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NCB Investor Relations | 2Q 2020 Investor Presentation

Investor Presentation

The National Commercial Bank

2Q 2020 Results


Investor Presentation Content

2

Page 4 Operating Environment

Page 7 Strategy Overview

Page 8 Financial Results Highlights

Page 16 Financial Results Details

Page 3 NCB at a glance Page 30 Segmental Review

Page 37 Additional Information


28%

51%66%

0

0

1

1

1

2018 2019 1H 20

Digital Sales Penetration

NCB at a glance NCB is the leading bank in Saudi Arabia

3

*Includes Alahli Esnad (1,891 employees) - fully owned subsidiary engaged in outsourcing and manpower services in KSA

Employees*

13,283Assets

SAR557 bn

Deposits

SAR380 bn

Market Cap

SAR112 bn

NCB Group Presence NCB's business model delivers diversified operating income(FY 2019)

Customers & Digitization Strong Credit Ratings

Operating Income

SAR20.6bn

Net Income

SAR11.4 bn

C/I Ratio

30.7%

ROE

18.4 %

CoR

0.51%

10.1bn49%

RETAIL

4.4bn21%

CORPORATE

3.9bn19%

TREASURY

SAR 20.6bn89%

NCB

1.5bn7%

International

0.8bn4%

Capital Markets

Clients

8mn

Digital Financial Transactions

>98%

Robotics

+75 bots

NCB Long term Short Term Outlook

S&P BBB+ A-2 StableFitch A- F1 NegativeMoody’s* A1 P-1 NegativeCapital Intelligence A+ A1 Stable

Government of Saudi Arabia

S&P A- StableFitch A NegativeMoody’s A1 NegativeCapital Intelligence A+ Stable

International: Subsidiary in TurkeyTürkiye Finans Katılım Bankası (TFKB)310 branches, 624 ATMs3,581 employees

Offices in Seoul & Shanghai

Wholesale branches in Bahrain & Singapore

NCB GroupHeadquartered in Saudi Arabia

458 branches, 3,611 ATMs138 Remittance centers

9,453 Employees

NCB CapitalSaudi Arabia

22 Branches249 Employees

19%

71%87%

0

0

1

1

1

1

2018 2019 1H 20

Digital Account Opening


Key Government Support

Operating Environment Banking sector impacted by Covid-19 measures, oil market, interest rates and contraction in GDP

4

Source: IMF, Opec, Ministry of Finance, SAMA and Social Development Bank (IMF projections based on June 2020 WEO)

1.7%

-0.7%

2.4%

0.3%

-6.8%

3.4% 3.9% 3.6% 2.9%

-4.9%

1.7%2.5%

2.2%1.7%

-8.0%-9.0%

-7.0%

-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

0

0

0

0

0

0

0

0

0

2016 2017 2018 2019 2020F

Real GDP Growth

KSA World Advanced Economies

9.210.5 10.0 10.3 9.8

40.952.4

70.1 64.5

40.00.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

0

5

10

15

20

25

2016 2017 2018 2019 2020F

Oil Production

Oil Production (Mb/d) Average Oil Price (USD)

1.89%

0.99%1.78%

0.30%

(0)

(0)

0

0

0

0

0

0

0

0

Interbank Rates (%)

3M SAR SAIBOR 3M USD LIBOR

> SAR 224bn

NCB Response Compliant with SAMA Measures

Government Response Key Government Measures

Healthcare

Containment & Treatment

Government Debt to GDP Ceiling

Up to 50%

Expenditure Rationalization

Opex & Capex

VAT increases to

15%

POS & e-commerce Fees

SAR0.8 bn

Loan Guarantee Program

SAR6 bn

Funding for Lending Program

SAR13.2 bn

Deferred Payment Program

SAR50.3 bn

SAMA - PSFP SAR 70.3bn

Deferrals and Exemptions

SAR43 bn

SDB: SMEs & Families

SAR12 bn

Healthcare sector support

SAR47 bn

Private Sector Support

SAR70 bn

Serving our Customers

Cash availability acrossATMs, branches & remittance centers

100%

Digital channel availability

99.7%

Digital account opening

87%

BranchesOperational

100%


Retail42%

Corporate25%

Treasury27%

Capital Markets4%

International2%

FY 19 Net Income Before Zakat & Income Tax (SARbn)

17.2%

19.2%20.0%

20.6%

18.7%

15.1%

16.9%17.7%

18.5%18.0%

13.5%

15.3% 15.7%16.6% 16.2%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

2015 2016 2017 2018 2019

Capital Ratios (%)

TC ratio T1 ratio CET1 ratio

152.3%172.5% 177.3% 176.0% 168.9%

10.0%

60.0%

110.0%

160.0%

210.0%

2015 2016 2017 2018 2019

LCR Ratio (%)

NCB Strong Track Record Resilience against the challenging environment

5

136.0%119.0%

128.0% 124.4%

78.1% 80.3% 80.7% 83.2% 79.9%

10.0%

30.0%

50.0%

70.0%

90.0%

110.0%

130.0%

150.0%

2015 2016 2017 2018 2019

LTD and NSFR Ratios (%)

NSFR (%) Financing to customers' deposit ratio

10.8 12.9

0

2

4

6

8

10

12

14

16

18

FY 18 FY 19


KSA Total Market NCB Market Share in SARbn NCB Market Share in % Rank KSA

Overall banking (Assets)

SAR 2,633 bn 21.2% #1

Corporate banking (Performing Financing)

SAR 975 bn 14.4% #1

Retail banking(Performing Financing)

