Banque Saudi Fransi · TADAWUL:1050
Banque Saudi Fransi — Q3 2021 Earnings Presentation
45 slides from Banque Saudi Fransi's earnings presentation, 2021
Slide 1: Banque Saudi Fransi Investor Presentation 3Q 2021
3 Column Slides Banque Saudi Fransi Investor Presentation 3Q 2021
Slide 2: Contents
INVESTOR PRESENTATION 3Q 2021 Contents BSF Profile 3 Operating Environment 6 Strategy 10 Financial Performance 16 Outlook & Guidance 31 Segmental Performance 33 Performance Track Record 39 Appendix 42
Slide 3: BSF Profile
INVESTOR PRESENTATION 3Q 2021 BSF Profile
Slide 4: Leading banking group in Saudi Arabia with strong 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 85 2,995 +4.4% year-to-date -2 year-to-date +4.0% year-to-date 9M21 Operating Income Diversity (SAR Mn) 5,463 Headquartered in Riyadh: Su
Slide 5: Market parameters and credit ratings stable following Covid-19 disruption
PROFILE | SHARE PROFILE AND CREDIT RATINGS Market parameters and credit ratings stable following Covid-19 disruption in 2020 Share Parameters 30 Sept 2021 Total Shareholder Return (TSR) 60 Closing price (SAR) 41.70 50 52 weeks range (SAR) 27.8 - 41.7 40 Shares issued (million) 1,205 30 20 10 Market
Slide 6: Operating Environment
INVESTOR PRESENTATION 3Q 2021 Operating Environment
Slide 7: Financial markets and economic activity largely recovered following Covid-19
OPERATING ENVIRONMENT | COVID-19 DISRUPTION Financial markets and economic activity largely recovered following Covid- 19 disruption during 2020 Brent Oil Price / Barrel (USD) Tadawul Index Oil prices dropped sharply in 1Q 2020 as the Covid-19 pandemic spread, with a recovery to USD 78/bl by 3Q 20
Slide 8: GDP for Saudi Arabia expected to recover to +2.8% growth in 2021
OPERATING ENVIRONMENT | ECONOMIC OUTLOOK GDP for Saudi Arabia is expected to recover to +2.8% growth in 2021 Real GDP growth (%) Brent Oil Price / Barrel (USD) GDP for Saudi Arabia is expected to recover to positive 2.8% GDP growth in 2021 following a contraction of 4.1% in 2020 resulting from the
Slide 9: Saudi banking sector well positioned to absorb Covid-19 impact
OPERATING ENVIRONMENT | KSA BANKING SECTOR The Saudi banking sector was well positioned to absorb the impact of Covid-19 in 2020 Bank Credit (SAR Bn) Capitalization: T1|CAR (%) NPL Ratio (%) 2,009 18.1%|19.8% 2.1% +8% 19.5% 20.4% 20.3% 19.4% 20.3% 19.8% 2,009 1,783 2.2% 2.1% 1,419 1,405 1,443 1,552
Slide 10: Strategy
INVESTOR PRESENTATION 3Q 2021 Strategy
Slide 11: Redefined purpose to build a dynamic, 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… Rayan Mohammed Fayez Mazen Azoony Mutasim Mufti Managing Director & Chief Executive Acting Chief Financial Officer Acting Chief Risk Officer Officer BSF: appointed Jun-2021 BSF: appointed Acting
Slide 13: 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: Strategy progress, 2020 declines in financial KPIs
STRATEGY | 2019 PROGRESS | STRATEGIC OUTCOMES Despite strong progress made on strategy implementation, 2020 saw declines in financial KPIs from an elevated risk cost STRATEGIC OUTCOMES Shareholder darling Resilience KPI #1 KPI #2 KPI #3 KPI #4 Total shareholder return (TSR) Return on average equity
Slide 16: Financial Performance
INVESTOR PRESENTATION 3Q 2021 Financial Performance
Slide 17: Solid balance sheet growth and strong recovery in net income
FINANCIAL PERFORMANCE | HIGHLIGHTS Solid balance sheet growth and strong recovery in net income BALANCE SHEET Loans & Advances Investments Non Interest Bearing Deposits High quality loan growth of 11% driven by 9% commercial loan growth and 26% growth in mortgages YTD. 144.4 +11% year-to-date 43
Slide 18: Solid balance sheet growth from lending and investments
FINANCIAL PERFORMANCE | BALANCE SHEET HIGHLIGHTS Solid balance sheet growth from lending and investments Total Assets Movement (SAR Bn) Growth in total assets of 10% YTD driven by healthy 11% loan growth and strong growth of 16% in investments. Liabilities grew by 12% during 2021 YTD from 13% de
Slide 19: Net income improved 69% year-on-year due to lower provisions
