NCB Investor Relations 2Q 2018 Investor Presentation 1
National Commercial Bank Investor Presentation 2Q 2018 Results NCB - - PowerPoint PPT Presentation
National Commercial Bank Investor Presentation 2Q 2018 Results NCB - - PowerPoint PPT Presentation
National Commercial Bank Investor Presentation 2Q 2018 Results NCB Investor Relations 2Q 2018 Investor Presentation 1 Disclaimer The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background
NCB Investor Relations 2Q 2018 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 2018 Investor Presentation 3
Investor Presentation
Contents
04 12 18 29 51 59 NCB – The leading KSA bank Grow with KSA. Grow with NCB Strategy Overview Financial Results Highlights Segmental Overview Additional Information 37 Financial Results Details
NCB Investor Relations 2Q 2018 Investor Presentation 4
The leading KSA bank 2Q 2018 Results National Commercial Bank
NCB Investor Relations 2Q 2018 Investor Presentation 5
NCB is the leading banking group in Saudi Arabia (1)
Established in 1953; IPO in 2014
NCB Snapshot (FY 2017)
Jeddah HQ
>8m
m Clients
13, 3,436 36
Employees* SAR AR
444 444bn
Assets SAR AR
309 309bn
Deposits SAR AR
>100 100bn
Market Cap
Who hole lesale le b branch h in B Bahr hrain Offices: Si Singapor
- re, Se
Seou
- ul, Sh
Shanghai Subs bsidi diary ry in T n Turk rkey: y: Türk rkiye ye Fina nans ns Katılım B Bank nkası Subs bsidi diary ry in K n KSA: NCB CB Ca Capi pital
*Includes Alahli Esnad (1,381 employees) - fully owned subsidiary engaged in recruitment services within KSA
NCB Investor Relations 2Q 2018 Investor Presentation 6
NCB is the leading banking group in Saudi Arabia (2)
NCB has a strong market and financial position (FY 2017)
444 343 228 216 193 50 100 150 200 250 300 350 400 450 500 NCB Rajhi Samba Riyad BSF
As Assets (S (SARb ARbn)
249 234 139 122 118 50 100 150 200 250 300 NCB Rajhi Riyad BSF Samba
Financing ( (SARbn)
309 273 168 154 151 50 100 150 200 250 300 350 NCB Rajhi Samba Riyad BSF
De Deposits (S (SARb ARbn)
Mar arket P Pos
- sition
- n
by by KSA SA
Overall banking Assets #1 Corporate banking Financing #1 Retail banking Financing #2 Treasury Investments #1 Asset Management AUMs #1 Brokerage Value Traded #3
Finan ancial al P Pos
- sition
- n
KSA SA GC GCC
Assets #1 #4 Financing #1 #4 Deposits #1 #3 Investments #1 #1 Total Operating Income #1 #3 Net Income #1 #3
NCB Investor Relations 2Q 2018 Investor Presentation
SR SR ( (bn bn) 8. 8.7 9.8 9.8 +4%
2 4 6 8 10 12 14 16 18 20
2014 2017
16 6 18 8 +4%
5 10 15 20 25 30 35 40
2014 2017
221 221 249 49 +4%
100 200 300 400 500
2014 2017
7
NCB is the leading banking group in Saudi Arabia (3)
Key KPIs compared to Saudi Arabian banking peers (FY 2017)
CAGR
Industry Peers (ex NCB) Total o l operating ing inc income Ne Net i income me attr ttributa utable to to equit ity h y hold lders
206 06 234 4 +4%
50 100 150 200 250 300 350 400 450
2014 2017
133 33 139 39 +1%
50 100 150 200
2014 2017
117 122 22 +2%
50 100 150 200
2014 2017
124 24 118
- 2%
50 100 150 200
2014 2017
1,045 45 1,129 29 +3%
200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000
2014 2017
14 4 16 6 +5%
5 10 15 20 25 30 35
2014 2017
8 8 8 8 +0%
2 4 6 8 10 12 14 16 18 20
2014 2017
6 6 7 7 +4%
2 4 6 8 10 12 14
2014 2017
14 4 8 8
- 17%
5 10 15 20 25 30 35 40
2014 2017
60 60 68 8 +5%
20 40 60 80 100 120
2014 2017
6.8 6.8 9.1 9.1 +10%
2 4 6 8 10 12 14 16 18 20
2014 2017
4. 4.4 4 3.9 3.9
- 3%
1 2 3 4 5 6 7 8 9 10
2014 2017
32 32.8 .8 35 35.2 .2 +2%
10 20 30 40 50 60 70
2014 2017
3.5 3.5 3.5 3.5 +0%
2 4 6 8 10 12
2014 2017
5.0 .0 5.0 .0 +0%
2 4 6 8 10 12 14
2014 2017
Fina inanc ncing ing a and nd ad advan ances, n , net
NCB Investor Relations 2Q 2018 Investor Presentation 8
NCB has a well-diversified business model
Total operating income contribution (FY 2017)
Capital Markets
NCB Capital Largest Asset Manager in KSA Largest Shariah-compliant Asset Manager worldwide Top 3 Broker 15 locations 297 Employees
SAR 16.1bn 88%
NCB
400 branches, 3,488 ATMs 150 Remittance centers 7,991 Employees 96% Saudization 100% Saudi Top Management
7.9bn
43%
4.5bn
25%
3.8bn
20%
RETAIL CORPORATE TREASURY
1.6bn
9%
636mn
3% International
Türkiye Finans Katılım Bankası (TFKB) 287 branches, 587 ATMs 3,767 employees
Note: KSA based recruitment services firm Alahli Esnad (fully owned subsidiary) employs 1,381 persons
NCB Investor Relations 2Q 2018 Investor Presentation 9
NCB has a strong financial position
Key KPIs
CAGR CAGR
LCR is based on 4Q average numbers LCR was not reported before 2015 Capital ratios are based on Pillar I RWA
377 77 43 435 449 449 443 443 444 444 +4%
100 200 300 400 500 600 700 800
2013 2014 2015 2016 2017
Total As Assets (S (SARb ARbn)
43 43 47 47 56 56 60 60 64 4 +11%
20 40 60 80 100 120
2013 2014 2015 2016 2017
Total tal E Equity ty (SARbn)
17.1% 17.2% 17.2% 19.2% 20.0% 15.1% 16.9% 17.7% 16.2% 14.7% 13.5% 15.3% 15.7%
10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0%
2013 2014 2015 2016 2017
Cap apital al R Rati atios ( (%)
TC ratio T1 ratio CET1 ratio
152.3% 172.5% 177.3% 62.4% 66.3% 78.1% 80.3% 80.7%
1 1 1 1 1 2 2 2
2013 2014 2015 2016 2017
Liq iquid idit ity Ratio ios ( (%)
Liquidity coverage ratio (LCR) Financing to customer deposit ratio
NCB Investor Relations 2Q 2018 Investor Presentation 10
NCB has a strong performance track record
Key KPIs
CAGR CAGR
10.1 11.4 12.6 13.5 13.7 4.8 4.8 4.9 5.1 4.7 14.9 .9 16.2 6.2 17.5 5 18.6 .6 18.3 .3 +5%
5 10 15 20 25 30 35
2013 2014 2015 2016 2017
Total tal O Operati rating In Income me (SARbn)
Net special commission income Fee and other income
7.9 .9 8. 8.7 9.1 9.1 9.3 9.3 9.8 9.8 +6%
2 4 6 8 10 12 14 16 18
2013 2014 2015 2016 2017
Net In Income me Attri ttribute ted T To Equity ty Ho Holders rs ( (SARbn)
2.99% 2.91% 3.04% 3.35% 3.48%
0.00% 1.00% 2.00% 3.00% 4.00% 5.00%
2013 2014 2015 2016 2017
Net Net Spec ecial C Commission M Margin (%) %)
39.0% 39.0% 37.4% 37.7% 35.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%
2013 2014 2015 2016 2017
Cost to to In Income me R Rati atio ( (%)
20.0% 20.1% 19.2% 17.8% 17.4% 2.2% 2.2% 2.1% 2.1% 2.2%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
2013 2014 2015 2016 2017
Ret eturns ( (%) %)
ROE common shares (%) ROA (%)
NCB Investor Relations 2Q 2018 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
MSCI CI Sau audi A Arab rabia Index ex
Floa
- at Adj. M
Mcap (U p (USDb) Weigh ghting ng (%) %)
SABIC 25.24 17.62 Al Rajhi Bank 18.32 12.79 Nat ational al Co Commercial al Ban Bank 15 15.55 10 10.85 Saudi Telecom (STC) 9.57 6.68 Samba Financial Group 8.49 5.93 Saudi Arabian Mining Co (Maaden) 6.24 4.35 Riyad Bank 5.20 3.63 Saudi Electricity Co (SEC) 4.63 3.23 Yanbu Natl Petrochem Co (Yansab) 4.47 3.12 Alinma Bank 4.20 2.93 Rati atings
LT LT ST ST Outlook
- ok
Nat ational al Co Commercial al Ban Bank S&P BBB+ A-2 Stable Fitch A- F1 Stable Moody’s* A1 P-1 Stable Capital Intelligence A+ A1 Negative Government of Saudi di Arabia bia S&P A- Stable Fitch A+ Stable Moody’s A1 Stable Capital Intelligence A+ Negative
*Moody’s rating is unsolicited [Source: MSCI, 29 June 2018] Source: NCB, Bloomberg Source: Bloomberg
Share hare parame arameters rs
30 30 Jun n 20 2018
Closing Price (SAR) 48.6 52 week range (SAR) 31-49 Free Float 36% Shares issued (mn) 3,000 Tangible Book Value (SARmn) 56.756 Tangible BVPS 18.92 P/TBV Ratio 2.6x P/E Ratio (FY 2017 earnings) 15.38x Div Yield (FY 2017 dividends) 2.33% 3m Avg Daily Volume (shares) 956,579
5 10 15 20 25 30 35 40 45 50 55
Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18
Share hare p pri rice p perf rforman rmance since IP IPO (SAR)
(Adj price)
Trading commenced 12/11/2014. Day 1 at SAR 33
NCB Investor Relations 2Q 2018 Investor Presentation
National Commercial Bank Grow with KSA. Grow with NCB 2Q 2018 Results
NCB Investor Relations 2Q 2018 Investor Presentation 13
Moving towards economic inflection
Growth and fiscal indicators point to a positive inflection point in the Saudi Economy Headwinds including international trade tension persist
Source: Thomson Reuters, Ministry of Finance, SAMA, Tadawul, and NCB Economics Forecasts
718 725 610 529 490
36 43 60 39 39
754 4 768 8 67 670 56 568 8 52 529
100 200 300 400 500 600 700 800 900
2013 2014 2015 2016 2017
Forei eign R Res eser erves es ( (USDbn)
SAMA Banks
20 40 60 80 100 120 140 2 4 6 8 10 12 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 USD/bbl MMBD
Oil M Market ket
Saudi Oil Production, LHS Arabian Light Spot Price,… 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17
Stock M k Market ket
Tadawul Index
6.4 6.4%
- 2.3
.3%
- 14.
