The National Commercial Bank Investor Presentation · The National Commercial Bank (NCB) prepared...

Investor Presentation

The National Commercial Bank

1Q 2020 Results

NCB Investor Relations | 1Q 2020 Investor Presentation

Investor Presentation Content

2

Page 4 Operating Environment

Page 9 Strategy Overview

Page 10 Financial Results Highlights

Page 17 Financial Results Details

Page 3 NCB at a glance Page 31 Segmental Review

Page 38 Additional Information


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

3

*Includes Alahli Esnad (1,679 employees) - fully owned subsidiary engaged in outsourcing and manpower services in KSA

Employees*

13,238Assets

SAR535 bn

Deposits

SAR375 bn

Market Cap

SAR104 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

8m

Digital Financial Transactions

>98%

Robotics

+55 bots

NCB Long term Short Term Outlook

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

Government of Saudi Arabia

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

International: Subsidiary in TurkeyTürkiye Finans Katılım Bankası (TFKB)310 branches, 624 ATMs3,480 employees

Offices in Seoul & Shanghai

Wholesale branches in Bahrain & Singapore

NCB GroupHeadquartered in Saudi Arabia

458 branches, 3,611 ATMs138 Remittance centers

9,758 Employees

NCB CapitalSaudi Arabia

22 Branches245 Employees

19%

71%84%

0

0

0

1

1

1

1

2018 2019 1Q 20

Digital Account Opening

28%

51% 59%

0

0

1

1

1

2018 2019 1Q 20

Digital Sales Penetration


OPERATING ENVIRONMENT


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

5

Source: IMF, Ministry of Finance and SAMA (IMF projections based on April 2020 WEO)

3.4% 3.9% 3.6% 2.9%

-3.0%

1.7% 2.5% 2.2%

1.7%

-6.1%

1.7%

-0.7%

2.4%

0.3%-2.3%

-9.0%

-7.0%

-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

0

0

0

0

0

0

0

2016 2017 2018 2019 2020F

Real GDP Growth

World Advanced Economies KSA

9.810.5 10.0 10.3 9.8

40.952.4

70.1 64.0

36.00.0

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%1.23%

1.78%

0.56%

(0)

(0)

0

0

0

0

0

0

0

0

Interbank Rates (%)

3M SAR SAIBOR 3M USD LIBOR

Government Response Key Government Measures Key Government Support SAR 200+bn

Healthcare

Containment & Treatment

Government Debt to GDP Ceiling

Up to 50%

Expenditure Rationalization

Opex & Capex

VAT increases to

15%

Deferrals and Exemptions

SAR43 bn

Social Development Bank: SMEs & Families

SAR12 bn

Private Sector Support

SAR70 bn

Healthcare Sector Support

SAR47 bn

POS & e-commerce Fees

SAR0.8 bn

Loan Guarantee Program

SAR6 bn

Funding for Lending Program

SAR13.2 bn

Deferred Payment Program

SAR30 bn

Support Initiative Highlights SAMA (PSFP SAR 50bn)


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

6

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

Retail45%

Corporate22%

Treasury27%

Capital Markets4%

International2%

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

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 2,445 bn 19.9% #1

Corporate banking (Performing Financing)

SAR 930 bn 14.0% #1

Retail banking(Performing Financing)

SAR 556 bn 22.2% #2

Treasury(Investments)

SAR 538bn 24.9% #1

Asset Management (AUMs)

SAR 500bn 32.0% #1

Brokerage(Value Traded)

SAR 882bn 10.4% #2

Leading, diversified franchise NCB Market Position as of 4Q 2019

7

481

130

124

134

160

183

1,964

800

432

404

340

699

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


NCB Response Maintained seamless operations in serving our customers

8

BCM Protocols

InitiatedActive situation management of

Covid-19

Enabling our employees and the entire bank to focus on

Serving our Customers

Business Continuity

Branches Operational

~95%Cash availability across ATMs, branches & remittance centers

100%Digital channel availability

99.9%

Meals & PPE

DistributionSaudi Health Endowment Fund

SAR33 mn

Social Welfare Fund

SAR20.5 mn

All customer-facing systems

> SLA levelsNon-Branch Staff working

RemotelyDeferrals of over 1,000 SMEs supported by SAMA deposit of

SAR 3.3 bn

Health, safety & hygiene standards

All premises

Health & Safety

Supporting our Community


Stra

tegi

cEn

able

rs

Digital Productivity

Accelerate digital transformation Increase Operational Efficiency

Digital sales Advanced analytics

Lean distribution Robotics & AI

Impact on 2020 Strategy Strategy validated by recent events; looking ahead accelerated focus on Retail & Digital

