Download - 2Q 2021 Earnings Presentation - alahli.com
2Q 2021 Earnings PresentationSaudi National Bank
Riyadh | 23 August 2021
SNB | 2Q 2021 | Earnings Presentation
SNB | 2Q 2021 | Earnings Presentation
Disclaimer
The Saudi National Bank (SNB) prepared this presentation on a proprietary basis as general background information about the activities of SNB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by SNB is obtained from sources believed to be reliable, but SNB (nor any of its directors, officers, employees, agents, affiliates or subsidiaries) does not guarantee the accuracy or completeness of such information, and disclaims all liability or responsibility for any loss or damage caused by any act taken as a result of the information. This presentation including the information covered therein is not intended either to be relied upon or construed as an advertisement for, or an offer, solicitation or invitation to sell or issue, or to subscribe, underwrite or otherwise acquire any securities in any jurisdiction. It should and must not be treated as giving tax, legal, investment or other specialist advice or a recommendation to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Neither shall any part of this information nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision or commitment relating thereto, nor does it constitute a recommendation regarding the subject of this presentation. All statements included in this presentation other than statements of historical facts, including, without limitation, those regarding financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives) are forward-looking statements and may thus include words like "anticipate", "believe", "intend", "estimate", "expect", "will", "may", "project", "plan" and such other words of similar meaning. Such forward-looking statements are based on numerous assumptions regarding present and future business strategies and the relevant future business environment. Any forward-looking statements speak only as of the date of this presentation and SNB 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. SNB 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 SNB, 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 SNB 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, SNB, 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.
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SNB | 2Q 2021 | Earnings Presentation
Pro-forma financial statements are most relevant comparatives
The pro-forma financial information consists of the unaudited pro-forma condensed consolidated statement of financial position of NCB and SAMBA (together referred to as ‘‘the Group’ or “SNB”’) as at March 31, 2021, as if the merger has taken place as at January 1, 2020, and its unaudited pro-forma condensed consolidated income statement for the six and three month periods ended June 30, 2021 and notes to the unaudited pro-forma financial information.
The purpose of the pro-forma financial information is to show the material effects that the merger of NCB and SAMBA would have had on the historical consolidated statement of financial position if the Group had already existed in the structure created by the combination as at January 1, 2020 and on the historical consolidated income statement for the six and three month periods ended June 30, 2021 . The presentation of the pro-forma financial information of the Group is based on certain pro-forma assumptions and has been prepared for illustrative purposes only and, because of its nature, the pro-forma condensed consolidated statement of financial position and condensed consolidated income statement addresses a hypothetical situation and, therefore may not give a true picture of the financial position of the Group. Furthermore, the pro-forma financial information is only meaningful in conjunction with the historical consolidated financial statements of NCB and SAMBA as at and for the financial period ended June 30, 2020.The material presented in the financial performance update section of this presentation are presented on the above pro-forma basis, unless otherwise stated.
