the national commercial bank earnings presentation

Earnings Presentation

The National Commercial Bank

4Q & FY 2020 Results

NCB Investor Relations | 4Q 2020 Earnings Presentation

Disclaimer

The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background information about the activities of NCB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by NCB is obtained from sources believed to be reliable, but NCB (nor any of its directors, officers, employees, agents, affiliates or subsidiaries) does not guarantee the accuracy or completeness of such information, and disclaims all liability or responsibility for any loss or damage caused by any act taken as a result of the information. This presentation including the information covered therein is not intended either to be relied upon or construed as an advertisement for, or an offer, solicitation or invitation to sell or issue, or to subscribe, underwrite or otherwise acquire any securities in any jurisdiction. It should and must not be treated as giving tax, legal, investment or other specialist advice or a recommendation to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Neither shall any part of this information nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision or commitment relating thereto, nor does it constitute a recommendation regarding the subject of this presentation.

All statements included in this presentation other than statements of historical facts, including, without limitation, those regarding financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives) are forward-looking statements and may thus include words like "anticipate", "believe", "intend", "estimate", "expect", "will", "may", "project", "plan" and such other words of similar meaning. Such forward-looking statements are based on numerous assumptions regarding present and future business strategies and the relevant future business environment. Any forward-looking statements speak only as of the date of this presentation and NCB expressly disclaims to the fullest extent permitted by law any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Nothing in the foregoing is intended to or shall exclude any liability for, or remedy in respect of, fraudulent misrepresentation. Due to rounding, numbers and percentages presented throughout this presentation may not add up precisely to the totals provided.

NCB is not under any obligation to update, complete, amend, revise or keep current the information contained herein, and any opinions expressed herein are subject to change materially without notice. Accordingly, no representation or warranty, express or implied, is or will be made by NCB, their respective advisors or any such persons’ directors, officers or employees, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation, and any reliance you place on them will be at your sole risk. Investors must rely solely on their own examinations of the Offering and relevant documentation in making a determination as to whether to invest in the securities described. An investor should seek independent professional advice when deciding if an investment is appropriate. Securities that may be discussed herein may not be suitable for all investors. Investors are required to make their own independent investigation and appraisal of the business and financial condition of NCB and its subsidiaries, the nature of the securities and the merits or suitability of the securities or any transaction to any investor’s particular situation and objectives, including the possible risks and benefits of purchasing any securities. Any such determination should involve an assessment of the legal, tax, accounting, regulatory, financial, credit or other related aspects of the offering or the securities. Without prejudice to the foregoing, NCB, their advisors and any such persons’ directors, officers or employees expressly disclaim any liability whatsoever, in negligence or otherwise, for any loss howsoever arising, directly or indirectly, from use of, or reliance on, this presentation or its contents or otherwise arising in connection therewith.

2


Current Accounts (SAR bn)

+27%

251 319

2019 2020

Key Messages Solid financial performance within guidance; effective Covid-19 response and rigorous focus on strategic execution

2020 Performance

Strategy

3

NCB & Samba Merger

Operating Income(SAR bn)

21,458+4%

Mortgage Balances(SAR bn)

+99%

Approvals

All requisite local & foreign regulatory approvals received

Net Income (SAR bn)

11,440+0.3%

One NCB

One Bank Collaboration Initiative:

Transforming Client Business with specific focus on non-

lending revenues across multiple touchpoints

Timeline

Ahead of schedule: effective merger date planned for 1st

April 2021

Financing, net (SAR bn)

+23%

Digital Account Opening

88%+16.9ppts

Progress to Date

IMO established & detailed integration masterplans

prepared

Digital Sales Penetration

65%+13.5ppts

New Bank Name

Saudi National Bank

282 347

2019 2020

37 74

2019 2020


11,401304

579

(198)

(531) (115)

11,440

+0.3%

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

FY 19 NSCI Fee &Other

Income

OperatingExpenses

Impair-ments*

Other** FY 20

Net Income after Zakat and Income Tax attributed to Equity Holders (SARmn)

240

762

(100)

100

300

500

700

900

1,100

1,300

1,500

FY 19 FY 20

1,410 1,789

0

500

1,000

1,500

2,000

2,500

3,000

3,500

FY 19 FY 20

2020 Financial Performance Stable net profit despite Covid-19 impacts

4

Investment-related income(SARmn)

Brokerage & Inv. Mgt. (SARmn)

* Impairments include impairment charges for financing and investments. ** Includes other non-operating income, zakat & income tax and non-controlling interest.

