Q2 –Year 2014

Saudi Hollandi Bank

Investor Presentation

Financial Update – Q2-Year 2016

Q3-2014

800-124-2525

Important notice

Disclaimer:

The information in this presentation is prepared by Saudi Hollandi Bank. The information is solely intended to provide financial and general information about Saudi Hollandi Bank’s activities at the date of the presentation. The information in the Presentation is strictly proprietary and being supplied to you solely for your information. This information may not be reproduced, distributed or passed to a third party or used for any other purposes then stated above.

The information in this presentation is given in a summary form and does not purport to be complete. The information contained herein has been obtained from the sources believed to be reliable but does not guarantee its accuracy, reasonableness or completeness. Whilst all reasonable care has been taken to ensure that the facts stated herein are accurate and that the opinions and expectations contained herein are fair and reasonable, no reliance may be placed for any purposes whatsoever on the information, opinion, forecast and assumptions contained in the Presentation or on its completeness, accuracy or fairness. No representation or warranty, express or implied, is given/made by the company or its affiliates as to the accuracy, fairness and completeness of the information contained herein and no liability is accepted for any loss , arising, directly or indirectly, from any use of such information.

Forward looking Statements:

The information in this presentation could or may contain forward-looking statements with respect to financial conditions and results of operations. These forward-looking statements are not historical facts and represent only SHB’s beliefs regarding future events and, many of which by their nature are inherently uncertain and beyond the bank’s control which could cause actual results, performance or events to differ materially from those expressed or implied in such statement.

There are several factors that could cause actual results to differ materially from those anticipated by forward-looking statements contained in this presentation include, but not limited to: changes in economic, business, competitive, global, market, regulatory, interest rates, tax rates etc.

2

3

Strategy 2

Financial and Operating Performance3

Segment Performance4

Awards 5

Group Overview 1

Group Overview - at a glance

4

Consistently profitable with clearly defined business model. >

Well positioned to grow and deliver great values to its customers, shareholders and employees.>

Fully fledged and diversified financial services offering. >

Moderate risk profile with clean balance sheet, low exposure to peripherals and sound capital and liquidity management.

>

Founded in 1926 as the Netherlands Trading Society – the first bank to be established in the Kingdom.>

Over 1,650 staff with Saudization ratio greater than 89%.>State of the art Multi Channel capabilities to its growing customer base in commercial, corporate and investment sectors. >

Strong focus on improving service to customer, lowering cost base and achieving integration synergies.>

Domestic network of 60 branches and a network of 500 ATMs.>

Subsidiaries and Associates :

• Saudi Hollandi Capital: Manage the Group’s Investment services , Asset management and Brokerage activities.

• Saudi Hollandi Real Estate Company: Registration of real estate title deeds in support of the bank’s home financing products.

• Saudi Hollandi Insurance Agency Company: The company act as agent for Wataniya Insurance Company, an associate, selling insurance products.

• Wataniya Insurance: The bank has 20% equity stake in Wataniya.

Shareholder Structure

40%

21.76%

10.51%

27.73%ABN AMRO

Olayan SIC

GOSI

Public

Bank’s Operating Segments

5

The Personal Banking Group operates through a network of branches and ATMs as well as state ofthe art e-banking services. It provides clients with a full range of Shariah compliant products cateringfor their deposit, financing, mortgage and payment needs. It also provides Brokerage and WealthManagement services through Saudi Hollandi Bank’s subsidiary, Saudi Hollandi Capital. Insuranceservices are also provided through Saudi Hollandi Insurance Agency. Personal Banking has tailored“Affluent Banking” services for its qualified customers through relationship managers in dedicatedcenters. Ladies Banking services are also provided through a network of ladies branches. SMEbanking is offered through well trained relationship managers in dedicated Business Banking centers.