4.8%
- 12.
2.9%
- 9.3
9.3%
- 1.6
.6% 18. 8.1% 9.7 9.7%
- 8.
8.7%
- 3.7
3.7% 2.2 .2% 9.2 9.2%
- 25.0%
- 15.0%
- 5.0%
2013 2014 2015 2016 2017P 2018F
Twin Ba Balances es ( (%) %)
Budget Balance / GDP Current Account Balance / GDP
NCB Investor Relations 2Q 2018 Investor Presentation 14
Saudi banking sector
Banking profitability likely to remain resilient on the back of rising rates, as well as ongoing and upcoming government stimuli in support of private sector and individuals
Source: Thomson Reuters, SAMA, Banks’ Annual Reports, and NCB Economics Estimates
37.6 41.5 43.7 41.3 45.0 7.2% 10.2% 5.4%
- 5.4%
8.7%
- 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 80 90 100
2013 2014 2015 2016 2017
Profits (S (SARb ARbn)
Profits Annual Growth (%)
1,402 2 1,5 ,576 76 1,605 605 1,6 ,617 7 1,61 619 9 11.2% 12.4% 1.9% 0.8% 0.1%
- 10.0%
- 5.0%
0.0% 5.0% 10.0% 15.0% 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
2013 2014 2015 2016 2017
Ba Bank D k Dep eposits ( (SARbn)
Deposits Deposit Growth Rate (YoY%)
69 69 76 76 80 80 83 83 87 87 6.8% 9.1% 5.7% 3.8% 4.3%
- 9.9%
- 7.9%
- 5.9%
- 3.9%
- 1.9%
0.1% 2.1% 4.1% 6.1% 8.1% 10.1% 20 40 60 80 100 120 140 160 180
2013 2014 2015 2016 2017
Total tal O Operati rating In Income me (SARbn)
Profits (FY) Annual Growth (%)
0.99 0.99% 2.59 59% 0.30 0.30% 2.34 .34%
(0) (0)
2013 2014 2015 2016 2017 2018
Inter erbank R k Rates es ( (%) %)
3M SAR SAIBOR 3M USD LIBOR
1,121 21 1,25 251 1,362 362 1,400 00 1,3 ,387 7 12.0% 11.6% 8.9% 2.9%
- 1.0%
- 25.0%
- 20.0%
- 15.0%
- 10.0%
- 5.0%
0.0% 5.0% 10.0% 15.0% 500 1,000 1,500 2,000 2,500 3,000 3,500
2013 2014 2015 2016 2017
Ba Bank L k Len ending (SARbn)
Bank credit, private and public sectors Credit Growth Rate (YoY%)
NCB Investor Relations 2Q 2018 Investor Presentation 15
Vision 2030
Saudi Arabia’s vision 2030 establishes a clear roadmap to accelerate economic growth
A T Thriv ivin ing g Eco Economy my An n Ambit bitio ious Nati tion A Vibr Vibrant So Societ ety Pilla llars Sel Selec ected ed G Goals & & K KPIs Obj Objectiv ives
Strengthen Islamic values & national identity Offer a fulfilling & healthy life Grow & diversify the economy Increase employment Enhance government effectiveness Enable social responsibility
Vis Visio ion R Realiz izatio ion P Progr grams
Enriching the Hajj and Umrah Experience National Transformation Program PIF Program National Industrial Development and Logistics Program Financial Sector Development Program Lifestyle Improvement Program National Companies Promotion Program Strategic Partnerships Program The Housing Program Privatization Program Saudi Character Enrichment Program Fiscal Balance Program
- Lower the rate of unemployment from 11.6% to 7%
- Increase the Public Investment Fund’s assets to over
SAR 7 trillion
- 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 the localization of oil and gas sectors from
40% to 75%
- Increase SME contribution to GDP from 20% to 35%
- Increase FDI from 3.8% to the international level of
5.7% of GDP
- Raise non-oil government revenue from SAR 163
billion to SAR 1 trillion
- Increase women’s participation in the workforce from
22% to 30%
NCB Investor Relations 2Q 2018 Investor Presentation 16
NCB is aligned with Government priorities
NCB is a key contributor to economic transformation and the Financial Sector Development Program (FSDP) objectives
NCB lev evera erages es competi titi tiveness and d scale e to d del eliver er value to to i its ts stakeh eholders ers and support rt the n natio ional age genda da Vis Visio ion 203 030 0 Obj Objectiv ives Di Directl tly R Relate ted to to th the FS FSDP DP Enabl blin ing g fin inancia ial insti titu tuti tions to to support t pri rivate s e sec ector g r gro rowth Developin ing g an adv dvanced d cap apital al mar arket Promotin ing g and d enabl blin ing g fina nanc ncial planni nning ng
- Leading lender for KSA companies with a
portfolio of SAR 128bn; 14% Corporate market share (1Q 2018)
- Supporting +70,000 SMEs across KSA; a leading
SME lender and participant in the relaunched Kafalah guarantee program
- Appointed as a Primary Dealer in local
government securities
- Large investor in Saudi Government Bonds with
a portfolio SAR 48bn
- Major advisor to Government and GRE sukuk
issuances and debt refinancing (KSA Government, Aramco, Ma’aden Aluminum, SEC, ACWA power, Ma’aden Phosphate)
- Provided home financing for more than 30,000
Saudi families with a portfolio of SAR 21bn
- Driving inclusive financial services access in KSA
through extensive branch network as well as digitization and mobile penetration
- Expanding participation in the financial services
sector with 6 million KSA based customers, large POS network and full suite of Takaful protection and savings products
NCB Investor Relations 2Q 2018 Investor Presentation 17
Projected economic upturn progression
Budgetary pro-growth measures, growing CAPEX, and additional stimuli point to continuing economic and banking growth despite the non-oil private sector adjusting to structural shifts
Source: Ministry of Finance, Fiscal Balance Program, and NCB Economics Forecasts
60 60 44 44 142 2 317 7 443 443 555 555 67 673 3 749 49 2% 2% 6% 13% 17% 19% 22% 25%
- 10%
- 5%
0% 5% 10% 15% 20% 25% 30% 200 400 600 800 1,000 1,200
2013 2014 2015 2016 2017 2018F 2019F 2020F
Gover ernmen ent D Deb ebt (SARbn)
Domestic Public Debt Debt to GDP Ratio (%)
(
312 370 264 134 208 205 218 228 664 740 714 696 722 773 789 822 97 976 6 1,110 978 8 830 30 930 930 978 8 1,0 ,007 7 1,05 050
200 400 600 800 1,000 1,200
2013 2014 2015 2016 2017P 2018F 2019F 2020F
Gover ernmen ent E Expen enditure ( e (SARbn)
Capex Current Expenditure (Opex)
1,035 913 446 334 436 643 651 616 121 131 169 186 256 289 326 368 1,156 1,044 44 61 616 6 51 519 692 692 932 932 977 77 984 4 106 06 97 7 50 50 41 41 53 53 60 60 65 5 65 5
(70) (50) (30) (10) 10 30 50 70 90 110
500 1,000 1,500 2,000
2013 2014 2015 2016 2017P 2018F 2019F 2020F
Gover ernmen ent R Rev even enue e (SARbn)
Oil Revenues Non-oil Revenues Average Oil Price (USD)
1,54 545 5 1,72 ,729 1,773 ,773 1,78 ,787 7 1,79 ,791 1,91 910 0 2, 2,052 2 2, 2,225 225 10.9 0.9% 11.9% 2.5 .5% 0.8 0.8% 0.2 0.2% 6.6 6.6% 7. 7.5% 8. 8.4%
- 2.0%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
500 1,000 1,500 2,000 2,500 3,000
2013 2014 2015 2016 2017 2018F 2019F 2020F
Money ey Supply ( (SARbn)
Money Supply Money Supply Growth Rate (YoY%)
1,121 21 1,25 251 1,362 362 1,400 00 1,3 ,387 7 1,4 ,477 77 1,5 ,574 74 1,70 ,704 12.0% 11.6% 8.9% 2.9%
- 1.0%
6.5% 6.6% 8.3%
- 30.0%
- 25.0%
- 20.0%
- 15.0%
- 10.0%
- 5.0%
0.0% 5.0% 10.0% 15.0% 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
2013 2014 2015 2016 2017 2018F 2019F 2020F
Ba Bank L k Len ending (SARbn)
Bank credit, private and public sectors Credit Growth Rate (YoY%)
917 7 967 967 999 999 1,000 000 1,012 2 1,02 023 3 1,04 046 6 1,084 4 7. 7.0% 5. 5.4% 3.4 3.4% 0.1 0.1% 1.2 .2% 1.1 .1% 2.2 .2% 3.6 3.6% 2.7 .7% 3.6 3.6% 4. 4.1% 1.7 .7%
- 0.9
0.9% 2.6 .6% 2.7 .7% 1.9 .9%
- 20.0%
- 15.0%
- 10.0%
- 5.0%
0.0% 5.0% 10.0%
(100) 400 900 1,400 1,900 2,400 2,900 3,400
2013 2014 2015 2016 2017 2018F 2019F 2020F
GDP P - Rea eal vs. n non-oil pri rivate ate s secto tor r (S (SARb ARbn)
Non-Oil Private GDP Non-Oil private sector Annual Growth Real GDP
NCB Investor Relations 2Q 2018 Investor Presentation
National Commercial Bank Strategic Overview 2Q 2018 Results
NCB Investor Relations 2Q 2018 Investor Presentation 19
NCB’s strategic plan is about execution
Our strategic objectives are supported by productivity enablers
Retail il B Bankin ing
Expan and s shar are of
- f retai
ail p prof
- fits
Co Corporat ate Ban Banking
Grow in in V Vis isio ion 2030 030 target eted ed s sec ectors and res esilien ent SME ME’s
TF TFKB KB
Incre rease pro rofit c t contri tributi tion
Trea reasury ry
Diversi sify f fun unding, sust sustain i invest stme ment retur urns a s and cr cross ss- sel ell
NCBC CBC
Gen ener erate A e AUM UMs and cater er t to GRE’s g growing n need eeds