353 375 380 408 416

0

200

400

600

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Customers' Deposits (SARbn)

282 305 316 336 347

0

200

400

600

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Financing, net (SARbn)

5,577 5,305 4,766 5,638 5,749

(200)

1,800

3,800

5,800

7,800

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Operating Income (SARmn)

3,390 2,834 2,0883,158 3,360

(200)

1,800

3,800

5,800

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Net income (SARmn)


Strategy Dashboard Progress update on key 2020 strategy metrics

5

CASA (SAR)

+27%

SubsidiariesGrow Value Contribution

RetailGrow Mortgages

CorporateImprove Returns

TreasurySustain Investment Returns

Asset Deployment

Funding

Mortgage Growth

+99%

Financing Growth (Corporate)

+3%

NSCI (Treasury)

+16%

TFKB NI & C/I (TRY)

+79% & 45.0%

Mortgage Balance

SAR 74bn

POS Market Share

+2.6 ppts

Investment Related Income

+27%

NCBC NI & C/I

+78% & 27.9%

Strategic Enablers

LT Diversified Funding

USD 1.05bn MurabahaSAR 4.2bn T1 Sukuk Issued

Digital Transactors

+77%

Bots

300 (+245)

LCR

172%

Digital Account Opening

88%

Self-Service Kiosks

406 (+91)

ProductivityIncrease Operational Efficiency

Current AccountsGrow Current Accounts

Wholesale FundingExpand Funding Options

DigitalAccelerate Digital Transformation

Affluent Banking

Proposition enhancements


NCB and Samba Merger Forming a New Saudi Banking Champion & Regional Powerhouse

6

NCBShareholders to own 67.4%

SambaShareholders to own 32.6%

Two leading banks with complementary strengths and leading market positions across all key metrics, enabling social and economic prosperity and propelling the Kingdom towards achieving Vision 2030.

The largest bank in Saudi ArabiaA new Saudi banking

champion Significant value for all shareholders

Key milestones

Approvals – All local regulatory approvals now received – Saudi Central Bank, CMA, Tadawul, GAC. Foreign regulatory requirements completed

Timing – Merger originally expected to take up to 9 months to close but progress has been made ahead of plan. The effective date of the merger is now planned for 1st

April 2021.Key dates:

EGM Invitation: 8th February 2021 EGM date: 1st March 2021 Creditor Objection period: 1st March - 31st March 2021 Legal day 1: 1st April 2021

Name – Saudi National Bank will be the new name of the Merged Bank upon the Merger effective date

Integration – IMO established and detailed integration masterplans prepared; the integration execution is expected to commence by April 2021

1

2

3

4


Mortgage(SAR bn)

+99%

Financing, net(SAR bn)

+23%

282 347

2019 2020

EPS (SAR)

-0%

2020 Financial Highlights Resilient performance; healthy returns; strong asset growth, capitalization & liquidity; stable credit quality

ROE

16.8%-163 bps

ROA

2.1%-31 bps

Net Income (SAR bn)

11,440 +0.3%

Total Assets (SAR bn)

599.4+18%

Cost to Income Ratio

-33 bps

Cost of Risk

0.6%+9 bps

NPL Coverage Ratio

143.5%+531 bps

Investments, net(SAR bn)

144.9+8%

Customers’ Deposits (SAR bn)

+18%

7

NSCI(SAR mn)

16,687+2%

Fee & Other income(SAR mn)

4,771+14%

T1 Capital Ratio

19.3%+1.4%

3.91% 3.46%2019 2020

3.68 3.68

2019 2020

37 74

2019 2020

353 416

2019 2020

30.6% 30.3%

2019 2020

NSCI Margin


Retail34%

Corporate23%

Treasury35%

Capital Markets1%

International7%

Total Assets Mix (SARbn)

Asset Deployment Strong balance sheet growth from financing and investments

8

506.864.9 10.8 8.5 2.6 5.9 599.4

+18%

0

100

200

300

400

500

600

700

800

900

1,000

4Q 19 Financing,net

Invest-ments,

net

Cash &Balances with

SAMA

PositiveFV of

Derivatives,net

Other 4Q 20

Movement in Assets (SARbn)