SAR 607 bn 23.0% #2

Treasury(Investments)

SAR 590bn 24.8% #1

Asset Management (AUMs)

SAR 516bn 31.3% #1

Brokerage(Value Traded)

SAR 569bn 12.8% #2

Leading, diversified franchise NCB Market Position as of 2Q 2020

6

557

140

140

146

161

146

2,076

835

467

444

355

423

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%


2020 Strategy Progress Accelerated focus on Retail & Digital

7

Stra

tegi

cEn

able

rs

Digital Productivity

Accelerate digital transformation Increase Operational Efficiency

Digital sales Advanced analytics

Lean distribution Robotics & AI

1H 2020 Update

Digital Transactors (% of total base): 72.8% Digital Account Opening: 87.2%

NCB 1H20 C/I 31% (NCB Group 32%) 130 bots (+75 YTD) 333 self-service kiosks (+22 YTD)

Funding

Current Accounts Wholesale Funding

Grow Current Accounts

Expand Funding Options

Digital & physical distribution

Cash management Customer coverage

models

Programs across maturity and seniority spectrums

Mix and cost optimization

1H 2020 Update CASA +17% YTD Affluent Banking

proposition enhancements

SAR 5bn long-term diversified funding YTD

SAR 4.2bn T1 Sukuk issued & SAR 1bn Sukuk redemption

Asset Deployment

Retail Corporate Treasury Subsidiaries

Grow Mortgages Improve Returns Sustain Investment Returns

Grow Value Contribution

Sales channels Digitization

Mega financing SME Transaction banking

Recurring revenues Portfolio liquidity &

quality

Key business lines Efficiency &

productivity

1H 2020 Update +42% Mortgage

growth SAR 52bn Mortgage

balance

1Q 2020 Update +9% Financing

growth Cash Mgmt Coverage

up. POS M.S. +1.6ppts

1Q 2020 Update +16% 2Q 2020 NSCI Stable 172% LCR,

>85% IG portfolio

1Q 2020 Update TFKB 1H NI +97%

(TRY), C/I 40.5% YTD NCBC 1H NI +31% YoY,

CI 33% YTD


FINANCIAL RESULTS HIGHLIGHTS

2Q 2020 Results


5,461233

(164)

61

(754) (16)

133

(32)

4,922

-10%

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

6,000.00

7,000.00

8,000.00

1H 19 NSCI Fee &Other

Income

Expenses Impair-ments*

OtherNon-

Operating

Zakat &Tax

Minorities 1H 20

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

Balance Sheet

Asset Quality, Capital & Liquidity

Financial Results Update 1H 2020 Results highlights

9

Financing (SARbn) Deposits (SARbn)

353 380

+8%

0

100

200

300

400

500

600

700

800

4Q 19 2Q 20

282316

+12%

0

100

200

300

400

500

600

4Q 19 2Q 20

* Impairments include impairment charges for financing and investments

NPL & COR (%) CET1 and LTD (%)

1.8% 1.8%

0.5%

0.8%

-0.1%

0.1%

0.3%

0.5%

0.7%

0.9%

1.1%

1.3%

1.5%

0

0

0

0

0

0

4Q 19 2Q 20

NPL ratio CoR YTD

16.2% 15.6%

80% 83%

20%

30%

40%

50%

60%

70%

80%

90%

0

0

0

0

0

0

0

0

4Q 19 2Q 20

CET1 LTD


Income Statement 1H 2020 SAR 4.9bn NI down 10%YoY impacted by fee and other income and higher credit costs due to challenging operating environment and Covid-19

10

Profitability Trends

SAR (mn) 2Q 2020 1Q 2020 2Q 2019 YoY % change 1H 2020 1H 2019 YoY % change

Net special commission income 3,882 4,013 3,907 -1% 7,895 7,662 +3%Fee and other income 884 1,292 1,143 -23% 2,176 2,340 -7%Total operating income 4,766 5,305 5,050 -6% 10,071 10,001 +1%Operating expenses (1,530) (1,692) (1,666) -8% (3,221) (3,282) -2%Total impairment charge (828) (396) (325) +155% (1,224) (470) +160%Income from operations, net 2,408 3,218 3,060 -21% 5,626 6,249 -10%Net income before Zakat and income tax 2,388 3,211 3,047 -22% 5,599 6,239 -10%Zakat and Income Tax (260) (340) (338) -23% (600) (732) -18%Net income for the period after Zakat and income tax attributable to equity holders* 2,088 2,834 2,686 -22% 4,922 5,461 -10%

4,697 4,635 5,161 4,830 4,312

354 381 429 475 4535,050 5,016 5,590 5,305 4,766

-6%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

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

Total Operating Income (SARmn)

International

Domestic

2,600 2,600 3,206 2,691 1,92886

(49)

184144 160

2,686 2,5513,390 2,834

2,088

-22%

(200)

1,800

3,800

5,800

7,800

9,800

11,800

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

Net income for the period after Zakat and income tax attributable to equity holders (SARmn)

International

Domestic

* 1H 2020 Dividend deferred; retaining capital in an uncertain environment and preserving capacity to support lending activities


Balance Sheet 10% YTD increase in total assets from growth in financing and investments

Domestic Deposits93%

International Deposits7%

Customers' Deposits Mix (SARbn)