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Our Performance (Pro-forma)
SAMA LTD Ratio1
75.7%
C/I Ratio
32.3%
Net Inc. to equity holders
SAR7.7bn
Retail penetration %
84.5%
Digital Account Opening
Our Presence
SNB | 2Q 2021 | Earnings Presentation 4
SNB OverviewSNB is Saudi Arabia's largest Banking Group with a well-diversified business model, leading client offering, and international presence
Robust credit standing
Figures as of 30 June 2021 | 1Presented on reported basis | 2 Includes Alahli Esnad (2,118 employees) – fully owned subsidiary engaged in outsourcing and manpower services in KSA
Offices in Shanghai & Seoul
Wholesale branches in Bahrain, Singapore,
& UAE
Saudi National BankHeadquartered in Riyadh
503 branches, 3,285 ATMs131 Remittance centers
10,156 Employees
SNB CapitalSaudi Arabia
21 Branches427 Employees
Operating Income
SAR15.4bn
COR
0.69%
Countries
8Total Assets
SAR862 bn
Deposits
SAR588 bn
Market Cap
SAR250 bn
T1 Capital Ratio1
17.8%
Customers
10mn
Employees 2
17,331Financing
SAR508 bn
316 branches, 580 ATMs3,657 EmployeesSamba Bank, Ltd (Pakistan)41 branches, 44 ATMs973 Employees
Subsidiaries:TFKB (Turkey)
" "To propel our nation towards Vision
2030 and beyond
Our Purpose
Advanced Digital Capabilities
% of total base
76.3%
Digital User PenetrationDigital:Branch %
98.5% : 1.5%
Digital Financial TransactionsRetail sales penetration %
60.5%
Digital Sales Ratings LT ST Outlook
S&P A- A-2 Stable
Fitch A- F1 Stable
Moody’s (unsolicited) A1 P-1 Negative
Capital Intelligence A+ A1 Negative
C/I Ratio, excluding int’l
30.3%
SAR Million 1,100 2021->2022
Budgeted Integration Cash Spend
Excellent progress made with the merger integration and synergies expected to be SAR 800mn or higher
Highlights
SNB Brand Launched Accelerated progress on all key
work streams leading to expected Operational Day 1 by YE 2021
Executive SummaryMerger integration and strategic execution progressing well
Strategic direction continues to focus on mortgages and non-financing revenues
Accelerated digital transformation and operational efficiency improvements
SNB | 2Q 2021 | Earnings Presentation 5
Retail
Grow Financing Mortgage Digitization
Wholesale
Manage Corporate for value V2030 opportunities Transaction banking
Sustain investment returns
Subsidiaries
Grow value contribution Key business lines Efficiency Productivity
Funding
Grow current accounts Affluent Cash management
Expand funding options
One SNB Initiative: Growing Ancillary Revenues
SAR Million 800+ Year 2023
Target Cost Synergies Ongoing activities
Rebranding products, premises and offerings
Customers’ data migration
Digital : Branch
98.5% : 1.5%Digital Financial Transactions
Transaction value
22%POS Market Share
Pro-forma, incl. int'l | excl. int'l
32.3% | 30.3%Cost to Income Ratio
Bots # | Transactions conducted in 1H21
313 | 2mnRPA
% of total base
76.3%Digital User Penetration
Retail sales penetration
84.5%
Digital Account OpeningNumber of devices
21%POS Market Share
Merger Update2Q2021
Jun 2020 Oct 2020 Apr 2021 Jun 2021
Merger Announced Merger Signed SNB LD 1 SNB Brand launch
Jul 2021
SNB Capital LD 1
SNB | 2Q 2021 | Earnings Presentation 7
Merger Status SummaryAccelerated progress on all key work streams leading to sooner Operational Day 1, from planned 2H22 to YE21
Accounts opened for ~1.1mn SAMBA retail customers
52% of SAMBA wholesale customers fully migrated
FI & Trade Finance migrated
Completed training for all SAMBA staff
Rebranded all customers’ applications and systems
Completed integration for all enterprise systems
Securities portfolio creation completed for 84% of SAMBA Capital clients
Rebrand all customer products, branches and ATMs in line with the new bank identity
Reprint and issue credit cards
Samba UAE migration into SNB KSA IT platform
Launch single coverage model with unified branch network
Integrate remaining Business and Support IT systems
Complete customer data migration
Consolidation of contracts with vendors
SNB Brand Launch
Let’s Shape Tomorrow
Brand IdeaNew Saudi Banking
Brand PurposeTo propel our nation towards
Vision 2030 and beyond
Completed Activities during 2Q 2020 Ongoing Activities
Dec 2021Operational &
Customer Day 1
SNB | 2Q 2021 | Earnings Presentation 8
Synergies & Integration CostRealisation of targeted cost synergies expected to be largely achieved by 2022