Treasury

Saudi Hollandi Bank’s Treasury provides hedging and other treasury solutions to the Bank's clients.Already a leading provider of foreign exchange cash products, the Treasury department has grown its(structured) derivatives businesses in foreign exchange and special commission rates. Treasury is anactive interbank market maker in Saudi Riyal-denominated foreign exchange and interest rateproducts. Treasury offer Foreign exchange spot,Forwards,Options, Deposits and Loans, Specialcommission rate swaps, Forward rate agreements, Structured commission rate derivative solutionand Structured Foreign Exchange solutions in conventional and Sharia-complaint variants.

Personal

Banking Group

Institutional &

Corporate

Banking Groups

The Institutional & Corporate Banking Groups provide their clients with a wide range of products andservices including Term Loans, Working Capital and Trade Financing, Asset Financing, StructuredFinancing Solutions, Clean Overdraft Line, Short Term Financing for LC retirement, Letters ofGuarantee issued on behalf of our clients for a third party, Acquisition Financing, equity bridgefinancing, SIDF bridge financing and Corporate Finance and Advisory. They offer both conventionaland Sharia-compliant financial solutions across the full spectrum of corporate banking.

Investment

Banking

Saudi Hollandi Capital was established as an independent investment subsidiary of Saudi HollandiBank with a vision to become a leading provider of innovative investment Banking and wealthmanagement solutions for private and institutional clients.

Saudi Hollandi Capital’s investment team provides a broad range of investment Banking products tocorporate and financial intuitions. Services that SHC offer include Public offering and Convertibles,Sukuk and Bonds issuance, Mergers and Acquisitions Advisory Private placements and Privatization.

6

Strategy 2

Financial and Operating Performance3

Segment Performance4

Awards 5

Group Overview 1

7

Vision & Strategy - Highlights

SHB will have defensible positions in various segments, ranging from retail banking to largecorporate and institutional customers, resulting in a balanced liability, asset, revenue and profitmix. The Bank will compete on the basis of maximizing customer value, enabled by strict riskmanagement, and a strong capital and liquidity position.

1

Continue the expansion of our Retail Bank, in terms of assets (personal loans, home finance,credit cards), liabilities (CASA), branches and ATMs. The retail banking offering is a truly multi-channel one, where we aim to retain our leading position in mobile and internet banking.

2

Maintain strict hurdle rates on profitability and risk-adjusted returns in the Institutional andCorporate Banking segments by a strong focus on non-funded income and a “One Bank”proposition to the large corporate clients.

3

Focus on continuous process and efficiency improvements, with the aim of maintaining orlowering our Cost-to-Income ratio.

4

Financial highlights

Key messages

• Past 30 months have seen SHB record strong income generation on the back of pick-up in corporate and consumer lending.

• Ahead of the pack in addressing asset quality and concentration issues allowing it to re-focus on balance sheet growth.

• Established profile, strong sponsors, and historical links with Saudi have enabled SHB to establish itself as a top tier lender.

• Record Net Profit of SAR 2.02 bln during Year 2015 was the highest in the bank’s history.

• Net profit is stable during the period under current challenging market conditions.

• Improvement driven by both solid increase in total income and cost controls.

• Total Asset up 6% to SAR 109 bln (Q2-2015: SAR102 bln).

• Underlying cost/income ratio at 32.7% is marginally higher than prior year at 31.0% as a result of retail banking initiatives.

• All business segments showed good performance despite challenging market conditions.

• Maintained stable credit rating.

• Invested in people & technology to strengthen the platform.

Key figures

8

Increase balance sheet primarily due to loan growth

Strong Asset Base

• Asset base has increased by 6% yoy during Q2-

2016.

• Assets growth driven by 9% increase in total loans.

• Loans and investments represents more c.72% of

the total asset base.

•Maintain a moderate risk profile.

• Investment activities are part of liquidity

management.

• Active management of funding surplus.

• Significant success in mortgage finance growth.