Lean D Dis istribu ibutio ion Digit igitiz izatio ion
Expand reach w ch with l h lean b branche ches Anyw nywhere, anyt nytime, ins nstant nt b bank nking ng Strategic
- bjectives
Strategic enablers
NCB Investor Relations 2Q 2018 Investor Presentation 20
NCB continues to deliver on its strategic plan
1H 2018 Highlights
Retai ail por
- rtfol
- lio i
- increas
ased by y 3% % mainly o nly on n growth in in mor
- rtgag
age Ac Achie ieved g growth in in depo posit its Gre rew w Cor
- rpor
- rat
ate le lend nding ng 9% Laun unche ched A Alahl hli E-Corp p app, pp, KSA’s f fir irst c compr prehensiv ive mobil ile a app pp for c compa panie ies Resumed branc nch expans nsion n and nd expand nded d digital c l channe nnels ls Grew l lendi ding a g and d de deposit ba base NCB was as ap appoi
- inted as
as a P a Primar ary Deal aler in lo n local l gover ernmen ent s sec ecurities es Surg rge in re recurri rring re revenue, re resulti ting i in YoY NSCI CI g gro rowth wth o
- f 25
25% Continue ued e expanding net i inco come me t thr hroug ugh i h incr creasi sing AUMs Ms and ma maintaining co cost st dis iscipl iplin ine Opti timized b branch n netw twork f for p r pro roducti tivity ty wi with th 6 6 FTEs s at n newest st b branche ches Con
- ntinued t
to d
- drive digital
al migrat ation
- n: digital
al chan annel t tran ansac action
- ns u
up 39 39%
Retail il B Bankin ing Co Corporat ate Ban Banking TF TFKB KB Trea reasury ry NCBC CBC Lean D Dis istribu ibutio ion Digit igitiz izatio ion
NCB Investor Relations 2Q 2018 Investor Presentation 21
Lean distribution
We accelerated expansion of our distribution platform in Saudi Arabia and are streamlining branch formats to enhance productivity gains
Strategic ic Im Impe perativ ives
- 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
39.0 39.0% 35 35.2 .2%
- 10%
1 1 1
2014 2017
Cost to to In Income me R Rati atio ( (%)
342 42 400 00 +17%
100 200 300 400 500 600 700
2014 2017
Numb mber r of B Bran ranche hes
8,021 21 7,9 7,991
- 0%
2014 2017
Ba Bank k Hea eadcount ( (NC NCB B em employees ees)
12. 2.1 11.0 .0
- 9%
5 10 15 20
2014 2017
FTE TE / / br branch
60 60% 71 71% +18%
1 1 1 1 1
2014 2017
Fro ront / t / Bac ack Office R Rat atio (%) %)
1.65 .65 2.02 .02 +22%
1 1 2 2 3 3 4
2014 2017
Operati rating In Income me / / FTE (S (SARm ARmn)
NCB Investor Relations 2Q 2018 Investor Presentation
10% 37 37% +54%
1 1 1
2014 2017
Digital tal Tran ransac acto tors rs (% of to total tal b bas ase)
22
Digitization
Migrate customers to digital through superior user experiences
Strategic F Focus cus 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
CAGR CAGR CAGR
13.0 30.7 2.8 19.4 15. 5.8 8 50.1 0.1 +47%
10 20 30 40 50 60 70 80 90
2014 2017
Digital tal Tran ransac acti tions ( (mn mn)
Online Mobile
8% 4%
- 21%
2014 2017
Bran ranch F h Finan ancial al T Tran ransac acti tions (% of tot
- f total)
l)
NCB Investor Relations 2Q 2018 Investor Presentation
Retail Banking
We are transforming retail distribution to increase share of profits
Strategic F Focus cus Areas
- Grow market share in consumer finance
- Grow deposits in key segments (Mass/ Affluent/ GRE)
- Expand and optimize branch network
- Drive digital migration
- Continue improving customer satisfaction
CAGR CAGR CAGR
23
5. 5.7 8.3 .3 +13%
2 4 6 8 10 12 14 16
2014 2017
Oper erating I Income ( e (SARbn)
74 4 89 89 17. 7.4% 19.5 9.5% +6%
10.0% 15.0% 20.0% 25.0% 30.0% 35.0%20 40 60 80 100 120 140 160
2014 2017
Consumer er Financing & & Advances es, n net et (S (SARb ARbn)
Market Share (%)
1.6 .6 4.0 .0 +38%
1 2 3 4 5 6 7 8
2014 2017
Net Net Income ( e (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 24
Corporate Banking
Grow selectively and increase risk-adjusted returns
Strategic F Focus cus Areas
- Build a deal pipeline in V2030 target sectors
- Cross sell treasury and cash management
- Focus on portfolio quality and proactively manage risk
- Drive migration to digital channels
- Expand collection capacity and increase recoveries
CAGR CAGR CAGR
108 8 124 24 +5%
50 100 150 200
2014 2017
Corporate e Financing & & A Advances es, net et (S (SARb ARbn)
3.7 3.7 4. 4.5 +6%
1 2 3 4 5 6 7 8
2014 2017
Total tal O Operati rating In Income me (SARbn)
3.2 3.2 2.3 .3
- 10%
1 2 3 4 5
2014 2017
Net Net Income ( e (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 25
Treasury
Broaden and deepen liquidity access while sustaining investment returns and cross-sell
Strategic F Focus cus 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
CAGR CAGR
HQLA is group-wide 4Q average LCR shows 4Q average
94 94% 91 91%
- 1%
1 1 1 1 1 2 2 2
2014 2017
Sau audi G Govern rnme ment an t and In Investme ment Grad rade In Investme tments ts as as % % o
- f T
Total tal
35 35% 26 26%
- 10%
1 1
2014 2017
In Investme tments ts as as % % o
- f T
Total tal Assets ts
100 00 95 5 152. 2.3% 177. 77.3%
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
2015 2017
HQ HQLA an and L Liquidity ty C Coverag rage (S (SARb ARbn/%)
High quality liquid assets (HQLA) Liquidity coverage ratio (LCR)
NCB Investor Relations 2Q 2018 Investor Presentation
10.1 0.1% 17. 7.6% +7.5ppt
1
2014 2017
NCBC S Share hare of S Sector r Net Net I Income e (%) %) ( (SARbn)
490 90 198 8 11.4% 11.8%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%100 200 300 400 500 600 700 800 900 1,000
2014 2017
NCBC Tr Trade ded V d Value (SARbn) & M Mark arket S t Share hare (%) %)
NCBC Traded Value Market Share (%)
26
NCB Capital
KSA’s leading investment bank and asset manager; well positioned to capture future growth
Strategic F Focus cus 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
2,1 ,147 7 836 36 8,333 333 7,2 7,226
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
2014 2017
Tad adaw awul T Trad raded Val alue (S (SARb ARbn) ) & T TAS ASI I Index
Tadawul Traded Value TASI Index
55 55 129 29 +134%
50 100 150 200 250
2014 2017
NC NCBC BC A Asset ets under er Managem emen ent ( (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation
34 4 39 39 +5%
10 20 30 40 50 60 70
2014 2017
Total A Asse ssets s (TRYbn) n)
1,446 446 1,914 +10%
500 1,000 1,500 2,000 2,500 3,000 3,500
2014 2017
Total tal O Operati rating In Income me (T (TRY RYmn)
334 334 375 5 +4%
100 200 300 400 500 600 700
2014 2017
Net Net Income ( e (TRYmn)
2.9 .9% 3.2 3.2% +3%
2014 2017
TFKB C Contri ributi tion t to NC NCB Net B Net I Income e (%) %) (T (TRY RYmn)
27
Türkiye Finans Katılım Bankası
We are executing a transformation program to grow TFKB’s net income
Strategic F Focus cus Areas s
- Resume branch expansion and expand digital channels to
drive customer acquisition
- Strengthen underwriting and improve collections
- Increase automation and drive capacity optimization
- Instill NCB’s principles (Customer excellence, robust
governance, best-in-class technology)
CAGR CAGR CAGR CAGR
Note: Figures according to BRSA accounting standards
NCB Investor Relations 2Q 2018 Investor Presentation
Grew Corporate loan portfolio by 9%
28
Three Strategic Priorities for 2018
NCB’s strategy continues to be about execution
Grow Residential Finance Current Account and Capital Base Focus Position Corporate Banking for growth
- Position NCB as the preferred funding partner
- Leverage National housing initiatives
- Leverage branch expansion for customer acquisition
- Drive focus on current account growth to maintain funding
advantage
- Sustain capital base to support credit growth
- Win mandates in vision 2030 targeted sectors
- Resume growth in SMEs by targeting resilient sectors
- Optimize operating model to improve platform productivity
- Reduce cost of credit through proactive remedial
management and recoveries 2. 3. 1. 1 H 2018 Update Grew mortgage portfolio by 9% Grew Current Accounts by 6%
NCB Investor Relations 2Q 2018 Investor Presentation
National Commercial Bank Financial Results Highlights 2Q 2018 Results
NCB Investor Relations 2Q 2018 Investor Presentation 30
Key messages
2Q 2018 Results
Income Statement Balance Sheet Asset Quality, Capital & Liquidity
- 2%
% increase in total assets.