9

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

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

FINANCIAL RESULTS HIGHLIGHTS

1Q 2020 Results


Balance Sheet

Asset Quality, Capital & Liquidity

Financial Results Update 1Q 2020 Results highlights

11

Financing (SARbn) Deposits (SARbn)

353 375

+6%

0

100

200

300

400

500

600

700

800

4Q 19 1Q 20

282 305

+8%

0

100

200

300

400

500

600

4Q 19 1Q 20

* Impairments include impairment charges for financing and investments

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

1.8% 1.7%

0.5% 0.6%

-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 1Q 20

NPL ratio CoR YTD

16.2% 14.4%

80% 81%

20%

30%

40%

50%

60%

70%

80%

90%

0

0

0

0

0

0

0

0

4Q 19 1Q 20

CET1 LTD

2,776

25996

(75)

(251) (9)

54

(15)

2,834

+2%

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

3,500.00

4,000.00

1Q 19 NSCI Fee &Other

Income

Expenses Impair-ments*

OtherNon-

Operating

Zakat &Tax

Minorities 1Q 20

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


Income Statement 1Q 2020 YoY Net income after zakat and income tax growth driven by improved NSCI and fee income; partly offset by increase in impairments

Profitability Trends

SAR (mn) 1Q 2020 4Q 2019 YTD % change 1Q 2019 YoY % change

Net special commission income 4,013 4,268 -6% 3,754 +7%Fee and other income 1,292 1,322 -2% 1,197 +8%Total operating income 5,305 5,590 -5% 4,951 +7%Operating expenses (1,692) (1,453) +16% (1,616) +5%Total impairment charge (396) (287) +38% (145) +173%Income from operations, net 3,218 3,850 -16% 3,189 +1%Net income before Zakat and income tax 3,211 3,851 -17% 3,192 +1%Zakat and Income Tax (340) (414) -18% (394) -14%Net income for the period after Zakat and income tax attributable to equity holders 2,834 3,390 -16% 2,776 +2%

12

4,654 4,825 4,507 5,161 4,830

297 354 381 429 4754,951 5,178 4,888 5,590 5,305

+7%

-5%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

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

Total Operating Income (SARmn)

International

Domestic

2,703 2,778 2,478 3,206 2,69172 29

(48)

184 1442,776 2,807 2,429

3,390 2,834

+2%

-16%

(200)

1,800

3,800

5,800

7,800

9,800

11,800

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

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

International

Domestic


Balance Sheet 5% YTD increase in total assets on the back of growth in financing

Balance Sheet

SAR (mn) 1Q 2020 4Q 2019 YTD % change 1Q 2019 YoY % change

Cash & due from banks 53,850 61,948 -13% 45,726 +18%Investments, net 133,000 134,077 -1% 123,419 +8%Financing and advances, net 305,214 282,289 +8% 267,215 +14%Total assets 535,007 507,264 +5% 464,906 +15%Due to banks and other financial institutions 63,323 62,186 +2% 63,127 +0%Customers' deposits 375,241 353,389 +6% 309,676 +21%Debt securities issued 565 1,016 -44% 4,421 -87%Total liabilities 470,027 437,476 +7% 397,243 +18%Common equity 57,159 61,888 -8% 59,761 -4%Total equity 64,979 69,788 -7% 67,663 -4%

Domestic Deposits93%

International Deposits7%

Customers' Deposits Mix (SARbn)

353 375

0

100

200

300

400

500

4Q 19 1Q 20

13

236 240 255 251 29061 73 73 90 7213 14 12 13 13310 327 340 353 375

+6%

+21%

0

100

200

300

400

500

600

700

800

900

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

Customers' Deposits (SARbn)

CASA Time Others

128 135 137 127 138

107 110 112 124 13112 12 12 11 1721 20 19 20 20267 276 281 282 305

+8%

+14%

0

100

200

300

400

500

600

700

800

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

Financing & Advances, net (SARbn)

Corporate Consumer and credit card Others International


Retail44%

Corporate21%

Treasury21%

Capital Markets5%

International9%

1Q 20 Total Operating Income (SARbn)

Retail37%

Corporate22%

Treasury31%

Capital Markets5%

International5%

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

Segmental Information (1/2) 1Q 2020 Total operating income and Net income before zakat and income tax growth in all segments except Corporate

14

3,192 46

(208)

43 67 71 3,211

0

500

1,000

1,500

2,000

2,500

1Q 19 Retail Corporate Treasury CapitalMarkets

International 1Q 20

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

4,95180

(45)

