National Commercial Bank Investor Presentation 3Q …...NCB Investor Relations 3Q 2018 Investor Presentation 2 Disclaimer The National Commercial Bank (NCB) prepared this presentation

NCB Investor Relations3Q 2018 Investor Presentation 1

National Commercial Bank Investor Presentation3Q 2018 Results


Disclaimer

The National Commercial Bank (NCB) prepared this presentation on a proprietary basis as general background information about the activities of NCB. The information contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by NCB is obtained from sources believed to be reliable, but NCB (nor any of its directors, officers, employees, agents, affiliates or subsidiaries) does not guarantee the accuracy or completeness of such information, and disclaims all liability or responsibility for any loss or damage caused by any act taken as a result of the information. This presentation including the information covered therein is not intended either to be relied upon or construed as an advertisement for, or an offer, solicitation or invitation to sell or issue, or to subscribe, underwrite or 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.


Investor Presentation

Contents

04

12

18

29

51

59

NCB – The leading KSA bank

Grow with KSA, Grow with NCB

Strategy Overview

Financial Results Highlights

Segmental Overview

Additional Information

37 Financial Results Details


The leading KSA bank3Q 2018 Results

National Commercial Bank


NCB is the leading banking group in Saudi Arabia (1)

Established in 1953; IPO in 2014

NCB Snapshot (9M 2018)

Jeddah HQ

7mn Clients13,293

Employees*

SAR

459bn Assets

SAR

325bn Deposits

SAR

>130bn Market Cap

Wholesale branch in BahrainOffices: Singapore, Seoul, Shanghai

Subsidiary in Turkey:Türkiye Finans Katılım Bankası

Subsidiary in KSA:NCB Capital

*Includes Alahli Esnad (1,541 employees) - fully owned subsidiary engaged in recruitment services within KSA



NCB has a strong market and financial position (FY 2017)

444

343

228 216 193

050

100150200250300350400450500

NCB Rajhi Samba Riyad BSF

Assets (SARbn)

249 234

139 122 118

0

50

100

150

200

250

300

NCB Rajhi Riyad BSF Samba

Financing (SARbn)

309 273

168 154 151

0

50

100

150

200

250

300

350

NCB Rajhi Samba Riyad BSF

Deposits (SARbn)

Market Position by KSA

Overall banking Assets #1

Corporate banking Financing #1

Retail banking Financing #2

Treasury Investments #1

Asset Management AUMs #1

Brokerage Value Traded #3

Financial Position KSA GCC

Assets #1 #4

Financing #1 #4

Deposits #1 #3

Investments #1 #1

Total Operating Income #1 #3

Net Income #1 #3

NCB Investor Relations3Q 2018 Investor Presentation

SR (bn)

8.7 9.8

+4%

0

2

4

6

8

10

12

14

16

18

2014 2017

16 18

+4%

0

5

10

15

20

25

30

35

2014 2017

221 249

+4%

0

100

200

300

400

500

2014 2017

7


Key KPIs compared to Saudi Arabian banking peers (FY 2017)

CAGR

Industry Peers(ex NCB)

Total operating income

Net income attributable to equity holders

206 234

+4%

0

100

200

300

400

500

2014 2017

133 139

+1%

0

100

200

300

400

500

2014 2017

117 122

+2%

0

100

200

300

400

500

2014 2017

124 118

-2%

0

100

200

300

400

500

2014 2017

1,045 1,129

+3%

0

500

1,000

1,500

2,000

2014 2017

14 16

+5%

0

5

10

15

20

25

30

35

2014 2017

8 8

+0%

0

5

10

15

20

25

30

35

2014 2017

6 7

+4%

0

5

10

15

20

25

30

35

2014 2017

14 8

-17%

0

5

10

15

20

25

30

35

2014 2017

60 68

+5%

0

20

40

60

80

100

120

2014 2017

6.8 9.1

+10%

0

2

4

6

8

10

12

14

16

18

2014 2017

4.4 3.9

-3%

0

2

4

6

8

10

12

14

16

18

2014 2017

3.5 3.5

+0%

0

2

4

6

8

10

12

14

16

18

2014 2017

5.0 5.0

+0%

0

2

4

6

8

10

12

14

16

18

2014 2017

Financing and advances, net

32.8 35.2

+2%

0

10

20

30

40

50

60

2014 2017


NCB has a well-diversified business model

Total operating income contribution

Capital Markets

NCB CapitalLargest Asset Manager in KSA

Largest Shariah-compliant Asset Manager worldwide

Top 3 Broker22 locations

287 Employees

SAR 16.1bn88%

NCB

401 branches, 3,624 ATMs153 Remittance centers

7,714 Employees96% Saudization100% CEO DRs

7.9bn43%

4.5bn25%

3.8bn20%

RETAIL

CORPORATE

TREASURY

1.6bn9%

636mn3%

International

Türkiye Finans Katılım Bankası (TFKB)301 branches, 600 ATMs

3,751 employees

Notes: KSA based recruitment services firm Alahli Esnad (fully owned subsidiary) employs 1,541 personsOperating Income as of FY 2107


NCB has a strong financial position

Key KPIs

CAGR CAGR

LCR is based on 4Q average numbersLCR was not reported before 2015

Capital ratios are based on Pillar I RWA

377 435 449 443 444

+4%

0

100

200

300

400

500

600

700

800

2013 2014 2015 2016 2017

Total Assets (SARbn)

43 47 56 60 64

+11%

0

20

40

60

80

100

120

2013 2014 2015 2016 2017

Total Equity (SARbn)

17.1% 17.2% 17.2%

19.2%20.0%

15.1%

16.9%17.7%

16.2%

14.7%13.5%

15.3% 15.7%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

2013 2014 2015 2016 2017

Capital Ratios (%)

TC ratio T1 ratio CET1 ratio

152.3%172.5% 177.3%

62.4% 66.3%78.1% 80.3% 80.7%

0

0

0

1

1

1

1

1

2

2

2

2013 2014 2015 2016 2017

Liquidity Ratios (%)