- Strong financing growth of 7%
% driven by domestic.
- Investment levels stab
able with ongoing portfolio re-balancing and participation in Saudi Government debt issuance.
- Customer’s deposits mix improved, CASA ratio up at 79
79%. %.
- Balance sheet growth limited by ~1.6% from Turkish Lira depreciation.
- 8.
8.7% YoY
- Y growth of net income in 1H 2018, depressed by ~29bps from Turkish
Lira depreciation.
- 2% NSCI growth in 1H 2018 as NSCI margin improved by 9bps.
- 2% d
% decline in fee and other income in 1H 2018.
- 5% Operating Expenses increase in 1H 2018 from VAT & Cost of living
allowances.
- 63
63% less impairment charges for financing and advances losses, and CoR 26bps.
- Group NPL ratio at 1.
1.7% % at 2Q 2018 and higher NPL coverage at 16 161. 1.4%. %.
- Capital position comfortably above regulatory minima with CET1 of 16.
6.2% % and T1
- f 18
18.1% at 2Q 2018.
- Strong liquidity with LTD ratio of 83.8%, average 2Q 2018 LCR of 211.
11.9% and Leverage Ratio of 13 13.1% at 2Q 2018.
Fina nanc ncing ng (SAR ARbn) Deposi sits ( s (SAR ARbn) Net t Income e Attr ttributa table to
- Equity H
ty Holders Movement ent ( (SAR ARbn) NPL PL & & Co CoR (%) %) CE CET1 1 and L LTD D (%) 249 9 266 66 +7%
100 200 300 400 500 6004Q 17 2Q 18 309 309 31 318 +3%
100 200 300 400 500 600 700 8004Q 17 2Q 18 1.9 .9% 1.7 .7% 0.7 0.7% 0.3 0.3%
- 0.1%
4Q 17 2Q 18
Group NPL ratio Group CoR YTD
15.7 .7% 16.2 6.2% 81 81% 84 84%
20% 30% 40% 50% 60% 70% 80% 90%4Q 17 2Q 18
CET1 LTD
5.1 .12 0.1 0.16 6 (0.06 0.06) (0.1 0.16) 0.4 0.48 0.02 0.02 5. 5.57 57
1 1 2 2 3 3
1H 17 NSCI Non-NSCI Expenses Impair- ments Other 1H 18
NCB Investor Relations 2Q 2018 Investor Presentation 31
Income Statement
Pro rofitab tability ty T Tre rends
SAR (mn) 2Q Q 20 2018 1Q Q 20 2018 2Q Q 20 2017 Yo YoY Y % change nge 1H H 20 2018 1H H 20 2017 Yo YoY Y % change nge Net special commission income 3,573 3,419 3,473 +3% 6,992 6,832 +2% Fee and other income 1,087 1,361 1,005 +8% 2,448 2,506
- 2%
Total o
- pera
rating ng inc ncome 4,661 661 4,779 ,779 4, 4,47 478 +4% 9,440 440 9, 9,338 338 +1% Operating expenses (1,692) (1,673) (1,516) +12% (3,366) (3,205) +5% Total impairment charge (340) (78) (479)
- 29%
(418) (902)
- 54%
Inc Income from o
- pera
rations ns, ne net 2, 2,628 28 3, 3,02 028 2,48 483 +6% 5, 5,656 56 5,23 232 2 +8% Net inc ncome a attri ribu buted t d to equ quity h y holde ders rs 2,5 ,579 79 2,9 ,987 7 2,4 ,417 7 +7% 5, 5,56 566 5,120 20 +9%
2Q 2018 Net income growth from higher operating income and lower impairments, partly offset by higher operating expenses
2,647 2,352 2,063 2,431 2,908 2,496
55 66 62 125 78 83
2,70 ,703 2,4 ,417 7 2, 2,126 26 2,556 556 2,9 ,987 7 2,5 ,579 79 +7%
1,000 2,000 3,000 4,000 5,000
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Net income me att attri ribute ted to e equity ty ho holders rs ( (SARmn mn)
International net income Domestic net income
4,472 4,085 4,083 4,111 4,407 4,234 388 393 409 405 372 427 4,860 60 4, 4,47 478 4, 4,49 492 4, 4,516 4,779 ,779 4,661 661 +4%
1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Total tal o
- perati
rating income me ( (SARmn mn)
International Operating Income Domestic Operating Income
NCB Investor Relations 2Q 2018 Investor Presentation
309 318 8
50 100 150 200 250 300 350 400 450 5004Q 17 2Q 18
Domestic Deposits 94% International Deposits 6%
Custo tome mers rs' ' Deposits ts M Mix ( x (SARbn)
32
Balance Sheet
Ba Balance e Sheet eet T Tren ends
SAR (mn) 2Q Q 20 2018 1Q Q 20 2018 2Q Q 20 2017 Yo YoY Y % change nge FY Y 20 2017 YTD % % change nge Investments, net 114,978 113,555 114,634 +0% 114,578 +0% Financing and Advances, net 266,043 252,777 256,901 +4% 249,234 +7% Total al as assets 45 454, 4,374 4 437 37,506 06 45 450,48 486 +1% 443, 3,866 66 +2% Due to banks and other financial institutions 50,024 37,968 51,303
- 2%
48,558 +3% Customers' deposits 317,653 309,001 314,690 +1% 308,942 +3% Debt securities issued 8,754 10,528 9,926
- 12%
10,250
- 15%
Total l lia iabil ilit itie ies 38 389, 9,34 342 372 72,6 ,645 38 389, 9,334 334 +0% 37 379, 9,590 90 +3% Equ quity y attri ribu butabl ble to s share reholde ders rs 57,0 7,007 7 56 56,684 84 52 52,87 876 +8% 56, 6,04 041 +2% Total e equity 65 65,032 032 64 64,861 61 61,152 2 +6% 64,2 ,276 76 +1%
Growth indicating signs of economic recovery
133 135 135 124 126 135 86 87 88 89 90 92 9 8 8 10 12 16 27 27 27 26 25 24 254 4 257 57 257 57 249 49 253 53 266 66 +7%
50 100 150 200 250 300 350 400 450 500
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Financing & A Advances es, n net et (SARbn)
Corporate Consumer and credit card Others International
236 248 232 238 237 251 66 55 59 58 61 53 12 12 12 13 11 13 314 4 315 5 303 303 309 309 309 309 318 8 +3%
100 200 300 400 500
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Custo tome mers rs' D ' Deposits (SARbn)
CASA Time Others
NCB Investor Relations 2Q 2018 Investor Presentation
Retail 44% Corporate 19% Treasury 24% Capital Market 4% International 9%
Total tal O Operati rating In Income me (SARbn)
Retail 42% Corporate 20% Treasury 25% Capital Market 4% International 9%
Total tal O Operati rating In Income me (SARbn)
33
Segmental Information (1/3)
2Q 2018 Total operating income higher due to Retail and Treasury income, partly offset by Corporate
9, 9,338 338 103 03 (388 88) 273 73 96 96 18 8 9,440 440
500 1,000 1,500 2,000 2,500
1H 17 Retail Corporate Treasury Capital Market International 1H 18
1H H 18 18 Total tal Operati rating In Income me M Moveme ment ( t (SARmn mn)
4, 4,47 478 100 00 (148 48) 164 4 32 32 34 4 4,661 661
200 400 600 800 1,000 1,200
2Q 17 Retail Corporate Treasury Capital Market International 2Q 18
2Q Q 18 18 Total tal O Operati rating In Income me M Moveme ment ( (SARmn mn)
9.3 9.4 9.4
2 4 6 8 101H 17 1H 18
4.5 4. 4.7
1 2 3 4 52Q 17 2Q 18
NCB Investor Relations 2Q 2018 Investor Presentation
2.4 2.6
1 1 2 2 3 3 42Q 17 2Q 18
Retail 35% Corporate 21% Treasury 38% Capital Market 3% International 3%
Net In Income me attri attribute ted to to e equity ty ho holders rs ( (SARbn)
Retail 33% Corporate 23% Treasury 36% Capital Market 4% International 4%
Net In Income me attri attribute ted to to e equity ty ho holders rs ( (SARbn)
34
Segmental Information (2/3)
2Q 2018 net income attributable to equity holder growth mainly driven by Treasury and Capital market segment
5,120 20 118 15 5 184 4 89 89 41 41 5, 5,56 566
200 400 600 800 1,000 1,200 1,400
1H 17 Retail Corporate Treasury Capital Market International 1H 18
1H H 18 18 Net In Income me at attri tributed to e equity ho holders rs M Moveme ment (S (SARm ARmn)
2,4 ,417 7 (6) (26 26) 146 46 31 31 17 7 2,5 ,579 79
100 200 300 400 500 600
2Q 17 Retail Corporate Treasury Capital Market International 2Q 18
2Q Q 18 18 Net In Income me attri attribute ted to to e equity ty ho holders rs M Moveme ment t (S (SARm ARmn)
5.2 5.7
1 2 3 4 5 6 71H 17 1H 18
NCB Investor Relations 2Q 2018 Investor Presentation 35
Segmental Information (3/3)
2Q 2018 financing growth mainly driven by Corporate and Retail segments
Ma Manageme ment C Comme mmentary
- 2Q 2018 Total Assets increased by 2% due to high Corporate
financing (+11%) and Retail financing (+3%) while investments remained stable.
