Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q2 2022 Earnings Presentation
43 slides from Banque Saudi Fransi's earnings presentation, 2022
Slide 1: Banque Saudi Fransi Investor Presentation 2Q 2022
3 Column Slides Banque Saudi Fransi Investor Presentation 2Q 2022 Internal Use
Slide 2: Contents
INVESTOR PRESENTATION 2Q 2022 Contents BSF Profile 3 Operating Environment 6 Strategy 10 Financial Performance 16 Outlook & Guidance 32 Segmental Performance 34 Performance Track Record 40 Disclaimer 43 Internal Use
Slide 3: BSF Profile
INVESTOR PRESENTATION 2Q 2022 BSF Profile Internal Use
Slide 4: A 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 2,634 p +2.6% year-to-date q -3 year-to-date u -0.4% year-to-date 1H 22 Operating Income Diversity (SAR Mn) 3,747 Headquartered in Riyadh: S
Slide 5: Solid market parameters and credit ratings
PROFILE | SHARE PROFILE AND CREDIT RATINGS Solid market parameters and credit ratings Share Parameters 30 Jun 2022 Total Shareholder Return (TSR) 160 Closing price (SAR) 47.40 140 52 weeks range (SAR) 36.3 - 57.2 120 Shares issued (million) 1,205 100 80 60 Market capitalization (SARbn) 57.13 40 Mark
Slide 6: Operating Environment
INVESTOR PRESENTATION 2Q 2022 Operating Environment Internal Use
Slide 7: 1H 2022 characterized by rising rate environment and higher oil prices
OPERATING ENVIRONMENT | ECONOMIC CONDITIONS 1H 2022 characterized by rising rate environment and higher oil prices Brent Oil Price / Barrel (USD) Tadawul Index ▪ Oil prices rose to USD 120/bl in 2Q 2022, following Ukraine-Russia disruption. ▪ Interbank rates increased in 1H 2022 from 3 hikes in the
Slide 8: GDP growth for Saudi Arabia is expected to reach +7.6% in 2022
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK GDP growth for Saudi Arabia is expected to reach +7.6% in 2022 Real GDP growth (%) Brent Oil Price / Barrel (USD) ▪ GDP growth for Saudi Arabia is expected to reach 7.6% in 2022 following a post-covid recovery of 3.2% growth in 2021. 7.60% 111 ▪ Interest rate
Slide 9: 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 (%) 2,242 18.4%|20.0% 1.8% +11% 2.2% 20.4% 20.3% 19.4% 20.3% 19.9% 20.0% 2.0% 2,242 1.9% 1.9% 1.8% 2,059 1.6% 1,783 1,405 1,
Slide 10: Strategy
INVESTOR PRESENTATION 2Q 2022 Strategy Internal Use
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… Bader Alsalloom Sander Aardoom Acting Chief Executive Officer & Head of Deputy Chief Financial Officer Wholesale Banking ▪ Business Lease Group B.V.: CFO & Board ▪ BSF: appointeApr-21 member: 3 year
Slide 13: Comprehensive 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: 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 2Q 2022 Financial Performance Internal Use
Slide 17: Solid balance sheet and net income growth
FINANCIAL PERFORMANCE | HIGHLIGHTS Solid balance sheet and net income growth BALANCE SHEET Loans & Advances Investments Customers' Deposits ▪ High quality loan growth of 13% YoY driven by 12% commercial and 13% consumer lending growth. 159.6 p +13% year-on-year 43.5 p +3% year-on-year 157.9 p +12% y
Slide 18: Solid balance sheet growth from lending
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Solid balance sheet growth from lending Total Assets Movement (SAR Bn) ▪ Growth in total assets of 7% YTD, mainly driven by healthy 8% loan growth. ▪ Liabilities grew by 10% during 1H 2022 from 11% deposit growth. 231.3 ▪ Total equity declined 5% YTD
Slide 19: Net income grew 10% year-on-year from income growth
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income grew 10% year-on-year from income growth Net Income Movement (SAR Mn) ▪ Net income for 1H 2022 grew 10% YoY to SAR 1,712mn from 6% growth in operating income. ▪ Net income for 2Q 2022 grew by 9% YoY to SAR 837mn from 8% income growth but
Slide 20: Healthy loan growth in 1H 2022
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy loan growth in 1H 2022 Total Loans & Advances (SAR Bn) Commercial Loans Movement (SAR Bn) Loans & Advances Composition (SAR Mn) 159.6 130.6 159,625 +8% +8% Consumer 18.2% Commercial 152.7 159.6 1.5 1.2 1.0 0.7 130.6 81.8% 147.8 4.3 1.8 120.6 18% 19%
Slide 21: Modest YTD decline in investment portfolio
FINANCIAL PERFORMANCE | INVESTMENTS Modest YTD decline investment portfolio Investments Movement by Type (SAR Bn) Investments Composition by Type ▪ Investments declined 1% during 1H 2022, (SAR Mn) reflecting gradual reinvestments in 2Q 2022 following maturities in 1Q 2022. 43.5 43,505 ▪ The investme
Slide 22: Strong 11% growth in deposits YTD, improving headline LTD to 101%
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Strong 11% growth in deposits YTD, improving headline LTD to 101% Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) ▪ Deposits grew 11% during 1H 2022, mainly from higher IBDs. ▪ IBD’s increased 30% YTD from 61% growth in high-quality 157.
Slide 23: NII growth of 7% as earning assets growth partly offset by margin contraction
FINANCIAL PERFORMANCE | NET INTEREST INCOME NII growth of 7% as earning assets growth partly offset by margin contraction Net Interest Income Movement (SAR Mn) ▪ NII for 1H 2022 grew 7% YoY to SAR 2,792mn on 12% growth in (simple) average earning assets, partly offset by a 13bps margin contraction.