353 380

0

100

200

300

400

500

4Q 19 2Q 20

11

Balance Sheet

SAR (mn) 2Q 2020 1Q 2020 2Q 2019 YoY % change FY 2019 YTD % change

Cash & banks 52,510 53,850 45,621 +15% 61,948 -15%Investments, net 146,306 133,000 126,630 +16% 134,077 +9%Financing and advances, net 316,299 305,214 274,830 +15% 282,289 +12%Total assets 557,310 535,007 476,588 +17% 507,264 +10%Due to banks and other financial institutions 74,083 63,323 61,594 +20% 62,186 +19%Customers' deposits 380,398 375,241 327,438 +16% 353,389 +8%Debt securities issued 696 565 1,865 -63% 1,016 -31%Total liabilities 483,375 470,027 409,476 +18% 437,476 +10%Common equity 62,888 57,159 59,248 +6% 61,888 +2%Total equity 73,935 64,979 67,112 +10% 69,788 +6%

133 137 127 138 139

111 112 124 131 13912 12 11 17 1520 19 20 20 23275 281 282 305 316

+12%

0

100

200

300

400

500

600

700

800

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

Financing & Advances, net (SARbn)

Corporate Consumer and credit card Others International

240 255 251 290 294

73 73 90 72 7214 12 13 13 14327 340 353 375 380

+8%

0

100

200

300

400

500

600

700

800

900

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

Customers' Deposits (SARbn)

CASA Time Others


Retail48%

Corporate14%

Treasury27%

Capital Markets6%

International5%

1H 20 Net Income Before Zakat & Income Tax (SARbn)

Retail62%

Corporate4%

Treasury21%

Capital Markets6%

International7%

2Q 20 Net Income Before Zakat & Income Tax (SARbn)

Segmental Information (1/3) 1H 2020 total net income before zakat and income tax impacted by decline in Corporate and Treasury

12

6,239382

(805)(430)

68 145 5,599

0

1,000

2,000

3,000

4,000

5,000

6,000

1H 19 Retail Corporate Treasury CapitalMarkets

International 1H 20

1H 20 Net Income Before Zakat & Income Tax Movement (SARmn)

3,047337

(597)

(473)

1 74 2,388

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2Q 19 Retail Corporate Treasury CapitalMarkets

International 2Q 20

2Q 20 Net Income Before Zakat & Income Tax Movement (SARmn)

6.2 5.6

0

1

2

3

4

5

6

7

8

9

10

1H 19 1H 20

3.02.4

0

1

1

2

2

3

3

4

4

5

2Q 19 2Q 20


Retail53%

Corporate20%

Treasury13%

Capital Markets5%

International9%

2Q 20 Total Operating Income (SARbn)

Retail48%

Corporate20%

Treasury18%

Capital Markets5%

International9%

1H 20 Total Operating Income (SARbn)

Segmental Information (2/3) 1H 2020 total operating income impacted by decline in Corporate and Treasury

13

10,001 220

(70) (429)

71 277 10,071

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1H 19 Retail Corporate Treasury CapitalMarkets

International 1H 20

1H 20 Total Operating Income Movement (SARmn)

5,050140

(25)

(503)

3100 4,766

0

200

400

600

800

1,000

1,200

1,400

2Q 19 Retail Corporate Treasury CapitalMarkets

International 2Q 20

2Q 20 Total Operating Income Movement (SARmn)

10.0 10.1

0

2

4

6

8

10

12

14

1H 19 1H 20

5.1 4.8

0

1

2

3

4

5

6

7

2Q 19 2Q 20


Segmental Information (3/3) 2Q 2020 Asset growth across all segments

Management Commentary

YTD 2020 Total Assets increased by 10% due to higher financing (+12%) and investments (+9%).

Total Financing increased by 12%: Retail increased by 12%, Corporate by 9% and FI by 19%.

Customers’ deposits increased by 8% from Corporate and International segments offsetting the modest decline in Retail and others (Treasury) segments.

CASA balances at 77% of total deposits at 2Q 2020 compared with 71% at 4Q 2019.

154 163 170133 142 146185 194 2022 2 2

33 3437507 535 557

+10%

0

100

200

300

400

500

600

700

800

900

1,000

4Q 19 1Q 20 2Q 20

Total Assets (SARbn)

RetailCorporateTreasuryCapital MarketsInternational

14

231 226 224

84 113 12613 9 226 27 28353 375 380

+8%

0

100

200

300

400

500

600

700

4Q 19 1Q 20 2Q 20


RetailCorporateOthersInternational

124 131 139127 138 13920 20 23

11 17 15282 305 316

+12%

0

100

200

300

400

500

600

700

4Q 19 1Q 20 2Q 20

Financing and Advances, net (SARbn)

Consumer and credit cardCorporateInternationalOther


2020 Guidance Financing guidance revised upwards; Possibility of varied outcomes persists

15

Macroeconomic Indicator Sources: IMF, Opec (June 2020)

Macro-Economic Outlook

2020 Original Outlook 2020 Expected Outlook

Oil Price USD 60 / bbl USD 40 / bbl

US Fed Rates Stable Stable rest of 2020

GDP Growth Real GDP 2.3% Real GDP -6.8%

Fiscal Balance Deficit 6.4% of GDP Deficit 11.4% of GDP

Inflation 2.0% 0.9%

NCB Financial Guidance

FY 2019 Reported

2Q 2020 Reported

FY 2020 Guidance

FY 2020 Outlook

Financing Growth +6.5% +12% +8% - 10% Revised+12%-14%

NSCI Margin 3.77% 3.46% 3.40% - 3.60% Within Guidance

Cost to Income 30.7% 32.0% Below 33% Within Guidance

Cost of Risk 0.51% 0.82% 0.8% - 1.0% Within Guidance

Tier 1 CAR 18.0% 18.0% 16% - 18% Within Guidance


FINANCIAL RESULTS DETAILS

2Q 2020 Results


10.00 0.13

(0.34)

0.28 10.07

9.14

0.93

9.35

0.65

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

1H 19 NSCI Fee and otherincome

InternationalNOR

1H 20

1H 20 Total Operating Income Movement (SARbn)


1H 2020 Total operating income increased 1% YoY from a 2% improvement in net special commission income offset by 15% lower fee and other income.