FINANCIAL PERFORMANCE | INCOME STATEMENT HIGHLIGHTS Net income improved 69% year-on-year due to lower provisions Net Income After Zakat & Tax Movement (SAR Mn) Net income for 9M 2021 grew 69% YoY to SAR 2,457mn from 4% income growth and a 52% decline in impairments, partly offset by an 8% increase
Slide 20: Healthy loan growth in 9M 2021
FINANCIAL PERFORMANCE | LOANS AND ADVANCES Healthy loan growth in 9M 2021 Total Loans & Advances (SAR Bn) Commercial Loans Movement (SAR Bn) Loans & Advances Composition (SAR Mn) 144.4 144,393 117.4 Consumer +11% 18.7% +9% Commercial 141.8 144.4 81.3% 130.6 0.6 2.5 117.4 2.5 1.8 25.6 27.0 3.4 22.8 1
Slide 21: Strong growth in investment portfolio from fixed rate bonds
FINANCIAL PERFORMANCE | INVESTMENTS Strong growth in investment portfolio from fixed rate bond holdings across sectors Investments Movement by Type (SAR Bn) Investments Composition by Type Investments rose 16% during 9M 2021 as (SAR Mn) the bank increased fixed rate bond holdings across Saudi Gove
Slide 22: Growth in NIBD deposits YTD with temporary moderation in 3Q
FINANCIAL PERFORMANCE | CUSTOMERS’ DEPOSITS Growth in NIBD deposits YTD with temporary moderation in 3Q 2021 Customers' Deposits (SAR Bn) Customers' Deposits Movement (SAR Bn) Deposits grew 13% during 9M 2021 from higher NIBDs and IBDs. NIBD’s grew 5% YTD but declined 4% QoQ from a 143.3 143.3 t
Slide 23: Moderate 2% NII growth as earning asset growth offset by margin
FINANCIAL PERFORMANCE | NET INTEREST INCOME Moderate 2% NII growth as earning asset growth partly offset by moderate margin contraction Net Interest Income Movement (SAR Mn) NII for 9M 2021 grew 2% YoY to SAR 4,041mn as 8% growth in average earning assets was partly offset by a moderate 13bps marg
Slide 24: Yield pressure from lower rates partly offset by mix and funding costs
FINANCIAL PERFORMANCE | NET INTEREST MARGIN Yield pressure from lower rates partly offset by improved balance sheet mix and improved funding costs Net Interest Margin Trend (%) Net Interest Margin Movement (%) The NIM decreased by 13bps YoY to 2.89% in 9M 2021. The margin was supported by improv
Slide 25: Non-interest income grew 9% from brokerage, lending and trading
FINANCIAL PERFORMANCE | NON-INTEREST INCOME Non-interest income grew 9% from improved brokerage, lending and trading income, partly offset by lower exchange and other income Non-interest income for 9M 2021 grew 9% YoY at SAR 1,422mn from improved net fee & Non-Interest Income Movement (SAR Mn) com
Slide 26: Higher operating expenses due to increase in VAT rate
FINANCIAL PERFORMANCE | OPERATING EXPENSES Higher operating expenses due increase in VAT rate Operating Expenses Movement (SAR Mn) Operating expenses increased 8% YoY to SAR 1,827mn in 9M 2021 due to increased rate of VAT in Saudi Arabia from 5% to 15%. The cost to income ratio increased modestl
Slide 27: Moderation in impairment charge and cost of risk
FINANCIAL PERFORMANCE | IMPAIRMENT CHARGE Moderation in impairment charge and cost of risk from peak in 4Q 2020 Impairment Charge (SAR Mn) Impairment Charge (SAR Mn) Cost of Credit Risk (%) Commercial COR 289 289 0.80% 0.96% -123 bps year-on-year -61% 1.91% -61% 751 2.07% 872 1.19% 751 270 289 650
Slide 28: NPL ratio moderated and NPL coverage improved
FINANCIAL PERFORMANCE | CREDIT QUALITY NPL ratio moderated during 9M 2021 and NPL coverage improved 32.6ppts YoY Non Performing Loans & Advances Allowance For Impairment NPL Ratio (%) Commercial NPL Ratio (%) (SAR Bn) (SAR Bn) 3.8 5.1 2.54% 2.95% 2.9% -7 bps year-on-year +1% +9% 2.78% 3.8 3.8 3.8
Slide 29: Capital ratios broadly stable during 9M 2021
FINANCIAL PERFORMANCE | CAPITALIZATION Capital ratios broadly stable during 9M 2021 Total Capital (SAR Bn) RWA (SAR Bn) Total capital increased by SAR 1.5bn (+4% YTD) during 9M 2021 from net income generation, partly offset by dividend payments. 41.9 199.9 RWAs increased 7% during 9M 2021 to SAR
Slide 30: Liquidity remains strong and within regulatory limits