Targeted Cost Synergies
SAR +400mn Cost synergiesSAR +240mn Cost synergies
On target to deliver total targeted cost synergies:
Integration Costs
IT stack optimization spend
Data migration
Rebranding & marketing
Advisory
SAR +160mn Cost synergies
Sources of synergies
Benefit from the combined talent of the two banks and natural FTE attrition
Optimization of technology stack
Operational efficiencies from control and support functions
Revenue synergies being assessed
650
450
2021 2022
Targeted Profile of Integration costs (cash basis) (SARmn)
800+SARMillion
0%
50%
80%
100%
0
0
0
1
1
1
1
2020 2021 2022 2023
Targeted Realization of Cost Synergies (%)
Financial Performance Update2Q2021
7.3 0.3 0.8
-11.7
31.8
40.2
28.5
pre-PPA31-March-21
LoansFV adjustments
InvestmentsFV adjustments
Other balancesheet
FV adjustments
Goodwill afterFV adjustments,incl. intangible
assets
Intangible assets GoodwillLegal day 11-April-21
Summary of Changes in Goodwill (SARbn)Transaction perimeter and structure On 11 October 2020 , NCB entered into a merger agreement
with Samba. The merger was completed on 1 April 2021. The transaction perimeter included Samba's assets and liabilities
in exchange for 1.478bn of NCB shares. The purchase consideration was determined based on the
exchange ratio ( 0.739 ) and NCB’s 31 March 2021 share price. The final purchase consideration was SAR 78.5 bn vs, Samba’s
net assets of SAR 45.8bn book value.
PPA at a glance The purchase price allocation is an application of goodwill
accounting under IFRS 3 whereby the acquirer , when purchasing the target, allocates the purchase price into various assets and liabilities acquired from the transaction.
Goodwill is the difference between the final purchase consideration and the net asset value of the target.
SNB | 2Q 2021 | Earnings Presentation 10
PPA accountingPurchase price allocation exercise in progress with preliminary goodwill assessment amounting to SAR 28.5 billion, and intangible assets of SAR 11.7bn
1POCI are Purchased or Originated Credit-Impaired financial assets which are credit impaired at the initial recognition date
Intangible assets primarily pertains to core deposit
intangibles (SAR 10.6bn)
• Performing loans of SAR 1.6bn• POCI1 funded SAR 3.5bn• POCI unfunded SAR 2.3bn
Application of PPA to the NCB-SAMBA merger SNB is required to align the book value of SAMBA’s assets and liabilities to their
Fair Value (“FV ”). This includes on balance recognition of intangible assets, contingent liabilities and
unfunded loan commitments acquired. The residual unallocated Goodwill is recognized on balance sheet. IFRS3 allows 12 months to complete the PPA exercise (i.e. until 31 March 2022),
though SNB is aiming to complete it by year-end 2021.
SNB | 2Q 2021 | Earnings Presentation 11
Summary of fair value adjustments on SAMBA book valueSAMBA’s adjusted net asset value amounted to SAR 48.2 billion versus the pre-PPA value of SAR 45.7 billion
1Includes corporate POCI of SAR 3.5bn | 2Includes corporate POCI (unfunded) of SAR 2.3bn and contingent liabilities of SAR 1.3bn | 31,478mn NCB shares issued at the share price on 31 March 2021 of SAR 53.1
PPA Fair Value Adjustments
SAR (bn) Pre-PPA31-March-21
FV Adjustments
Post-PPA1-April-21
Cash and balances with SAMA 30.8 0.0 30.8
Due from banks and other financial Institutions 5.3 0.0 5.3
Investments, net 73.9 (0.3) 73.5
Financing and advances, net1 157.5 (5.1) 152.4
Other assets, net 12.1 0.2 12.2
Total asset value 279.6 (5.3) 274.3
Total liabilities2 (233.9) (3.8) (237.8)
Net asset value 45.7 (9.1) 36.5
Intangible assets identified 11.7
SAMBA adjusted net asset value 48.23
11.7-1.7
-48.2
78.5
28.540.2
Purchase priceconsideration
Treasury sharesheld by SAMBA &
otheradjustments
SAMBA adjustednet asset value
Goodwill Intangiblesassets identified
Goodwill andintangibles
assets1-April-21
Goodwill and Intangibles (SARbn)
SNB | 2Q 2021 | Earnings Presentation 12
Accounting treatment of goodwill and intangiblesGoodwill is subject to annual impairment testing and intangible assets are amortized through the income statement
~90% of intangible assets are driven by core customers’ current accounts Intangible assets identified as a result of the PPA exercise are to be amortized through the income statement over their
useful lives (~10 years).
