NCB Investor Relations 2Q 2017 Investor Presentation 1
National Commercial Bank Investor Presentation 2Q 2017 Results NCB - - PowerPoint PPT Presentation
National Commercial Bank Investor Presentation 2Q 2017 Results NCB - - PowerPoint PPT Presentation
National Commercial Bank Investor Presentation 2Q 2017 Results NCB Investor Relations 2Q 2017 Investor Presentation 1 Disclaimer The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background
NCB Investor Relations 2Q 2017 Investor Presentation 2
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
- therwise 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.
NCB Investor Relations 2Q 2017 Investor Presentation 3
Investor Presentation
Contents
04 12 18 28 43 51 NCB – The leading KSA bank Grow with KSA. Grow with NCB. Strategy Overview Financial Results Segmental Overview Additional Information
NCB Investor Relations 2Q 2017 Investor Presentation 4
National Commercial Bank The Leading KSA Bank 2Q 2017 Results
NCB Investor Relations 2Q 2017 Investor Presentation 5
NCB is the leading banking group in Saudi Arabia
Established in 1953; IPO in 2014
NC NCB Snaps pshot
Jeddah HQ
>8 >8m
m Clients
12 12,310 10
Employees
441 441bn
bn Assets
31 316bn
bn Deposits
>1 >100bn
bn Market Cap
Wh Wholes esale e br branc nch in n Bahrain Of Offices: Singapore, Seoul, Shanghai Su Subsidiar ary in Turkey: Tü Türkiye Fi Fina nans ns Katılım Ba Bankası Su Subsidiar ary in KS KSA: NC NCB Cap apital al
NCB Investor Relations 2Q 2017 Investor Presentation 6
NCB is the leading banking group in Saudi Arabia
NCB has a strong market and financial position
Fin Financia ial Posit itio ion
KS KSA GC GCC Assets #1 #4 Financing #1 #4 Deposits #1 #3 tied Investments #1 #1 Total Operating Income #1 #3 Net Income #1 #3
Ma Market Position
by by KS KSA Overall banking Assets #1 Corporate banking Financing #1 Retail banking Financing #2 Treasury Investments #1 Asset Management AUMs #1 Brokerage Value Traded #3 441 340 231 218 203 100 200 300 400 500 NCB Rajhi Samba Riyad BSF
As Asset ets (SRb SRbn) n)
254 225 143 129 125 50 100 150 200 250 300 NCB Rajhi Riyad BSF Samba
Fi Financi nancing ng (SRbn) SRbn)
316 273 172 158 157 50 100 150 200 250 300 350 NCB Rajhi Samba BSF Riyad
De Deposits (SRb Rbn)
NCB Investor Relations 2Q 2017 Investor Presentation 7
NCB has a well-diversified business model
Total operating income contribution FY2016
Ca Capit pital Markets
Largest Asset Manager in KSA Largest Shariah-compliant Asset Manager worldwide Top 3 Broker 17 locations 286 Employees
15.8
SR bn
NC NCB
Largest bank in Saudi Arabia 374 branches, 3,477 ATMs 148 Remittance centers 8,035 Employees
7.5bn 4.6bn 3.7bn
RETAIL CORPORATE TREASURY
2.2bn
581mn
In Intern rnational
Türkiye Finans Katılım Bankası (TFKB) 286 branches, 750 ATMs 3,989 employees
NCB Investor Relations 2Q 2017 Investor Presentation 8
NCB has a strong financial position
Key KPIs
14.7% 15.1% 16.9% 17.5% 17.1% 17.2% 17.2% 19.2% 16.5% 16.2% 13.5% 15.3%
10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0%
2012 2013 2014 2015 2016
Ca Capital Ra Ratios (%) %)
T1 ratio TC ratio CET1 ratio
39 39 43 43 47 47 56 56 60 60 +11%
20 40 60 80 100
2012 2013 2014 2015 2016
Tot Total al Equi Equity y (SRbn) SRbn)
345 345 377 377 435 435 449 449 441 441 +6%
100 200 300 400 500 600 700
2012 2013 2014 2015 2016
Tot Total al Asset Assets s (SRbn) SRbn)
CAGR CAGR
LCR is based on Q4 average numbers LCR was not reported before 2015 Capital ratios are based on Pillar I RWA
152.3% 172.5% 59.8% 62.4% 66.3% 78.1% 80.3%
1 1 1 1 1 2 2 2
2012 2013 2014 2015 2016
Li Liqui quidi dity y Rat atios
- s (%)
Liquidity coverage ratio (LCR) Loan to customer deposit ratio
NCB Investor Relations 2Q 2017 Investor Presentation 9
NCB has a strong performance track record
Key KPIs
9.0 10.1 11.4 12.6 13.6 4.5 4.8 4.8 4.9 5.1 13 13.5 14 14.9 16 16.2 17 17.5 18 18.6 +8%
5 10 15 20 25 30
2012 2013 2014 2015 2016
Tot Total al Oper Operat ating ng Incom ncome e (SRbn) SRbn)
Net special commission income Fee and other income
2.92% 2.95% 2.64% 3.00% 3.27%
2012 2013 2014 2015 2016
Net Net Sp Spec ecial Co Commission n Margin n (%) %)
38.7% 39.0% 39.0% 37.4% 37.7%
1 1
2012 2013 2014 2015 2016
Co Cost to Inc ncome e Ra Ratio (%) %)
CAGR CAGR
6. 6.5 7. 7.9 8. 8.7 9. 9.1 9. 9.3 +10%
2 4 6 8 10 12 14 16 18
2012 2013 2014 2015 2016
Net Net Inc ncome e attribut utable e to eq equi uity y ho holder ers (SRb SRbn) n)
18.0% 20.0% 20.1% 19.2% 17.8% 2.0% 2.2% 2.2% 2.1% 2.1%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
2012 2013 2014 2015 2016
Ret Retur urns ns (%) %)
ROE common shares (%) ROA (%)
NCB Investor Relations 2Q 2017 Investor Presentation 10
NCB has outperformed the Saudi banking sector
Key KPIs compared to Saudi Arabian banking peers
SR SR (bn bn)
Fi Financing and ad advan ances, net To Total ope peratin ing in inco come Ne Net income at attributab able to eq equity holder ers
Source: Company financials
CAGR
16 163 25 254 4
+12%
100 200 300 400 500
2012 2016
17 172 225 225
+7%
100 200 300 400 500
2012 2016
117 117 14 143
+5%
100 200 300 400 500
2012 2016
10 103 12 129
+6%
100 200 300 400 500
2012 2016
10 103 12 125
+5%
100 200 300 400 500
2012 2016
13 13.5 18 18.6
+8%
5 10 15 20 25 30 35 40
2012 2016
14 14.0 15 15.3
+2%
5 10 15 20 25 30 35 40
2012 2016
6. 6.8 8 7. 7.7 7
+3%
5 10 15 20 25 30 35 40
2012 2016
5. 5.0 6. 6.4
+6%
5 10 15 20 25 30 35 40
2012 2016
6. 6.7 7. 7.8
+4%
5 10 15 20 25 30 35 40
2012 2016
7. 7.9 8. 8.1
+1%
2 4 6 8 10 12 14 16 18 20
2012 2016
3. 3.5 5 3. 3.3 3
- 1%
2 4 6 8 10 12 14 16 18 20
2012 2016
3. 3.0 3. 3.5 5
+4%
2 4 6 8 10 12 14 16 18 20
2012 2016
4. 4.3 3 5. 5.0
+4%
2 4 6 8 10 12 14 16 18 20
2012 2016
6. 6.5 9. 9.3
+10%
2 4 6 8 10 12 14 16 18 20
2012 2016
84 842 1, 1,14 141 1