- Customers’ Deposits increased by 3% from retail segment.
- Deposits’ mix improved toward CAs: CASA balances at 79%
109 104 113 133 141 147 163 154 158
38 36 34
444 444 43 438 45 454 4 +2%
100 200 300 400 500 600 700 800
4Q 17 1Q 18 2Q 18
Total As Assets (S (SARb ARbn)
Retail Corporate Treasury Capital Market International
89 90 92 124 126 135
26 25 24
249 49 253 53 266 66 +7%
100 200 300 400 500 600
4Q 17 1Q 18 2Q 18
Financing a and A Advances es, net et ( (SARb ARbn)
Consumer and credit card Corporate International Other
207 209 219 72 71 70 8 9 9
22 21 20
309 309 309 309 318 8 +3%
100 200 300 400 500 600
4Q 17 1Q 18 2Q 18
Custo tome mers rs' D ' Deposits (SARbn)
Retail Corporate Treasury Capital Market International
NCB Investor Relations 2Q 2018 Investor Presentation 36
Outlook
Improved macroeconomic environment expected to drive growth
- Average Arabian light oi
- il
l pric ice o
- f US
USD 67 67 per barrel
- A total of four
four US Fed rate rate hikes kes o
- f 25
25bp bps are expected in 2018 (Mar, Jun, Sep ep, Dec ec)
- Government’s ex
expansionary bu budge dget for 2018 drives s corporate l e len ending activity
- Res
esiden ential f financing drives es consumer er l len ending growth
- Budget
t deficit n t narro arrows to SAR 46bn
- Real GDP g
grow
- wth of
- f 2.
2.6% %
- VAT and increased tariffs on
utilities increases infla flation
- n to
aro around 3%
201 018 8 Macro croeco conomic c Outloo
- ok
Balance Sheet Capitalization and Asset Quality Profitability Financing growth
- 2%
+6.7% +5% t % to 8% Upper end of the range
FY Y 201 017 Rep eported ed 2Q Q 201 018 Rep eported ed FY Y 201 018 Gui uidance ce FY Y 2018 8 Outlook
- k
NSCI margin 3.48% 3.61% +5 to
- 15
15bp bps Upper end of the range Cost to income 35.2% 35.7% Below low 35% Similar level to 1H Tier 1 CAR 17.7% 18.1% 16 16% t % to 18 18% On target Group Cost of Risk 0.7% 0.3% 0. 0.6% t % to 0. 0.8% Lower end of the range
NCB Investor Relations 2Q 2018 Investor Presentation
National Commercial Bank Financial Results Details 2Q 2018 Results
NCB Investor Relations 2Q 2018 Investor Presentation 38
Operating Income Highlights
Ma Manageme ment C Comme mmentary
- 2Q 2018 total operating income increased 4% YoY from a 3%
improvement in net special commission income, higher investment- related income (8%), Fees revenue (2%) and Other operating expenses (36%)
- Excluding the International business, 2Q 2018 total operating
income was 4% higher YoY.
- International operating income increased despite 11% depreciation
- f average Turkish Lira rate as compared with 2Q 2017.
- 1H 2018 total operating income increased by 1% YoY from 2%
higher net special commission income.
Higher 2Q 2018 total operating income largely attributable to net special commission income
3.47 3.42 3.57 1.01 1.36 1.09 4. 4.48 48 4. 4.78 4.66 .66 +4%
1 2 3 4 5 6 7 8
2Q 17 1Q 18 2Q 18
Total tal O Operati rating In Income me (S (SARb ARbn)
Fee and other income Net special commission income
6.83 6.99 2.51 2.45 9.34 9.34 9.4 9.44 +1%
2 4 6 8 10 12 14 16
1H 17 1H 18
4. 4.48 48 0.1 0.10 0.05 0.05 0.03 0.03 4.66 .66 4.23 0.43 4.09 0.39
1 1 2 2 3 3
2Q 17 NSCI Fee and other income International NOR 2Q 18
2Q Q 18 18 Total tal O Operati rating In Income me M Moveme ment ( (SARbn)
9.34 9.34 0.1 0.17 (0.09 0.09) 0.02 0.02 9.44 44 8.64 0.80 8.56 0.78
1 2 3 4 5 6
1H 17 NSCI Fee and other income International NOR 1H 18
1H H 18 18 Total tal Operati rating In Income me M Moveme ment ( t (SARbn)
Domestic International Domestic International
NCB Investor Relations 2Q 2018 Investor Presentation
2.97% 3.25% 3.50% 3.46% 3.38% 4.15%
0 Net
Net Spec ecial C Commission M Margin (%) %)
International
39
Net special commission income trends
2Q 2018 net special commission income growth of 3% partly limited by Turkish Lira depreciation
Ma Manageme ment C Comme mmentary
- The 2Q 2018 net special commission margin
increased by 16bps YoY to 3.62% due to improved yields (+25bps).
- Special commission expense for 2Q 2018 was
19% higher due to higher SAIBOR/LIBOR rates.
- 1H 2018 NSCI improved by 2% on higher SCI,
despite 13% increase in cost of fund due to higher SAIBOR/LIBOR. Net Special al C Commi mmission In Income me
SAR (mn)
2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Special commission income 4,519 4,342 4,267 +6% 8,862 8,488 +4% Special commission expense (946) (924) (794) +19% (1,870) (1,655) +13% Net s t special c commission inc ncome 3, 3,573 3 3, 3,419 9 3, 3,473 3 +3% 6, 6,992 992 6, 6,832 32 +2% Commission yield (%) 4.57% 4.56% 4.32% +6% 4.5 .53% 4.37 .37% +4% Funding cost (%) 1.03% 1.04% 0.93% +11% 1.03 .03% 0.95 0.95% +8% Net t special commission m margin ( n (%) 3.62 3.62% 3.5 3.59% 3.4 3.46% +5% 3.61 3.61% 3.4 3.49% +3%
1.15% 1.30% 1.33% 1.69% 2.31% 2.34% 1.74% 1.78% 1.79% 1.90% 2.27% 2.59%
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
SAI AIBOR a R and LIBOR Ra R Rates (% (%)
3M USD LIBOR (%) 3M SAR SAIBOR (%)
4.08% 3.94% 3.92% 3.94% 4.06% 4.10% 0.61% 0.49% 0.52% 0.51% 0.51% 0.58% 7.76% 8.30% 8.44% 9.48% 9.85% 10.29% 5.12% 5.37% 5.24% 6.31% 6.80% 6.45%
(0)
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Commission Y Yiel eld a and F Funding C Cost ( (%) %)
Domestic Yields Domestic COF International Yields International COF
3.52% 3.46% 3.45% 3.49% 3.59% 3.62%
Group
3.52% 3.42% 3.43% 3.46% 3.59% 3.56%
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Domestic
NCB Investor Relations 2Q 2018 Investor Presentation
1,592 1,661 610 551 540 444 (236) (209) 2,506 06 2,448 448
- 2%
(500) 500 1,500 2,500 3,500 4,500 5,500
1H 17 1H 18
40
Fee and other income trends
Ma Manageme ment C Comme mmentary
- 2Q 2018 fee and other income increased 8% YoY due to 2% growth
in fees from banking services, 8% higher in investment-related income and 36% lower other operating expenses.
- The higher fees from banking services in 2Q 2018 were mainly
driven by higher fees from investment management services, partly
- ffset by lower financing and lending and trade fees.
- 1H 2018 lower fee and other income due to lower investment
income, as well as FX income.
Higher 2Q 2018 Fee income and lower other operating expenses
Fee Income
SAR (mn)
2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Finance and lending 358 358 373
- 4%
716 755
- 5%
Trade finance 121 137 134
- 10%
258 269
- 4%
Investment management services 133 164 106 +25% 297 195 +53% Shares brokerage 39 60 32 +22% 99 101
- 2%
Credit cards 50 38 37 +33% 87 74 +19% Others 109 96 106 +2% 205 198 +3% Fee inc ncome from bank nking ng services, ne net 809 09 85 852 790 90 +2% 1,661 661 1,5 ,592 +4%
790 852 809 285 262 289 80 359 86 (149) (113) (96) 1,005 005 1,361 361 1,0 ,087 7 +8%
(200) 300 800 1,300 1,800 2,300
2Q 17 1Q 18 2Q 18
Fee a ee and O Other er Income e (S (SARm ARmn)
Other operating income (expenses), net Investment-related income Exchange Income, net Fee income from banking services, net
1,592 2 100 00 (39 39) 14 4 (11) 6 6 1,661 661 1,539 122 1,448 144
200 400 600 800 1,000 1,200 1,400 1,600 1,800
1H 17 Brokerage & invmnt. Mngmnt. Finance & lending Credit cards Trade finance Other 1H 18
1H H 18 18 Driver ers o
- f F
Fee I ee Income e from Ba Banki king Ser ervices es Movem emen ent ( (SARmn)
Domestic International
NCB Investor Relations 2Q 2018 Investor Presentation 41
Expense highlights
Ma Manageme ment C Comme mmentary
- 2Q 2018 operating expenses increased by 12% YoY.
- The cost to income ratio for 1H 2018 was 35.7%, higher by 134bps
compared to 1H 2017.
- The cost base incremental was relatively broad-based, reflecting
growing business, cost of living allowances to employees announced this year and the impact of VAT. These were partly
- ffset by the continued strides made in digitization and productivity
initiatives, and lower depreciation.
