the 2022 2023 ESG Report Policy Framework Inaugural ESG Report ESG Report (soon to be 2020 ESG Report published) Implemented the ESG Govern
Slide 28: BSF achieves remarkable progress in boosting ESG ratings
BSF achieves remarkable progress in boosting ESG ratings ESG Ratings: ESG Risk Rating Score S&P Global ESG Score MSCI ESG Rating by Sustainalytics 21.2as of May 2024 30.0 for the year 2023 BBB as of June 2024 p from 27.8 in 2023 p from 25 in 2022 p from BB in 2022 Leading all Saudi Bnaks in ESG Risk
Slide 29: Financial Performance
Financial Performance Investor Presentation 9M 2024
Slide 30: Strong balance sheet momentum and modest 1% net income growth YoY
Strong balance sheet momentum and modest 1% net income growth YoY Loans & Investments Customers' Balance Sheet Advances Deposits Strong loan growth of 15% YoY, driven by both commercial (+15%) and consumer (+16%). Investments increased 24% YoY to manage IR risk while capturing higher yields. 201
Slide 31: Improved credit quality with comfortable capital and liquidity
Improved credit quality with comfortable capital and liquidity NPL Coverage Cost of Risk Asset Quality NPL Ratio Ratio Lower NPL ratio, mainly from write- offs, and improving coverage ratio. Improved COR in the commercial book. 0.83% 193.1% 0.57% q -115bps year-on-year p +53.6ppts year-on-year q
Slide 32: Balance sheet growth driven by lending and investments
Balance sheet growth driven by lending and investments Balance Sheet Total Assets Movement YTD (SAR Bn) Growth in total assets of 14% YTD, mainly driven by 12% loan growth, further aided by an increase in +14% investments. The investment portfolio expanded by 18% YTD from high-quality liquid ass
Slide 33: Net income grew 1% YoY from lower impairments, partially offset by higher costs
Net income grew 1% YoY from lower impairments, partially offset by higher costs Income Statement Net Income Movement YoY (SAR Mn) Net income for 9M 2024 grew 1% YoY to SAR 3,427mn from a 30% decline in the impairment charge, +1% partly offset by 12% growth in operating expenses and 2% decline in n
Slide 34: Balanced 12% YTD loan growth from both commercial and consumer sectors
Balanced 12% YTD loan growth from both commercial and consumer sectors Loans & Advances Loans & Advances (SAR Bn) Composition Total loans & advances grew 12% during 9M 2024 from both consumer and commercial lending growth. 201.0 Commercial Commercial loans grew 12% during 9M 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 164.2 +12% Other 20.6% 6.4 164.2 Contracting 3.0 2.7 (1.9) 10.7% 7.0 147.0 Utilities 11.8% (SAR Bn) Manufacturing Commerce +19% +21% +16% -31% +9% 13.4% 27.3% Servic
Slide 36: 18% Increase in the investment portfolio in 9M 2024
18% Increase in the investment portfolio in 9M 2024 Investments Investments Composition by Category Investments increased 18% YTD to manage interest rate risk while capturing higher yields. (SAR Bn) Amortized cost 57.4 FVSI - Debt/equity instruments 48.3% 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) 57.4 Fixed-rate - 52.2 Financials 17.0% (SAR Bn) Equities 0.7% Floating-rate - 4.8 Corporate Government - 42 Government Floating-rate Equities - 0.4 9.8% 73.3% Financials - 9.7 Fixed-rate 8.3
Slide 38: 12% YTD growth in deposits, with solid NIBD growth sequentially
12% YTD growth in deposits, with solid NIBD growth sequentially Customers’ Deposits Customers' Deposits (SAR Bn) Deposits grew by 12% during 9M 2024, driven by an increase in IBDs and further supported by NIBD +12% growth. NIBDs increased 11% YTD and IBD’s increased 13% YTD, mainly from corporat