+8%
500 1,000 1,500 2,000 2,500
2012 2016
51 51 64 64
+6%
20 40 60 80 100 120 140
2012 2016
29 29 32 32
+3%
10 20 30 40 50 60 70
2012 2016
In Industry Peers (e (ex x NCB)
NCB Investor Relations 2Q 2017 Investor Presentation 11
NCB Group listed on Tadawul in November 2014
Ranked third in Tadawul, S&P Pan Arab and MSCI Indices with significant weightings
Sh Share pa parameters
31 31 Ju July 2017 Closing Price 49.55 52 week range (SR) 32-58 Free Float 36% Shares issued (m) 2,000 Tangible Book Value (SRm) 52,712 Tangible BVPS 26.4 P/TBV Ratio 1.9 x P/E Ratio 10.6 x Div Yield 4.4 % 3m Avg Daily Volume (Shares) 1,199,318
MS MSCI GC GCC Index
Fl Float Ad
- Adj. Mcap
ap (USD SD) Wei Weighting (% (%) Al Rajhi Bank 22.67 9.28 SABIC 20.46 8.38 Na Nationa nal Co Commercia ial Bank 11. 11.33 4. 4.64 Almarai 8.23 3.37 Saudi Telecom 8.22 3.36 ETISALAT 8.19 3.35 Qatar National Bank 8.01 3.28 Samba Financial Group 7.59 3.11 Emaar Properties 7.43 3.04 National Bank of Kuwait 6.45 2.64
Ra Ratings
LT LT ST ST Ou Outlook Na Nationa nal Commercial Bank nk Moody’s* A1 P-1 Stable S&P BBB+ A-2 Stable Fitch A- F1 Stable Capital Intelligence A+ A1 Stable Go Gover ernmen ent of Saudi Arabia Moody’s A1 Stable S&P A- Stable Fitch A+ Stable Capital Intelligence A+ Stable
*Moody’s rating is unsolicited Source: MSCI, 6 July 2017 Source: Bloomberg Source: NCB, Bloomberg
10 20 30 40 50 60 70 80
Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17
Shar Share e pr price ce per perfor
- rmance
ance si since nce IPO (SR SR)
NCB Investor Relations 2Q 2017 Investor Presentation
National Commercial Bank Grow with KSA. Grow with NCB. 2Q 2017 Results
NCB Investor Relations 2Q 2017 Investor Presentation 13
Saudi banking sector
The Saudi banking sector has been maneuvering challenges
0. 0.9% 9% 1. 1.8% 0. 0.5% 1. 1.1% 1% 13 13.6% 0. 0.1%
- 5.0%
0.0% 5.0% 10.0% 15.0% 20.0% (0)
2012 2013 2014 2015 2016 2017
Li Liqui quidi dity y (% (%)
3M SAR SAIBOR 3M USD LIBOR Money Supply Growth
35 35 38 38 41 41 44 44 41 41 11.0% 7.2% 10.2% 5.4%
- 5.4%
- 8.0%
- 6.0%
- 4.0%
- 2.0%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 10 20 30 40 50 60 70
2012 2013 2014 2015 2016
Pr Profits (SRb SRbn) n)
Profits Annual Growth (%)
Source: Thomson Reuters, SAMA, Banks’ Annual Reports, and NCB Economics Estimates
0.52% 0.49% 0.47% 0.48% 1.01%
2012 2013 2014 2015 2016
Co Cost of Fund Funds (%) %)
Cost of Funds
960 960 1, 1,076 1, 1,205 1, 1,323 1, 1,351 1 16.4% 12.1% 11.9% 9.8% 2.2%
- 10.0%
- 5.0%
0.0% 5.0% 10.0% 15.0% 500 1,000 1,500 2,000 2,500 3,000
2012 2013 2014 2015 2016
Lendi Lending ng Mar arket ket (SR SRbn) bn)
Loans Credit Growth rate
NCB Investor Relations 2Q 2017 Investor Presentation 14
Economic headwinds
The oil market decline impacted the Kingdom financially
20 40 60 80 100 120 140 2 4 6 8 10 12 2009 2010 2011 2012 2013 2014 2015 2016 2017 USD/bbl MMBD
Oi Oil Mar arket et
Saudi Oil Production, LHS Arabian Light Spot Price, RHS
648 718 725 610 529 36 36 43 60 39 684 684 754 754 76 768 67 670 56 568
100 200 300 400 500 600 700 800 900
2012 2013 2014 2015 2016
For Forei eign gn Res Reser erves es (US USDb Dbn)
SAMA Banks
4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17
St Stoc
- ck
k Mar arket ket
Tadawul Index
Source: Thomson Reuters, Ministry of Finance, SAMA, Tadawul, and NCB Economics Forecasts
13 13.6% 6. 6.4%
- 2.
2.0%
- 15
15.0%
- 12
12.4% 22. 22.4% 4% 18 18.1% 1% 9. 9.7%
- 7.
7.9%
- 8.
8.3%
- 25.0%
- 15.0%
- 5.0%
2012 2013 2014 2015 2016P
Tw Twin n Bal alances ances (%)
Budget Balance / GDP Current Account Balance / GDP
NCB Investor Relations 2Q 2017 Investor Presentation 15
Vision 2030
The Kingdom of Saudi Arabia has responded with a bold vision to reduce oil dependency…
Ec Economic reform Move from a government driven economy to one that is market based § Increase the private sector’s contribution from 40% to 65% of GDP § Raise the share of non-oil exports in non-oil GDP from 16% to 50% § Increase FDI from 3.8% to the international level of 5.7% of GDP § Focus on strategic sectors: Mining and Minerals, Petrochemicals, Manufacturing, Retail and Trade, Tourism, Finance and Healthcare Fi Fiscal susta tainability ty Creating sustainable fiscal management § Raise non-oil revenue to SAR 530bn by 2020 § Reduce public wages to 40% of Budget § Create USD 2trn Public Investment Fund Pr Producti tivity ty Leverage our young population, 50% being younger than 25 § Lower the rate of unemployment from 11.6% to 7% § Increase SME contribution to GDP from 20% to 35% § Increase women’s participation in the workforce from 22% to 30% § Improve education with an uplift of 15% on Math and English attainment Are Areas of Focus Se Selected Com
- mmitments / KPIs
NCB Investor Relations 2Q 2017 Investor Presentation 16
Economic upturn
…leading to an expected economic rebound in 2018F
Source: Ministry of Finance, Fiscal Balance Program, and NCB Economics Forecasts
99 99 60 60 44 44 14 142 31 317 7 432 432 471 471 46 469 41 419 4% 4% 2% 2% 2% 2% 6% 6% 13 13% 17 17% 18 18% 17 17% 14 14.2%
- 10%
- 5%
0% 5% 10% 15% 20% 100 200 300 400 500 600 700 800
2012 2013 2014 2015 2016P 2017F 2018F 2019F 2020F
Ut Utilizing Un Untapped De Debt Ma Markets (SRb Rbn)
Domestic Public Debt Debt to GDP Ratio (%)
1,145 1,035 913 445 386 548 594 609 552 103 121 127 164 207 262 331 419 530 1, 1,247 1, 1,15 156 1, 1,044 608 608 59 593 3 81 810 92 925 1, 1,028 1, 1,082
(100) 100 300 500 700 900 1,100 1,300 1,500 1,700
2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F
Rev Revenue enue Di Diver ersification n (SRb SRbn) n)
Oil Revenues Non-oil Revenues
690 820 855 860 840 183 156 245 118 (15) 87 873 97 976 6 1, 1,10 100 97 978 8 82 825 890 890 92 928 8 95 950 95 953 26 26.6% 19 19.0% 28 28.7% 7% 13 13.7%
- 1.