887 919 899
188 193 196 154 156 155
288 405 443 1,516 1,6 ,673 73 1,692 692 +12%
(400) 100 600 1,100 1,600 2,100 2,600 3,100 3,600
2Q 17 1Q 18 2Q 18
Oper erating E Expen enses es (SARmn)
Other G&A Depreciation & amortization Rent & premises Employee-related
34.7% 34.3% 34.8% 35.2% 35.0% 35.7% 32.9% 32.3% 31.2% 33.3% 33.1% 34.1%
1Q 17 1H 17 9M 17 FY 17 1Q 18 1H 18
Cost to to In Income me R Rati atio ( (YTD % %)
Group (%) Excluding International (%)
3, 3,205 05 58 58 17 7 (38 38) 123 23 3, 3,366 366 2,945 420 2,766 439
500 1,000 1,500 2,000 2,500
1H 17 Employee-related Rent & premises Depreciation & amortization Other G&A 1H 18
1H H 18 18 Oper erating E Expen enses es M Movem emen ent Driver ers ( (SARmn)
Domestic International
1,760 1,818
371 389 349 311
724 848 3, 3,205 05 3, 3,366 366 +5%
1,000 2,000 3,000 4,000 5,000 6,000
1H 17 1H 18
VAT, Cost of living allowances and support growth plans largely contributed to higher expenses in 2Q 2018
NCB Investor Relations 2Q 2018 Investor Presentation
Financing and Advances, net 59% Investments, net 25% Cash, bank and SAMA balances 12% Other assets, net 4%
Total As Assets Mi Mix (S (SARb ARbn)
Retail 25% Corporate 32% Treasury 35% Capital Market 0% International 8%
Total Asset ets by S Seg egmen ent ( (SARbn)
42
Asset highlights and composition
2% growth in Balance sheet as a result of increase in financing, partially offset by Turkish Lira depreciation
Ma Manageme ment C Comme mmentary
- Total assets increased 2% due to increase in financing.
- 7% financing increase mainly due to 9% increase in domestic
financing partially offset by 10% decline in international financing impacted by 17% Turkish Lira depreciation.
- Overall financing trends were reflective of early signs of economic
recovery but further muted by Turkish Lira depreciation.
- Investments relatively stable while portfolio re-balancing and
participation in Saudi Government debt issuance continued.
249 253 266 115 114 115 60 49 54 444 444 43 438 45 454 4 +2%
100 200 300 400 500 600 700 800 900
4Q 17 1Q 18 2Q 18
Total As Assets (S (SARb ARbn)
Financing and Advances, net Investments, net Cash, bank and SAMA balances Other assets, net
444 45 454 4
100 200 300 400 500 6004Q 17 2Q 18
444 45 454 4
100 200 300 400 500 6004Q 17 2Q 18
NCB Investor Relations 2Q 2018 Investor Presentation
Consumer financing & credit cards 35% Commerce 15% Manufacturing 13% Services 9% Utilities & health 7% Building & construction 6% Others, across 6 sectors 15%
Financing a and A Advances es, gross b by Economic Sec ector (S (SARb ARbn)
43
Financing and advances
Financing growth driven by Corporate and Consumer & Credit Cards segments
Ma Manageme ment C Comme mmentary
- Domestically, financing grew for the Corporate Segment (+9%) and
Consumer & Credit Cards segment (+3%) since 4Q 2017.
- Growth in Corporate segment comes from all sectors apart from
Commerce.
- International financing declined 10% in 2Q 2018 due principally to
weakened Turkish Lira.
89 90 92 124 126 135
26 25 24 10 12 16
249 49 253 53 266 66 +7%
100 200 300 400 500 600
4Q 17 1Q 18 2Q 18
Financing a and A Advances es, net et ( (SARbn)
Consumer and credit card Corporate International Other
256 274 4
50 100 150 200 250 300 3504Q 17 2Q 18
256 56 5.0 .0 2.0 .0 1.9 .9 3.7 3.7 3.7 3.7 (1.3 .3) 2.7 7 274 4
5 10 15 20 25 30 35
4Q 17 Banking & financial Manufacturing Services Building & construction Commerce Consumer financing & credit cards Other 2Q 18
Movem emen ent Financing, Gross by Economic S Sec ector ( (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 44
Financing and advances credit quality (1/2)
Stable credit quality across the board
2.12 2.34 2.63 2.84 2.80 2.94 0.50 0.49 0.52 0.53 0.52 0.53 1.48 1.50 1.52 1.40 1.40 1.26 4.1 .10 4.33 .33 4.67 .67 4.77 77 4. 4.72 4. 4.75
- 0%
1 2 3 4 5 6 7 8 9
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
NPL (S (SARb ARbn)
Corporate Consumer and credit card International Others
4.77 77 0.1 0.12 (0.04 0.04) (0.03 0.03) (0.04 0.04) 0.01 0.01 0.00 0.00 (0.04 0.04) 4. 4.75
1 1 1
4Q 17 Manufacturing Commerce Services Building & construction Consumer financing & credit cards Transport & comms Other 2Q 18
Movem emen ent NP NPLs by Economic S Sec ector ( (SARbn)
3.68 3.92 3.99 4.18 4.79 4.87 1.16 1.24 1.29 1.30 1.50 1.48 1.27 1.29 1.33 1.26 1.38 1.21 6.1 6.15 6.5 6.50 6.65 6.65 6.8 6.80 7. 7.77 77 7.66 .66 +13%
2 4 6 8 10 12 14 16
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Imp Impai airme rment A Allowan ances (SARbn)
Corporate Consumer and credit card International Others
0.26 0.25 0.47 0.14
(0.04)
0.11 0.08 0.17 0.15 0.05
(0.04)
0.12 0.08 0.05 0.08 0.08 0.06 0.11 0.4 0.42 0.4 0.48 0.69 0.69 0.2 0.28
(0. 0.01 01)
0.34 0.34
- 29%
(0) 1 1 1 1
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Imp Impai airme rment C Charg harge (SARbn)
Corporate Consumer and credit card International Others
NCB Investor Relations 2Q 2018 Investor Presentation 45
Financing and advances credit quality (2/2)
Improved NPL ratio and higher NPL coverage
Ma Manageme ment C Comme mmentary
- NPL ratio declined in 2Q 2018 driven by proactive remedial
management and write offs of fully provided loans.
- NPL coverage was higher at 161% as at 2Q 2018 because of the
write offs as well as higher provision stock as a result of IFRS 9 adoption adjustments.
1.1% 1.2% 1.3% 1.5% 1.4% 1.4% 5.3% 5.4% 5.4% 5.1% 5.3% 5.1% 1.6% 1.6% 1.8% 1.9% 1.8% 1.7%
(0)
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
NP NPL Ratios ( (%) %)
Domestic International Group NPL ratio
186% 184% 169% 164% 192% 185% 86% 86% 87% 90% 99% 96% 150% 150% 142% 143% 165% 161%
1 1 1 1 1 2 2 2 2
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
NP NPL C Cover erage e Ratios ( (%) %)
Domestic International Group NPL coverage ratio
0.6% 0.6% 0.8% 0.7%
- 0.1%
0.1% 1.2% 1.0% 1.0% 1.1% 1.0% 1.4% 0.6% 0.7% 0.8% 0.7% 0.0% 0.3%
(0)
1Q 17 1H 17 9M 17 FY 17 1Q 18 1H 18
CoR Ra R Ratios (Y (YTD % D %)
Domestic International Group CoR ratio
NCB Investor Relations 2Q 2018 Investor Presentation 46
Domestic Financing and advances credit quality
Consumer NPLs stable while Corporate NPLs decreased
Ma Manageme ment C Comme mmentary
- Corporate NPL ratio declined in 1H 2018, in part due to increase in
gross financing.
- Corporate NPL coverage ratio improved due to write offs and
proactive remedial management as well as higher provision stock as a result of IFRS9 adoption adjustments.
1.5% 1.7% 1.9% 2.2% 2.1% 2.1% 0.6% 0.6% 0.6% 0.6% 0.6% 0.6%
(0) (0)
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
NP NPL Ratios ( (%) %)
Corporate Consumer and credit card
174% 168% 152% 147% 171% 166% 232% 254% 246% 245% 290% 279%
1 1 1 2 2 2 2 2 3 3 3
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
NP NPL C Cover erage e Ratios ( (%) %)
Corporate Consumer and credit card
0.8% 0.7% 0.9% 0.9%
- 0.1%
0.1% 0.4% 0.6% 0.6% 0.5%
- 0.2%
0.2%
(0) (0)
1Q 17 1H 17 9M 17 FY 17 1Q 18 1H 18
CoR Ra R Ratios (Y (YTD % D %)
Corporate Consumer and credit card
NCB Investor Relations 2Q 2018 Investor Presentation
Saudi Government securities 42% Other investment grade 48% Non-investment grade 5% Unrated 5%
Inves estmen ents b by C Cred edit G Grade ( e (SARbn)
115 115
20 40 60 80 100 120 1404Q 17 2Q 18
Saudi Arabia 58% GCC and Middle East 18% Europe 0% Turkey 3% Other countries 21%
Inves estmen ents b by G Geo eography (SARbn)
Investments trends and composition
Stable Investments and quality remains strong; ~90% of the investment portfolio remains Saudi Government and investment grade
Ma Manageme ment C Comme mmentary
- The investment portfolio is built on high quality securities with ~90%
being Saudi governments and investment grade.
- Since the resumption of KSA government debt issuance, NCB has
actively participated in issues of longer term debt securities.
- The portfolio has been re-balancing towards floating rate securities
in light of the rising interest-rate environment.
47
67 67 63 43 43 46
5 5 5
115 114 115 +0%
50 100 150 200
4Q 17 1Q 18 2Q 18
Inves estmen ents ( (SARbn)
Equity instruments, Mutual Funds, Hedge Funds and Others Floating rate securities Fixed rate securities
115 115
20 40 60 80 100 120 1404Q 17 2Q 18
NCB Investor Relations 2Q 2018 Investor Presentation
Due to banks and other financial institutions 13% Customers' deposits 82% Debt securities issued 2% Other liabilities 3%
Total Lia iabil ilit itie ies M Mix ix ( (SARbn)
48
Liabilities trends and composition
Higher total liability base and a high deposit mix towards CASA balances (79%)
Ma Manageme ment C Comme mmentary
- Customers’ deposits are the main source of funding and improved in
2Q 2018.
- CASA balances account for 79% of customers’ deposits.