Liquidity coverage ratio (LCR) Financing to customer deposit ratio


NCB has a strong performance track record

Key KPIs

CAGR CAGR

10.1 11.4 12.6 13.5 13.7

4.8 4.8 4.9 5.1 4.7 14.9 16.2 17.5 18.6 18.3

+5%

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017

Total Operating Income (SARbn)

Net special commission incomeFee and other income

7.9 8.7 9.1 9.3 9.8

+6%

0

2

4

6

8

10

12

14

16

18

2013 2014 2015 2016 2017

Net Income Attributed To Equity Holders (SARbn)

2.99% 2.91% 3.04%3.35% 3.48%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2013 2014 2015 2016 2017

Net Special Commission Margin (%)

39.0% 39.0% 37.4% 37.7%35.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2013 2014 2015 2016 2017

Cost to Income Ratio (%)

20.0% 20.1%19.2%

17.8% 17.4%

2.2% 2.2% 2.1% 2.1% 2.2%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

0

0

0

0

0

0

0

2013 2014 2015 2016 2017

Returns (%)

ROE common shares (%) ROA (%)


05

10152025303540455055

Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17 Mar-18 Aug-18

Share price performance since IPO (SAR)(Adj price)

11

NCB Group listed on Tadawul in November 2014

Ranked third in Tadawul, S&P Pan Arab and MSCI Indices with significant weightings

MSCI Saudi Arabia Index Float Adj. Mcap (USDb) Weighting (%)

SABIC 24.72 18.10

Al Rajhi Bank 18.30 13.40

National Commercial Bank 14.08 10.31

Saudi Telecom (STC) 8.99 6.58

Samba Financial Group 8.19 6.00

Ratings LT ST Outlook

National Commercial BankS&P BBB+ A-2 StableFitch A- F1 StableMoody’s* A1 P-1 StableCapital Intelligence A+ A1 NegativeGovernment of Saudi ArabiaS&P A- StableFitch A+ StableMoody’s A1 StableCapital Intelligence A+ Negative

*Moody’s rating is unsolicited

Source: MSCI, 28 September 2018Source: NCB, Bloomberg

Source: Bloomberg

Share parameters 30 Sep 2018

Closing Price (SAR) 45.0552 week range (SAR) 31-49Free Float 36%Shares issued (mn) 3,000Tangible Book Value (SARmn) 55.315Tangible BVPS 18.44P/TBV Ratio 2.4xP/E Ratio (FY 2017 earnings) 14.26xDiv Yield (FY 2017 dividends) 2.52%3m Avg Daily Volume (shares) 1,010.525

Trading commenced 12/11/2014. Day 1 at SAR 33


National Commercial Bank Grow with KSA, Grow with NCB3Q 2018 Results


Improving economic conditionsDomestic economic and fiscal indicators continue to improveGlobal macro headwinds persist

Source: Thomson Reuters, Ministry of Finance, SAMA, Tadawul, and NCB Economics Forecasts

6.4%

-2.3%

-14.8% -12.9%-9.2%

-3.5%

18.1%

9.7%

-8.7%-3.7%

2.2%

11.3%

-25.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

2013 2014 2015 2016 2017P 2018F

Twin Balances (%)

Budget Balance / GDPCurrent Account Balance / GDP

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

Dec-13 Jul-14 Feb-15 Sep-15 Apr-16 Nov-16 Jun-17 Jan-18 Aug-18

Stock Market

Tadawul Index

718 725 610 529 490 503

36 43

60 39

39 35

754 768 670

568 529 538

0

100

200

300

400

500

600

700

800

900

2013 2014 2015 2016 2017 8M 2018

Foreign Reserves (USDbn)

SAMABanks

0

20

40

60

80

100

120

140

0

2

4

6

8

10

12

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018TitleTitle

Oil Market

Saudi Oil Production, LHSArabian Light Spot Price, RHS


Saudi banking sectorBanking profitability likely to remain resilient on the back of rising rates, as well as ongoing and upcoming government stimuli in support of private sector and individuals

Source: Thomson Reuters, SAMA, Banks’ Annual Reports

0.99%

2.72%

0.30%

2.40%

(0)

(0)

0

0

0

0

0

0

0

2013 2013 2014 2015 2016 2016 2017 2018

Interbank Rates (%)

3M SAR SAIBOR 3M USD LIBOR

1,402 1,576 1,605 1,617 1,619 1,636

11.2% 12.4%

1.9% 0.8% 0.1% 1.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2013 2014 2015 2016 2017 9M 2018

Bank Deposits (SARbn)

DepositsGrowth Rate (YoY%)

1,121 1,251 1,362 1,400 1,387 1,430

12.0% 11.6%8.9%

2.9%-1.0%

0.9%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2014 2015 2016 2017 9M 2018

Bank Lending (SARbn)

Bank credit, private and public sectorsGrowth Rate (YoY%)

9M 2018

42.9 44.9

69.4 75.8 80.0 83.1 86.6

6.8%9.1%

5.7%3.8% 4.3% 4.7%

-9.9%

-7.9%

-5.9%

-3.9%

-1.9%

0.1%

2.1%

4.1%

6.1%

8.1%

10.1%

0

20

40

60

80

100

120

140

160

180

2013 2014 2015 2016 2017 2018


Profits (1H)Profits (FY)Growth Rate (YoY%)

23.0 25.1

37.6 41.5 43.7 41.3 45.0

7.2%

10.2%

5.4%

-5.4%

8.7% 9.5%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

0

10

20

30

40

50

60

70

80

90

100

2013 2014 2015 2016 2017 2018

Profits (SARbn)

Profits (1H)ProfitsGrowth Rate (YoY%)


Vision 2030

Saudi Arabia’s vision 2030 establishes a clear roadmap to accelerate economic growth