1.8% 0. 0.0% 0%
- 10.0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% (150) 50 250 450 650 850 1,050 1,250
2012 2013 2014 2015 2016P 2017F 2018F 2019F 2020F
Fi Fiscal scal Disci scipl pline ne (SRbn) SRbn)
Budget Actual Budget Overrun (%)
5. 5.6% 2. 2.7% 7% 3. 3.7% 7% 4. 4.1% 1. 1.6%
- 0.
0.7% 1. 1.2% 1. 1.8% 2. 2.1%
(0) (0)
2012 2013 2014 2015 2016P 2017F 2018F 2019F 2020F
Ec Econom
- nomic Reb
Rebound
- und (%)
Oil Non-oil Public Non-oil Private Real GDP
NCB Investor Relations 2Q 2017 Investor Presentation 17
NCB is aligned with Government priorities
NCB has already made significant contributions to the economic welfare of Saudi Arabia
Government aims to mobilize capital and channel to target sectors NCB plans to target sectors where we have competitiveness and scale
NCB supports +70,000 SME across Saudi Arabia with leading market share Only local and joint lead manager for KSA’s inaugural USD 17.5bn bond issuance and numerous sukuk issuances. NCB is a large investor in Saudi Government Bonds with a portfolio SR 39bn. NCB has provided home financing for more than 20,000 Saudi families with a portfolio of SR 18bn
Ac Achieving fisc scal al su sust stainability Op Opening up the Sau Saudi economy In Increase SME con contribution
- n to
to GDP In Increase home
- w
- wnership
Re Reduc uce Sau Saudi un unemp mployme ment Di Diversify economy
NCB is the leading lender for KSA companies with a portfolio
- f SR 157bn; 16% market share
NCB is the number one financial institution in Saudization (95%) and has a 100% Saudi top management team
NCB Investor Relations 2Q 2017 Investor Presentation
National Commercial Bank Strategic overview 2Q 2017 Results
NCB Investor Relations 2Q 2017 Investor Presentation 19
NCB’s strategic plan is about execution
Domestic leadership position drives strategic priorities
Re Retail Ba Banki king
Ex Expand sh share o re of reta retail pr profits
Co Corpo porate Ba Banki king
Gro Grow sel selec ectivel ely a and in increase ris isk-ad adjusted retu return rns
TF TFKB
In Increase profit co contri tributi tion
Tr Treasury
Di Diversify funding, sustain investment returns and cross-sel sell
NCBC
Gen Genera erate A e AUMs a s and c cater t er to GR GRE’s g s gro rowing n need eeds
Lean Distribution Di Digitization
Ex Expand rea reach ch w with th l lea ean br branches Anyw Anywhere, anyt nytime, ins nstant nt bank nking ng
NCB Investor Relations 2Q 2017 Investor Presentation 20
Distribution expansion
We accelerated expansion of our distribution platform in Saudi Arabia…
29 299 32 322 342 342 352 352 374 374 +6%
100 200 300 400 500 600 700
2012 2013 2014 2015 2016
Num Number er of branc nches hes
28 28 57 57 97 97 13 138 14 148 +52%
50 100 150 200 250
2012 2013 2014 2015 2016
Rem Remittanc nce e Cent Center ers
1, 1,960 2, 2,25 252 2 2, 2,643 43 3, 3,107 7 3, 3,477 477 +15%
1,000 2,000 3,000 4,000 5,000 6,000
2012 2013 2014 2015 2016
Num Number er of ATM ATMs
12 12,775 14 14,075 26 26,514 4 30 30,803 3 39 39,132 32 +32%
10,000 20,000 30,000 40,000 50,000 60,000 70,000
2012 2013 2014 2015 2016
Po Point nt of Sa Sale
CAGR CAGR CAGR CAGR
NCB Investor Relations 2Q 2017 Investor Presentation
60% 60% 69% 69% +15%
1 1 1 1
2014 2016
Fr Front
- nt / Back
ack Of Office ce Rat Ratio
- (%
(%)
21
Lean distribution
…and are streamlining branch formats to enhance productivity gains
St Strategic Imperatives
§ Continue expanding our distribution reach to acquire customers and grow market share § Expand with smaller branches that are headcount efficient § Optimize costs of existing branch network § Equip branches with self-service/assisted-service technologies § Enhance the in-branch sales and service model to improve customer experience
39 39.0% 37. 37.7% 7% +3%
1 1 1
2014 2016
Co Cost / Inc ncome e Ra Ratio (%) %)
1. 1.35 1. 1.78 +32%
1 1 2 2 3
2014 2016
Oper Operat ating ng Inc ncom
- me
e / FTE FTE (S (SRm)
12 12.1 1 11. 11.0
- 9%
2 4 6 8 10 12 14 16 18 20
2014 2016
FTE FTE / Branch anch
8, 8,02 021 8, 8,03 035 +0%
(1,000) 1,000 3,000 5,000 7,000 9,000 11,000 13,000 15,0002014 2016
Ba Bank He Headcount (NCB NCB em employees yees)
NCB Investor Relations 2Q 2017 Investor Presentation 22
Digitization
Migrate customers to digital through superior user experiences
St Strategic Fo Focus Areas
§ Mobile first - anytime, anywhere § Consistently lead KSA banks in functionality and user-experience § Expand end-to-end digital sales capability § Expand subscription base and incentivize usage § Leverage data and analytics to drive sales effectiveness
10 10% 29 29% +70%
1 1
2014 2016
Di Digital Tr Transact ansactor
- rs
(% (% of
- f tot
- tal
al base) base)
CAGR CAGR CAGR
13.0 17.5 2.8 17.9 15 15.8 35. 35.4 4 +50%
10 20 30 40 50 60
2014 2016
Di Digital Transactions (mn mn)
Online Mobile
8% 8% 4% 4%
- 29%
2014 2016
Br Branch Financial Transactions (% (% of total) l)
NCB Investor Relations 2Q 2017 Investor Presentation
Retail Banking
We are transforming retail distribution to increase share of profits
St Strategic Fo Focus Areas § Grow market share in consumer finance § Grow in high deposit segments (Affluent/ HNW / GRE) § Expand and optimize branch network § Drive digital migration § Continue improving customer satisfaction
CAGR CAGR CAGR
5. 5.7 7 7. 7.5 5 +15%
2 4 6 8 10 12 142014 2016
Tot Total al Oper Operat ating ng Incom ncome e (SRbn) SRbn)
1. 1.6 3. 3.2 +43%
1 2 3 4 5 6
2014 2016
Net Net Inc ncome e (SRb SRbn) n)
23
72 72 85 85 17.4% 19.7% +8%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%20 40 60 80 100 120 140 160
2014 2016
Co Cons nsum umer er Fi Fina nanc ncing ng & & Ad Advanc nces es, net net (S (SRbn)
Consumer Financing & Advances, net (SRbn) Market Share (%)
NCB Investor Relations 2Q 2017 Investor Presentation 24
Corporate Banking
Grow selectively and increase risk-adjusted returns
St Strategic Fo Focus Areas § Focus on portfolio quality and proactively manage risk § Build a deal pipeline in V2030 target sectors § Cross sell treasury and cash management § Drive migration to digital channels § Expand collection capacity and increase recoveries
CAGR CAGR CAGR
10 108 13 130 +10%
50 100 150 200 250
2014 2016
Co Corporate e Fi Fina nanc ncing ng & & Ad Advanc nces es, net net (S (SRbn)
3. 3.7 7 4. 4.6 +11%
1 2 3 4 5 6 7 82014 2016
Tot Total al Oper Operat ating ng Incom ncome e (SRbn) SRbn)
3. 3.2 2. 2.7 7
- 9%
1 1 2 2 3 3 4 4 5 5
2014 2016
Net Net Inc ncome e (SRb SRbn) n)
NCB Investor Relations 2Q 2017 Investor Presentation
35% 35% 25 25%
- 15%
1
2014 2016
In Investments a as % % o
- f T
f Total A l Assets
25
Treasury
Broaden and deepen liquidity access while sustaining investment returns and cross-sell
St Strategic Fo Focus Areas § Execute international hubs strategy § Expand wholesale funding program § Maintain the high quality/liquidity and profitability of the investment book § Support the development of the sukuk capital markets § Underpin Islamic product innovation
10 100 10 104 152.3% 172.5%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% 200.0% 20 40 60 80 100 120 140 160 180 200
2015 2016
HQ HQLA and Liquidity Co Coverage (SRb Rbn/%) %)
High quality liquid assets (HQLA) Liquidity coverage ratio (LCR) Lo London
Ba Bahrain
Si Singapore Je Jeddah
Es Esta tablished Un Under consideration
CAGR CAGR
HQLA is group-wide LCR shows Q4 average
Fr Frankfurt Ne New York Hon Hong Kon
- ng
99% 99% 96% 96%
- 2%
1 1 1 1 1 2 2
2014 2016