Slide 24: Reduced cash flow hedging impact and higher funding costs drive margin compression
FINANCIAL PERFORMANCE | NET INTEREST MARGIN Reduced cash flow hedging impact and higher funding costs drive YoY margin compression Net Interest Margin Trend (%) Net Interest Margin Movement (%) ▪ The YTD NIM declined 13bps YoY as a reduced cash flow hedging impact and higher funding costs more than
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 as at 31 December 2021 (SAR Bn) • At the start of the year, BSF estimated a 1-year NIM sensitivity of a 100bps rates rise at 31bps; at a stable balance sheet structure t
Slide 26: Non-interest income grew 3% YoY from higher exchange and other income
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income grew 3% YoY from higher exchange and other income ▪ Non-interest income for 1H 2022 grew 3% YoY to SAR 956mn as improved exchange and Non-Interest Income Movement (SAR Mn) other income was partly offset by lower net fee & commission inc
Slide 27: Disciplined cost control limiting operating expenses growth to 3%
FINANCIAL PERFORMANCE | OPERATING EXPENSES Disciplined cost control limiting operating expenses growth to 3% Operating Expenses Movement (SAR Mn) ▪ Operating expenses increased 3% YoY to SAR 1,253mn in 1H 2022 from higher G&A expenses. ▪ The YTD cost to income ratio improved by 0.9ppts YoY to 33.4%
Slide 28: Cost of risk relatively stable during 1H 2022
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Cost of risk relatively stable during 1H 2022 Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 319 319 0.75% 0.87% u -10 bps year-on-year +18% +18% 272 319 0.85% 270 299 319 0.79% 0.80% 0.75% 270 289 272 0.71% 0.71
Slide 29: Stable credit quality during 1H 2022
FINANCIAL PERFORMANCE | CREDIT QUALITY Stable credit quality during 1H 2022 Non Performing Loans & Advances Allowance For Impairment NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) (SAR Bn) 4.1 5.2 2.48% 2.9% u -3 bps year-to-date +6% +9% 2.70% 3.9 4.1 4.9 5.2 3.7 4.7 0.1 0.3 2.57% 0.2 0.1 0.4 0.3 2
Slide 30: Capital ratios declined during 1H 2022 from RWA growth and MTM
FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios declined during 1H 2022 from RWA growth and MTM on debt securities and cash flow hedges Total Capital (SAR Bn) RWA (SAR Bn) ▪ Total capital declined 3% to SAR 41.5bn during 1H 2022 as net retained income generation was more than offset by negativ
Slide 31: Liquidity remains strong and comfortably within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR and NSFR Liquidity Ratios (%) HQLA (SAR Bn) ▪ LCR improved by 22.0ppts during 1H 2022 to 201%. ▪ NSFR was 116% as at 30 June 2022. ▪ The bank continues to manage the LTD ratio for optimum 201% 40.
Slide 32: Outlook and Guidance
INVESTOR PRESENTATION 2Q 2022 Outlook and Guidance Internal Use
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 Previous 2022 Guidance 1H 2022 Outcome Revised 2022 Guidance Loans & Advances Unhanged ▪ 2Q 2022 growth of 13% SAR Billion YoY. 147.8 147.8 LOANS & ADVANCES, NET ▪ Balanced growth of consumer and L
Slide 34: Segmental Performance
INVESTOR PRESENTATION 2Q 2022 Segmental Performance Internal Use
Slide 35: Profitability boosted by growth in Corporate and Treasury
SEGMENTAL PERFORMANCE | SUMMARY Profitability boosted by growth in Corporate and Treasury Operating Income Movement (SAR Mn) Net Income Before Zakat Movement (SAR Mn) 3,747 1,903 +6% +8% 3,549 6 138 67 3,747 143 85 1,903 1,762 (13) (15) (72) Operating income Retail Corporate Treasury Investment Bank
Slide 36: Retail: lower profits YoY from lower fee income and higher costs
SEGMENTAL PERFORMANCE | RETAIL Lower profits YoY from lower fee income and higher operating and risk costs Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 276 492 437 +11.4% p year-on-year -21% +1% SAR Million 348 31 486 488 492 276 93 90 55 Fee & other
Slide 37: Higher operating income drives growth in Corporate profitability
SEGMENTAL PERFORMANCE | CORPORATE Higher operating income drives growth in Corporate profitability Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 684 838 658 +11.8% p year-on-year +26% +17% SAR Million 59 9 684 838 79 715 732 541 180 Fee & other income
Slide 38: Treasury: profit growth of 12% YoY from solid 10% income growth
SEGMENTAL PERFORMANCE | TREASURY Profit growth of 12% YoY from solid 10% income growth Net Income Before Zakat Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 817 452 319 -3.4% q year-on-year +12% +2% SAR Million 37 30 10 8 817 513 731 445 452 163 Fee & other income 114 133 -12
Slide 39: 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 127 113 34 +80.6% p year-on-year -11% +5% SAR Million 26 119 113 142 108 127 Fee & other income (40
Slide 40: Performance Track Record
INVESTOR PRESENTATION 2Q 2022 Performance Track Record Internal Use
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% 147.8 215.8 151.0 148.4 142.0 19.39% 19.77% 19.20% 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% 2.97% 7,188 2.85% 2.85% 36.3% 6,576 6,799 6,873 7,045 34.0% 2.50% 33.7% 33.3% 33.6% 0.72% 0.79% 0.71% +2% YoY 0.38% 20
Slide 43: Disclaimer
INVESTOR PRESENTATION 2Q 2022 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