74 68178 5,305

(100)

100

300

500

700

900

1,100

1,300

1,500

1Q 19 Retail Corporate Treasury CapitalMarkets

International 1Q 20

1Q 20 Total Operating Income Movement (SARmn)

3.2 3.2

0

1

1

2

2

3

3

4

4

5

5

1Q 19 1Q 20

5.0 5.3

0

1

2

3

4

5

6

7

1Q 19 1Q 20


Segmental Information (2/2) 1Q 2020 Asset growth mainly driven by growth across all segments

Management Commentary

YTD 2020 Total Assets increased by 5% due to higher financing (+8%).

Total Financing increased by 8%: Retail increased by 6%, Corporate by 8% and FI by 46%.

Customers’ deposits increased by 6% from Corporate and International segments offsetting the modest decline in Retail and others (Treasury) segments.

CASA balances at 77% of total deposits at 1Q 2020 compared with 71% at 4Q 2019.

139 155 163132 132 142159 185 1942 2 2

34 3334

465 507 535

+5%

0

100

200

300

400

500

600

700

800

900

1,000

1Q 19 4Q 19 1Q 20

Total Assets (SARbn)

RetailCorporateTreasuryCapital MarketsInternational

107 124 131

128 127 13821 20 2012 11 17267 282 305

+8%

0

100

200

300

400

500

1Q 19 4Q 19 1Q 20

Financing and Advances, net (SARbn)

Consumer and credit cardCorporateInternationalOther

15

234 231 226

46 84 1138 13 922

26 27310353 375

+6%

0

100

200

300

400

500

600

700

1Q 19 4Q 19 1Q 20


RetailCorporateOthersInternational


2020 Guidance Evolving circumstances necessitate revision of guidance and diminishes outcome certainty

16

Source: IMF, April 2020

Macro-Economic Outlook

2020 Original Outlook 2020 Expected Outlook

Oil Price USD 60 / bbl USD 36 / bbl

US Fed Rates Stable 150bps cut (Mar 2020)

Stable rest of 2020

GDP Growth Real GDP 2.3% Real GDP -2..3%

Fiscal Balance Deficit 6.4% of GDP Deficit 12.6% of GDP

Inflation 2.0% 0.9%

NCB Financial Guidance

FY 2019 Reported

1Q 2020 Reported 2020 Guidance 2020 New

Guidance

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

NSCI Margin 3.77% 3.60% 3.60% - 3.80% 3.40% - 3.60%

Cost to Income 30.7% 31.9% Below 32% Below 33%

Cost of Risk 0.51% 0.6% 0.6% - 0.8% 0.8% - 1.0%

Tier 1 CAR 18.0% 16.0% 16% - 18% Within guidance

FINANCIAL RESULTS DETAILS

1Q 2020 Results


4.95 0.16 0.02 0.18 5.31

4.83

0.47

4.65

0.30

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

1Q 19 NSCI Fee and otherincome

InternationalNOR

1Q 20

1Q 20 Total Operating Income Movement (SARbn)

3.75 4.27 4.011.20 1.32 1.29

4.95 5.59 5.31

+7%

0

2

4

6

8

10

12

14

16

18

1Q 19 4Q 19 1Q 20

Total Operating Income (SARbn)

Fee and other income

Net special commission income

Operating Income Highlights Higher 1Q 2020 total operating income driven by higher NSCI and fee & other income


Total operating income increased 7% YoY from a 7% improvement in net special commission income, 9% higher investment-related income and an increase in FX revenue by 31%.

International operating income increased by 60% boosted by core banking activity.

18

Domestic

Intl.

Domestic

Intl.

5.59

(0.28) (0.05)

0.05 5.31

4.83

0.47

5.16

0.43

0

1

1

2

2

3

3

4

4Q 19 NSCI Fee and otherincome

InternationalNOR

1Q 20

1Q 20 Total Operating Income Movement (SARbn)


Net special commission income 1Q 2020 net special commission income grew by 7% YoY

19

3,754 135

(33)

89 86

(6)

4,013

+7%

3.75% -21 bps -14 bps +14 bps +1 bps -0 bps +5 bps 3.60%

(12)

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1Q 19 Financing mix &yield

Investments Deposit mix &cost

Wholesalefunding

Other International 1Q 20

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

3.79% 3.79% 3.73% 3.74%3.52%

3.75% 3.79% 3.75% 3.77%

3.60%

3.44%3.99% 4.15% 4.22%

4.72%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

5.00%

0

0

0

0

0

0

0

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

Net Special Commission Margin (%)

Domestic Group International


• NSCI improved by 7% driven by increase in

average commission earing assets.