Saudi Saudi Gov Gover ernm nment ent and and Inv nvest estment ent Gr Grad ade e Inv nves estment ents as as % of
- f Tot
Total al
NCB Investor Relations 2Q 2017 Investor Presentation 26
NCB Capital
KSA’s leading investment bank and asset manager; well positioned to capture future growth
St Strategic Fo Focus Areas § Grow recurring revenues by gathering more AUMs, launching new products, growing Corporate Savings business § Set the stage for future market upturn by growing brokerage market share and continuing to invest in NCBC capabilities § Build on market leadership, landmark IB mandates to support GREs as well as local and foreign institutional clients § Continue to focus on increasing efficiency, improving productivity to bolster resilience
57 57 115 115 +102%
50 100 150 200 2502014 2016
NC NCBC BC As Assets under Ma Manageme ment (SRbn) 4, 4,29 294 4 2, 2,314 4 8, 8,333 7, 7,21 210
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,0002014 2016
Tadaw Tadawul ul Tr Traded aded Val alue ue (S (SRbn) ) & TASI I In Index
Traded Value TASI Index
49 490 28 283 11. 11.4% 12 12.2%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 100 200 300 400 500 600 700 800 9002014 2016
NC NCBC BC Traded Va Value (SRb SRbn) & & Market Sh Share (%) 10 10.1% 1% 13 13.0%
+2.9ppt 2014 2016
NC NCBC BC Sh Share of Se Sector Ne Net In Income (% (%)
NCB Investor Relations 2Q 2017 Investor Presentation
334 334 29 296
- 6%
100 200 300 400 500
2014 2016
Net Net Inc ncome e (TRYm TRYmn) n)
33. 33.5 5 38 38.8 +8%
10 20 30 40 50 60 70
2014 2016
Tot Total al Asset Assets s (TRYbn) TRYbn)
27
Türkiye Finans Katılım Bankası
We are executing a transformation program to grow TFKB’s net income
Lo Long-term term stra strateg tegic i c investm estmen ent i t in T TFKB § High-growth and profitable banking sector § Strong position in participation banking and scalable platform § Large, young and skilled workforce St Strategic Fo Focus us Areas § Strengthen underwriting and improve collections § Resume branch expansion and expand digital channels § Increase automation and drive capacity optimization § Instill NCB’s principles (Customer excellence, robust governance, best-in-class technology)
CAGR CAGR CAGR CAGR
4. 4.1% 3. 3.0%
- 15%
2014 2016
TFKB TFKB Cont Contribut bution
- n to
- NCB
NCB Net Net Inc ncome e (%) %)
1, 1,446 2, 2,066 +20%
500 1,000 1,500 2,000 2,500 3,000 3,5002014 2016
Tot Total al Oper Operat ating ng Incom ncome e (T (TRYmn)
NCB Investor Relations 2Q 2017 Investor Presentation
National Commercial Bank Financial Results Highlights 2Q 2017 Results
NCB Investor Relations 2Q 2017 Investor Presentation 29
Profitability and balance sheet drivers
Net income stable as improved efficiency offset lower fee income Balance sheet growth reflective of a more subdued economic environment
Ma Management Commentary § Growth in total assets (+2%) and financing (+1%) year to date was in line with the more subdued economic environment. § Total operating income declined 4% YoY. Domestically, total
- perating income was stable YoY as healthy net commission
margin and income growth was offset by lower fee and investment income. § Total operating income from International operations declined by 33% YoY primarily due to a 20% avg. depreciation of the Turkish Lira. § 2Q net income stable YoY as improved operational efficiency offset declining fee and investment-related income.
254 254 257 112 108 115 63 71 60 441 441 449 449 450 450 +2%
100 200 300 400 500 600 700 800
4Q 16 1Q 17 2Q 17
Tot Total al Asset Assets s (SRbn) SRbn)
Financing and advances, net Investments, net Cash and bank balances Other assets
2. 2.44 44 0. 0.13 (0 (0.31) 0. 0.30 (0 (0.08) (0 (0.06) 2. 2.42 42
1 1 1 1 1
2Q 16 NSCI Non-NSCI Income Expenses Impairments Other 2Q 17
Net Net inc ncome e At Attribut uted ed to Eq Equi uity y Ho Holder ers Movem ement ent (SRb SRbn) n)
4. 4.66 0. 0.19 9 (0 (0.18) 4. 4.67 7 (0 (0.19) 4. 4.48 48
1 1 1 1 1
2Q 16 NSCI Non-NSCI Income
- Excl. Intn'l
International 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e Movem
- vement
ent (SRbn) SRbn)
NCB Investor Relations 2Q 2017 Investor Presentation
Retail 42% Corporate 25% Treasury 21% Capital Market 3% International 9%
Tot Total al Oper Operat ating ng Incom ncome e by by Segm Segment ent (SRbn) SRbn)
30
Income Highlights
Ma Management Commentary
§ Q2 total operating income declined 4% YoY as a healthy 4% growth in net special commission income was more than offset by lower fee and investment-related income § Excluding the International business, Q2 total operating income was stable YoY.
Lower total operating income largely attributable to capital gains and TRY depreciation
3.35 3.36 3.47 1.31 1.50 1.00 4. 4.66 4. 4.86 4. 4.48 48
- 4%
1 2 3 4 5 6 7 8
2Q 16 1Q 17 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e (SRbn) SRbn)
Net special commission income Fee and other income
9.38 9. 9.34
2 4 6 8 10 12 141H 2016 1H 2017
4. 4.66 0. 0.03 03 (0 (0.06) 0. 0.04 04 (0 (0.00) (0 (0.19) 4. 4.48 48
1 1 1
2Q 16 Retail Corporate Treasury Capital Market International 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e Gr Grow
- wth
h by by Segm Segment ent (SRbn) SRbn)
NCB Investor Relations 2Q 2017 Investor Presentation 31
Net special commission income trends
Commission income grew 4% on domestic margin improvement
Ma Management Commentary
§ The Q2 net special commission margin improved by 0.17% YoY to 3.40% due to the higher interest rate environment in combination with a more beneficial funding mix. § Special commission expense for Q2 was 19% lower YoY due to lower SAIBOR rates and optimal funding mix. § Despite a marginal decline in commission sensitive assets, net special commission income grew 4% YoY driven by the margin improvement. § Excluding the International business, where NSCI was impacted by currency depreciation, domestic NSCI grew by 6%. Ne Net Special al Commi mmission In Income
SR (mn) 2Q 2Q 20 2017 1Q 1Q 2017 17 2Q 2Q 20 2016 Yo YoY Y % % ch change ge 1H 1H 2017 17 1H 1H 2016 16 Yo YoY Y % % ch change ge Special commission income 4,268 4,222 4,329
- 1%
8,489 8,726
- 3%
Special commission expense (794) (861) (981) +19% (1,655) (1,942) +15% Ne Net special commission income 3, 3,473 3 3, 3,36 360 3, 3,34 348 +4 +4% 6, 6,834 6, 6,784 +1 +1% Ne Net special commission margin (%) 3. 3.40% 3. 3.43% 3% 3. 3.23% 3% +5 +5% 3. 3.42% 3. 3.29% +4%
4.29% 4.18% 4.24% 4.22% 4.31% 4.18% 1.00% 1.02% 0.96% 1.12% 0.95% 0.84%
(0)
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Co Commission n Yi Yiel eld and nd Fund Funding ng Co Cost (%) %)
Commission yield (%) Funding cost (%)
3.35% 3.23% 3.33% 3.18% 3.43% 3.40%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Net Net Sp Spec ecial Co Commission n Margin n (%) %)
1.80% 2.22% 2.36% 2.04% 1.74% 1.78% 0.63% 0.65% 0.85% 1.00% 1.15% 1.30%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
SAI SAIBOR BOR and and LI LIBOR BOR Rat Rates es (%)
3M SAR SAIBOR (%) 3M USD LIBOR ($)
NCB Investor Relations 2Q 2017 Investor Presentation 32
Fee and other income trends
Ma Management Commentary
§ 2Q fee and other income declined 23% YoY primarily resulting from a 13% decline in fees from banking services and a 60% drop in investment-related income. § The lower fees from banking services were mainly driven by lower financing-related fees on lower net new lending activity. Additionally, trade finance and brokerage activity were also more subdued.