282 347

134 14562 70

29 37507 599

0%

10%

20%

30%

40%

50%

60%

70%

4Q 19 4Q 20

Total Assets Composition (SARbn)

Financing, net Investments, netCash, Bank & SAMA Other

507 599

0

100

200

300

400

500

600

700

4Q 19 4Q 20


Financing, net Strong mortgage growth leads broad based 23% financing expansion

9

Retail+SAR 51.2bn (+42%)

20 20 23 23 22

0

5

10

15

20

25

30

35

40

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

International (SARbn)

128 138 139 140 133

0

50

100

150

200

250

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Corporate (SARbn)

123 130 138 159 174

0

20

40

60

80

100

120

140

160

180

200

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Retail (SARbn)

2020 Guidance~ +20%

281.8

36.5

14.64.4

6.5 2.8 346.7

+23%

0

20

40

60

80

100

120

140

4Q 19 Mortgages Other Corporate FI Inter-national

4Q 20

Movement in Financing (SARbn)


Saudi Government

securities52%

Other investment grade33%

Non-investment grade8%

Equity & others7%

Investments by Credit Grade (SARbn)

Fixed rate securities

65%

Floating rate securities

28%Equity instruments & others7%

Investments by Type (SARbn)

Investments Investment portfolio increased 8% from continued participation in SGSs; portfolio is 85% investment grade

10

134.16.3 0.4

4.6

(0.6)

144.9

+8%

0

20

40

60

80

100

120

4Q 19 SaudiGovernmentsecurities

Otherinvestment

grade

Non-investment

grade

Equity & others 4Q 20

Movement in Investments (SARbn)

134 145

0

20

40

60

80

100

120

140

160

180

200

4Q 19 4Q 20

134 145

0

50

100

150

200

4Q 19 4Q 20


Interbank15%

Customers' deposits80%

Debt0.3%

Other5%

Total Liabilities Mix (SARbn)

506.8

63.6

(5.8)

12.81.0 5.1

(1.3)

0.40.8

599.4

+18%

5.110.9

0

50

100

150

200

250

4Q 19 CASA Time Other CASA Time Other Inter-bank

Debt OtherLiabil-ities

TotalEquity

4Q 20

Movement in Funding (SARbn)

Funding Balance sheet growth funded mainly by strong 18% domestic deposit growth

11

Domestic Deposits+SAR 58.8bn (+18%)

International Deposits

+SAR 4.2bn (+16%)

CASA77%Time

20%

Others3%

Customers' Deposits Mix (SARbn)

437 519

0

100

200

300

400

500

600

4Q 19 4Q 20

353 416

0

100

200

300

400

500

4Q 19 4Q 20


Net Income Net income stable; healthy ROE and ROA on profitable deployment of equity and assets

12

18.5% 16.8%

-163 bps

0

0

0

0

0

0

0

0

0

0

1

FY 19 FY 20

ROE (%)

2.4% 2.1%

-31 bps

0

0

0

0

0

0

0

0

0

FY 19 FY 20

ROA (%)

3.68 3.68

-0%

0

1

2

3

4

5

6

7

8

9

10

FY 19 FY 20

EPS (SAR)

* Impairments include impairment charges for financing and investments

11,401304

579

(198)(531) (139)

61

(38)

11,440

+0.3%

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

8,000.00

FY 19 NSCI Fee &Other

Income

OperatingExpenses

Impair-ments*

OtherNon-

OperatingIncome

Zakat &Income Tax

Non-Controlling

Interest

FY 20

Net Income after Zakat and Income Tax attributed to Equity Holders (SARmn)


16,382 86

(281)

1,127

(1,846)

56737

(18)

16,687

+2%

3.91% +2 bps -58 bps -1 bps -18 bps +17 bps +16 bps -0 bps -3 bps 3.46%

633

-

2,000

4,000

6,000

8,000

10,000

12,000

FY 19 Retail Corporate Other Investments Depositmix &cost

Wholesalefunding

Other International FY 20

Movement in Net Special Commission Income (SARmn) & NSCI Margin (%)

NSCI and Margin Net special commission income grew 2% YOY

13

Financing Mix & Yield-SAR 634mn

2020 Guidance3.4%-3.6%

4.1% 3.7% 3.4% 3.4% 3.4%

2.2% 1.8%1.1% 0.9% 0.8%

0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

NSCI margin

NSCI margin 3M SAR SAIBOR

1.0% 0.9% 0.7% 0.6% 0.4%0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Funding cost (%)