Intangible assets
Goodwill is to be allocated on a reasonable basis to SNB’s cash generation units (“CGUs”) typically determined based on independent cash flow generation as it is likely to reflect the impact of merger synergies. This allocation exercise is currently in progress.
Once the allocation of Goodwill to CGU’s is completed, IFRS requires goodwill to be assessed for impairment before the end of the financial year in which it was acquired.
Goodwill impairment testing will qualify as annual impairment testing and will be completed as part of the year-end closing.
Goodwill
Goodwill 28.5
Intangible assets 11.7
40.2
1-April-21
Goodwill and Intangibles (SARbn)
+2%SAR Billion 457.1 year-to-date
2Q 21 CASA
Balance Sheet
Income Statement
SNB | 2Q 2021 | Earnings Presentation 13
Financial Performance DashboardProgress on key financial metrics
-4%SAR Billion 861.5 year-to-date
2Q 21 Total Assets
+50%SAR Billion 896.4 year-to-date
2Q 21 Total Assets
+45%SAR Billion 503.2 year-to-date
2Q 21 Financing, Net
+32%SAR Million 13,274 year-on-year
1H 21 Total Operating Income
Pro-forma Reported
+40%SAR Billion 102.6 year-to-date
2Q 21 Residential Financing, Net
+43%SAR Billion 457.1 year-to-date
2Q 21 CASA
+12%SAR Million 5,526 year-on-year
1H 21 Net Income Attributed To Equity Holders
CASA Ratio 78%CASA Ratio 78%
+1%SAR Billion 508.0 year-to-date
2Q 21 Financing, Net
+25%SAR Billion 102.7 year-to-date
2Q 21 Residential Financing, Net
+4%SAR Million15,439 year-on-year
1H 21 Total Operating Income
+7%SAR Million 7,668 year-on-year
1H 21 Net Income Attributed To Equity Holders
0.9 3.7
-36.0 -0.6 -0.1
768.1 732.4 736.1
-5% +1% -6% -8% -0%
-5%
Total liabilities4Q 20
Interbank Customers'deposits
Debt securities Other liabilities Total liabilities2Q 21
LD1 FVadjustments
Total liabilities2Q 21
Total Liabilities Movement YTD (SARbn)
PRO-FORMA PRO-FORMA REPORTED
SNB | 2Q 2021 | Earnings Presentation 14
Balance Sheet SummaryTotal assets declined 4% YTD primarily from redeployment of reverse repo balances with SAMA and sales of investment portfolio securities
Pro-forma Reported | 1 Includes POCI of SAR 2.3bn
599.4896.4
+50%
4Q 20 2Q 21
Total Assets (SARbn)
519.2736.1
+42%
4Q 20 2Q 21
Total Liabilities (SARbn)
1
1
5.3 40.2
-18.3 -16.9 -5.0 -0.3 -5.0
896.4 861.5 896.4
-19% -7% +1% -10%
-4%
Total assets4Q 20
Cash &interbank
Investments Financing Other assets Total assets2Q 21
Goodwill &intangibles
Amortizationof intangibles
FVadjustments,
net
Total assets2Q 21
Total Assets Movement YTD (SARbn)
PRO-FORMA PRO-FORMA REPORTED
Goodwill & intangibles, net
SAR 39.9bn
26.6 0.3
-8.1 -10.5 -2.7 -5.1
502.7 508.0 503.2
+1% +13% -3% -39% -11%
+1%
Financing andAdvances, net
4Q 20