Lower fees and investment related income
910 802 790 293 325 285 193 458 78 1, 1,312 12 1, 1,499 1, 1,005
- 23%
(200) 300 800 1,300 1,800 2,300 2,800
2Q 16 1Q 17 2Q 17
Fee Fee and and Ot Other her Incom ncome e (SRm SRmn) n)
Fee income from banking services, net Exchange Income, net Investment-related income Other operating income (expenses), net
91 910 (7 (74) (2 (26) (2 (26) 6 6 79 790
100 200 300 400 500 600 700
2Q 16 Financing Trade Finance Brokerage Others 2Q 17
Key Key Driver ers s of
- f Fee
Fee Inc ncom
- me
e from
- m Banki
Banking ng Ser Services es Mo Moveme ment (SRmn mn)
Shares brokerage 8% Investment management services 9% Financing and advances, net 43% Credit cards 13% Trade finance 16% Others 11%
Fee Fee Incom ncome e from
- m Banki
anking ng Ser Servi vices ces by by Type Type (SRm SRmn) n)
1,830 1, 1,592
500 1,000 1,500 2,000 2,5001H 2016 1H 2017
NCB Investor Relations 2Q 2017 Investor Presentation 33
Expense highlights
Digitization and productivity enhancement delivered expense savings in 2Q 2017
Ma Management Commentary
§ 2Q Group operating expenses improved by 17% YoY. § The Group cost to income ratio improved by 2.5% YoY to 34.0%. § The cost base improvement was relatively broad-based and benefited from the cessation of intangible assets amortisation as well as currency depreciation in the Turkish subsidiary.
36.0% 39.1% 36.5% 39.5% 34.7% 34.0% 33.2% 37.0% 34.4% 40.2% 32.9% 31.8%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Co Cost to Inc ncome e Ra Ratio (%) %)
Group (%) Excluding International (%)
900 840 835 512 469 345 1, 1,822 1, 1,688 1, 1,521 1
- 17%
500 1,000 1,500 2,000 2,500 3,000 3,500
2Q 16 1Q 17 2Q 17
Oper Operat ating ng Ex Expens penses es (SRm SRmn) n)
Employee-related Rent & premises Depreciation & amortisation Other G&A
1, 1,822 (65 65) (63 63) (6) (1 (167) 1, 1,521 1
100 200 300 400 500 600 700 800 900
2Q 16 Employee-related Rent & premises Depreciation & amortisation Other G&A 2Q 17
Op Operating Expenses Movement Drivers (SRmn)
NCB Investor Relations 2Q 2017 Investor Presentation
Retail 24% Corporate 32% Treasury 35% Capital Market 0% International 9%
Tot Total al Asset Assets s by by Segm Segment ent (SRbn) SRbn)
34
Asset highlights and composition
Balance sheet growth reflective of a more subdued economic environment
254 254 257 112 108 115 63 71 60 441 441 449 449 450 450 +2%
100 200 300 400 500 600 700 800
4Q 16 1Q 17 2Q 17
Tot Total al Asset Assets s (SRbn) SRbn)
Financing and advances, net Investments, net Cash and bank balances Other assets
Financing and advances, net 57% Investments, net 26% Cash and bank balances 13% Other assets 4%
Tot Total al Asset Assets s Mix (SRbn) SRbn)
Ma Management Commentary
§ Total assets grew by 2% during the first half of 2017 due to limited growth in financing (+1%) and investments (+3%).
441 450 450
100 200 300 400 500 6004Q 16 2Q 17
441 450 450
100 200 300 400 500 6004Q 16 2Q 17
NCB Investor Relations 2Q 2017 Investor Presentation
Consumer loans and credit cards 35% Commerce 18% Manufacturing 12% Services 8% Building and construction 7% Others across 7 sectors 20%
Fi Financi nancing ng and and Advances, Advances, gr gross
- ss by
by Econom Economic c Sect Sector
- r (Top
Top 5) 5) (S (SRbn)
35
Financing and advances
Financing growth diluted by decline in Turkish subsidiary
Ma Management Commentary
§ Domestically, advances grew for the Corporate (+3%) and Consumer (+2%) segments. § International advances declined 6% due to both organic decline and weakened Turkish Lira.
254 25 257 7
50 100 150 200 250 300 350 4004Q 16 2Q 17
130 134 135 85 85 87 28 27 27 25 254 4 25 254 4 25 257 7 +1%
50 100 150 200 250 300 350 400 450 500
4Q 16 1Q 17 2Q 17
Fi Financi nancing ng and and Advances, Advances, net net (SRbn) SRbn)
Corporate Consumer and credit card International Others
Corporate 53% Consumer and credit card 34% International 10% Others 3%
Fi Financi nancing ng and and Advances, Advances, net net by by Type Type (SRbn) SRbn)
257 26 260
50 100 150 200 250 300 350 4004Q 16 2Q 17
NCB Investor Relations 2Q 2017 Investor Presentation 36
Financing and advances credit quality (1)
Rise in Corporate NPLs and impairment allowances partly offset by Retail and International
0.08 0.15 0.20 0.18 0.26 0.25 0.11 0.02 0.41 0.08 0.17 0.15 0.21 0.24 0.21 0.08 0.05 0. 0.35 0. 0.38 8 0. 0.84 84 0. 0.36 6 0. 0.42 0. 0.47 +24%
1 1 1 1
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Im Impair irment C Charge (S (SRbn)
Corporate Consumer and credit card International Others
2.77 2.72 3.15 3.03 3.06 3.23 3.02 2.84 2.97 2.90 3.09 3.27 5. 5.79 79 5. 5.56 56 6. 6.12 5. 5.93 3 6. 6.15 6. 6.50 +17%
2 4 6 8 10 12
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Im Impair irment A Allo llowances (S (SRbn)
Portfolio (collective) allowances Specific allowances
2.88 2.93 3.14 3.41 3.68 3.92 1.38 1.27 1.44 1.22 1.16 1.24 1.49 1.32 1.50 1.26 1.27 1.29 5. 5.79 79 5. 5.56 56 6. 6.12 5. 5.93 3 6. 6.15 6. 6.50 +17%
2 4 6 8 10 12
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Im Impair irment A Allo llowances (S (SRbn)
Corporate Consumer and credit card International Others
1.57 1.65 1.74 1.93 2.13 2.34 0.53 0.56 0.62 0.51 0.49 0.49 1.86 1.62 1.82 1.48 1.48 1.50 3. 3.96 3. 3.83 3 4. 4.17 7 3. 3.93 3 4. 4.10 4. 4.33 33 +13%
1 2 3 4 5 6 7 8
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
NPL NPL (SRb SRbn) n)
Corporate Consumer and credit card International Others
NCB Investor Relations 2Q 2017 Investor Presentation 37
Financing and advances credit quality (2)
Rise in NPL ratio but strong NPL coverage
Ma Management Commentary
§ Rising NPL ratio driven by the Corporate segment. § Consumer credit quality remains stable. § International NPL ratio deteriorated over the last year due to a more challenging economic and political environment in Turkey, but the impact on profitability was lessened by currency depreciation. § Provision coverage was strong at 150% as at 2Q 17 and has improved during the last year.