A Thriving Economy

An Ambitious

Nation

A Vibrant Society

Pillars Selected Goals & KPIsObjectives

Strengthen Islamic values & national

identity

Offer a fulfilling & healthy life

Grow & diversify the economy

Increaseemployment

Enhance government effectiveness

Enable social responsibility

Vision Realization Programs

Enriching the Hajj and Umrah Experience

National Transformation Program

PIF Program

National Industrial Development and Logistics

Program

Financial Sector Development ProgramLifestyle Improvement

Program

National Companies Promotion Program

Strategic Partnerships Program

The Housing Program

Privatization Program

Saudi Character Enrichment Program

Fiscal Balance Program

Lower the rate of unemployment from 11.6% to 7%

Increase the Public Investment Fund’s assets to over SAR 7 trillion

Increase the private sector’s contribution from 40% to 65% of GDP

Raise the share of non-oil exports in non-oil GDP from 16% to 50%

Increase the localization of oil and gas sectors from 40% to 75%

Increase SME contribution to GDP from 20% to 35%

Increase FDI from 3.8% to the international level of 5.7% of GDP

Raise non-oil government revenue from SAR 163 billion to SAR 1 trillion

Increase women’s participation in the workforce from 22% to 30%


NCB is aligned with Government prioritiesNCB is a key contributor to economic transformation and the Financial Sector Development Program (FSDP) objectives

NCB leverages competitiveness and scale

to deliver value to its stakeholders and support

the national agenda

Vision 2030 Objectives Directly Related to the

FSDP

Enabling financial institutions to support private sector growth

Developing an advanced capital market

Promoting and enabling financial planning

Leading lender for KSA companies with a portfolio of SAR 133bn; 15% Corporate market share (2Q 2018)

A leading supporter of the development of the SME market, working with over 115,000 SMEs across KSA

Primary Dealer in local government securities

SAR 51bn KSA Gov. Bond investment portfolio

Trusted partner and lead advisor in Capital Markets and M&A Activities (KSA Government, ARAMCO, SEDCO Capital REIT Fund, Ma’aden Phosphate Company, Ma’aden Aluminum Company, TaibaHolding Company)

Largest Corporate Savings Advisor, with approximately 50,000 individual participants

Provided home financing for more than 32,000 Saudi families with a portfolio of SAR 22.5bn

Driving inclusive financial services access in KSA through extensive branch network as well as digitization and mobile penetration

Expanding participation in the financial services sector with 6 million KSA based customers, large POS network and full suite of Takaful protection and savings products


Projected economic upturnRising government expenditure is expected to offset a higher interest rate environmentOngoing expansion of non-oil private GDP should reflect positively on banking growth

Source: Ministry of Finance, Fiscal Balance Program, and NCB Economics Forecasts

60 44 142

317 443

576 678

754

2% 2%6%

13%17% 19%

21%24%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

0

200

400

600

800

1,000

1,200

2013 2014 2015 2016 2017 2018F 2019F 2020F

Government Debt (SARbn)

Domestic Public DebtDebt to GDP Ratio (%)

312 370 264 134 208 205 218 228

664740

714696

722 825 888 915

976 1,110

978 830

930 1,030 1,106 1,143

0

200

400

600

800

1,000

1,200

2013 2014 2015 2016 2017P 2018F 2019F 2020F

Government Expenditure (SARbn)

CapexCurrent Expenditure (Opex)

1,5451,729 1,773 1,787 1,791 1,821 1,899 1,991

10.9%11.9%

2.5%0.8% 0.2%

1.7%4.3% 4.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

500

1,000

1,500

2,000

2,500

3,000

2013 2014 2015 2016 2017 2018F 2019F 2020F

Money Supply (SARbn)

Money SupplyGrowth Rate (YoY%)

1,121 1,251 1,362 1,400 1,387 1,420 1,485 1,564

12.0% 11.6% 8.9%2.9%

-1.0%2.4% 4.6% 5.4%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2014 2015 2016 2017 2018F 2019F 2020F

Bank Lending (SARbn)

Bank credit, private and public sectors Growth Rate (YoY%)

917 967 999 1,000 1,012 1,022 1,046 1,088

7.0% 5.4%

3.4%0.1%

1.2%

1.0% 2.4%

4.0%

2.7% 3.7%

4.1%1.7%

-0.8%

2.4% 3.0%

1.8%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

(100)

400

900

1,400

1,900

2,400

2,900

3,400

2013 2014 2015 2016 2017 2018F 2019F 2020F

Real GDP - Total vs. non-oil private sector (SARbn)

Non-Oil Private GDP Growth Rate (YoY%)Non-Oil private sector Growth Rate (YoY%)Real GDP

1,035 913 446 334 436 637 699 696

121 131

169 186 256

289 326 368

1,156 1,044

616 519 692

926 1,025 1,064

106 97

50 4152

73 73 66

-70

-50

-30

-10

10

30

50

70

90

110

0

500

1,000

1,500

2,000

2013 2014 2015 2016 2017P 2018F 2019F 2020F

Government Revenue (SARbn)

Oil RevenuesNon-oil RevenuesAverage Oil Price (USD)


National Commercial Bank Strategy Overview3Q 2018 Results


NCB’s strategic plan is all about execution

Our strategic objectives are supported by productivity enablers

Retail Banking

Corporate Banking

TFKB

Treasury

NCBC

Lean Distribution

Digitization

Expand share of retail profits

Grow in Vision 2030 targeted sectors and resilient SME’s

Increase profit contribution

Diversify funding, sustain investment returns and cross-sell

Generate AUMs and cater to GRE’s growing needs

Expand reach with lean branches

Anywhere, anytime, instant banking

Strategic objectives

Strategic enablers


NCB continues to deliver on its strategic plan

9M 2018 Highlights

Retail portfolio increased by 7% mainly on growth in mortgage including strong progress on REDF acquisition

Retail Banking

Achieved double digit growth in Corporate financing, up 11%Corporate Banking

Maintained strong liquidity and capitalization levels. Improved branch and employee productivity. Increased loan and deposit market share

TFKB

Active Primary Dealer in local government securitiesYoY NOR growth driven by double digit increase in NSCI

Treasury

Continued growth in Net Income from YoY AUM increase, while maintaining cost discipline

NCBC

Optimization of branch network for productivity on going, 3 new format branches added year to date at 6 FTEs

Lean Distribution

Sustain increase in active digital users, with digital channels capturing 97% of branch financial transactions

Digitization


Lean distributionWe accelerated expansion of our distribution platform in Saudi Arabia and are streamlining branch formats to enhance productivity gains