Retail Corporate FI International Financing andAdvances, net
2Q 21
LD1 FVadjustments
FV unwind Financing andAdvances, net
2Q 21
Financing and Advances, Net Movement YTD (SARbn)
PRO-FORMA PRO-FORMA REPORTED
Corporate46.5%
Consumer and credit card
46.0%
Others3.3%
International4.2%
Financing & Advances, Net Composition (%)
SNB | 2Q 2021 | Earnings Presentation 15
Financing and advancesFinancing growth of 1% YTD from strong 25% growth in mortgages partly offset by expected Corporate repayments and FI maturities
Pro-forma Reported
346.7503.2
+45%
4Q 20 2Q 21
Financing & Advances, Net (SARbn)
508.0346.7 356.7
156.0 157.5
502.7 514.2 508.0
+1%
-1%QoQ
4Q 20 1Q 21 2Q 21
Financing and Advances, Net (SARbn)
SNB NCB SAMBA
SNB | 2Q 2021 | Earnings Presentation 16
InvestmentsOpportunistic capital gains realized resulting 7% lower investments; 85% of portfolio comprised of Saudi Government securities and other investment grade securities
229.2144.9 149.7
101.2 74.2
246.1 223.8 229.2
-7%
+2%QoQ
4Q 20 1Q 21 2Q 21
Investments, Net (SARbn)
SNB NCB SAMBA
Pro-forma Reported
144.9228.9
+58%
4Q 20 2Q 21
Investments, Net (SARbn)
Saudi Government securities
58.3%Other investment grade26.9%
Non-investment grade5.7%
Funds and equity 9.1%
Investments, Net Composition (%)
2.2
-12.6 -6.5 -0.3
246.1 229.2 228.9
-7% -9% -8% +12%
-7%
Investments, net4Q 20
Saudi Governmentsecurities
Other fixed income Funds and equity Investments, net2Q 21
LD1 FVadjustments
Investments, net2Q 21
Investments, Net Movement YTD (SARbn)
PRO-FORMA PRO-FORMA REPORTED
12.8 0.6 0.0
-46.5 -2.9
624.1 588.1 588.1
-6% +3% -29% -19% +3%
-6%
Customers'deposits
4Q 20
CASA Time & other CASA Time & other Customers'deposits
2Q 21
LD1 FVadjustments
Customers'deposits
2Q 21
Customers' Deposits Movement YTD (SARbn)
PRO-FORMA PRO-FORMA REPORTED
SNB | 2Q 2021 | Earnings Presentation 17
DepositsContinued CASA growth and optimized deposit mix for improved Balance Sheet optimization
416.4588.1
+41%
4Q 20 2Q 21
Customers' Deposits (SARbn)
CASA77.7%
Time19.2%
Others3.0%
Customers' Deposits Composition (SARbn)
DomesticSAR -33.6bn (-6%)
InternationalSAR -2.4bn (-7%)
588.1416.4 419.4
207.7 193.8
624.1 613.2 588.1
-6%
-4%QoQ
4Q 20 1Q 21 2Q 21
Customers' Deposits (SARbn)
SNB NCB SAMBA
Pro-forma Reported
457.1319.5 331.1
127.7 128.0
447.3 459.0 457.1
+2%
-0%QoQ
4Q 20 1Q 21 2Q 21
CASA (SARbn)
SNB NCB SAMBA
SNB | 2Q 2021 | Earnings Presentation 18
Income Statement SummaryNet income after Zakat and tax growth of 7% YOY driven mainly by higher operating income
Pro-forma Reported
10,071 13,274
+32%
1H 20 1H 21
Total Operating Income (SARmn)
4,922 5,526
+12%
1H 20 1H 21
Net Income After Zakat and Income Tax Attributed To Equity Holders (SARmn)