International operating income increased by 43% boosted by core banking activity.

Operating Income Highlights 1H 2020 total operating income increased from improved NSCI offset by lower fee and other income

17

3.91 4.01 3.88

1.14 1.29 0.885.05 5.31 4.77

-6%

0

2

4

6

8

10

12

14

16

18

2Q 19 1Q 20 2Q 20

Total Operating Income (SARbn)

Fee and other income

Net special commission income

7.66 7.89

2.34 2.1810.00 10.07

+1%

0

5

10

15

20

25

1H 19 1H 20

5.05

(0.03)(0.35)

0.10 4.77

4.31

0.45

4.70

0.35

0

1

1

2

2

3

3

4

4

5

2Q 19 NSCI Fee and otherincome

InternationalNOR

2Q 20

2Q 20 Total Operating Income Movement (SARbn)

Domestic

Intl.

Domestic

Intl.


Net special commission income 1H 2020 net special commission income grew by 3% YoY; Margin impacted by lower rate environment

18

3.75% 3.73% 3.74%

3.51% 3.39%

3.77% 3.75% 3.77%

3.59%

3.46%

3.97%4.15% 4.22%

4.72%

4.36%

3.40%

3.60%

3.80%

4.00%

4.20%

4.40%

4.60%

4.80%

0

0

0

0

0

0

0

0

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

Net Special Commission Margin (%)

Domestic Group International

1.28% 1.26% 1.20%0.85% 0.76%

3.68% 3.68% 3.69% 3.53% 3.42%

0

0

0

0

0

0

0

0

0

0

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

Commission Yield & Funding Cost (%)

COF Commission Yield

7,662 104

(38)

452

(524)

144 104

(11)

7,895

+3%

3.77% +4 bps -40 bps +3 bps -12 bps +11 bps +2 bps -0 bps +1 bps 3.46%

2

-

1,000

2,000

3,000

4,000

5,000

6,000

1H 19 Retail Corporate Other Investments Depositmix &cost

Wholesalefunding

Other International 1H 20

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

Financing Mix & Yield+SAR 31mn

Guidance

3.40%-3.60%


81

254

2,340

(46) (26)

106

(16)

26101

(273) (35)

2,176

1,9222,259

-7%

0

500

1,000

1,500

2,000

2,500

3,000

1H 19 Finance&

lending

Tradefinance

Inv. mgt.&

brokerage

Creditcards

Others ExchangeIncome

Investment-relatedincome

Otheroperatingexpenses

1H 20

1H 20 Fee and other Income Movement (SARmn)

Fee and other income 1H 2020 fee and other income decline due to lower investment related income and fee waivers; partly offset from FX and investment management fees

19

615 624 628290 314 316

332 49020

(94) (136) (80)

1,143 1,292884

-23%

(400)

100

600

1,100

1,600

2,100

2,600

2Q 19 1Q 20 2Q 20

Fee and Other Income (SARmn)

Other operating income (expenses), netInvestment-related incomeExchange Income, netFee income from banking services, net


1H 2020 Fee and other income declined by 7% YoY due to 35% lower investment-related income, partly offset by 19% growth in exchange income and 4% growth in fee income from banking services.

Fees from Banking Services+SAR 44mn (+4%) Domestic

International


3,282

(32) (19)

11

(21)

3,221

2,837

384

2,915

367

-2%

(500)

500

1,500

2,500

3,500

4,500

5,500

1H 19 Employee-related

Rent &premises

Depreciation &amortization

Other G&A 1H 20

1H 20 Operating Expenses Movement (SARmn)


1H 2020 Expenses declined by 2% YoY,

1H 2020 Cost to income ratio was 32.0%, lower by 83bps compared to 1H 2019.

The cost base decrease was driven by lower operational, marketing and travel expenses due to lockdown.

Expense Highlights Lower operating expenses due to lockdown

20

892 908 85986 83 75

215 226 213473 475 383

1,666 1,692 1,530

-8%

0

500

1,000

1,500

2,000

2,500

3,000

2Q 19 1Q 20 2Q 20

Operating Expenses (SARmn)

Employee-relatedRent & premisesDepreciation & amortizationOther G&A

32.8% 32.5%

30.7%

31.9% 32.0%

31.2% 31.0%

29.3%

30.9% 31.0%

0

0

0

0

0

0

0

0

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

Cost to Income Ratio (YTD %)

Group (%) Excluding International (%)

Domestic

Intl.

Guidance

< 33%


Retail31%

Corporate26%

Treasury36%

Capital Markets1%

International7%

Total Assets by Segment (SARbn)


Total assets increased 10% due to increase in financing, investments and other assets, partly offset by decline in cash, bank and SAMA balances due to redeployment of reverse repo balances held with SAMA for liquidity management in 4Q 2019.

12% Financing increase primarily driven by increase in domestic and international financing, despite International financing being impacted by Turkish Lira depreciation.

Other assets increased 46% primarily from an increase in positive fair value of derivatives.