• Net special commission margin decreased by

15bps YoY to 3.60% from lower financing and

investments yields, partly offset by improved

deposit cost of funding.


471251,197 10

(10)

91

(19)(41)

7540

(50)

1,292

1,1671,150

+8%

0

200

400

600

800

1,000

1,200

1,400

1,600

1Q 19 Finance&

lending

Tradefinance

Inv. mgt.&

brokerage

Creditcards

Others ExchangeIncome

Investment-relatedincome

Otheroperatingexpenses

1Q 20

1Q 20 Fee and other Income Movement (SARmn)

Fee and other income 1Q 2020 fee and other income grew by 8% YoY due to higher investment income, exchange income, fee from banking services income

20

593 727 624240 253 314

450 360 490

(86) (18) (136)

1,197 1,322 1,292

+8%

(400)

100

600

1,100

1,600

2,100

2,600

1Q 19 4Q 19 1Q 20

Fee and Other Income (SARmn)

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


Fee and other income increased by 8% YoY due to 9% growth in investment-related income, 31% growth in exchange income, 5% growth in fee income from banking services, partly offset by an increase in other operating expenses.

Fees from Banking Services+SAR 31mn (+5%)

Domestic

International



Expenses increased by 5% YoY,

Cost to income ratio was 31.9%, lower by 76bps compared to 1Q 2019.

The cost base increase was driven by higher other G&A expenses due to additional digitization expenses related to SMS expenses and software subscriptions and licenses.

Expense Highlights Operating expenses increased from additional digitization expenses in 1Q 2020

21

907 887 90890 88 83

213 225 226406 253 4751,616 1,453

1,692

+5%

0

500

1,000

1,500

2,000

2,500

3,000

1Q 19 4Q 19 1Q 20

Operating Expenses (SARmn)

Employee-relatedRent & premisesDepreciation & amortizationOther G&A

32.6% 32.5%32.1%

30.7%

31.9%

30.6% 30.8% 30.6%

29.3%

30.9%

0

0

0

0

0

0

0

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

Cost to Income Ratio (YTD %)

Group (%) Excluding International (%)

Domestic

Intl.1,616 1

(8)

13 69 1,692

1,491

201

1,422

194

+5%

(300)

200

700

1,200

1,700

2,200

1Q 19 Employee-related

Rent &premises

Depreciation &amortization

Other G&A 1Q 20

1Q 20 Operating Expenses Movement (SARmn)



Total assets increased 5% due to increase in financing and other assets, partly offset by decline in cash, bank and SAMA balances.

Decrease in balances due to redeployment of reverse repo balances held with SAMA for liquidity management in 4Q 2019.

8% Financing increase primarily driven by increase in domestic and international financing, despite International financing being impacted by Turkish Lira depreciation.

Other assets increase includes increase in positive fair values of derivatives of SAR 3.7bn.

Asset Highlights and Composition

5% growth in balance sheet as a result of increase in financing and other assets

22

267 282 305

123 134 1334662 542929 43465 507 535

+5%

0

100

200

300

400

500

600

700

800

900

1,000

1Q 19 4Q 19 1Q 20

Total Assets (SARbn)

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

507 535

0

100

200

300

400

500

600

4Q 19 1Q 20

507.3 22.9

(1.1) (8.1)

3.7 10.3 535.0

+5%

0

100

200

300

400

500

600

700

800

900

1,000

4Q 19 Financing Invest-ments

Cash,Bank &SAMA

PositiveFV of

Derivatives

Other 1Q 20

Movement in Assets (SARbn)

Retail30%

Corporate27%

Treasury36%

Capital Markets1%

International6%

Total Assets by Segment (SARbn)


Consumer financing & credit cards

44%

Commerce13%

Services10%

Manufacturing10%

Utilities & health7%

Building & construction4%

Others, across 6 sectors12%

Financing and Advances, net by Economic Sector (SARbn)

282.37.6 0.1

9.45.2 0.6

305.2

+8%

0

20

40

60

80

100

120

4Q 19 Mortgages Other Corporate FI Inter-national

1Q 20

Movement in Financing (SARbn)

107 123 131

128 128 13821 20 2012 11 17267 282 305

+8%

0

100

200

300

400

500

600

1Q 19 4Q 19 1Q 20


Consumer and credit cardCorporateInternationalOther


Domestically, financing grew for Retail (+6%) on the back of mortgages (+21%), Corporate (+7%), International (+3%) and FI (+46%) portfolios from 4Q 2019.