Strategic Imperatives

Continue expanding our distribution reach to acquire customers and grow market share

Expand with smaller branches that are headcount efficient

Optimize costs of existing branch network

Equip branches with self-service/assisted-service technologies

Enhance the in-branch sales and service model to improve customer experience

39.0%35.2%

-10%

0

0

0

0

0

1

1

1

2014 2017

Cost to Income Ratio (%)

342 400

+17%

0

100

200

300

400

500

600

700

2014 2017

Number of Branches

8,021 7,991

-0%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2014 2017

Bank Headcount (NCB employees)

12.1 11.0

-9%

0

5

10

15

20

2014 2017

FTE / branch

60%71%

+18%

0

0

0

1

1

1

1

1

2014 2017

Front / Back Office Ratio (%)

1.65 2.02

+22%

0

1

1

2

2

3

3

4

2014 2017

Operating Income / FTE (SARmn)


8%

4%

-21%

0

0

0

0

0

0

0

2014 2017

Branch Financial Transactions (% of total)

13.0 30.7 2.8

19.4

15.8

50.1

+47%

0

10

20

30

40

50

60

70

80

90

2014 2017

Digital Transactions (mn)

OnlineMobile

10%

37%

+54%

0

0

0

0

0

1

1

1

2014 2017

Digital Transactors (% of total base)

22

Digitization

Migrate customers to digital through superior user experiences

Strategic Focus Areas

Mobile first - anytime, anywhere

Consistently lead KSA banks in functionality and user-experience

Expand end-to-end digital sales capability

Expand subscription base and incentivize usage

Leverage data and analytics to drive sales effectiveness

CAGR CAGR CAGR


74 89

17.4%19.5%

+6%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0

20

40

60

80

100

120

140

160

2014 2017

Consumer Financing & Advances, net (SARbn)

Market Share (%)

Retail Banking

We are transforming retail distribution to increase share of profits


Grow market share in consumer finance

Grow deposits in key segments (Mass/ Affluent/ GRE)

Expand and optimize branch network

Drive digital migration

Continue improving customer satisfaction

CAGR CAGR CAGR

23

5.7

8.1

+12%

0

2

4

6

8

10

12

14

16

2014 2017

Operating Income (SARbn)

1.6

3.8

+35%

0

1

2

3

4

5

6

7

2014 2017

Net Income (SARbn)


Corporate Banking

Grow selectively and increase risk-adjusted returns


Build a deal pipeline in V2030 target sectors

Cross sell treasury and cash management

Focus on portfolio quality and proactively manage risk

Drive migration to digital channels

Expand collection capacity and increase recoveries

CAGR CAGR CAGR

108 124

+5%

0

50

100

150

200

2014 2017

Corporate Financing & Advances, net (SARbn)

3.7 4.2

+4%

0

1

2

3

4

5

6

7

8

2014 2017


3.2

2.1

-13%

0

1

2

3

4

5

2014 2017

Net Income (SARbn)


35%26%

-10%

0

0

0

0

0

1

1

2014 2017

Investments as % of Total Assets

94% 91%

-1%

0

0

0

1

1

1

1

1

2

2

2

2014 2017

Saudi Government and Investment Grade Investments as % of Total

25

Treasury

Broaden and deepen liquidity access while sustaining investment returns and cross-sell


Execute international hubs strategy

Expand wholesale funding program

Maintain the high quality/liquidity and profitability of the investment book

Support the development of the sukuk capital markets

Underpin Islamic product innovation

CAGR CAGR

HQLA is group-wide 4Q averageLCR shows 4Q average

100 95

152.3%177.3%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

200.0%

0

20

40

60

80

100

120

140

160

180

200

2015 2017

HQLA and Liquidity Coverage (SARbn/%)

High quality liquid assets (HQLA)Liquidity coverage ratio (LCR)


10.1%

17.6%

+7.5ppt

0

0

0

0

0

0

0

0

0

2014 2017

NCBC Share of Sector Net Income (%) (SARbn)

490

198

11.4% 11.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

100

200

300

400

500

600

700

800

900

1,000

2014 2017

NCBC Traded Value (SARbn) & Market Share (%)

NCBC Traded ValueMarket Share (%)

26

NCB Capital

KSA’s leading investment bank and asset manager; well positioned to capture future growth


Grow recurring revenues by gathering more AUMs, launching new products, growing Corporate Savings business

Set the stage for future market upturn by growing brokerage market share and continuing to invest in NCBC capabilities

Build on market leadership, landmark IB mandates to support GREs as well as local and foreign institutional clients

Continue to focus on increasing efficiency, improving productivity to bolster resilience

2,147

836

8,333 7,226

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2014 2017

Tadawul Traded Value (SARbn) & TASI Index

Tadawul Traded ValueTASI Index

55

129

+134%

0

50

100

150

200

250

2014 2017

NCBC Assets under Management (SARbn)


34 39

+5%

0

10

20

30

40

50

60

70

2014 2017

Total Assets (TRYbn)

1,446

1,914

+10%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2014 2017

Total Operating Income (TRYmn)

334 375

+4%

0

100

200

300

400

500

600

700

2014 2017

Net Income (TRYmn)

2.9% 3.2%

+3%

0

0

0

0

0

0

0

0

2014 2017

TFKB Contribution to NCB Net Income (%)

27

Türkiye Finans Katılım Bankası

We are executing a transformation program to grow TFKB’s net income


Resume branch expansion and expand digital channels to drive customer acquisition

Strengthen underwriting and improve collections

Increase automation and drive capacity optimization

Instill NCB’s principles (Customer excellence, robust governance, best-in-class technology)

CAGRCAGRCAGRCAGR

Note: Figures according to BRSA accounting standards


Grew Corporate loan portfolio by 11%

28

Three Strategic Priorities for 2018

NCB’s strategy continues to be all about execution

Grow Residential Finance

Current Account and Capital Base

Focus

Position Corporate Banking

for growth

Position NCB as the preferred funding partner

Leverage National housing initiatives

Leverage branch expansion for customer acquisition

Drive focus on current account growth to maintain funding advantage

Sustain capital base to support credit growth

Win mandates in vision 2030 targeted sectors

Resume growth in SMEs by targeting resilient sectors

Optimize operating model to improve platform productivity

Reduce cost of credit through proactive remedial management and recoveries

2.