Asset mix

9

72%

1%

19%6% 2%

Loans (net)

Due from Banks

Investments(net)

Cash

Others

69

80

97

108 102

109

-

20

40

60

80

100

120

2012 2013 2014 2015 Q2-15 Q2-16

SA

R.b

ln

Loan Portfolio - growing at a steady rate…

Loan Portfolio Breakdown Key Highlights…

Increase in Loan Portfolio Highly Conservative Coverage Non Performing Loans and NPL %

10

• The main contributors to this increase in loans are from the

robust consumer and public spending growth being experienced

in the kingdom, SHB is actively participating and supporting this

growth phase.

• Strong focus on credit quality - NPLs % have reduced to 1.15% in

Q2-2016 vs. 1.18% in Q2-2015.

• Improved coverage ratio .

• Client diversification reflection of client focus.

45.3

53.2

65.1

76.4 71.5

77.9

0

10

20

30

40

50

60

70

80

90

2012 2013 2014 2015 Q2-15 Q2-16

SA

R.b

ln

1,104

1,193 1,352 1,375 1,435 1,528

153%

161%161%

167%166%

168%

145%

150%

155%

160%

165%

170%

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2012 2013 2014 2015 Q2 -15 Q2-16

SR

' m

ln

Impairment allowances Provisions Coverage ratio

722 739

842 824 863

910 1.56%

1.36%

1.27%

1.06%1.18%

1.15%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

-

100

200

300

400

500

600

700

800

900

1,000

2012 2013 2014 2015 Q2 -15 Q2-16

Non Performing Loans NPL% of Total Loans

Revenue breakup

Operating Income Operating Income breakup

•Operating Income remain stable during the period.

•Net Special Commission Income increased by 10% compared to Q2-2015.

• Contribution of Non-funded Income towards the total revenue at 35.3% represent improved cross-sell and customer centricity.

Evolution of Net Interest Margin

11

2,219

2,616

3,182

3,600

1,855 1,864

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2012 2013 2014 2015 Q2 -15 Q2-16

SR

'mln

62% 62% 61.8% 63.8% 59.3% 64.7%

28% 28% 27.2% 24.6%26.0%

22.7%

4.4% 5.2% 5.2% 6.0% 8.6% 4.6%

5.2% 4.7% 5.9% 5.5% 6.1% 8.0%

0%

20%

40%

60%

80%

100%

120%

2012 2013 2014 2015 Q2 -15 Q2-16

Net Special Commission Income Fee & Commission Income Trading Income Others

1.37 1.62

1.97

2.30

1.10 1.21

2.36% 2.34%2.39% 2.42%

2.49%

2.77%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

-

0.50

1.00

1.50

2.00

2.50

2012 2013 2014 2015 Q2 -15 Q2-16

SA

R.

bln

Net interest income Net Interest Margin

Financial Summary Trends

Operating Income breakup Operating expenses / Cost to Income ratio

Operating Profit Net Profit

12

2,219

2,616

3,182

3,600

1,855 1,864

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2012 2013 2014 2015 Q2 -15 Q2-16

SR

'mln

474 509 574 676

335 337

373 386

437

483

240 274

38.2%

34.2%

31.8% 32.2% 31.0%32.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

-

200

400

600

800

1,000

1,200

1,400

2012 2013 2014 2015 Q2 -15 Q2-16

SA

R.

mln

Staff cost Other cost Cost to income ratio

1.37 1.72

2.17 2.44

1.28 1.25

-

0.50

1.00

1.50

2.00

2.50

3.00

2012 2013 2014 2015 Q2 -15 Q2-16

SA

R b

ln

1.25 1.50

1.82 2.02

1.08 1.05

-

0.50

1.00

1.50

2.00

2.50

2012 2013 2014 2015 Q2 -15 Q2-16

SA

R.

bln

Capital, funding & liquidity

Regulatory capital (Basel III)

Loan to deposit and liquidity

Regulatory Capital

13

• Core Tier 1 capital increase as a result of increase in Share capital.

