Burgan Bank · KSE:BURG
Burgan Bank — Q3 2020 Earnings Presentation
16 slides from Burgan Bank's earnings presentation, Nov 18, 2020
Slide 1: Burgan Bank Group Q3'20 Financial Results
BURGAN BANK GROUP INVESTOR PRESENTATION Q3’20 FINANCIAL RESULTS 18TH NOVEMBER 2020
Slide 2: Table of Contents
TABLE OF CONTENTS Contents Page Q3’20 Key Highlights 3 Key P&L Metrics 4-7 Asset Quality 8 Key Balance Sheet Metrics 9 - 10 Capital & Liquidity 11 - 12 Performance Summary – Kuwait & International Operations 13 Summary 14 2
Slide 3: Key Highlights: Q3'20 Results
KEY HIGHLIGHTS: Q3’20 RESULTS Revenue: KD 57mn (vs Q2’20: KD47mn) 1 Strong Earnings Net Income: KD 10mn (vs Q2’20: KD6mn) Improved Operating Costs: KD 22mn (vs Q2’20: KD23mn) 2 Efficiency Cost-to-Income Ratio: 39.0% (vs Q2’20: 49.2%) CET1 Ratio: 10.7% (above reg min of 8%*) 3 Healthy Capit
Slide 4: Revenue Growth Supported by Margin Improvement
REVENUE GROWTH SUPPORTED BY MARGIN IMPROVEMENT… Revenue & Margins^ | KD mn, % FY’19 NIM: 2.7% YTD 9M’20 NIM: 2.3% 2.8% 2.8% 2.7% 2.7% 2.6% 2.2% 2.1% 66 70 62 60 57 50 28 47 22 19 19 13 23 15 37 44 43 42 41 32 34 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Net Interest Income Non-Interest Income NIMs ❖
Slide 5: Operating Expenses Continue to Be Optimized
…OPERATING EXPENSES CONTINUE TO BE OPTIMIZED… Operating Expenses & Efficiency | KD mn, % FY’19 CIR: 41.2% YTD 9M’20 CIR: 41.9% 49.2% 41.8% 42.3% 41.5% 39.4% 38.9% 39.0% 28 26 28 21 24 23 22 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Expenses Cost to Income Ratio ❖ OpEx is lower by KD 9.5mn^ in 9M’20
Slide 6: With Prudent Provisioning Levels
…WITH PRUDENT PROVISIONING LEVELS… Cost of Credit (CoC)^ | KD mn, % FY’19 CoC: 1.1% YTD 9M’20 CoC: 1.6% 1.5% 1.3% 1.9% 23 22 4 16 15 7 10 7 8 10 19 15 5 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Net Provision (excluding Precautionary Provisions) Precautionary Provision Cost of Credit (CoC) ❖ Elevate
Slide 7: Resulting in Improved Net Income Levels
…RESULTING IN IMPROVED NET INCOME LEVELS... Net Income & Returns^ | KD mn, % FY’19 RoE: 9.8% YTD 9M’20 RoE: 4.6% 26 23 19 17 17 10 6 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Net Income ❖ 9M’20 Net Income levels reflects impact of ongoing pandemic on the interest rate environment and credit costs, o
Slide 8: Asset Quality Improved
...ASSET QUALITY IMPROVED… NPLs & Coverage^ | KD mn, % 234.3% 248.6% 245.6% 282.8% 242.1% 185.8% 205.3% 4.8% 4.4% 3.0% 3.0% 3.1% 2.7% 2.5% 1.8% 1.9% 1.7% 1.7% 1.6% 1.5% 1.6% 150 237 119 215 184 36 153 35 136 127 140 34 34 34 134 33 34 86 117 39 37 59 41 64 52 68 60 64 67 62 Q1'19 Q2'19 Q3'19 Q4'19 Q
Slide 9: Loan Growth Led by Kuwait
…LOAN GROWTH LED BY KUWAIT … Customer Loans^ & Sector Concentration | KD mn , % 4,311 4,412 4,373 4,199 4,218 4,284 36 4,169 37 32 39 33 1,142 1,170 1,093 1,236 18% 1,278 1,301 1,235 2% 5% 30% 10% 3,059 3,179 3,216 3,258 2,859 2,868 2,948 12% 23% Personal Real estate Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2
Slide 10: Continued Growth in Deposits
… & CONTINUED GROWTH IN DEPOSITS … Customer Deposits & Deposits by Type | KD mn, % 4,514 4,176 4,263 222 3,959 3,967 3,991 3,918 220 197 197 232 1,080 3% 1,104 1,141 1,063 1,088 1,103 1,113 26% 65% 3,212 6% 2,875 2,850 2,831 2,980 2,659 2,622 Demand Saving Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 B
Slide 11: Optimal Capital Levels
… OPTIMAL CAPITAL LEVELS… Regulatory Capital | KD mn, % 17.3% 17.0% 2,500 16.6% 16.8% 16.2% 16.0% 15.7% 17.0% 14.0% 2,000 11.8% 11.6% 11.5% 11.0% 11.5% 12.0% 10.5% 1,500 10.4% 10.8% 10.7% 8.0% 7.0% 991 1,033 1,005 992 983 974 988 1,000 170 175 176 170 172 177 176 146 146 153 155 155 154 155 2.0% 500
Slide 12: And High Liquidity Levels
… AND HIGH LIQUIDITY LEVELS Liquidity Coverage Ratio (LCR) ^ & Net Stable Funding Ratio (NSFR) ^ | % 200.0% 175.5% 180.0% 159.5% 155.5% 160.0% 151.9% 134.3% 140.0% 134.0% 118.1% 115.8% 112.7% 120.0% 112.3% 111.8% 110.4% 106.7% 100% 100.0% 104.1% 80.0% 80% 60.0% 40.0% 20.0% 0.0% Q1'19 Q2'19 Q3'19 FY
Slide 13: Q3'20 Performance: Kuwait & International Operations
Q3’20 PERFORMANCE: KUWAIT & INTERNATIONAL OPERATIONS CONTRIBUTION NET KD million Q3’20 Q2’20 KPI % Q3’20 Q2’20 LOANS INCOME Revenue 32.5 22.0 NIM* 1.6% 1.4% 74% 84% Expenses 10.8 8.9 CIR 33.1% 40.6% Provisions^ 7.5 12.0 CoC* 0.9% 1.4% BB Kuwait# Net Income 13.9 0.8 NPL Ratio 1.6% 1.7% CONTRIBUTION K
Slide 14: Summary
SUMMARY The pandemic has had a strong impact on Burgan’s earnings over the 1 last two quarters but Burgan has responded well with focus on reducing operating expenses and optimizing funding costs. Kuwait, the core engine of the group, remains stable with steady asset 2 quality metrics Burgan is ensu
Slide 15: Thank You
Thank You =H ul Lo OL... 9 js Sms ‘79 BURGAN BANK
Slide 16: Disclaimers
DISCLAIMERS IMPORTANT NOTICE This presentation has been prepared by Burgan Bank K.P.S.C. and is subject to the applicable laws and regulations in the State of Kuwait. It is for information purposes only and it shall not be reproduced or redistributed to any other person without obtaining Burgan Bank