3.

1.

9M 2018 Update

Grew mortgage portfolio by 13%

Grew Current Accounts by 9%


National Commercial Bank Financial Results Highlights3Q 2018 Results


Key messages

9M 2018 Results

3% increase in total assets

Strong financing growth of 8%

2% investments growth

5% growth in customers’ deposits

Deposit mix improved 2% towards CASA (79%)

10.7% growth of net income

3% NSCI growth

Fee and other income stable

4% operating expenses increase

Impairments improved by 36%

CoR improved to 48bps

Group NPL ratio at 1.8% NPL coverage at 154%

Capital position: CET1 of 15.9% and T1 ratio of 17.8%

Strong liquidity with LTD ratio of 82%,

Average 3Q 2018 LCR of 184.4%

Leverage Ratio of 12.9% at 3Q 2018

Financing (SARbn) Deposits (SARbn)

Net Income Attributed to Equity Holders Movement (SARbn)

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

249 268

+8%

0

100

200

300

400

500

600

4Q 17 3Q 18

309 325

+5%

0

100

200

300

400

500

600

700

800

4Q 17 3Q 18

1.9% 1.8%

0.7%

0.5%

-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 17 3Q 18Group NPL ratioGroup CoR YTD

15.7% 15.9%

81% 82%

20%

30%

40%

50%

60%

70%

80%

90%

0

0

0

0

0

0

0

0

4Q 17 3Q 18CET1LTD

7.25 0.34

(0.00) (0.18)

0.58 0.04 8.02

011223344

9M 1

7

NSC

I

Non

-NSC

I

Expe

nses

Impa

ir-m

ents

Oth

er

9M 1

8

BalanceSheet

Income Statement

Asset Quality, Capital & Liquidity


Income Statement

Profitability Trends

SAR (mn) 3Q 2018 2Q 2018 3Q 2017 YoY % change 9M 2018 9M 2017 YoY % change

Net special commission income 3,637 3,573 3,453 +5% 10,629 10,286 +3%

Fee and other income 1,094 1,087 1,038 +5% 3,542 3,544 -0%

Total operating income 4,732 4,661 4,492 +5% 14,171 13,830 +2%

Operating expenses (1,606) (1,692) (1,587) +1% (4,972) (4,792) +4%

Total impairment charge (616) (340) (709) -13% (1,034) (1,611) -36%

Income from operations, net 2,510 2,628 2,195 +14% 8,166 7,426 +10%

Net income attributed to equity holders 2,454 2,579 2,126 +15% 8,020 7,246 +11%

Higher 9M 2018 net income derived from higher operating income and lower impairments, partly offset by higher operating expenses

2,647 2,352 2,063 2,431 2,908 2,496 2,388

5566

63125

7883 65

2,703 2,417 2,1262,556

2,9872,579 2,454

+15%

0

1,000

2,000

3,000

4,000

5,000

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Net Income Attributed to Equity Holders (SARmn)

International net incomeDomestic net income

4,472 4,085 4,086 4,108 4,407 4,234 4,331

388 393 406 407 372 427 4014,860 4,478 4,492 4,516 4,779 4,661 4,732

+5%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Total Operating Income (SARmn)

International Operating IncomeDomestic Operating Income


Domestic Deposits94%

International Deposits6%

Customers' Deposits Mix (SARbn)

309 325

0

100

200

300

400

500

4Q 17 3Q 18

32

Balance Sheet

Balance Sheet Trends

SAR (mn) 3Q 2018 2Q 2018 3Q 2017 YoY % change FY 2017 YTD % change

Investments, net 116,504 114,978 116,900 -0% 114,578 +2%

Financing and Advances, net 268,245 266,043 256,852 +4% 249,234 +8%

Total assets 459,080 454,374 446,191 +3% 443,866 +3%

Due to banks and other financial institutions 48,112 50,024 57,833 -17% 48,558 -1%

Customers' deposits 325,461 317,653 302,593 +8% 308,942 +5%

Debt securities issued 8,636 8,754 10,166 -15% 10,250 -16%

Total liabilities 395,805 389,342 383,456 +3% 379,590 +4%

Equity attributable to shareholders 55,504 57,007 54,433 +2% 56,041 -1%

Total equity 63,274 65,032 62,736 +1% 64,276 -2%

3% increase in total assets; excluding 38% Turkish Lira depreciation the growth would have been 8%

130 132 131 120 123 131 133

88 90 91 93 93 95 999 8 8 10 12 16 1627 27 27 26 25 24 20

254 257 257 249 253 266 268

+8%

0

50

100

150

200

250

300

350

400

450

500

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Financing & Advances, net (SARbn)

CorporateConsumer and credit cardOthersInternational

236 248 232 238 237 251 258

66 55 59 58 61 53 5512 12 12 13 11 13 12314 315 303 309 309 318 325

+5%

0

100

200

300

400

500

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Customers' Deposits (SARbn)

CASATimeOthers


Retail51%

Corporate19%

Treasury18%

Capital Market3%

International9%


Retail47%

Corporate18%

Treasury23%

Capital Market4%

International8%


33

Segmental Information (1/3)

9M 2018 Total operating income growth mainly from retail and treasury.

13,830

620

(549)

161 97 13 14,171

0

500

1,000

1,500

2,000

2,500

3,000

3,500

9M 17 Retail Corporate Treasury CapitalMarket

International 9M 18

9M 18 Total Operating Income Movement (SARmn)

4,492

452

(95)(112)

1

(5)

4,732

0

200

400

600

800

1,000

1,200

1,400

3Q 17 Retail Corporate Treasury CapitalMarket

International 3Q 18

3Q 18 Total Operating Income Movement (SARmn)

13.8 14.2

0

2

4

6

8

10

12

14

16

18

20

9M 17 9M 18

4.5 4.7

0

1

2

3

4

5

3Q 17 3Q 18


Retail55%

Corporate7%

Treasury32%

Capital Market3%

International3%

Net Income Attributed to Equity Holders (SARbn)

2.1 2.5

0

1

1

2

2

3

3

4

3Q 17 3Q 18

Retail42%

Corporate16%

Treasury35%

Capital Market4%

International3%

Net Income Attributed to Equity Holders (SARbn)

34


9M 2018 Net income growth driven by retail.