578 139 28 43
72
-240 -30
-839
-1,375
7,148 7,668
5,526
+7% +4% +5% -7% +103% -3% -48%
+7%
Netincome1H 20
Operatingincome
Operatingexpenses
Impair-ments
Othernon-
operatingincome
Zakat &tax
Non-CI Netincome1H 21
SAMBA1Q21
adjust-ments
LD2 ECLone off
provisions
Other2Q21
adjust-ments
Netincome1H 21
Net Income After Zakat and Income Tax Attributed to Equity Holders Movement YoY (SARmn)
PRO-FORMA PRO-FORMA REPORTED
0.22%0.36%
-0.52% 0.00% -0.25% -0.10%
3.15% 2.85% 2.85%
-30bps
1H 20Retail
financingWholesalefinancing
Otherfinancing
Investments&
placements
Inter-national
Cost offunding
NSCI margin1H 21
Net Special Commission Income Margin Movement YoY (SARmn)
PRO-FORMA PRO-FORMA
1,298 1,109 278
(1,524) (6) (639) (293) (1,330)
11,068 11,013 9,962
-0%
-0%
NSCI1H 20
Retailfinancing
Wholesalefinancing
Otherfinancing
Investments&
placements
Inter-national
Cost offunding
NSCI1H 21
SAMBA1Q21NSCI
FV unwind NSCI1H 21
Net Special Commission Income Movement YoY (SARmn)
PRO-FORMA PRO-FORMA REPORTED
SNB | 2Q 2021 | Earnings Presentation 19
NSCI & MarginStable NSCI as growth in average earnings assets was offset by lower margin
Pro-forma Reported
9,745 11,599 +19%
1H 20 1H 21
SCI (SARmn)
1,631 1,638
+0%
1H 20 1H 21
SCE (SARmn)
Financing Mix & YieldSAR -232mn
8,115 9,962 +23%
1H 20 1H 21
NSCI (SARmn)
3.15%2.85%
3.09% 2.88%
4.31%
2.39%
0
0
0
0
0
0
0
0
1H 20 1H 21
NSCI Margin (%)
GroupDomesticInternational
NSCI Margin1H 20
0.83% 0.56%
3.91%3.36%
0
0
0
0
0
0
0
0
0
0
1H 20 1H 21
Funding Cost & Commission Yield (%)
Funding cost (%)Commission yield (%)
SNB | 2Q 2021 | Earnings Presentation 20
Fee & Other IncomeFee and other income increased 17% YOY from improved investment-related and brokerage income
1,956 3,312
+69%
1H 20 1H 21
Fee and Other Income (SARmn)
509
1,577
+210%
1H 20 1H 21
Investment-Related Income (SARmn)
Pro-forma Reported
224 875
-63 -149 -255-1,113
3,793 4,426 3,312
+36% -8% +62% -14% +241%
+17%
Fee &other income
1H 20
Inv. mgt &brokerage
Exchangeincome
Inv-relatedincome
Other fees Otheroperating
income(expense)
Fee &other income
1H 21
SAMBA1Q21fee &
other income
Fee &other income
1H 21
Fee and Other Income Movement YoY (SARmn)
PRO-FORMA PRO-FORMA REPORTED
1,719 808
1,594 968
1,113 1,776
2,707
1,719
-3%
-37%QoQ
2Q 20 1Q 21 2Q 21
Fee and Other Income (SARmn)
SNB NCB SAMBA
713 20
864 463
703
482
1,567
713
+48%
-54%QoQ
2Q 20 1Q 21 2Q 21
Investment-Related Income (SARmn)
SNB NCB SAMBA
42 272 293 43 9
-69 -5 -1,036
4,754 4,993 4,301
+5% -3% -2% +8% +21%
+5%
Operatingexpenses
1H 20
Employee-related
Rent &premises
Depreciation &amortization
OtherG&A
Operatingexpenses
1H 21
SAMBA1Q21
expenses
Intangiblesamorti-zation
Integra-tion
costs
Other2Q21
adjust-ments