Corporate segment increased 7% from underwriting a few large high-quality transactions that were in pipeline from previous quarter.

Financing to financial institutions increased by 46% mainly in GCC & MENAT, USD and SAR exposures.

International financing increased 3% from 14% growth in local currency, partly offset by the weakened Turkish Lira -9%.

Financing and Advances 8% Financing growth driven by strong Retail mortgages, Corporate and FI

23

Retail

+SAR 7.7bn (+6%)

282 305

0

50

100

150

200

250

300

350

400

4Q 19 1Q 20


5.33 0.09 0.20

(0.22)

5.39

+1%

-

1

2

3

4

5

6

7

8

9

10

4Q 19 Retail Corporate International 1Q 20

Movement in NPLs (SARbn)

Financing and Advances Credit Quality (1/2)

YTD NPLs rose moderately by 1% while NPL coverage remained stable; YoY -4% decline in NPL coverage driven by International segment.

24

Domestic

+SAR 29mn (+5%)

0.5% 0.6% 0.6% 0.5% 0.5%

2.4% 2.3% 2.1% 2.3% 2.3%

5.2% 5.5%

9.2%8.2%

6.9%

1.8% 1.8% 1.9% 1.8% 1.7%

(0)

0

0

0

0

0

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

NPL Ratios (%)

Retail Corporate International Group NPL Ratio

280%257% 258%

277%

242%

140% 142%

151% 152% 146%

83% 81%56% 62%

71%

145% 145%

133% 138% 140%

0

1

1

2

2

3

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

NPL Coverage Ratios (%)

Retail Corporate International Group NPL coverage ratio

5.330.07

0.075.39

0.04

(0.09) (0.04)

0

0

0

0

0

1

1

1

1

4Q 19 Commerce Consumer Building &construction

Manu-facturing

Others 1Q 20

Movement NPLs by Economic Sector (SARbn)


21

(6)

6 6

11

4 13

55

+34 bps

-

10

20

30

40

50

60

70

80

90

1Q 19 Impairments Recoveries& Other

Impairments Recoveries& Other


Movement in Cost of Risk (bps)

144

(17)

27 54

89

31 88

415

188%

-

100

200

300

400

500

600

700

800

1Q 19 Impairments Recoveries& Other

Impairments Recoveries& Other


Movement in Impairments for Financing and Advances losses (SARmn)

Financing and Advances Credit Quality (2/2)

Increase in impairments and cost of risk from international and reduced domestic corporate recoveries

25

Corporate

+19 bps

Retail

0 bps

Corporate

+SAR 142mnRetail

+SAR 10mn0.4%

0.6%

0.4%

0.2%

0.3%

0.0% 0.1%

0.9%

0.6%

0.4%

0.2%

0.5%

0.9%

0.4%

0.6%

(0)

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

CoR Ratios (%)

Retail Corporate Group CoR ratio

0.1% 0.3% 0.4% 0.4% 0.4%

0.9%

1.4%

2.5%2.2%

2.7%

0.2%

0.3%0.5% 0.5% 0.6%

(0)

(0)

0

0

0

0

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

CoR Ratios (%)

Domestic International Group CoR ratio


Investments Investments declined 1% due to mark-to-market impact; quality remains strong, ~86% of the investment portfolio is investment grade including Saudi Government securities

26

64 85 83

5139 418

9 9123 134 133

-1%

0

50

100

150

200

1Q 19 4Q 19 1Q 20

Investments (SARbn)

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

Saudi Government securities51%

Other investment grade35%

Non-investment grade7%

Equity & others7%

Investments by Credit Grade (SARbn)

134 133

0

20

40

60

80

100

120

140

160

4Q 19 1Q 20

Saudi Arabia67%

GCC and Middle East11%

Europe1%

Turkey3%

Other countries18%

Investments by Geography (SARbn)

134 133

0

20

40

60

80

100

120

140

160

4Q 19 1Q 20

134.1

(1.0) (0.7)

0.7

(0.1)

133.0

-1%

0

20

40

60

80

100

120

4Q 19 SaudiGovernmentsecurities

Otherinvestment

grade

Non-investment

grade

Equity & others 1Q 20

Movement in Investments (SARbn)


Due to banks and other financial institutions

12%

Customers' deposits70%

Debt securities issued0%

Other liabilities6%

Total equity12%

Funding Mix (SARbn)


5% increase in funding mainly from growth in CASA deposits and increase other liabilities.

Customers’ deposits increased by 6%.