7,246

671

(126)

104 82 43 8,020

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

9M 17 Retail Corporate Treasury CapitalMarket

International 9M 18

9M 18 Net Income Attributed to Equity Holders Movement (SARmn)

2,126

486

(74)(80) (7)

2 2,454

0

100

200

300

400

500

600

700

800

3Q 17 Retail Corporate Treasury CapitalMarket

International 3Q 18

3Q 18 Net Income Attributed to Equity Holders Movement (SARmn)

7.2 8.0

0

1

2

3

4

5

6

7

8

9

10

9M 17 9M 18



9M 2018 financing growth mainly driven by Corporate and Retail segments

113 118 124128 143 143

163 158 16038 34 31

444 454 459

+3%

0

100

200

300

400

500

600

700

800

4Q 17 2Q 18 3Q 18


RetailCorporateTreasuryCapital MarketInternational

93 95 99

120 131 13326 24 20

249 266 268

+8%

0

100

200

300

400

500

4Q 17 2Q 18 3Q 18

Financing and Advances, net (SARbn)

Consumer and credit cardCorporateInternationalOther

Management Commentary

YTD 2018 Total assets increased by 3% due to higher Corporate (+11%) and Retail (+7%) financing and investments (+2%).

Customers’ deposits increased by 5% from the Retail segment.

Deposits mix improved with CASA balances at 79% of total deposits at 3Q 2018 compared with 77% at 4Q 2017.

237 242 247

42 47 528 9 822 20 18309 318 325

+5%

0

100

200

300

400

500

600

4Q 17 2Q 18 3Q 18


RetailCorporateTreasuryInternational


Outlook

Improved macroeconomic environment expected to drive growth

Average Arabian light oil price of USD 73 per barrel

A total of four US Fed rate hikes of 25bps are expected in 2018 (Mar, Jun, Sep, Dec)

Government’s expansionary budget drives corporate lending activity going forward

Residential financing drives consumer lending growth

Budget deficit is expected to narrow to SAR 104bn

Real GDP growth is estimated to reach 2.4%

VAT and increased tariffs on utilities increases inflation to around 2.7%

2018 Macroeconomic Outlook

Financing growth -2% +7.6% +5% to 8% Upper end of the

range

FY 2017Reported

9M 2018Reported

FY 2018Guidance

FY 2018 Outlook

Tier 1 CAR 17.7% 17.8% 16% to 18% Upper end of the range

Group Cost of Risk 0.7% 0.5% 0.6% to 0.8% Lower end of the

range

BalanceSheet

Profitability

Capitalization and Asset

Quality

NSCI margin 3.48% 3.60% +5 to 15bps Upper end of the range

Cost to income 35.2% 35.1% Below 35% Similar level to YTD


National Commercial Bank Financial Results Details3Q 2018 Results


Operating Income Highlights


9M 2018 total operating income increased by 2% YoY from 3% higher net special commission income, while fee and other income remained stable YoY.

International operating income increased by 1% despite 20% depreciation of the average Turkish Lira rate as compared with 9M 2017.

3Q 2018 total operating income increased 5% YoY from a 5% improvement in both net special commission income and fee and other income.

Excluding the International business, 3Q 2018 total operating income was 6% higher YoY.

Higher 9M 2018 total operating income driven by net special commission income growth

10.29 10.63

3.54 3.54

13.83 14.17

+2%

0

5

10

15

20

25

9M 17 9M 18

13.83 0.39

(0.06)

0.01 14.17

12.97

1.20

12.64

1.19

0

1

2

3

4

5

6

7

8

9

9M 17 NSCI Fee and other income InternationalNOR

9M 18

9M 18 Total Operating Income Movement (SARbn)

Domestic

International

Domestic

International

3.45 3.57 3.64

1.04 1.09 1.094.49 4.66 4.73

+5%

0

1

2

3

4

5

6

7

8

9

10

3Q 17 2Q 18 3Q 18


Fee and other income

Net special commission income

4.490.22 0.03 (0.01) 4.73

4.33

0.40

4.09

0.41

0

1

1

2

2

3

3

3Q 17 NSCI Fee and other income InternationalNOR

3Q 18

3Q 18 Total Operating Income Movement (SARbn)


Net special commission income trends

9M 2018 net special commission income growth of 3%.


9M 2018 NSCI improved by 3% on higher SCI (+5%), despite 13% increase in cost of fund due mainly to higher SAIBOR/LIBOR, while 3Q 2018 NSCI improved by 4%.

The 3Q 2018 net special commission margin increased by 12bps YoY to 3.60% due to improved yields (+36bps).

Funding cost for 3Q 2018 was 32% higher YoY mainly due to higher SAIBOR/LIBOR rates.

Net Special Commission Income

SAR (mn) 3Q 2018 2Q 2018 3Q 2017 YoY % change 9M 2018 9M 2017 YoY %

change

Special commission income 4,700 4,442 4,264 +10% 13,370 12,690 +5%

Special commission expense (1,063) (869) (810) +31% (2,740) (2,404) +14%

Net special commission income 3,637 3,573 3,453 +5% 10,629 10,286 +3%

Commission yield (%) 4.65% 4.50% 4.29% +8% 4.53% 4.32% +5%

Funding cost (%) 1.14% 0.95% 0.87% +32% 1.00% 0.88% +13%

Net special commission margin (%) 3.60% 3.62% 3.48% +4% 3.60% 3.50% +3%

1.15% 1.30% 1.33%1.69%

2.31%

2.34% 2.40%1.74% 1.78% 1.79% 1.90%2.27%

2.59% 2.72%

0

0

0

0

0

0

0

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

SAIBOR and LIBOR Rates (%)

3M USD LIBOR (%) 3M SAR SAIBOR (%)