5.1%4.5%

4.0% 3.9% 3.7%

0

0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Commission yield (%)


498 498 555 525 682

0

200

400

600

800

1,000

1,200

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Fee from banking services (SARmn)

237

3414,192

(66) (36)

392 36 15 143379

(283)

4,771

4,4303,955

+14%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

FY 19 Finance&

lending

Tradefinance

Inv. mgt.&

brokerage

Creditcards

Others ExchangeIncome

Investment-relatedincome

Otheroperatingexpenses

FY 20

Fee and Other Income Movement (SARmn)

Fees from Banking Services+SAR 340mn (+18%)

Fee & Other Income Fee and other income increased from improved investment management and brokerage income, and increase in exchange income and investment-related income

14

Domestic

*

International

253 314 316 290 285

0

100

200

300

400

500

600

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Exchange Income (SARmn)

* Includes adjustments for adoption IFRS 9/15 relating to fees amortization

361 490

20

785

495

0

200

400

600

800

1,000

1,200

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Investment-related Income (SARmn)


6,299

(0) (15)

35178 6,497

5,778

719

5,572

727

+3%

0

1,000

2,000

3,000

4,000

5,000

6,000

FY 19 Employee-related

Rent &premises

Deprecia-tion &amorti-zation

OtherG&A

FY 20

Operating Expenses Movement (SARmn)

Operating Expenses Modest increase in operating expenses; improved cost to income ratio back at 2019 levels

15

Domestic

International 30.6%

31.9% 32.0%

30.9%30.3%

29.2%

30.9% 31.0%

30.0%

29.1%

0

0

0

0

0

0

FY 19 1Q 20 1H 20 9M 20 FY 20

Cost to Income Ratio (YTD %)

Group (%) Excluding International (%)

2020 Guidance< 33%


1,447

(317) (74)

893

(35)

43

(7)

1,950

35%

-

500

1,000

1,500

2,000

2,500

3,000

3,500

FY 19 Impairments Recoveries& Other

Impairments Recoveries& Other

Other International FY 20

Movement in Impairments (SARmn)2020

Guidance< 0.8%

0.5% 0.6%0.8% 0.7% 0.6%

0

0

0

0

0

0

0

0

FY 19 1Q 20 1H 20 9M 20 FY 20

Group

Cost of Risk for Financing Increase in impairments from Covid-19 related adjustments and impacts

16CoR (%)

Corporate+ SAR 886 mn

Retail-SAR 391 mn

0.4% 0.3% 0.3% 0.2%0.0%

0

0

0

0

0

0

FY 19 1Q 20 1H 20 9M 20 FY 20

Retail

0.32% 0.4%

1.1% 1.0% 1.1%

(0)

0

0

0

0

0

0

0

0

0

FY 19 1Q 20 1H 20 9M 20 FY 20

Corporate

2.2% 2.7% 2.3% 2.3% 2.0%0

0

0

0

0

0

FY 19 1Q 20 1H 20 9M 20 FY 20

International


5,329

(14)

1,154

(341)

6,128

+15%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

4Q 19 Retail Corporate International 4Q 20

Movement in NPLs (SARmn)

Credit Quality Healthy credit quality despite Covid-19 impacts in corporate; stable coverage including sustained improvement in international

17

Domestic+SAR 1,140mn (+31%)

62% 71% 75% 84% 90%

8.2% 6.9%6.1% 5.4% 5.7%

20%

40%

60%

80%

100%

120%

0

0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

International

NPL Ratio NPL Coverage

152% 146%150%

142% 145%2.3% 2.3% 2.6%

2.8% 3.0%

130%

135%

140%

145%

150%

155%

160%

0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Corporate

277%

242% 221%

280%

244%0.5%

0.5% 0.5%

0.4%

0.3%

200%

220%

240%

260%

280%

300%

320%

340%

0

0

0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Retail

138% 140% 141% 143% 143%

1.8% 1.7% 1.8% 1.7% 1.7%

120%

130%

140%

150%

160%

170%

180%

190%

200%

0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Group


Financing and Advances Credit Quality

Healthy and stable stage-wise NPL coverage

18

255 267 332 12 17 18 5

5 6

272 289 355

0

100

200

300

400

500

600

FY 18 FY 19 FY 20

Financing & Advances, Gross (SARbn)