Asset Highlights and Composition

10% growth in balance sheet as a result of increase in financing and investments

21

282 305 316

134 133 14662 54 5329 43 42507 535 557

+10%

0

100

200

300

400

500

600

700

800

900

1,000

4Q 19 1Q 20 2Q 20

Total Assets (SARbn)

Financing and Advances, netInvestments, netCash, bank and SAMA balancesOther assets, net

507 557

0

100

200

300

400

500

600

4Q 19 2Q 20

507.334.0 12.2

(9.4)

13.2 557.3

+10%

(30.00)

20.00

70.00

120.00

170.00

220.00

270.00

320.00

370.00

4Q 19 Financing andAdvances

Invest-ments

Cash,Bank &SAMA

Other assets 2Q 20

Movement in Total Assets (SARbn)


Consumer financing & credit cards

45%

Commerce13%

Manufacturing10%

Services10%

Utilities & health6%

Building & construction4%

Others, across 6 sectors12%

Financing and Advances, net by Economic Sector (SARbn)

124 131 139

127 138 13920 20 231117 15282 305 316

+12%

0

100

200

300

400

500

600

4Q 19 1Q 20 2Q 20


Consumer and credit cardCorporateInternationalOther


Financing grew for Retail (+12%) on the back of mortgages (+42%), Corporate (+9%), International (+19%) and FI (+36%) portfolios from 4Q 2019.

Corporate segment increased 9% mainly during 1Q 2020 from underwriting a few large high-quality transactions that were in pipeline from previous quarters.

International financing increased 19% from 37% growth in local currency, partly offset by the weakened Turkish Lira -18%.

Financing and Advances 12% financing growth driven by strong Retail mortgages, Corporate, FI and International

22

Retail

+SAR 15bn (+12%)

282 316

0

50

100

150

200

250

300

350

400

4Q 19 2Q 20

282.3

15.4

(0.4)

11.3 4.1 3.8 316.3

+12%

0

20

40

60

80

100

120

4Q 19 Mortgages Other Corporate FI Inter-national

2Q 20

Movement in Financing (SARbn)

Guidance

+12%-14%


5.33 0.13 0.63

(0.18)

5.91

+11%

-

2

4

6

8

10

12

4Q 19 Retail Corporate International 2Q 20

Movement in NPLs (SARbn)

Financing and Advances Credit Quality (1/2)

YTD NPLs rose by 11% primarily on Corporate from Covid-19, while NPL coverage remained stable

23

Domestic

+SAR 77mn (+21%)

0.5% 0.6% 0.5% 0.5% 0.5%

2.4% 2.1% 2.3% 2.3% 2.6%

5.5%

9.2%8.2%

6.9%6.1%

1.8% 1.9% 1.8% 1.7% 1.8%

(0)

0

0

0

0

0

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

NPL Ratios (%)

Retail Corporate International Group NPL Ratio

278%258%

277%

242%221%

141%

151% 152% 146% 150%

81%56% 62%

71% 75%

145%

133% 138% 140% 141%

0

1

1

2

2

3

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

NPL Coverage Ratios (%)

Retail Corporate International Group NPL coverage ratio

5.330.36

0.20 5.910.03

(0.07)

0.05

0

1

1

2

2

3

3

4

4Q 19 Commerce Consumer Building &construction

Manu-facturing

Others 2Q 20

Movement NPLs by Economic Sector (SARbn)


34

(10)

5

49 6 1

(2)

82

+48 bps

(10)

10

30

50

70

90

110

130

1H 19 Impairments Recoveries& Other

Impairments Recoveries& Other


Movement in Cost of Risk (bps)

Corporate

+47 bps

472

(102)

42

768 107 13

(41)

1,258

+166%

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1H 19 Impairments Recoveries& Other

Impairments Recoveries& Other


Movement in Impairments (SARmn)

Financing and Advances Credit Quality (2/2)

Increase in impairments and cost of risk from Covid-19 related adjustments and impacts

24

Retail

-5 bps

Corporate

+SAR 727mn

Retail

-SAR 60mn

0.3% 0.4% 0.4% 0.4%

1.4%

1.4%

2.5%2.2%

2.7%2.3%

0.3%

0.5% 0.5% 0.6%

0.8%

(0)

(0)

0

0

0

0

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

CoR Ratios (%)

Domestic International Group CoR ratio

0.5%0.5%

0.4%0.3%

0.3%

0.1%

0.3%0.4% 0.4%

1.1%

0.3%

0.5% 0.5% 0.6%0.8%

(0)

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

CoR Ratios (%)

Retail Corporate Group CoR ratio

Guidance

80-100


Investments Investments portfolio increased 9% from growth in SGBs and high-quality securities

25

Saudi Government securities50%

Other investment grade35%

Non-investment grade8%

Equity & others7%

Investments by Credit Grade (SARbn)

134 146

0

20

40

60

80

100

120

140

160

4Q 19 2Q 20

Saudi Arabia65%

GCC and Middle East11%

Europe1%

Turkey5%

Other countries18%

Investments by Geography (SARbn)

134 146

0

20

40

60

80

100

120

140

160

4Q 19 2Q 20

85 83 74

39 41 519 9 12

134 133 146

+9%

0

50

100

150

200

250

4Q 19 1Q 20 2Q 20

Investments (SARbn)

Equity instruments, Mutual Funds, Hedge Funds and OthersFloating rate securitiesFixed rate securities

134.1 4.6 4.0 3.7

(0.1)

146.3

+9%

0

20

40

60

80

100

120

140

4Q 19 SaudiGovernmentsecurities

Otherinvestment

grade

Non-investment

grade

Equity & others 2Q 20

Movement in Investments (SARbn)


Due to banks and other financial institutions

14%

Customers' deposits68%

Other liabilities5%

Total equity13%

Funding Mix (SARbn)


10% increase in funding mainly from growth in deposits and increase other liabilities.