Slide 39: 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 80% of total liabilities and Local and International Capital Markets 67% of total liabilities and equity
Slide 40: 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 Sukuk A- Tier 1 Sukuk 8.0 u Stable outlook Moody's Fitch 3.9 8.0 3.4 0.9 3.2 A2 A- 2.1 2.1 2.6 3.4 0.5 2.6 0.2 0.2 0.4 p Positive outlook u Stable outlook 2025 202
Slide 41: 2% decline in NII YoY as earning assets growth was offset by margin contraction
2% decline in NII YoY as earning assets growth was offset by margin contraction Net Interest Income Net Interest Income Movement YoY (SAR Mn) NII for 9M 2024 declined by 2% YoY to SAR 5,844mn, with 16% average earnings assets growth offset by -2% margin contraction. Interest income rose 26% YoY
Slide 42: 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 6.35% 6.41% 6.40% 6.50% The NIM declined 57bps YoY to 3.06% due to increased costs on customers’ deposits, partly offset by the 5.91% 5.95% 6.17% 6.35% 6.33% 6.05% higher yields on loans
Slide 43: 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 ±3bps; this as at 31 December 2023 (SAR Bn) would translate into a SAR ±67mn NII delta. 157.1 130.9 The
Slide 44: Non-interest income increased 7% YoY
Non-interest income increased 7% YoY on higher net fee & commission income and investment- related income Non-Interest Income Non-interest Income (SAR Mn) Non-interest income for 9M 2024 increased 7% YoY to SAR 1,242mn on improved net fee & commission income and investment-related income, partly o
Slide 45: Fee & commission income increased 8% YoY
Fee & commission income increased 8% YoY, mainly from improved brokerage & asset management income and trade finance Fee & Commission Non-funded Exposure* Fee & Commission Income (SAR Mn) Income (SAR Bn) 3Q 23 231 Net fee & commission grew 8% to SAR 735mn in 9M 2024 due to higher 3Q 23 70.2 4Q 23
Slide 46: Operating expenses growth of 12% YoY
Operating expenses growth of 12% YoY from higher employee-related expenses, G&A and depreciation Operating Expenses Operating Expenses (SAR Cost Ratios (%) Operating expenses increased 12% YoY to SAR 2,439mn in 9M 2024 mainly due to increased employee- Mn) 33.2% 33.9% 34.4% related costs, as well
Slide 47: Cost of risk decreased by 41bps YoY to 0.57%
Cost of risk decreased by 41bps YoY to 0.57% for 9M 2024 from lower commercial impairments Impairment Charge Cost of Credit Risk (%) Impairment Charge (SAR Impairment Charge The total impairment charge for 9M 2024 Mn) (SAR Mn) decreased by 30% YoY to SAR 824mn, 0.98% -20% 0.96% mainly from lower c
Slide 48: Credit quality remains strong with further NPL ratio & coverage improvement
Credit quality remains strong with further NPL ratio & coverage improvement NPL Ratio NPL Ratio (%) Non Performing Loans & Non Performing Loans & The NPL ratio improved 23bps YTD to Advances (SAR Bn) Advances (SAR Bn) 0.83% as NPLs declined 12% on write-offs 1.97% in the commercial book relative t
Slide 49: NPL coverage improved 55.5ppts YTD to 193.1%
NPL coverage improved 55.5ppts YTD to 193.1% NPL Coverage NPL Coverage Ratio (%) Stage-Wise Provision Allowance for Impairment The NPL coverage ratio improved by Coverage (%) Stage 3 Stage 2 (SAR Bn) 55.5ppts YTD to 193.1%, attributed to Stage 1 +23% enhancements in commercial coverage. 193.1% 73.