205% 192% 196% 191% 186% 184% 80% 81% 83% 85% 86% 86% 14 146% 14 145% 14 147% 15 151% 1% 15 150% 15 150%
(0) 1 1 2 2
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
NPL NPL Co Cover erage e Ra Ratios (%) %)
Domestic International Total NPL coverage ratio
0.9% 1.0% 1.0% 1.1% 1.1% 1.2% 4.7% 4.3% 5.3% 5.0% 5.3% 5.4% 1. 1.5% 1. 1.4% 1. 1.6% 1. 1.5% 1. 1.6% 1. 1.6%
(0) (0)
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
NPL NPL Ra Ratios (%) %)
Domestic International Total NPL ratio
0.3% 0.3% 1.0% 0.3% 0.6% 0.7% 1.5% 2.2% 2.8% 2.9% 1.2% 0.8% 0. 0.5% 0. 0.6% 6% 1. 1.3% 0. 0.6% 6% 0. 0.6% 6% 0. 0.7%
(0) (0)
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
NCL NCL Ra Ratios (%) %)
Domestic International Total NCL ratio
NCB Investor Relations 2Q 2017 Investor Presentation 38
Financing and advances credit quality (3)
Consumer NPLs declined while Corporate NPLs increased
1.1% 1.2% 1.3% 1.4% 1.5% 1.7% 0.7% 0.7% 0.7% 0.6% 0.6% 0.6%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
NPL NPL Ra Ratios (%) %)
Corporate Consumer and credit card
184% 177% 181% 177% 173% 168% 260% 229% 234% 237% 238% 254%
(0) 1 1 2 2 3
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
NPL NPL Co Cover erage e Ra Ratios (%) %)
Corporate Consumer and credit card
0.2% 0.4% 0.6% 0.5% 0.8% 0.7% 0.6% 0.1% 1.9%
- 0.2%
0.4% 0.8%
(0) (0)
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
NCL NCL Ra Ratios (%) %)
Corporate Consumer and credit card
NCB Investor Relations 2Q 2017 Investor Presentation
Saudi Arabia 47% GCC and Middle East 23% Europe 2% Turkey 3% Other countries 25%
In Investments b by G Geography (S (SRbn)
Investments trends and composition
Investments rose through participation in Saudi Government debt issuance and ~90% of the investment portfolio remains Saudi Government or investment grade
112 115 115
20 40 60 80 100 120 140 1604Q 16 2Q 17
Ma Management Commentary
§ The investment portfolio is built on high quality securities with ~90% being investment grade. § Since the resumption of KSA government debt issuance , NCB has actively participated in issues of longer term debt securities
Saudi Government Bonds, Sukuk and Treasury Bills 31% Other investment grade 58% Non-investment grade 5% Unrated 6%
In Investments b by C Credit it G Grade (S (SRbn)
112 115 115
20 40 60 80 100 120 140 160 1804Q 16 2Q 17
39
71 66 65 35 37 44 112 112 10 108 115 115 +3%
50 100 150 200 250
4Q 16 1Q 17 2Q 17
In Investments (S (SRbn)
Equity instruments, Mutual Funds, Hedge Funds and Others Floating rate securities Fixed rate securities
NCB Investor Relations 2Q 2017 Investor Presentation 40
Liabilities trends and composition
NCB maintained a strong liquidity profile
Ma Management Commentary
§ As at 2Q 2017, the loan to customer deposits ratio was 81.6% and comfortably below the regulatory guidelines. § HQLA balances were flat compared to 2Q 2016. § LCR improved to 166.1% from 156.1% in 2Q 2016. § Basel III leverage ratio remained stable at 12.2%.
81.4% 84.1% 83.5% 80.3% 81.0% 81.6%
1 1 1 1 1 1 1 1 1
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Loan Loan to
- Cust
ustom
- mer
er Deposi eposits s Rat atio
- (%)
11.5% 11.7% 12.1% 12.2% 12.4% 12.2%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Ba Basel III Leverage Ra Ratio (%) %)
LCR is quarterly average
94 94 10 101 1 97 97 10 104 10 102 10 101 1 145.3% 156.1% 159.8% 172.5% 163.8% 166.1%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% 200.0% 50 100 150 200
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
HQ HQLA and Liquidity Co Coverage (SRb Rbn/%) %)
High quality liquid assets (HQLA) Liquidity coverage ratio (LCR)
NCB Investor Relations 2Q 2017 Investor Presentation
Due to banks and other financial institutions 13% Customers' deposits 81% Debt securities issued 3% Other liabilities 3%
Tot Total al Li Liabi abilities es Mix (SRbn) SRbn)
41
Liabilities trends and composition
2% growth in total liability base and improving deposit mix towards CASA balances
Ma Management Commentary
§ Customers’ deposits are the main source of funding and remained broadly stable during 1H 2017. § CASA balances grew by 11% YTD and account for 79% of customers’ deposits.
316 314 315 45 51 51 38 381 38 387 7 38 389 +2%
100 200 300 400 500 600 700
4Q 16 1Q 17 2Q 17
Tot Total al Li Liabi abilities es (SRbn) SRbn)
Customers' deposits Due to banks and other financial institutions Debt securities issued Other liabilities
381 38 389
100 200 300 400 500 6004Q 16 2Q 17
218 242 6 6 79 55 31 316 31 315 5
- 0%
100 200 300 400 500 600
4Q 16 2Q 17
Cus Customer ers' Dep Deposits (SRb SRbn) n)
CASA - Domestic CASA - International Time Others
NCB Investor Relations 2Q 2017 Investor Presentation
Ma Management Commentary
§ As at 2Q 2017, capitalization remained strong and comfortably above the regulatory minima. § Pillar I risk weighted assets increased by 8% during 1H 2017 as revised regulatory requirements for the calculation of certain credit risk weighted assets came into effect during 1Q. § During 2Q, additional Tier 1 Sukuk of SR 1.3bn were issued, taking the total to SR 7bn as at 30 June 2017.