Customers’ deposits increased by 8% mainly driven by CASA deposits (+17%).

Other liabilities increase attributable to negative fair value of derivatives by SAR 6.1 bn resulting from change in the interest rate environment.

Funding Balance sheet growth funded by growth in CASA deposits, interbank balances and other liabilities

26

353 375 380

62 63 741 1 121 31 28

70 65 74507 535 557

+10%

0

100

200

300

400

500

600

700

800

900

1,000

4Q 19 1Q 20 2Q 20

Funding (SARbn)

Total equity Other liabilities

Debt securities issued Due to banks and other financial institutions

Customers' deposits

507 557

0

100

200

300

400

500

600

4Q 19 2Q 20

507.3 27.0 11.9

(0.3)

7.3 4.1 557.3

+10%

0

100

200

300

400

500

600

700

4Q 19 Customers'deposits

Interbank Debt Otherliabilities

Total equity 2Q 20

Movement in Funding (SARbn)


353.439.3

(16.1)

1.1 3.7

(1.5)

0.5

+8%

380.4

0

100

200

300

400

500

600

4Q 19 CASA Time Others CASA Time Others 2Q 20

Movement in Customers' Deposits (SARbn)

CASA77%

Time19%

Others4%

Customers' Deposits Mix (SARbn)


Customers’ deposits increased by 8%, mainly from 17% increase in CASA deposits.

Increase in CASA deposits boosted by focus on strengthening affluent proposition, digital account opening and cash management; as well as lower time deposits from lower rates.

CASA balances account for 77% of customers’ deposits compared to 71% at 4Q 2019.

Deposits Customers’ deposits increased 8%, mainly from CASA deposits

27

353 380

0

50

100

150

200

250

300

350

400

450

500

4Q 19 2Q 20

Domestic Deposits

+SAR 24.2bn (+7%)

International Deposits

+SAR 2.8bn (+11%)

241 278 2819

12 1374 58 5816 14 1413 13 14353 375 380

+8%

0

100

200

300

400

500

600

700

4Q 19 1Q 20 2Q 20


CASA - DomesticCASA - InternationalTime - DomesticTime - InternationalOthers


Liquidity NCB maintained a strong and stable liquidity profile

28


As at 2Q 2020, the financing to customers’ deposit ratio was 83.1% and the regulatory LDR ratio was comfortably below SAMA limit.

NSFR was 120.0% at 2Q 2020 relative to 124.4% at 4Q 2019.

The average quarterly LCR was comfortable at 165.0% in 2Q 2020 compared to 168.9% in 4Q 2019.

Basel III leverage ratio was 12.4% as at 2Q 2020 relative to 12.8% at 4Q 2019.

* Headline ratio, which does not equate to SAMA regulatory LDR ratio

92 92 99 113 112

50 53 59 64 68

185.5%173.2% 168.9% 176.1%

165.0%

(5)

15

35

55

75

95

115

135

1

1

1

1

1

2

2

2

2

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

LCR Ratio (%)

HQLA (SARbn)Net cash outflows (SARbn)LCR

330 334 343 362 384

263 271 275 309 319

125.5% 123.2% 124.4%117.1% 120.0%

(20)

80

180

280

380

480

580

1

1

1

1

1

1

1

1

1

1

2

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

NSFR Ratio (%)

Available stable funding (SARbn)Required stable funding (SARbn)NSFR

13.0% 12.6% 12.8% 11.4% 12.4%

83.9% 82.4% 79.9% 81.3% 83.1%

0

0

0

0

0

1

1

1

1

1

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

LDR* and Basel III leverage Ratios (%)

Basel III leverage ratio Financing to customers' deposit ratio


T1 Guidance

16% - 18%

15.8% 15.4%16.2%

14.4%

15.6%

17.6% 17.2%18.0%

16.0%

18.0%

18.4% 18.0%18.7%

16.9%

19.0%

0

0

0

0

0

0

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

Capital Ratios (%)

CET1 ratio T1 ratio TC ratio


Capitalization remained comfortably above the regulatory minima

with CET1 at 15.6% and T1 at 18.0%.

Total capital increased 9% from net additional SAR 3.2bn T1 Sukuk

issuance.

RWA 8% growth is attributable to the growth in financing.

Total capital adequacy ratio at 19.0%.

Capital Capital position comfortably above regulatory minima

29

63 60 65

77

103 4

473 7080

+9%

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

4Q 19 1Q 20 2Q 20

Capitalisation (SARbn)

Tier 2 capital (T2)Additional tier 1 capital (AT1)Common equity tier 1 capital (CET1)

337 365 372

36 36 3617 15 12390 416 421

+8%

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

4Q 19 1Q 20 2Q 20

Pillar I Risk Weighted Assets (SARbn)

Credit riskOperational riskMarket risk

73.2 4.9 3.2

(3.6)

79.9 2.2

+9%

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

4Q 19 Net Income Net SukukIssuance

2019 FinalDividend

Other 2Q 20

Movement in Total Capital (SARbn)


SEGMENTAL REVIEW

2Q 2020 Results


NCB Bank (standalone) 2Q 2020 SAR 2.1bn net income after zakat down 16% YoY from higher impairments

31


1H 2020 Net income after zakat declined 3% YoY due to higher impairment charges from lower recoveries and Covid-19 provisioning impact.