4.08% 3.94% 3.92% 3.94% 4.06% 4.10% 4.19%

0.61% 0.49% 0.52% 0.51% 0.51% 0.58% 0.71%

7.55% 7.81% 8.19% 8.54% 8.47%9.30%

11.07%

4.27% 4.11% 4.43%5.94%

5.01% 5.10%6.40%

(0)

0

0

0

0

0

0

0

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Commission Yield and Funding Cost (%)

Domestic Yields Domestic COFInternational Yields International COF

3.48%3.43%

3.46%3.56% 3.53%

3.52% 3.52%3.48%

3.41%

3.59% 3.62% 3.60%

3.55%3.95% 4.01%

2.89%

3.69%

4.44% 4.66%

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

0

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Net Special Commission Margin (%)

Domestic Group International


2,385 2,464

890 920638 466

(369) (308)

3,544 3,542

-0%

(500)

500

1,500

2,500

3,500

4,500

5,500

6,500

9M 17 9M 18

793 809 802

281 289 36997 86 22

(133) (96) (100)

1,038 1,087 1,094

+5%

(200)

300

800

1,300

1,800

2,300

3Q 17 2Q 18 3Q 18

Fee and Other Income (SARmn)

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

40

Fee and other income trends


Fee and other income for 9M 2018 was stable YoY as 3% growth in fee and FX income was offset by lower investment income.

3Q 2018 fee and other income increased 5% YoY due to 1% growth in fees from banking services, 25% lower other operating expenses which were offset by lower investment-related income (-77%).

The higher fees from banking services in 3Q 2018 were mainly driven by higher fees from investment management services and financing and lending, partly offset by lower trade finance fees and shares brokerage.

Higher 9M 2018 fee and exchange income, offset by lower Investment income

Fee IncomeSAR (mn) 3Q 2018 2Q 2018 3Q 2017 YoY %

change 9M 2018 9M 2017 YoY % change

Finance and lending 400 358 373 +7% 1,115 1,128 -1%Trade finance 109 121 131 -17% 368 400 -8%Investment management services 129 133 117 +10% 426 311 +37%

Shares brokerage 24 39 32 -26% 122 133 -8%Credit cards 35 50 38 -9% 122 112 +9%Others 106 109 101 +4% 310 300 +4%Fee income from banking services, net 802 809 793 +1% 2,464 2,385 +3%

2,385 104

(13)

10

(33)

11 2,464

2,297

167

2,171

214

(100)

400

900

1,400

1,900

2,400

2,900

9M 17 Brokerage& invmnt.Mngmnt.

Finance &lending

Credit cards Tradefinance

Other 9M 18

9M 18 Drivers of Fee Income from Banking Services Movement (SARmn)

Domestic

International


2,578 2,662

568 572501 464

1,144 1,274

4,792 4,972

+4%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

9M 17 9M 18

834 899 844197 196 183153 155 153404 443 426

1,587 1,692 1,606

+1%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

3Q 17 2Q 18 3Q 18

Operating Expenses (SARmn)

Other G&ADepreciation & amortizationRent & premisesEmployee-related

41

Expense highlights


9M 2018 expenses grew by 4% YoY, while 3Q 2018 operating expenses increased by 1% YoY.

The cost to income ratio for 9M 2018 was 35.08%, higher by 43bps compared to 9M 2017.

The cost base incremental was relatively broad-based, reflecting growing business, cost of living allowances to employees announced this year and the impact of VAT. These were partly offset by the continued strides made in digitization and productivity initiatives, and lower depreciation.

34.7%34.3%

34.6%35.2% 35.0%

35.7%35.1%

32.9%32.3%

32.7%33.3%

33.1%

34.1% 33.9%

0

0

0

0

0

0

0

1Q 17 1H 17 9M 17 FY 17 1Q 18 1H 18 9M 18

Cost to Income Ratio (YTD %)

Group (%) Excluding International (%)

4,792 84 4

(38)

130 4,972

4,399

573

4,139

653

0

500

1,000

1,500

2,000

2,500

3,000

3,500

9M 17 Employee-related Rent & premises Depreciation &amortization

Other G&A 9M 18

9M 18 Operating Expenses Movement Drivers (SARmn)

Domestic

International

VAT, cost of living allowances and growth plans largely contributed to higher expenses in 9M 2018


Financing and Advances, net59%

Investments, net25%

Cash, bank and SAMA balances12%

Other assets, net4%

Total Assets Mix (SARbn)

Retail27%

Corporate31%

Treasury35%

Capital Market0%

International7%

Total Assets by Segment (SARbn)

42

Asset highlights and composition

3% growth in balance sheet as a result of increase in financing


Total assets increased 3% due to increase in financing.

8% Financing increase driven by 11% increase in domestic financing, despite 22% decline in international financing impacted by 38% Turkish Lira depreciation.

Overall financing trends were reflective of early signs of economic recovery but muted by Turkish Lira depreciation.

Investments increased by 2% as portfolio re-balancing and participation in Saudi Government debt issuance continued.

249 266 268

115 115 11760 54 55444 454 459

+3%

0

100

200

300

400

500

600

700

800

4Q 17 2Q 18 3Q 18


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

444 459

0

100

200

300

400

500

600

4Q 17 3Q 18

444 459

0

100

200

300

400

500

600

4Q 17 3Q 18


Consumer financing & credit cards

35%

Commerce13%

Manufacturing12%

Services9%

Utilities & health8%

Building & construction7%

Others, across 6 sectors16%

Financing and Advances, gross by Economic Sector (SARbn)

43

Financing and advances

Financing growth driven by Corporate and Consumer segments


Domestically, financing grew for the Corporate Segment (+11%) and Consumer segment (+7%) from 4Q 2017.

Growth in the Corporate segment was driven across all economic sectors apart from Commerce.

International financing declined 22% in 3Q 2018 due principally to the weakened Turkish Lira.