Stage 1 Stage 2 Stage 3

2,566 1,716 1,808 1,098 1,582 2,448

3,762 4,065 4,536

7,426 7,362 8,791

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

FY 18 FY 19 FY 20

Loss Allowance for Financing & Advances (SARmn)


Loss Allowance for Financing & Advances by Segment (SARmn)

1.0% 0.6% 0.5%

9.2% 9.3% 13.8%

71.7% 76.3% 74.0%

(0)

(0)

0

0

1

1

1

FY 18 FY 19 FY 20

Coverage Ratios (%)


2019 2020

Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3

Consumer & Credit Card 1,234 166 258 856 286 286

Corporate 397 1,330 2,896 838 1,966 3,294

International 51 78 911 59 195 955

Others 34 7 - 54 0.02 -


16.1%

14.4%

15.6% 15.8%

16.9%

17.9%

16.0%

18.0% 18.2%

19.3%18.7%

16.9%

19.0% 19.2%

20.3%

0

0

0

0

0

0

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

Capital Ratios (%)

CET1 ratio T1 ratio TC ratio

Capital & Liquidity Capital position comfortably above regulatory minima; strong liquidity profile maintained

19

2020 T1 Guidance

> 18%

168.9% 176.1% 165.0%184.9% 172.4%

(5)

15

35

55

75

95

115

135

1

1

2

2

3

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

LCR Ratio (%)

124.4% 117.1% 120.0% 121.2% 122.7%

(18)

82

182

282

382

482

582

1

1

1

1

1

2

2

2

4Q 19 1Q 20 2Q 20 3Q 20 4Q 20

NSFR Ratio (%)


Strategy Dashboard 2021 strategy - rigorous execution and focus on mortgage, digitization, non-financing revenues and merger

20

SubsidiariesGrow Value Contribution

RetailGrow Financing

CorporateManage for Value

TreasurySustain Recurring Revenues

Asset Deployment

Funding

Mortgage

Digitization

Transaction banking

V2030 opportunities

Asset returns

Portfolio quality & liquidity

Key business lines

Efficiency

Productivity

Strategic Enablers

Affluent

Customer coverage & experience

Cash management

Programs across maturity & seniority

Mix and cost optimization

Digital product journeys

Predictive analytics

Mobile First

Leverage Robotics & AI

Automate back-office processes

Lean distribution

ProductivityIncrease Operational Efficiency

Current AccountsGrow Current Accounts

Wholesale FundingExpand Funding Options

DigitalAccelerate Digital Transformation

NCB-SAMBA Merger

New Saudi Banking ChampionCreate Regional Financial Powerhouse

Best in class value proposition

Accelerated growth

Value creation for all stakeholders

One Bank Collaboration Initiative


2021 Guidance Economic recovery provides opportunities; mortgage momentum partially offset by expected corporate repayments

*Macroeconomic Indicator Sources: NCB Economics, US Federal Reserve, IMF, KSA MoF. **For NCB only. Guidance will be revisited upon legal completion of merger21

Macro-Economic Outlook*

2021 Outlook

Oil Price USD 50 / bbl

US Fed Rates Stable 2021

GDP Growth Real GDP 3.2%

Fiscal Balance Deficit 4.9% of GDP

Inflation 2.9%

NCB Financial Guidance**

FY 2020 Reported 2021 Guidance

Financing Growth +23% High Single Digit

NSCI Margin 3.5% 3.5% - 3.6%

Cost to Income 30.3% Below 32%

Cost of Risk 0.6% 0.6% - 0.8%

Tier 1 CAR 19.3% 17% - 19%

Q&A SESSION

4Q 2020 Results

22

ADDITIONAL INFORMATION

4Q 2020 Results

23


Contact UsThe National Commercial Bank

P.O. Box 3555

21481 Jeddah, Kingdom of Saudi Arabia

Mr. Abdulbadie Alyafi

Head Of Investor Relations

[email protected]

More InformationVisit: http://www.alahli.com/en-us/Investor_Relation

to access NCB’s current and previous Investor Publications including:

Financial statements

Pillar III Disclosures

Earnings releases

Investor presentations

Financial data packs (in Excel)

NCB Contacts NCB welcomes your feedback and inquiries

24

mailto:[email protected]

http://www.alahli.com/en-us/Investor_Relation

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