Other liabilities increase is due to increase in negative fair value of derivatives and 2H 2019 proposed dividend moved from equity to liabilities in 1Q 2020

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

27

310 353 375

63 62 634 1 120 21 31

68 70 65465 507 535

+5%

0

100

200

300

400

500

600

700

800

900

1,000

1Q 19 4Q 19 1Q 20

Funding (SARbn)

Total equity Other liabilities

Debt securities issued Due to banks and other financial institutions

Customers' deposits

507 535

0

100

200

300

400

500

600

4Q 19 1Q 20

507.3 21.9 1.1

(0.5)

10.0

(4.8)

535.0

+5%

0

100

200

300

400

500

600

700

4Q 19 Customers'deposits

Interbank Debt Otherliabilities

Total equity 1Q 20

Movement in Funding (SARbn)


CASA77%

Time19%

Others4%

Customers' Deposits Mix (SARbn)


Customers’ deposits increased by 6%, mainly from 16% increase in CASA deposits.

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

Deposits Customers’ deposits increased 6%, mainly from CASA deposits

28

353 375

0

50

100

150

200

250

300

350

400

450

500

4Q 19 1Q 20

Domestic Deposits

+SAR 20.2bn (+6%)

International Deposits

+SAR 1.7bn (+7%)

227 241 2788 9 1247 74 5813 16 1413 13 13310 353 375

+6%

0

100

200

300

400

500

600

700

1Q 19 4Q 19 1Q 20


CASA - DomesticCASA - InternationalTime - DomesticTime - InternationalOthers

353.4 36.7

(16.5) (0.0)

2.9

(1.4)

0.2

+6%

375.2

0

100

200

300

400

500

600

4Q 19 CASA Time Others CASA Time Others 1Q 20

Movement in Customers' Deposits (SARbn)


Liquidity NCB maintained a strong and stable liquidity profile

29


As at 1Q 2020, the financing to customers’ deposit ratio was 81.3% and the regulatory LDR ratio was comfortably below SAMA limit.

NSFR was 117.1% at 1Q 2020 relative to 124.4% at 4Q 2019.

The average quarterly LCR increased to 176.1% in 1Q 2020 from 168.9% in 4Q 2019.

Basel III leverage ratio was 11.4% as at 1Q 2020 relative to 12.8% at 4Q 2019.

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

98 92 92 99 113

53 50 53 59 64

183.9% 185.5%173.2% 168.9% 176.1%

(5)

15

35

55

75

95

115

135

1

1

1

1

1

2

2

2

2

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

LCR Ratio (%)

HQLA (SARbn)Net cash outflows (SARbn)LCR

319 330 334 343 362

256 263 271 275 309

124.0% 125.5% 123.2% 124.4%117.1%

(20)

80

180

280

380

480

580

1

1

1

1

1

1

1

1

1

1

2

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

NSFR Ratio (%)

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

13.4% 13.2% 12.6% 12.8% 11.4%

86.3% 84.4% 82.4% 79.9% 81.3%

0

0

0

0

0

1

1

1

1

1

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

LDR* and Basel III leverage Ratios (%)

Basel III leverage ratio Financing to customers' deposit ratio


16.3% 16.0%15.4%

16.2%14.4%

18.2% 17.8% 17.2%18.0%

16.0%

19.0% 18.7%18.0%

18.7%

16.9%

0

0

0

0

0

0

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

Capital Ratios (%)

CET1 ratio T1 ratio TC ratio


Capitalization remained comfortably above the regulatory minima

with CET1 at 14.4% and T1 at 16.0%.

Total capital declined 4% due to combined impact of 2H 2019

dividend of SAR 3.6bn and mark-to-market loss on investment

portfolio of SAR 3.5bn.

RWA 6% growth is attributable to the growth in financing.

Total capital adequacy ratio at 16.9%.

Capital Capital position comfortably above regulatory minima

30

61 63 60

7 7 7

3 3 471 73 70

-4%

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

1Q 19 4Q 19 1Q 20

Capitalisation (SARbn)

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

323 337 365

35 3636

16 1715374 390 416

+6%

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

1Q 19 4Q 19 1Q 20

Pillar I Risk Weighted Assets (SARbn)

Credit riskOperational riskMarket risk

73.2 2.8

(0.1) (3.6)

1.5

(3.5)

70.3

-4%

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

4Q 19 Net Income Tier 1 Sukukcost

Dividends MTM onInvestment

Other 1Q 20

Movement in Total Capital (SARbn)

SEGMENTAL REVIEW

1Q 2020 Results

NCB Bank (standalone) Modest decline in 1Q 2020 net income after zakat YoY resulting from higher impairments

32


Net income after zakat declined 2% YoY as 2% operating income growth was more than offset by a higher impairment charge.