NSCI improved by 2% YoY due to an increase in average earning assets.

Financing and advances, net increased 11% YTD from 42% growth in Mortgage and 9% growth in Corporate.

262 285 292

+11%

0

100

200

300

400

500

4Q 19 1Q 20 2Q 20


328 348 352

+7%

0

100

200

300

400

500

600

4Q 19 1Q 20 2Q 20


Summary Financial Performance

SAR (mn) 2Q 2020 1Q 2020 2Q 2019 YoY % change 1H 2020 1H 2019 YoY %

changeTotal assets 525,723 506,689 450,347 +17% 525,723 450,347 +17%Total operating income 4,095 4,582 4,467 -8% 8,677 8,939 -3%

Net special commission income 3,552 3,658 3,583 -1% 7,210 7,083 +2%Fee income from banking services, net 387 332 373 +4% 718 753 -5%

Operating expenses (1,268) (1,412) (1,417) -10% (2,681) (2,761) -3%Total impairment charge (711) (256) (225) +216% (967) (319) +203%Other non-operating income (expenses), net (27) (16) (17) +54% (43) (36) +21%Net income for the period before Zakat 2,089 2,898 2,807 -26% 4,986 5,823 -14%Zakat 0 (299) (308) -100% (515) (678) -24%

Net income for the period after Zakat 2,089 2,598 2,499 -16% 4,986 5,146 -3%

% of total assets 94.3% 94.7% 94.5% -0% 94.3% 94.5% -0%Cost to income (%) 31.0% 30.8% 31.7% -2% 30.9% 30.9% +0%NCL (%) 1.1% 0.4% 0.4% +202% 1.4% 0.3% +458%ROA (%) 1.6% 2.1% 2.3% -28% 1.8% 2.4% -25%


Retail Banking Higher 2Q 2020 net income before zakat YoY from higher operating income

32


1H 2020 NSCI improved by 6% YoY on strong financing growth, with mortgage surging 42% YTD.

Net income before zakat increased by 17% YoY driven principally by 5% higher operating income.

Operating expenses decreased 5% YoY and the cost to income ratio improved from 44.5% in 1H 2019 to 40.3% in 1H 2020, supported by digitization, and productivity enhancements.

231 226 224

-3%

0

50

100

150

200

250

300

350

400

450

4Q 19 1Q 20 2Q 20


124 131 139

+12%

0

50

100

150

200

250

4Q 19 1Q 20 2Q 20

Financing & Advances, net (SARbn) Summary Financial Performance


change

Total assets 169,982 162,520 142,614 +19% 169,982 142,614 +19%

Total operating income 2,526 2,321 2,386 +6% 4,847 4,627 +5%

Net special commission income 2,242 2,075 2,108 +6% 4,316 4,073 +6%

Fee income from banking services, net 260 229 240 +8% 489 493 -1%

Operating expenses (927) (1,027) (1,058) -12% (1,953) (2,058) -5%

Impairment charge (99) (106) (168) -41% (205) (264) -23%

Other income (expenses) (9) (5) (5) +75% (14) (12) +18%

Net income for the period before Zakat 1,491 1,183 1,155 +29% 2,674 2,292 +17%

% of total assets 30.5% 30.4% 29.9% +2% 30.5% 29.9% +2%

Cost to income (%) 36.7% 44.2% 44.3% -17% 40.3% 44.5% -9%

CoR 0.3% 0.3% 0.6% -52% 0.3% 0.5% -37%

ROA (% before zakat & taxes) 3.6% 3.0% 3.3% +9% 3.3% 3.3% -0%


Corporate Banking 2Q 2020 Business volume growth; net income before zakat impacted by operating environment and higher impairment charges

33


9% YTD net financing growth, focusing on high-quality financing business, and 49% growth in customers’ deposits.

1H 2020 Operating income declined by 3% YoY; NSCI declined by 2% primarily due to lower market rates.

Fee income declined by 10% on slower trade finance environment.

Impairments increased by SAR 727mn YoY, largely attributable to base effect, adverse operating environment and Covid-19 impacts.

127 138 139

+9%

0

50

100

150

200

250

4Q 19 1Q 20 2Q 20

Financing & Advances, net (SARbn) Summary Financial Performance


change

Total assets 145,500 142,029 134,980 +8% 145,500 134,980 +8%

Total operating income 941 1,113 966 -3% 2,053 2,123 -3%

Net special commission income 842 1,029 860 -2% 1,871 1,918 -2%

Fee income from banking services, net 99 85 105 -6% 184 205 -10%

Operating expenses (217) (251) (232) -6% (468) (461) +2%

Impairment charge (620) (145) (35) +1676% (765) (38) +1909%


Net income for the period before Zakat 96 712 693 -86% 808 1,614 -50%

% of total assets 26.1% 26.5% 28.3% -8% 26.1% 28.3% -8%

Cost to income (%) 23.1% 22.5% 24.0% -4% 22.8% 21.7% +5%

CoR 1.8% 0.4% 0.1% +1650% 1.1% 0.1% +1951%

ROA (% before zakat & taxes) 0.3% 2.1% 2.1% -87% 1.2% 2.4% -52%

84113 126

+49%

0

50

100

150

200

250

300

4Q 19 1Q 20 2Q 20



Treasury 2Q 2020 net income before zakat decline driven by lower gains from non- FVIS investments

34


1H 2020 Net income before zakat declined YoY due to lower investment-related income..