Operatingexpenses
1H 21
Operating Expenses Movement YoY (SARmn)
PRO-FORMA PRO-FORMA REPORTED
SNB | 2Q 2021 | Earnings Presentation 21
Operating Expenses5% higher operating expenses attributable to 10% higher VAT and IT related costs which were partially offset by realized synergy savings to date
3,221 4,301
+34%
1H 20 1H 21
Operating Expenses (SARmn)
Pro-forma Reported | 1 Reported C/I ratio excluding intangible amortization
2,336 1,530 1,622
737 1,036 2,267
2,658 2,336
+3%
-12%QoQ
2Q 20 1Q 21 2Q 21
Operating Expenses (SARmn)
SNB NCB SAMBA
32.0%32.3%
29.3%30.3%
0
0
0
0
0
0
0
0
0
1H 20 1H 21
Cost to Income Ratio (%)
Cost to Income Ratio (%) Cost to income, excl. International (%)
32.0%
30.2%30.9%
28.7%
0
0
0
0
0
0
1H 20 1H 21
C/I Ratio (%)1
Cost to Income Ratio (%)Cost to income, excl. International (%)
314
1,375
-232 -36 -161-418
1,904 1,7902,747
-6% -92% +22% -109% -62%
-7%
Impairmentcharge1H 20
Retail Corporate FI International Impairmentcharge1H 21
LD2 ECLone off
provisions
SAMBA1Q21
impairments& one offs
Impairmentcharge1H 21
Net Impairment Charge for Financing and Advances Movement YoY (SARmn)
PRO-FORMA PRO-FORMA REPORTED
SNB | 2Q 2021 | Earnings Presentation 22
Credit Impairments & Cost of RiskCost of risk stood at 69bps vs. 73 bps the previous year on a pro-forma basis; Reported cost of risk including merger related items reached 126bps
1,258
2,747
+118%
1H 20 1H 21
Net Impairment (SARmn)
Pro-forma Reported | 1COR including POCI
WholesaleSAR 278mn (+26%)
843 349
463
418
1,306
767 1,023
-22%
+33%QoQ
2Q 20 1Q 21 2Q 21
Net Impairment (SARmn)
SNB NCB SAMBA
0.73%
0.69%
0.66%
0.69%
0
0
0
0
0
0
0
1H 20 1H 21
COR (%)1
Group Group excluding int'l
0.82%
1.26%
0.63%
0
0
0
0
0
1H 20 1H 21
COR (%)
COR, normalized
SNB | 2Q 2021 | Earnings Presentation 23
Credit QualityHealthy NPL ratio and NPL coverage ratio levels
Pro-forma Reported
1.73%1.82% 1.73% 1.72% 1.69%
1.47%2.03%
1.35%1.47% 1.45% 1.44% 1.44% 1.28%
6.90%
6.13%5.39% 5.68% 5.54%
5.52%
0
0
0
0
0
0
0
0
1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21
NPL Ratio (%)
Group Group including POCI Domestic International
0.2 1.32.9
-0.16.1
7.510.4
+23% +30% +31% -8%
+23%
NPLs4Q 20
Retail Wholesale International NPLs2Q 21
POCI Credit impaired financing2Q 21
Credit Impaired Financing Movement YTD (SARbn)
REPORTED REPORTED REPORTED, INCL. POCI
140%141% 143% 143% 145%
149%165%
163% 160% 158% 159%159%
71%75%
84% 90% 91% 99%
1
1
1
1
1
2
2
1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21
NPL Coverage Ratio (%)
Group Domestic International
2.6 12.2 6.3
-39.9
147.3107.4 110.0 122.2 128.5
-13%
Equityattributable toshareholders
Goodwill &intangibles,net
Tangiblecommon equity
Otherregulatory
adjustments