NSCI improved by 5% YoY due to an increase in average earning assets.

The impairment charge increased by SAR 162mn YoY due to lower recoveries and normalization in the corporate cost of risk.

Summary Financial Performance

SAR (mn) 1Q 2020 4Q 2019 QoQ % change 1Q 2019 YoY %

change

Total assets 506,689 480,079 +6% 437,258 +16%

Total operating income 4,582 4,936 -7% 4,473 +2%

Net special commission income 3,658 3,937 -7% 3,500 +5%

Fee income from banking services, net 332 472 -30% 379 -13%

Operating expenses (1,412) (1,181) +20% (1,344) +5%

Total impairment charge (256) (214) +20% (94) +172%

Other non-operating income (expenses), net (16) (7) +129% (18) -10%

Net income for the period before Zakat 2,898 3,534 -18% 3,016 -4%

Zakat (299) (365) -18% (370) -19%

Net income for the period after Zakat 2,598 3,170 -18% 2,646 -2%

% of total assets 94.7% 94.6% +0% 94.1% +1%

Cost to income (%) 30.8% 23.9% +29% 30.1% +3%

NCL (%) 0.4% 0.3% +16% 0.1% +165%

ROA (%) 2.1% 2.9% -25% 2.5% -14%

246 262 285

+8%

0

100

200

300

400

500

1Q 19 4Q 19 1Q 20


288328 348

+6%

0

100

200

300

400

500

600

1Q 19 4Q 19 1Q 20


Retail Banking Higher 1Q 2020 net income before zakat YoY from higher operating income

33


NSCI improved by 6% YoY on strong financing growth.

Net income before zakat increased by 4% YoY driven principally by 4% higher operating income.

Operating expenses increased 3% YoY but the cost to income ratio improved from 44.7% in 1Q 2019 to 44.2% in 1Q 2020, supported by digitization, and productivity enhancements.



change

Total assets 162,520 154,386 +5% 138,673 +17%

Total operating income 2,321 2,518 -8% 2,241 +4%

Net special commission income 2,075 2,145 -3% 1,966 +6%


Operating expenses (1,027) (879) +17% (1,001) +3%

Impairment charge (106) (72) +46% (96) +10%

Other income (expenses) (5) 14 -139% (7) -23%

Net income for the period before Zakat 1,183 1,581 -25% 1,137 +4%

% of total assets 30.4% 30.6% -1% 29.8% +2%

Cost to income (%) 44.2% 34.9% +27% 44.7% -1%

CoR 0.3% 0.2% +36% 0.4% -9%

ROA (% before zakat) 3.0% 4.2% -29% 3.3% -10%234 231 226

-2%

0

50

100

150

200

250

300

350

400

450

1Q 19 4Q 19 1Q 20


107123 131

+6%

0

50

100

150

200

250

1Q 19 4Q 19 1Q 20

Financing & Advances, net (SARbn)

Corporate Banking 1Q 2020 net income before zakat reduced on lower operating income and normalization of risk cost

34


Operating income declined by 4% YoY; NSCI declined by 3% primarily due to lower market rates.

Fee income declined by 15% on slower trade finance environment.

Impairments increased by SAR 142mn YoY as cost of risk normalized and from lower recoveries in view of current market conditions.

128 128 138

+7%

0

50

100

150

200

250

1Q 19 4Q 19 1Q 20

Financing & Advances, net (SARbn) Summary Financial Performance


change

Total assets 142,029 132,775 +7% 131,501 +8%

Total operating income 1,113 1,527 -27% 1,157 -4%

Net special commission income 1,029 1,337 -23% 1,058 -3%


Operating expenses (251) (202) +24% (229) +10%

Impairment charge (145) (208) -30% (3) +4499%

Other income (expenses) (5) (18) -75% (5) -11%

Net income for the period before Zakat 712 1,099 -35% 920 -23%

% of total assets 26.5% 26.0% +2% 28.3% -6%

Cost to income (%) 22.5% 13.2% +70% 19.8% +14%

CoR 0.4% 0.6% -30% 0.0% +4387%

ROA (% before zakat) 2.1% 3.2% -36% 2.8% -25%

46

84113

+34%

0

50

100

150

200

1Q 19 4Q 19 1Q 20


Treasury 1Q 2020 growth in net income before zakat from operating income growth

35


Net income before zakat improved by 4% YoY driven by 7% higher operating income.