• The credit risk is around 95% of total RWA, while operational and market risk are low at 5.1% and 0.2% respectively.

• Increase in credit RWA caused by business growth.

• Actively managed liquidity.53.9

61.9

76.8 89.1 83.6 86.4

45.3 53.2

65.1 76.4

71.5 77.9

79.9% 80.3% 80.9%82.3%

81.8%86.0%

27.0% 25.8% 24.0% 25.7% 23.0% 24.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

10

20

30

40

50

60

70

80

90

100

2012 2013 2014 2015 Q2-15 Q2-16

SA

R.

bln

Deposits Loans & advances Loan/deposit Liquidity ratio

7.8 8.9

10.1 11.7 11.13

12.75

3.3

5.0 4.2

4.1 4.2

4.1

11.1

13.9 14.3

15.8 15.33

16.89

12.4% 11.8% 11.6% 12.4% 11.56%12.37%

17.6% 18.3% 15.6%16.4% 15.92% 16.39%

0%

5%

10%

15%

20%

25%

30%

35%

-

2

4

6

8

10

12

14

16

18

2012 2013 2014 2015 Q2 -15 Q2-16

SA

R b

ln

Tier 1 Tier 2 Total Tier 1 Ratio Total Ratio

14

Strategy 2

Financial and Operating Performance3

Segment Performance4

Awards 5

Group Overview 1

15

Underlying results by segment

Underlying results by segment

• State of the art banking platform with Multi Channel capabilities for its growing retail base and to service commercial banking needs as well as customer investment needs through advanced brokerage capabilities.

• The bank is upgrading its Trade & Cash portal and Trade back office to provide state of the art electronic platform for its institutional, corporate & SME customer base.

• The Financial Institutions Group (FIG) has an active correspondent banking relation with more than 500 banks in 57 countries providing the banks and its clients all available products

• SUPPORT function consists of units which support the business segments. Cost of SUPPORT units are allocated to the relevant business segments.

Relative contribution per segment

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

Total Liabilities

Total Asset

Operating Profit

Operating cost

Operating Income

CBG PBG TRY & ALCO INV

16

Sustained revenue growth and improvement in profitability

Personal Banking , putting clients first

• Focus on Product enhancement.

• Introduced new acquisition channels.

• Moved away from plain vanilla products

• Stable business with resilient income generation, sticky deposit flow providing stable funding base for the bank.

Operating Income

SAR million

Total Liabilities

SAR billion

CAGR : 14%

CAGR :20% CAGR :37%

623734

918

1124

536

706

0

200

400

600

800

1000

1200

2012 2013 2014 2015 Q2-2015 Q2-2016

6.459.55

12.92

17.4615.71

20.96

0

5

10

15

20

25

2012 2013 2014 2015 Q2-2015 Q2-2016

Total Assets SAR billion

17.5320.33 21.34

29.21 27.99 26.88

0

5

10

15

20

25

30

35

2012 2013 2014 2015 Q2-2015 Q2-2016

17

Maintained a strong presence in the market

Corporate Banking , a leading franchise

• Focus on growth in mid-corporate segments

• Successful cross selling Trade and Treasury products.

• Tailored service model to the size of the client with dedicated client teams.

Operating Income

SAR million

CAGR :

18%

CAGR : 15%

Total Liabilities

SAR billion

CAGR :

30%

1,537 1,702

2,017

2,309

1,062 1,067

-

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 Q2-2015 Q2-2016

38.9343.86

52.2258.70 55.75 56.94

0

10

20

30

40

50

60

70

2012 2013 2014 2015 Q2-2015 Q2-2016

Total Assets SAR billion

26.7931.55

50.08

59.24

21.89 25.13

0

10

20

30

40

50

60

70

2012 2013 2014 2015 Q2-2015 Q2-2016

18

Strategy 2

Financial and Operating Performance3

Segment Performance4

Awards 5

Group Overview 1

Awards

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Awards

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Awards

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Awards

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Awards contd…

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