Common equity tier 1 capital (CET1) 78% Additional tier 1 capital 10% Tier 2 capital (T2) 12%
Tot Total al Capi Capital al Com Composi position
- n (SRbn)
SRbn)
42
Capital
Capital position comfortably above regulatory minima
67.7 68. 68.9 9
10 20 30 40 50 60 70 80 90 1004Q 16 2Q 17 Capital ratios are based on Pillar I RWA
15.5% 16.1% 16.7% 16.9% 16.1% 16.0% 17.5% 18.2% 19.0% 19.2% 18.2% 18.2% 14.0% 14.7% 15.1% 15.3% 14.6% 14.1%
12.0% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0%
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17
Ca Capital Ra Ratios (%) %)
T1 ratio TC ratio CET1 ratio
312 336 33 34 353 353 38 380 +8%
100 200 300 400 500 600 700 800
4Q 16 2Q 17
Pi Pillar I Ri Risk Weight hted As Assets (SRb SRbn) n)
Credit risk Operational risk Market risk
54 56 54 6 6 7 8 8 8 68 68 70 70 69 69 +2%
20 40 60 80 100 120
4Q 16 1Q 17 2Q 17
Ca Capitalisation n (SRb SRbn) n)
Tier 2 capital (T2) Additional tier 1 capital (AT1) Common equity tier 1 capital (CET1)
NCB Investor Relations 2Q 2017 Investor Presentation
National Commercial Bank Segmental Review 2Q 2017 Results
NCB Investor Relations 2Q 2017 Investor Presentation
Retail 42% Corporate 25% Treasury 21% Capital Market 3% International 9%
Tot Total al Oper Operat ating ng Incom ncome e by by Segm Segment ent (SRbn) SRbn)
44
Segmental Information
Total operating income lower on trading, dividend income and currency translation
9.4 9. 9.3
2 4 6 8 10 12 141H 2016 1H 2017
5.1 5.3 5.7 6.4 7.5 2.3 3.4 3.7 4.1 4.6 3.2 3.4 3.8 4.1 3.7 2.1 2.1 2.3 2.2 2.2 13 13.5 14 14.9 16 16.2 17 17.5 18 18.6 +8%
5 10 15 20 25 30
2012 2013 2014 2015 2016
Tot Total al Oper Operat ating ng Incom ncome e (SRbn) SRbn)
Retail Corporate Treasury Capital Market International
4, 4,660 33 33 (6 (63) 45 45 (3 (3) (1 (194) 4, 4,478 478
100 200 300 400 500 600
2Q 16 Retail Corporate Treasury Capital Market International 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e Gr Grow
- wth
h by by Segm Segment ent (SRm SRmn) n)
NCB Investor Relations 2Q 2017 Investor Presentation
Retail 35% Corporate 26% Treasury 33% Capital Market 3% International 3%
Net Net Inc ncome e by y Seg Segment ent (SRb SRbn) n)
45
Segmental Information
Net income was stable due to higher provisions and cost of funds
2.1 1.9 1.6 2.0 3.2 0.8 2.6 3.2 3.1 2.7 2.9 3.0 3.3 3.5 3.1 6. 6.6 6 8. 8.0 8. 8.8 8 9. 9.1 9. 9.4 +9%
2 4 6 8 10 12 14 16
2012 2013 2014 2015 2016
Net Net Inc ncome e (SRb SRbn) n)
Retail Corporate Treasury Capital Market International
5.1 5. 5.2
1 2 3 4 5 6 7 81H 2016 1H 2017
2, 2,45 459 21 21 (3 (36) (2 (20) (6 (6) 33 33 2, 2,45 451
50 100 150 200 250 300
2Q 16 Retail Corporate Treasury Capital Market International 2Q 17
Net Net Inc ncome e Gr Growth h by y Seg Segment ent (SRm SRmn) n)
NCB Investor Relations 2Q 2017 Investor Presentation 46
Retail Banking
2% net profit growth resulting from NSCI growth and improved efficiency, partly offset by reduced fee income and increased collective impairments
Ma Management Commentary § 2Q net income rose 2% YoY driven principally by 2% operating income growth, while a 15% improvement in operating efficiency was offset by rising impairments. § NSCI for 2Q improved by 8% YoY due to a 5% increase in retail financing. § Fee income declined by 12% in 2Q YoY mainly due to a change in regulations for charging fees on consumer finance. § 2Q operating expenses improved by 14% and the cost to income ratio improved 15% YoY to 45.1%. This improvement was relatively broad-based across most expense categories, reflecting the continued strides made in digitisation and productivity initiatives. § While retail NPLs showed a marginal improvement YoY, an increase in collectective impairments drove the SR150m increase in the impairment charge. The coverage ratio improved from 237% as at 4Q 2016 to 254% as at 2Q 2017.
1,570 1,568 1,688 415 370 331 1, 1,985 1, 1,938 2, 2,019 +2%
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
2Q 16 1Q 17 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e (SRm SRmn) n)
Net special commission income Fee and other income
91 912 894 894 93 933 +2%
200 400 600 800 1,000 1,200 1,400 1,600 1,800
2Q 16 1Q 17 2Q 17
Net Net Inc ncome e (SRm SRmn) n) Su Summary Financial Per erformance
SR (mn) 2Q 2Q 20 2017 1Q 1Q 2017 17 2Q 2Q 20 2016 Yo YoY Y % % ch change ge 1H 1H 2017 17 1H 1H 2016 16 Yo YoY Y % % ch change ge Total assets 109,354 105,446 110,448
- 1%
109,354 110,448
- 1%
To Total ope perating income 2, 2,019 1, 1,938 1, 1,985 +2 +2% 3, 3,957 3, 3,955 +0 +0% Net special commission income 1,688 1,568 1,570 +8% 3,256 3,059 +6% Fee income from banking services, net 311 279 352
- 12%
591 751
- 21%
Operating expenses (911) (963) (1,057) +14% (1,875) (2,028) +8% Impairment charge (171) (78) (21)
- 725%
(250) (134)
- 87%
Other income (expenses) (3) (3) 5
- 161%
(6)
- 4682%
Ne Net income 93 933 89 894 91 912 +2 +2% 1, 1,827 1, 1,794 +2 +2% Cost to income (%) 45.1% 49.7% 53.3% +15% 47.4% 51.3% +8% % of total assets 24.3% 23.5% 24.4%
- 0%
24.3% 24.4%
- 0%
ROA (%) 3.5% 3.4% 3.4% +2% 3.4% 3.4% +0%
NCB Investor Relations 2Q 2017 Investor Presentation 47
Corporate Banking
Good NSCI growth and improved efficiency offset by lower fee income and higher impairments
Ma Management Commentary § 2Q net income dropped 3% YoY as 4% operating income growth and a 19% improvement in operating efficiency were more than offset by rising impairments. § NSCI for 2Q improved by 10% YoY despite broadly stable corporate financing balances due to improved margins resulting from the benefit of rising interest rates. § Fee income declined by 12% in 2Q YoY mainly due to lower financing fees on the back
- f reduced new lending.
§ 2Q operating expenses improved by 15% and the cost to income ratio improved 19% YoY to 19.0%. This improvement was relatively broad-based across most expense categories, reflecting the ongoing progress made in cost-optimisation initiatives. § While the 2Q impairment charge was lower than the previous quarter, it rose 62% YoY, mainly resulting from specific provisions.
745 930 820 310 314 280 1, 1,055 1, 1,244 1, 1,10 100 +4%
500 1,000 1,500 2,000 2,500 3,000
2Q 16 1Q 17 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e (SRm SRmn) n)
Net special commission income Fee and other income
660 660 70 709 63 639 9
- 3%
200 400 600 800 1,000 1,200 1,400 1,600
2Q 16 1Q 17 2Q 17
Net Net Inc ncome e (SRm SRmn) n) Su Summary Fi Financial Performance
SR (mn) 2Q 2Q 20 2017 1Q 1Q 2017 17 2Q 2Q 20 2016 Yo YoY Y % % ch change ge 1H 1H 2017 17 1H 1H 2016 16 YoY % change Total assets 143,320 145,282 142,694 +0% 143,320 142,694 +0% To Total ope perating income 1, 1,10 100 1, 1,244 1, 1,055 +4 +4% 2, 2,343 2, 2,095 +1 +12% Net special commission income 820 930 745 +10% 1,749 1,523 +15% Fee income from banking services, net 243 267 275
- 12%
510 508 +0% Operating expenses (209) (271) (247) +15% (480) (481) +0% Impairment charge (247) (260) (153)
- 62%
(507) (230)
- 120%
Other income (expenses) (4) (3) 5
- 180%
(7)
- 6427%
Ne Net income 63 639 9 70 709 660 660
- 3%
3% 1, 1,349 1, 1,384
- 3%
3% Cost to income (%) 19.0% 21.8% 23.4% +19% 20.5% 23.0% +11% % of total assets 31.9% 32.4% 31.5% +1% 31.9% 31.5% +1% ROA (%) 1.8% 2.0% 1.8%
- 3%
1.9% 1.9%
- 3%
NCB Investor Relations 2Q 2017 Investor Presentation 48
Treasury
Stable NSCI offset by lower trading gains
Ma Management Commentary § 2Q net income decreased 5% YoY as an 18% improvement in operating efficiency were more than offset by lower operating income. § Operating income in 2Q declined 7% YoY due to lower dividend income and lower gains on non-trading investments from repositioning the investment portfolio. § For 1H 2017, growth in operating income (+2%) and net income (+1%) was boosted by trading gains. § 2Q operating expenses improved by 24% and the cost to income ratio improved 18% YoY to 10.5%, reflecting the ongoing progress made in cost-optimisation initiatives.