FINANCIAL PERFORMANCE | LIQUIDITY Liquidity remains strong and comfortably within regulatory limits LCR Average (%) HQLA (SAR Bn) NSFR was stable YTD at 129%. LCR declined by 23ppts during 9M 2021 due to more efficient utilization of excess liquidity but remains at a 40.0 comfortable level of 17
Slide 31: Outlook and Guidance
INVESTOR PRESENTATION 3Q 2021 Outlook and Guidance
Slide 32: Loan growth guidance raised and cost of risk outlook more certain
GUIDANCE & OUTLOOK | GUIDANCE Loan growth guidance raised and cost of risk outlook more certain 2021 Outlook as at 2Q 3Q 2021 Outcome Current 2021 Outlook Loans & Advances SAR Billion 9M 2021 growth of 11%. 130.6 130.6 LOANS & ADVANCES, NET Continued mortgage and corporate growth Mid to high sin
Slide 33: Segmental Performance
INVESTOR PRESENTATION 3Q 2021 Segmental Performance
Slide 34: Healthy profit growth in all segments except Treasury
SEGMENTAL PERFORMANCE | SUMMARY Healthy profit growth in all segments expect for Treasury Operating Income Movement (SAR Mn) Net Income Before Zakat & Tax Movement (SAR Mn) 5,463 2,778 +4% +56% 730 101 2,778 5,268 92 6 110 5,463 223 1,777 (12) (52) Operating income Retail Corporate Treasury Investme
Slide 35: Retail: profit growth from higher income and lower impairments
SEGMENTAL PERFORMANCE | RETAIL Growth in profits driven by higher income and lower impairments Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 464 472 390 -8.2% year-on-year SAR Million +93% -0% 473 486 472 220 464 87 49 93 82 Fee & other
Slide 36: Corporate: lower impairments drive improved profitability
SEGMENTAL PERFORMANCE | CORPORATE Lower impairments drive improvement in Corporate profitability Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 928 803 657 +15.7% year-on-year SAR Million +368% +12% 725 928 803 716 715 146 Fee & other inc
Slide 37: Treasury: decline in profit from lower fee income and higher expenses
SEGMENTAL PERFORMANCE | TREASURY Decline in profit driven by lower fee and other income and higher expenses Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) Net Interest Income 1,181 529 356 -4.3% year-on-year SAR Million -4% +12% 529 474 445 1,233 4 Fee & oth
Slide 38: Investment Banking and Brokerage: profitability improvement
SEGMENTAL PERFORMANCE | INVESTMENT BANKING AND BROKERAGE Profitability improvement from higher brokerage & asset management income Net Income Before Zakat & Income Tax Movement (SAR Mn) Total Operating Income (SAR Mn) 206 111 +96% +26% 108 111 91 5 206 88 105 18 89 90 +3% (14) 77 QoQ 11 19 21 Net in
Slide 39: Performance Track Record
INVESTOR PRESENTATION 3Q 2021 Performance Track Record
Slide 40: Balance Sheet Metrics
PERFORMANCE TRACK RECORD Balance Sheet Metrics Loans & Advances (SAR Bn) Total Assets (SAR Bn) Customers' Deposits (SAR Bn) CAR (%) 130.6 194.1 127.1 21.56% +1% -1% -5% 21.56% 19.39% 19.77% 19.20% 129.5 125.7 130.6 203.4 192.9 190.3 194.1 158.5 151.0 148.4 121.9 120.6 178.1 132.8 17.78% 127.1 20.56%
Slide 41: Income Statement Metrics
PERFORMANCE TRACK RECORD Income Statement Metrics Operating Income (SAR Mn) Net Interest Margin (%) Cost To Income Ratio (%) Cost Of Risk (%) 7,045 3.00% 33.6% 2.07% +2% 2.07% 3.04% 3.00% 2.85% 36.3% 6,400 6,576 6,799 6,873 7,045 2.50% 33.6% 33.7% 33.3% 33.6% 2.38% 0.72% 0.79% +3% 0.59% 0.38% YoY 20
Slide 42: Appendix
INVESTOR PRESENTATION 3Q 2021 Appendix
Slide 43: Saudi Arabia responded strongly to contain the pandemic
OPERATING ENVIRONMENT | SAUDI ARABIA’S RESPONSE TO COVID-19 Saudi Arabia 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 to curtail, inter alia, domestic and
Slide 44: BSF's response to Covid-19 was effective and executed against a robust plan
OPERATING ENVIRONMENT | BSF RESPONSE TO COVID-19 BSF’s response to Covid-19 was effective and executed against a robust plan Putting the safety of our people first Supporting customers Digital enablement Initiated and expanded flexible and remote working Waived payments on mortgages and personal
Slide 45: Disclaimer
INVESTOR PRESENTATION 3Q 2021 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