NSCI improved by 16% YoY due to lower cost of funds resulting from 3 rate cuts during the 2nd

half od 2019.



change

Total assets 194,327 185,235 +5% 159,032 +22%

Total operating income 1,148 890 +29% 1,074 +7%

Net special commission income 555 456 +22% 477 +16%

Fee income from banking services, net 18 15 +17% 26 -31%

Other operating income 575 419 +37% 572 +1%


Impairment charge (5) 80 -107% 5 -205%

Other income (expenses) (6) (17) -63% (6) +8%

Net income for the period before Zakat 1,001 854 +17% 959 +4%

% of total assets 36.3% 36.5% -1% 34.2% +6%

Cost to income (%) 11.8% 11.2% +5% 10.7% +10%

ROA (% before zakat) 2.1% 1.9% +12% 2.5% -15%

123 134 133

-1%

0

50

100

150

200

1Q 19 4Q 19 1Q 20

Investments, net (SARbn)

477 555

597 593

1,074 1,148

+7%

0

500

1,000

1,500

2,000

2,500

1Q 19 1Q 20

Total Operating Income (SARmn)

Net special commission income Fee and other income

Capital Markets Higher 1Q 2020 net income growth YoY driven by higher operating income

36


Net income before zakat increased by 65% YoY due to increased operating income (+38%).

Operating income increased by 38% YoY due to higher brokerage-related fee income (+65%) and AUM-related fee income (+19%).

151 156 146

-6%

0

50

100

150

200

250

1Q 19 4Q 19 1Q 20

Client Assets Under Management (SARbn)



change

Client assets under management 146,180 156,027 -6% 151,248 -3%

Brokerages Volume 69,613 54,244 +28% 45,559 +53%

Total operating income 249 225 +11% 181 +38%

Net special commission income 5 5 -8% 3 +38%

Fee income from banking services, net 250 210 +19% 163 +53%

AUM Related Fee Income 143 127 +12% 120 +19%

Brokerage Related Fee Income 54 36 +49% 32 +65%

Other operating income (expenses) (6) 10 -154% 14 -140%

Operating expenses (79) (92) -15% (78) +1%

Net income before Zakat 171 134 +28% 103 +65%

Cost to income (%) 31.5% 40.8% -23% 42.9% -26%

46

70

+53%

0

20

40

60

80

100

120

140

1Q 19 1Q 20

Brokerages Volume (SARbn)

40.64.6 45.2 2.4 47.6

+10%

+17%

0

10

20

30

40

50

60

70

4Q 19Reported

Growth atconstant FX

1Q 20Underlying

TFKB FXtranslation

impact

1Q 20Reported

Customers' Deposits (TRYbn)

31.1

3.1 34.21.3 35.5

+9%

+14%

0

2

4

6

8

10

12

14

16

18

20

4Q 19Reported

Growth atconstant FX

1Q 20Underlying

TFKB FXtranslation

impact

1Q 20Reported

Financing & Advances, net (TRYbn)

International (in TRY) 1Q 2020 net income growth YoY on higher operating income

37


Net income after tax grew 119% primarily due strong

growth in operating income

Operating income increased by 81% YoY boosted by core

banking activity and reduced funding costs.

NSCI improved by 59% YoY due to increase in financing

and improved margins.

Operating expenses rose 17% YoY from inflationary

pressures and additional expenses for Covid-19.

Impairments increased 208% as TFKB intends to increase

NPL coverage and additional provisions were required due

to Covid-19.


TRY (mn) 1Q 2020 4Q 2019 QoQ % change 1Q 2019 YoY %

change

Total assets 59,311 52,051 +14% 50,434 +18%

Total operating income 771 659 +17% 427 +81%

Net special commission income 570 501 +14% 359 +59%



Impairment charge (228) (116) +97% (74) +208%

Other income (expenses) 148 101 +47% 25 +492%

Net income for the period before tax 232 279 -17% 104 +123%

Tax (50) (61) -18% (21) +138%

Net income after tax 182 217 -16% 83 +119%

Cost to income (%) 51.2% 48.7% +5% 64.6% -21%

CAR (%) 16.1% 17.5% -8% 15.2% +6%

Tier 1 CAR % 11.6% 12.9% -10% 10.9% +6%

LTD ratio (%) 73.6% 76.2% -3% 95.0% -23%

45% 44%% of balance in foreign currency

62% 59%% of balance in foreign currency

ADDITIONAL INFORMATION

1Q 2020 Results


Disclaimer

39

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

40

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