Slide 50: Strong capital ratios
Strong capital ratios Capital Total Capital (SAR Bn) RWA (SAR Bn) Total capital (Tier 1 + Tier 2 regulatory +11% +12% capital) increased 11% YTD to SAR 48.5bn during 9M 2024 from SAR 3bn Additional Tier 1 sukuk issuance in 3Q 2024 as well 48.5 234.3 246.7 249.4 42.1 43.6 44.5 44.6 219.3 223.0 as t
Slide 51: Liquidity remains strong and comfortably within regulatory limits
Liquidity remains strong and comfortably within regulatory limits Headline LTD Ratio Liquidity Leverage Ratio (%) LTD Ratios (%) LTD SAMA ratio LCR moderated 34ppts to 162% during 9M 2024. NSFR was broadly stable YTD at 118% as 13.5% 13.6% 106.1% 13.1% 105.0% 104.2% 104.0% of 30 September 2024.
Slide 52: Outlook & Guidance
Outlook & Guidance Investor Presentation 9M 2024
Slide 53: 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 -0.8% Real GDP Growth 7.5% +1.5% 4.6% 4.4% Real GDP Growth q #N/A trend: -0.8% 1.5% 2022 2023 2024E 2025E 2026E
Slide 54: BSF maintains loan, NIM and CoR guidance, refining CIR, ROE and CET1
BSF maintains the loan guidance, NIM and CoR unchanged, while moderating and refining the CIR, ROE and CET1 guidance Metric 9M 2024 Outcome 2024 Guidance 3Q 2024 Revision Guidance Drivers Loans & Advances Growth +12.1% YTD Mid-teens unchanged The guidance reflects robust loan growth in 9M 2024, and
Slide 55: Segmental Performance
Segmental Performance Investor Presentation 9M 2024
Slide 56: Profitability driven by growth in Corporate, offset by lower Treasury net income
Profitability driven by growth in Corporate, offset by lower Treasury net income Operating Income Movement YoY (SAR Mn) Net Income Before Zakat Movement YoY (SAR Mn) -1% +1% 595 (1,099) 1,149 (1,125) 384 3,822 3,776 (15) 38 7,133 72 7,086 +15% +19% -115% +22% -1% +83% -160% +22% 9M 23 Retail Corpora
Slide 57: Retail Segment
Retail Segment: Higher net interest income from loan growth, offset by higher impairments and expenses Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Income Net Income Before Zakat (SAR Mn) (SAR Mn) -1% 3Q 23 950 3Q 23 551 410 (27) (123) (276) 1,514 1,499 4Q 23 942 4Q 23 412 1Q 24 1,0
Slide 58: Corporate Segment
Corporate Segment: Increased profitability from net interest income growth and lower impairments Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Income Net Income Before Zakat (SAR Mn) (SAR Mn) +83% 2,535 3Q 23 1,137 3Q 23 609 630 584 11 (77) 4Q 23 1,057 4Q 23 490 1,386 1Q 24 1,164 +18
Slide 59: Treasury Segment
Treasury Segment: Net income declined due to higher funding costs Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Income Net Income Before Zakat (SAR Mn) (SAR Mn) -160% 3Q 23 253 3Q 23 162 705 (1,112) 4Q 23 54 4Q 23 (40) 1Q 24 (82) -183% 13 (29) 3 (420) 1Q 24 8 -115% 2Q 24 (205) -208%
Slide 60: Investment Banking and Brokerage Segment
Investment Banking and Brokerage Segment: Profitability improvement YoY as higher fee & other income were partly offset by higher expenses Net Income Before Zakat Movement YoY (SAR Mn) Total Operating Income Net Income Before Zakat (SAR Mn) (SAR Mn) +22% 3Q 23 128 3Q 23 61 79 (34) 209 171 (7) 4Q 23
Slide 61: Performance Track Record
Performance Track Record Investor Presentation 9M 2024
Slide 62: Balance Sheet Metrics
Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR LCR (%) CAR (%) CAR T1 ratio Bn) 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 63: Income Statement Metrics
Income Statement Metrics Total Operating Income NIM (%) Cost to Income Ratio (%) Cost of Risk (%) (SAR Mn) 2.07% 2019 6,873 3.53% 34.3% 33.3% 33.6% 33.1% 2020 7,045 32.4% 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 64: Appendix
Appendix Investor Presentation 9M 2024
Slide 65: 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 66: 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