Maintained strong portfolio quality with >85% being SGBs and investment grade securities.



change

Total assets 202,227 194,327 164,661 +23% 202,227 164,661 +23%

Total operating income 626 1,148 1,129 -45% 1,774 2,203 -19%

Net special commission income 469 555 615 -24% 1,024 1,092 -6%

Fee income from banking services, net 28 18 28 -0% 46 54 -15%

Other operating income 129 575 485 -73% 704 1,057 -33%

Operating expenses (124) (135) (127) -2% (259) (242) +7%

Impairment charge 8 (5) (22) -135% 2 (17) -113%


Net income for the period before Zakat 499 1,001 972 -49% 1,500 1,931 -22%

% of total assets 36.3% 36.3% 34.5% +5% 36.3% 34.5% +5%

Cost to income (%) 19.8% 11.8% 11.3% +76% 14.6% 11.0% +33%

ROA (% before zakat & taxes) 1.0% 2.1% 2.4% -58% 1.5% 2.5% -37%

134 133 146

+9%

0

50

100

150

200

250

300

4Q 19 1Q 20 2Q 20

Investments, net (SARbn)

1,092 1,024

1,111 750

2,2031,774

-19%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1H 19 1H 20

Total Operating Income (SARmn)

Net special commission income

Fee and other income


Capital Markets Higher 2Q 2020 net income growth YoY driven by higher operating income

35


1H 2020 Net income before zakat increased by 28% YoY due to increased operating income (+18%).

Operating income increased by 18% YoY due to higher brokerage-related fee income (+78%) and AUM-related fee income (+5%).



change

Client assets under management 157,572 146,180 152,297 +3% 157,572 152,297 +3%

Brokerages Volume 76,186 69,613 46,855 +63% 145,799 92,414 +58%

Total operating income 220 249 217 +1% 469 398 +18%

Net special commission income 4 5 5 -8% 9 8 +11%

Fee income from banking services, net 206 250 198 +4% 456 361 +26%

AUM Related Fee Income 128 143 138 -7% 270 258 +5%

Brokerage Related Fee Income 63 54 33 +92% 116 65 +78%

Other operating income (expenses) 9 (6) 14 -35% 4 28 -87%

Operating expenses (78) (79) (76) +3% (157) (153) +2%

Net income before Zakat 142 171 141 +1% 312 244 +28%

Cost to income (%) 35.5% 31.5% 35.0% +2% 33.4% 38.6% -13%

156 146 158

+1%

0

50

100

150

200

250

4Q 19 1Q 20 2Q 20

Client Assets Under Management (SARbn)

92

146

+58%

0

50

100

150

200

250

300

1H 19 1H 20

Brokerages Volume (SARbn)


International (in TRY) 2Q 2020 net income growth YoY on higher operating income

36


1H 2020 Net income after tax grew 97% primarily due to strong growth in operating income and FX/Trading gains.

Operating income increased by 60% YoY boosted by core banking activity and reduced funding costs.

NSCI improved by 36% YoY due to improved margins and decreasing borrowing costs.

Operating expenses rose 20% YoY from inflationary pressures and additional expenses for Covid-19.

Impairments increased 96% as TFKB intends to increase NPL coverage and additional provisions were required due to Covid-19.

45% 35%% of balance in foreign currency

62% 63%% of balance in foreign currency


TRY (mn) 2Q 2020 1Q 2020 2Q 2019 YoY % change 1H 2020 1H 2019 YoY %

changeTotal assets 67,904 59,311 50,309 +35% 67,904 50,309 +35%Total operating income 821 771 570 +44% 1,593 997 +60%

Net special commission income 593 570 496 +20% 1,162 855 +36%Fee income from banking services, net 71 70 69 +2% 140 142 -1%

Operating expenses (336) (327) (272) +23% (663) (551) +20%Impairment charge (215) (228) (152) +41% (443) (226) +96%Other income (expenses) 171 148 12 +1323% 319 37 +761%Net income for the period before tax 284 232 153 +85% 516 257 +101%Tax (62) (50) (31) +98% (112) (52) +114%

Net income after tax 222 182 122 +82% 404 205 +97%

Cost to income (%) 39.8% 41.2% 41.4% -4% 40.5% 47.7% -15%CAR (%) 16.9% 16.1% 16.8% +1% 16.9% 16.8% +1%Tier 1 CAR % 12.4% 11.6% 12.1% +2% 12.4% 12.1% +2%LTD ratio (%) 82.1% 73.6% 87.0% -6% 82.1% 87.0% -6%

40.76.9 47.6

4.3 51.9

+17%

+28%

0

10

20

30

40

50

60

70

4Q 19Reported

Growth atconstant FX

2Q 20Underlying

TFKB FXtranslation

impact

2Q 20Reported

Customers' Deposits (TRYbn)

31.09.6 40.6 2.0 42.6

+31%

+37%

0

10

20

30

40

50

60

70

80

90

100

4Q 19Reported

Growth atconstant FX

2Q 20Underlying

TFKB FXtranslation

impact

2Q 20Reported

Financing & Advances, net (TRYbn)


ADDITIONAL INFORMATION

2Q 2020 Results


Disclaimer

38

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

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

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


Contact UsThe National Commercial Bank

P.O. Box 3555

21481 Jeddah, Kingdom of Saudi Arabia

Mr. Abdulbadie Alyafi

Head Of Investor Relations

[email protected]

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

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

Financial statements

Earnings releases

Investor presentations

Financial data packs (in Excel)

NCB Contacts NCB welcomes your feedback and inquiries

39

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