614 547 615 269 579 205 883 883 1, 1,12 126 82 820
- 7%
500 1,000 1,500 2,000 2,500
2Q 16 1Q 17 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e (SRm SRmn) n)
Net special commission income Fee and other income
76 762 2 966 966 727 727
- 5%
200 400 600 800 1,000 1,200 1,400 1,600 1,800
2Q 16 1Q 17 2Q 17
Net Net Inc ncome e (SRm SRmn) n) Su Summary Fi Financial Performance
SR (mn) 2Q 2Q 20 2017 1Q 1Q 2017 17 2Q 2Q 20 2016 Yo YoY Y % % ch change ge 1H 1H 2017 17 1H 1H 2016 16 Yo YoY Y % % ch change ge Total assets 156,203 157,120 145,916 +7% 156,203 145,916 +7% To Total ope perating income 82 820 1, 1,12 126 883 883
- 7%
7% 1, 1,946 1, 1,900 +2 +2% Net special commission income 615 547 614 +0% 1,161 1,237
- 6%
Fee income from banking services, net 22 25 37
- 41%
48 59
- 19%
Other operating income 183 554 232
- 21%
737 605 +22% Operating expenses (86) (154) (114) +24% (240) (214)
- 12%
Impairment charge (2) (1) (12) +87% (2) (16) +86% Other income (expenses) (6) (4) 5
- 210%
(10)
- 8300%
Ne Net income 72 727 7 966 966 76 762
- 5%
5% 1, 1,693 1, 1,670 +1 +1% Cost to income (%) 10.5% 13.7% 12.9% +18% 12.4% 11.3%
- 10%
% of total assets 34.7% 35.0% 32.2% +8% 34.7% 32.2% +8% ROA (%) 1.9% 2.5% 2.1%
- 11%
2.2% 2.2%
- 1%
NCB Investor Relations 2Q 2017 Investor Presentation 49
Capital Markets
Market-driven decline in brokerage activity offset by AUM growth
Ma Management Commentary § 2Q net income decreased by 10% (SR 6m) YoY due to lower operating income and higher operating expenses. § Operating income in 2Q declined 2% (SR 3m) YoY due to lower fee and other income, mainly resulting from lower brokerage activity.
147 163 143 14 147 16 164 14 144
- 2%
50 100 150 200 250 300
2Q 16 1Q 17 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e (SRm SRmn) n)
Fee and other income
60 60 80 80 54 54
- 10%
20 40 60 80 100 120 140 160
2Q 16 1Q 17 2Q 17
Net Net Inc ncome e (SRm SRmn) n) Su Summary Fi Financial Performance
SR (mn) 2Q 2Q 20 2017 1Q 1Q 2017 17 2Q 2Q 20 2016 YoY % change 1H 1H 2017 17 1H 1H 2016 16 Yo YoY Y % % ch change ge Total assets 1,465 1,394 1,528
- 4%
1,465 1,528
- 4%
To Total ope perating income 14 144 16 164 14 147
- 2%
2% 30 308 30 307 +0 +0% Net special commission income 1 +404% 1 +588% Fee income, net 140 160 141
- 0%
300 304
- 1%
Operating expenses (91) (83) (86)
- 6%
(175) (172)
- 2%
Impairment charge Other income (expenses) 1 (1) (1)
- 236%
1 3
- 67%
Ne Net income 54 54 80 80 60 60
- 10
10% 13 134 13 138
- 3%
3% Cost to income (%) 63.2% 51.0% 58.4%
- 8%
56.7% 56.0%
- 1%
% of total assets 0.3% 0.3% 0.3%
- 4%
0.3% 0.3%
- 4%
ROA (%) 15.2% 23.5% 16.0%
- 5%
19.3% 16.3% +19%
NCB Investor Relations 2Q 2017 Investor Presentation 50
International
Operating income impacted by depreciating Turkish currency but strong net income growth from declining expenses and lower impairment charges
Ma Management Commentary § 2Q net income improved by 51% YoY as a significant reduction in the cost base and improving credit trends more than offset declining operating income. § 2Q operating expenses fell by 30%. This improvement resulted from the ongoing progress made in cost-optimisation initiatives as well as the cessation of intangible assets amortisation from the start of 2017. § The impairment charge for 2Q declined by 74% due to limited new NPL formation in the Turkish subsidiary over the period, further aided by the TL depreciation.
419 316 350 171 72 46 59 590 38 388 39 396
- 33%
200 400 600 800 1,000 1,200
2Q 16 1Q 17 2Q 17
Tot Total al Oper Operat ating ng Incom ncome e (SRm SRmn) n)
Net special commission income Fee and other income
65 65 84 84 98 98 +51%
20 40 60 80 100 120 140 160 180 200
2Q 16 1Q 17 2Q 17
Net Net Inc ncome e (SRm SRmn) n) Su Summary Fi Financial Performance
SR (mn) 2Q 2Q 20 2017 1Q 1Q 2017 17 2Q 2Q 20 2016 Yo YoY Y % % ch change ge 1H 1H 2017 17 1H 1H 2016 16 Yo YoY Y % % ch change ge Total assets 39,433 39,476 52,027
- 24%
39,433 52,027
- 24%
To Total ope perating income 39 396 38 388 59 590
- 33%
33% 78 784 1, 1,12 126
- 30
30% Net special commission income 350 316 419
- 16%
666 965
- 31%
Fee income from banking services, net 73 71 105
- 30%
144 207
- 30%
Operating expenses (223) (216) (318) +30% (439) (625) +30% Impairment charge (54) (84) (208) +74% (139) (361) +62% Other income (expenses) (20) (5) 1
- 2744%
(25) (12) +99% Ne Net Income 98 98 84 84 65 65 +5 +51% 18 182 12 128 +4 +42% Cost to income (%) 56.4% 55.6% 53.9%
- 5%
56.0% 55.5%
- 1%
% of total assets 8.8% 8.8% 11.5%
- 24%
8.8% 11.5%
- 24%
ROA (%) 1.0% 0.8% 0.5% +98% 0.9% 0.5% +80%
NCB Investor Relations 2Q 2017 Investor Presentation
National Commercial Bank Additional Information 2Q 2017 Results
NCB Investor Relations 2Q 2017 Investor Presentation 52
Additional Information
Please don’t hesitate to contact NCB Group Investor Relations
Mo More information Download copies of National Commercial Bank’s: § Financial statements § Earnings release § Investor presentation § Financial data pack (Excel) Visit: http://www.alahli.com/en-us/Investor_Relation Mr
- Mr. Abdulbadie Alyafi
Head, Investor Relations P: +966 12 646 3988 E: investorrelations@alahli.com National Commercial Bank P.O. Box 3555 21481 Jeddah, Kingdom of Saudi Arabia