- Domestically, CASA balances grew (+6%) and lower time deposits
(-7%) since 4Q 2017.
309 309 318 49 38 50
10 11 9
38 380 37 373 3 38 389 9 +3%
100 200 300 400 500 600 700
4Q 17 1Q 18 2Q 18
Total L Lia iabil ilit itie ies (SARbn)
Customers' deposits Due to banks and other financial institutions Debt securities issued Other liabilities
380 38 389 9
50 100 150 200 250 300 350 400 450 5004Q 17 2Q 18
231 231 244
7 6 7
43 46 40
15 15 13 13 11 13
309 309 309 309 318 8 +3%
100 200 300 400 500 600
4Q 17 1Q 18 2Q 18
Custo tome mers rs' D ' Deposits (SARbn)
CASA - Domestic CASA - International Time - Domestic Time - International Others
NCB Investor Relations 2Q 2018 Investor Presentation 49
Liquidity
NCB maintained a strong liquidity profile
Ma Manageme ment C Comme mmentary
- As at 2Q 2018, the financing to customers’ deposit ratio was 83.8%
and comfortably below the regulatory guidelines.
- HQLA balances risen by 4% compared to 4Q 2017.
- The average quarterly LCR improved to 211.9% from 177.3% in 4Q
2017.
- Basel III leverage ratio improved to 13.1% from 13.0% in 4Q 2017.
Quarterly averages
102 2 96 96 91 91 95 5 97 7 99 99 163.8% 166.1% 172.5% 177.3% 198.6% 211.9%
0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 50 100 150 200
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
HQLA a and Aver erage L e Liquidity Cover erage ( e (SARbn/%) %)
High quality liquid assets (HQLA) Liquidity coverage ratio (LCR)
81.0% 81.6% 84.9% 80.7% 81.8% 83.8%
1 1 1 1 1 1 1 1 1 1 1
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Finan ancing to to Custo tome mer D r Deposit Rat atio ( (%)
12.4% 12.2% 12.7% 13.0% 13.5% 13.1%
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Bas asel III l III leverag rage Rati atio ( (%)
NCB Investor Relations 2Q 2018 Investor Presentation
72 73 73
10 20 30 40 50 60 70 80 90 1004Q 17 2Q 18
Common equity tier 1 capital (CET1) 80% Additional tier 1 capital (AT1) 9% Tier 2 capital (T2) 11%
Total tal C Cap apital tal C Comp mpositi tion ( (SARbn)
Ma Manageme ment C Comme mmentary
- Capitalization remained strong and comfortably above the regulatory
minima.
- Pillar I risk weighted assets remained stable in 1H 2018 despite
growth in financing, which was offset by lower charge on residential real estate financing as recently allowed by SAMA, and Turkish Lira depreciation.
- Common equity Tier 1 capital (CET1) is impacted by one time
IFRS9 adjustment adoption.
50
Capital
Capital position comfortably above regulatory minima
Capital ratios are based on Pillar I RWA
57 58 58 7 7 7
8 8 8
72 72 73 73 73 73 +2%
20 40 60 80 100 120 140
4Q 17 1Q 18 2Q 18
Cap apital alisati ation ( (SARbn)
Tier 2 capital (T2) Additional tier 1 capital (AT1) Common equity tier 1 capital (CET1)
318 311 315 34 34 35
9 12 12
361 361 358 58 361 361
- 0%
100 200 300 400 500 600 700
4Q 17 1Q 18 2Q 18
Pillar I Ri Risk We Weighted As Assets (S (SARb ARbn)
Credit risk Operational risk Market risk
14.6% 14.1% 14.5% 15.7% 16.2% 16.2% 16.1% 16.0% 16.4% 17.7% 18.2% 18.1% 18. 8.2% 18. 8.2% 18. 8.5% 20.0 0.0% 20.4 0.4% 20.3 0.3%
1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18
Cap apital al R Rati atios ( (%)
CET1 ratio T1 ratio TC ratio
NCB Investor Relations 2Q 2018 Investor Presentation
National Commercial Bank Segmental Review 2Q 2018 Results
NCB Investor Relations 2Q 2018 Investor Presentation 52
NCB Bank (standalone)
Strong 2Q 2018 net income growth 5% resulting from operating income growth and lower impairment charge
Ma Manageme ment C Comme mmentary
- 2Q 2018 net income rose 5% YoY driven principally by 3% operating income growth
and a 46% improvement in impairment charge.
- NSCI for 2Q 2018 improved by 3% YoY due to increase in average earning assets,
better margins, and higher CAs growth.
- 1H 2018 operating expenses increased by 7%, mainly due to VAT, Cost of living
allowances and business growth. Summary mmary Finan ancial al P Perf rforman rmance
SAR (mn) 2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 YoY % change Total assets 426,577 407,869 418,135 +2% 426,577 418,135 +2% Tota tal operati ting ng i inc ncome 4,05 056 6 4, 4,18 180 3, 3,938 938 +3% 8,2 ,237 8,2 ,249
- 0%
Net special commission income 3,224 3,111 3,122 +3% 6,335 6,166 +3% Fee income from banking services, net 582 568 576 +1% 1,150 1,148 +0% Operating expenses (1,400) (1,369) (1,203) +16% (2,769) (2,595) +7% Total impairment charge (228) (14) (425)
- 46%
(243) (763)
- 68%
Other non-operating income (expenses), net (17) (24) (13) +34% (40) (26) +55% Net i t inc ncome for th the p period 2,411 411 2,774 2,2 ,298 +5% 5, 5,185 5 4,865 65 +7% % of total assets 93.9% 93.2% 92.8% +1% 93.9% 92.8% +1% Cost to income (%) 34.5% 32.7% 30.6% +13% 33.6% 31.5% +7% NCL (%) 0.4%
- 0.1%
0.7%
- 49%
0.1% 0.6%
- 80%
ROA (%) 2.4% 2.8% 2.2% +5% 2.5% 2.4% +5% NIM (%) 3.6% 3.6% 3.4% +4% 3.6% 3.5% +2% NPL (%) 1.4% 1.4% 1.2% +16% 1.4% 1.2% +16% NPL Coverage Ratio (%) 185% 192% 184% +1% 185% 184% +1%
223 223 228 228 24 242 2 +9%
100 200 300 400 500 600
4Q 17 1Q 18 2Q 18
Financing & a advances es ( (SARbn)
287 87 288 88 298 8 +4%
100 200 300 400 500 600 700
4Q 17 1Q 18 2Q 18
Custo tome mers rs' d ' deposits ts (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 53
Retail Banking
2Q 2018 net income slightly lower
Ma Manageme ment C Comme mmentary
- 2Q 2018 net income slightly dropped 1% YoY driven principally by 17% higher
- perating expenses, which was partially offset by operating income growth of 5%, and a
31% improvement in impairment charges.
- NSCI for 2Q 2018 improved by 2% YoY due to a 3% increase in retail financing, better
margins and higher current account growth.
- Fee income increased by 10% in 2Q 2018 YoY, mainly from financing-related activity.
- 2Q 2018 operating expenses increased YoY and the cost to income ratio reached
50.8% from 45.4% a year earlier. Summary mmary Finan ancial al P Perf rforman rmance
SAR (mn) 2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Total assets 113,479 104,445 110,187 +3% 113,479 110,187 +3% Tota tal operati ting ng i inc ncome 2,07 070 1,896 96 1,97 970 +5% 3, 3,966 966 3, 3,863 63 +3% Net special commission income 1,683 1,571 1,642 +2% 3,254 3,203 +2% Fee income from banking services, net 343 310 311 +10% 653 591 +11% Operating expenses (1,051) (978) (894) +17% (2,028) (1,874) +8% Impairment charge (118) 45 (171)
- 31%
(73) (250)
- 71%
Other income (expenses) (7) (6) (4) +73% (13) (6) +104% Net i t inc ncome 894 94 95 956 6 901 901
- 1%
1, 1,851 1 1,733 33 +7% Cost to income (%) 50.8% 51.6% 45.4% +12% 51.1% 48.5% +5% % of total assets 25.0% 23.9% 24.5% +2% 25.0% 24.5% +2% ROA (%) 3.3% 3.6% 3.3%
- 2%
3.3% 3.2% +4%
207 7 209 09 21 219 +5%
50 100 150 200 250 300 350 400 450 500
4Q 17 1Q 18 2Q 18
Custo tome mers rs' D ' Deposits (SARbn)
89 89 90 90 92 92 +3%
50 100 150 200 250
4Q 17 1Q 18 2Q 18
Financing & a advances es ( (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 54
Corporate Banking
2Q 2018 net income dropped by 5% due to lower operating income, offset by improvement in impairment charges
Ma Manageme ment C Comme mmentary
- 2Q 2018 net income decreased 5% YoY contributed by lower operating income (-14%)
and higher operating expenses (+22%) despite improvements in impairments (-54%).
- NSCI for 2Q 2018 declined 12% YoY as a result of repayments in 4Q 2017 that reduced
the average balance by 5% compared with 2Q 2017.
- Fee income decreased by 17% YoY mainly on lower lending and trade fees.
- 2Q 2018 operating expenses higher by 22% and the cost to income ratio increased by
43% YoY to 30.5%.