CET1 Tier 1 Sukuk Tier 1 Capital Tier 2 Capital Total capital1H 21
Reconciliation of Shareholders' Equity to Capitilization (SARbn)
SNB | 2Q 2021 | Earnings Presentation 24
CapitalizationCapital position comfortably above regulatory minima, despite modest decline in capital ratios due to merger impact
377.3 379.2604.1
37.7 38.0
53.7
10.4 12.4
27.5
425.4 429.6
685.3
+61%
+60%QoQ
4Q 20 1Q 21 2Q 21
Risk Weighted Assets (SARbn)
Credit risk Operational risk Market risk
Pro-forma Reported | 1 After amortization of intangibles of SAR 293mn
1
71.7 73.8110.0
10.2 12.2
12.24.5 4.6
6.386.5 90.5
128.5
+49%
+42%QoQ
4Q 20 1Q 21 2Q 21
Total Capital (SARbn)
Common equity tier 1 capital Additional tier 1 capital Tier 2 capital
5.3 2.039.7
-3.6-1.4
86.5128.5
+49%
Totalcapital4Q 20
Retainedearnings
Tier 1Sukuk
2020Dividend
Mergerimpact
Other Totalcapital2Q 21
Total Capital Movement YTD (SARbn)
20.3%
21.1%
18.8%
16.9%17.2% 16.0%
19.3% 20.0%17.8%
0
0
0
0
0
0
4Q 20 1Q 21 2Q 21
Capitalization Ratios (%)
TC ratio CET1 ratio T1 ratio
SNB | 2Q 2021 | Earnings Presentation 25
LiquidityStrong liquidity profile maintained
Pro-forma Reported
413.3 420.7
647.2
123% 122% 121%
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
27
27
27
27
27
27
27
4Q 20 1Q 21 2Q 21
NSFR (%)
Total available stable funding (SARbn) NSFR (%)
123.2 133.1
218.1
172% 180% 231%
0.0
50.0
100.0
150.0
200.0
250.0
300.0
1
3
5
7
9
11
13
15
4Q 20 1Q 21 2Q 21
Liquidity Coverage Ratio (%)
High quality liquid assets (HQLA)(SARbn) Liquidity coverage ratio (LCR)
653.4 649.6
943.3
12.5% 13.2% 13.0%
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
12
17
22
27
32
37
42
47
52
4Q 20 1Q 21 2Q 21
Basel III Leverage Ratio (%)
Leverage ratio exposure (SARbn) Basel III leverage ratio
71.9%
73.7% 75.7%
1
1
1
1
1
1
1
1
4Q 20 1Q 21 2Q 21
SAMA LTD Ratio (%)
Regulatory ceiling
90%
SNB | 2Q 2021 | Earnings Presentation 26
Outlook and GuidanceContinued drive on strategic priorities and focus on operating efficiencies; supported by the improving economic outlook
Macro-Economic Outlook1 SNB Financial Guidance
Oil Price
US Fed Rates
Real GDP Growth
Fiscal Balance
Inflation
2020
USD 40 / bbl
Stable
-5.2%
-12% of GDP
3.6%
2021 Outlook
USD 60 / bbl
Stable
+3.2%
-4.9% of GDP
2.9%
1 Macroeconomic Indicator Sources: SNB Economics, US Federal Reserve, IMF, KSA MoF|2 2021 targets are pro-forma, except Tier 1 CAR which is on a reported basis
Financing growth
NSCI Margin
Cost to Income Ratio
Cost of risk
Tier 1 CAR
Baseline
SAR 502.7bn
2.85% YTD
32.3%
0.69%
17.8%
2021 Guidance2
+6% to 8%
2.8% - 3.0%
< 33%
0.6% - 0.8%
17% - 18%
(Dec 2020 Pro-forma)
(June 2021 Pro-forma)
(June 2021 Pro-forma)
(June 2021 Pro-forma)
(June 2021 Reported)
Q&A2Q2021