- The 2Q 2018 impairment charge declined 54% YoY due mainly to a significant recovery
and one-time IFRS 9 adoption adjustment to retained earnings permissible by IFRS 9. Summary mmary Finan ancial al P Perf rforman rmance
SAR (mn) 2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Total assets 147,389 141,465 143,589 +3% 147,389 143,589 +3% Tota tal operati ting ng i inc ncome 891 91 1,000 000 1,039 039
- 14
14% 1, 1,891 1 2,2 ,279
- 17
17% Net special commission income 745 724 843
- 12%
1,469 1,769
- 17%
Fee income from banking services, net 201 222 243
- 17%
423 510
- 17%
Operating expenses (271) (231) (222) +22% (503) (478) +5% Impairment charge (115) 40 (247)
- 54%
(75) (507)
- 85%
Other income (expenses) 34 (47) (5)
- 823%
(13) (8) +65% Net i t inc ncome 539 39 761 61 56 565 5
- 5%
1,300 300 1,2 ,285 +1% Cost to income (%) 30.5% 23.1% 21.4% +43% 26.6% 21.0% +27% % of total assets 32.5% 32.3% 31.9% +2% 32.5% 31.9% +2% ROA (%) 1.5% 2.2% 1.6%
- 6%
1.9% 1.8% +2%
124 24 126 26 135 5 +9%
50 100 150 200 250 300
4Q 17 1Q 18 2Q 18
Financing & a advances es ( (SARbn)
72 72 71 71 70 70
- 2%
20 40 60 80 100 120 140 160 180
4Q 17 1Q 18 2Q 18
Custo tome mers rs' D ' Deposits (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 55
Treasury
Strong 2Q 2018 net income growth from operating income
Ma Manageme ment C Comme mmentary
- 2Q 2018 net income increased 18% YoY driven by higher operating income (18%).
- 2Q 2018 NSCI improved 25% YoY due to net interest margin expansion.
Summary mmary Finan ancial al P Perf rforman rmance
SAR (mn) 2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Total assets 157,626 153,884 155,851 +1% 157,626 155,851 +1% Tota tal operati ting ng i inc ncome 1,096 096 1, 1,284 4 932 932 +18 18% 2,38 380 2,1 ,107 +13 13% Net special commission income 797 815 638 +25% 1,612 1,194 +35% Fee income from banking services, net 37 37 23 +64% 74 48 +54% Other operating income 262 432 272
- 3%
695 865
- 20%
Operating expenses (118) (119) (86) +37% (237) (239)
- 1%
Impairment charge 5 (99) (6)
- 177%
(95) (7) +1282% Other income (expenses) (4) (10) (7)
- 40%
(14) (12) +20% Net i t inc ncome for th the p period 97 979 9 1,05 056 6 833 33 +18 18% 2,034 034 1,850 +10 10% Cost to income (%) 10.8% 9.3% 9.2% +17% 10.0% 11.3%
- 12%
% of total assets 34.7% 35.2% 34.6% +0% 34.7% 34.6% +0% ROA (%) 2.5% 2.7% 2.1% +19% 2.5% 2.4% +7%
115 114 115 +0%
50 100 150 200 250 300
4Q 17 1Q 18 2Q 18
Inves estmen ents ( (SARbn)
550 550 81 815 5 79 797 7 +45%
200 400 600 800 1,000 1,200 1,400 1,600 1,800
4Q 17 1Q 18 2Q 18
Net Net Spec ecial C Commission I Income e (SARmn)
NCB Investor Relations 2Q 2018 Investor Presentation 56
Capital Markets
Robust 2Q 2018 net income growth, driven by assets management and brokerages fees
Ma Manageme ment C Comme mmentary
- 2Q 2018 net income increased by 62% YoY due to higher operating income (22%) and
improved operating efficiency.
- Operating income in 2Q 2018 rose 22% YoY due to higher AUM and brokerages related
fee income.
- Cost to income improved to 50.1% in 2Q 2018 from 63.2% in 2Q 2017.
Summary mmary Finan ancial al P Perf rforman rmance
SAR (mn) 2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Assets Under Management 143,850 136,780 142,330 +1% 143,850 142,330 +1% Brokerages Volume 48,510 46,990 47,980 +1% 48,510 47,980 +1% Tota tal operati ting ng i inc ncome 176 6 228 144 144 +22% 40 404 4 308 308 +31 31% AUM Related Fee Income 120 155 98 +22% 120 98 +22% Brokerage Related Fee Income 38 38 31 +22% 38 31 +22% Other fee income 9 29 11
- 19%
231 170 +36% Fee income, net 167 222 140 +19% 389 300 +30% Operating expenses (88) (89) (91)
- 3%
(177) (175) +1% Other income (expenses) (0) 1
- 100%
(0) 1
- 100%
Net i t inc ncome 88 88 139 39 54 4 +62 62% 227 13 134 4 +69 69% Non-controlling interests (4) (4) (1) +208% (7) (3) +109% Net i t inc ncome attr ttribute ted to to e equity ty holders rs 84 4 135 35 53 3 +59 59% 220 13 131 1 +68 68% Cost to income (%) 50.1% 39.0% 63.2%
- 21%
43.8% 56.7%
- 23%
ROA (%) 22.8% 38.3% 15.2% +50% 30.6% 19.3% +59%
129 29 137 7 144 44 +11%
50 100 150 200 250 300
4Q 17 1Q 18 2Q 18
Asset ets Under er M Managem emen ent ( (SARbn)
49 49 47 47 49 49
- 1%
20 40 60 80 100 120
4Q 17 1Q 18 2Q 18
Br Broker kerages es Volume ( e (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 57
International (in SAR)
2Q 2018 net income higher by 26% YoY due to higher operating income, and lower operating expenses
Ma Manageme ment C Comme mmentary
- 1H 2018 net income rose by 34% YTD driven by 2% operating income growth, despite a
higher NPL coverage.
- 2Q 2018 operating expenses improved by 9% YoY, and the cost to income ratio
improved to 47.8% from 56.7% a year earlier.
- 10.7% drop YoY in YTD average TRY/SAR rate, and 17.2% decline in the TRY/SAR
spot rate since 4Q 2017. Summary mmary Finan ancial al P Perf rforman rmance
SAR (mn) 2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Total assets 34,306 36,199 39,395
- 13%
34,306 39,395
- 13%
Tota tal operati ting ng i inc ncome 427 37 372 393 393 +9% 799 99 782 +2% Net special commission income 347 306 350
- 1%
653 666
- 2%
Fee income from banking services, net 60 62 73
- 18%
122 144
- 15%
Operating expenses (204) (216) (223)
- 9%
(420) (439)
- 4%
Impairment charge (112) (63) (54) +105% (175) (139) +26% Other income (expenses) 13 24 (17)
- 178%
38 (22)
- 274%
Net i t inc ncome 12 124 4 117 117 99 99 +26% 241 41 18 182 +32 32% Non-controlling interests (41) (38) (33) +26% (80) (61) +30% Net i t inc ncome attr ttribute ted to to e equity ty holders rs 83 3 78 66 66 +26% 162 62 12 121 1 +34 34% % of total assets 7.6% 8.3% 8.7%
- 14%
7.6% 8.7%
- 14%
Cost to income (%) 47.8% 58.1% 56.7%
- 16%
52.6% 56.1%
- 6%
NCL (%) 1.8% 1.0% 0.8% +130% 1.4% 1.0% +42% ROA (%) 1.4% 1.3% 1.0% +40% 1.3% 1.8%
- 27%
NIM (%) 4.2% 3.4% 3.3% +28% 3.8% 3.3% +15% NPL (%) 5.1% 5.3% 5.4%
- 5%
5.1% 5.4%
- 5%
NPL Coverage Ratio (%) 96% 99% 86% +11% 96% 86% +11%
26 6 25 5 24 4
- 10%
10 20 30 40 50 60
4Q 17 1Q 18 2Q 18
Financing a and A Advances es, net et ( (SARbn)
22 22 21 21 20
- 9%
5 10 15 20 25 30 35 40 45 50
4Q 17 1Q 18 2Q 18
Custo tome mers rs' d ' deposits ts (SARbn)
NCB Investor Relations 2Q 2018 Investor Presentation 58
International (in TRY)
2Q 2018 net income grew by 39% YoY due to higher operating income and lower impairment charge
Ma Manageme ment C Comme mmentary
- 2Q 2018 total operating income increased by 20% YoY, due to higher NSCI by 10%,
and income increased by 39% YoY.
- 2Q 2018 operating expenses higher by 2%, the impairment charge for 1H 2018
increased by 41%.
- 2Q 2018 cost to income ratio improved to reach 47.8% from 56.0% in 2Q 2017
Summary mmary Finan ancial al P Perf rforman rmance
TRY (mn) 2Q Q 201 018 1Q Q 201 018 2Q Q 201 017 Yo YoY Y % ch chan ange 1H H 201 018 1H H 201 017 Yo YoY Y % ch chan ange Total assets 41,867 38,202 36,945 +13% 41,867 36,945 +13% Tota tal operati ting ng i inc ncome 45 452 37 378 37 378 +20% 867 67 758 +14 14% Net special commission income 367 311 334 +10% 709 645 +10% Fee income from banking services, net 63 63 70
- 10%
133 139
- 5%
Operating expenses (216) (220) (212) +2% (456) (422) +8% Impairment charge (118) (64) (52) +130% (190) (134) +41% Other income (expenses) 14 25 (20)
- 172%
41 (21)
- 295%
Net i t inc ncome 132 32 118 118 95 95 +39 39% 262 18 181 1 +45 45% Non-controlling interests (44) (39) (31) +40% (87) (60) +45% Net i t inc ncome attr ttribute ted to to e equity ty holders rs 88 88 79 9 64 64 +38 38% 175 12 121 1 +45 45% Cost to income (%) 47.8% 58.2% 56.0%
- 15%
52.6% 55.7%
- 5%
ROA (%) 1.3% 1.2% 1.0% +30% 1.3% 1.0% +36% Note: Figures according to IFRS accounting standards
26 6 26 6 29 9 +9%
10 20 30 40 50 60
4Q 17 1Q 18 2Q 18
Financing a and a advances es, net et ( (TRYbn)
22 22 22 22 24 4 +10%
(9) 1 11 21 31 41 51
4Q 17 1Q 18 2Q 18
Custo tome mers rs' d ' deposits ts (TRYbn)
NCB Investor Relations 2Q 2018 Investor Presentation
National Commercial Bank Additional Information 2Q 2018 Results
NCB Investor Relations 2Q 2018 Investor Presentation 60
Additional Information
Please don’t hesitate to contact NCB Group Investor Relations
More re i informat rmation 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. Abdu
bdulba badi die Aly lyafi fi 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