93 95 99

120 131 13326 24 2010 16 16

249 266 268

+8%

0

50

100

150

200

250

300

350

400

450

500

4Q 17 2Q 18 3Q 18


Consumer and credit cardCorporateInternationalOther

256 276

0

50

100

150

200

250

300

350

4Q 17 3Q 18

256

7.5

4.8

(7.7)

4.0 3.3

1.6

6.5 276

0

5

10

15

20

25

30

35

4Q 17 Building &construction

Banking &financial

Services Consumerfinancing &credit cards

Transport &comms

Commerce Other 3Q 18

Movement Financing, gross by Economic Sector (SARbn)


Financing and advances credit quality (1/2)

Rise in Corporate NPLs and impairment allowances partly offset by lower International

2.12 2.34 2.59 2.84 2.80 2.94 3.510.50 0.49 0.56 0.53 0.52 0.53

0.511.48 1.50 1.52 1.40 1.40 1.26 1.034.10 4.33 4.67 4.77 4.72 4.75 5.06

+6%

0

1

2

3

4

5

6

7

8

9

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

NPL (SARbn)

CorporateConsumer and credit cardInternationalOthers

3.68 3.92 3.96 4.15 4.79 4.87 5.211.16 1.24 1.32 1.34 1.50 1.48 1.531.27 1.29 1.33 1.26 1.38 1.21 0.966.15 6.50 6.65 6.80

7.77 7.66 7.79

+15%

0

2

4

6

8

10

12

14

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Impairment Allowances (SARbn)

CorporateConsumer and credit cardInternationalOthers

0.26 0.250.47

0.14

(0.04)

0.120.490.08 0.17

0.17

0.03

(0.04)

0.12

0.030.08 0.05

0.08

0.08 0.060.11

0.140.42 0.48

0.71

0.26

(0.01)

0.34

0.61

-14%

(0)

0

0

1

1

1

1

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Impairment Charge (SARbn)

Corporate Consumer and credit card International Others

4.77

0.29

0.15

(0.05)

0.03 0.01

(0.08)(0.05)

5.06

0

0

0

0

0

1

1

1

1

4Q 17 Building &construction

Utilities &health

Manufacturing Transport &comms

Services Consumerfinancing &credit cards

Other 3Q 18

Movement NPLs by Economic Sector (SARbn)


Financing and advances credit quality (2/2)

Stable NPL ratio and higher NPL coverage


NPL ratio declined in 3Q 2018 vs 4Q 2017 driven by International

NPL coverage was higher at 154% as at 3Q 2018 from write-offs as well as higher provision stock as a result of IFRS9 adoption adjustments.

1.1% 1.2% 1.3% 1.5% 1.4% 1.4% 1.6%

5.3% 5.4% 5.4% 5.1% 5.3% 5.1% 4.8%

1.6% 1.6% 1.8% 1.9% 1.8% 1.7% 1.8%

(0)

0

0

0

0

0

0

0

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

NPL Ratios (%)

Domestic International Group NPL ratio

186% 184%169% 164%

192% 185%170%

86% 86% 87% 90%99% 96% 93%

150% 150% 142% 143%

165% 161% 154%

0

1

1

1

1

1

2

2

2

2

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

NPL Coverage Ratios (%)

Domestic International Group NPL coverage ratio

0.6% 0.6%0.8% 0.7%

-0.1% 0.1%0.3%

1.2%1.0% 1.0% 1.1%

1.0%

1.4%

2.0%

0.6% 0.7% 0.8% 0.7%

0.0%

0.3%0.5%

(0)

0

0

0

0

0

0

1Q 17 1H 17 9M 17 FY 17 1Q 18 1H 18 9M 18

CoR Ratios (YTD %)

Domestic International Group CoR ratio


Domestic financing and advances credit quality

Corporate NPLs increased while Consumer NPLs were stable


The Corporate NPL ratio and cost of risk increased and NPL coverage dropped in 3Q 2018, in part due to higher NPL inflows during the quarter. The 9M 2018 impact was limited by IFRS9 adjustments and write-offs during the period.

Consumer and credit card risk metrics remained healthy during the period.

1.6% 1.7%1.9%

2.2% 2.2% 2.2%2.5%

0.6% 0.5% 0.6% 0.6% 0.5% 0.5% 0.5%

(0)

(0)

0

0

0

0

0

0

0

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

NPL Ratios (%)

Corporate Consumer and credit card

174% 168%153% 148%

171% 166%149%

232%254%

237% 236%

290% 279%301%

1

2

2

3

3

4

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

NPL Coverage Ratios (%)


0.8% 0.7%

1.0% 0.9%

-0.1%

0.1%

0.5%

0.4%

0.5% 0.6%0.5%

-0.2%

0.2% 0.1%

(0)

(0)

0

0

0

0

0

0

0

1Q 17 1H 17 9M 17 FY 17 1Q 18 1H 18 9M 18

CoR Ratios (YTD %)



Saudi Government securities44%

Other investment grade47%

Non-investment grade3%

Unrated6%

Investments by Credit Grade (SARbn)

115 117

0

20

40

60

80

100

120

140

4Q 17 3Q 18

Saudi Arabia60%

GCC and Middle East17%

Europe1%

Turkey2%

Other countries20%

Investments by Geography (SARbn)

Investments trends and compositionInvestments increased 2% and quality remains strong; ~91% of the investment portfolio remains Saudi Government and investment grade


The investment portfolio is built on high quality securities with ~91% being Saudi governments and investment grade.

Since the resumption of KSA government debt issuance, NCB has actively participated in issues of longer term debt securities.

The portfolio has been re-balancing towards floating rate securities in light of the rising interest-rate environment.

47

67 63 64

43 46 465 5 6

115 115 117

+2%

0

50

100

150

200

4Q 17 2Q 18 3Q 18

Investments (SARbn)

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

115 117

0

20

40

60

80

100

120

140

4Q 17 3Q 18


Due to banks and other financial institutions

12%

Customers' deposits82%

Debt securities issued2%

Other liabilities4%

Total Liabilities Mix (SARbn)

48

Liabilities trends and composition

Higher total liability base and a improving deposit mix towards CASA balances (79%)


4% Increase in total liabilities; excluding Turkish Lira depreciation, the growth would have been 13%.

Customers’ deposits are the main source of funding and rose by 4% in 3Q 2018.

CASA balances account for 79% of customers’ deposits compared to 77% at 4Q 2017.

Domestically, CASA balances grew by 8.5% and time deposits declined by 5% from 4Q 2017.

309 318 325

49 50 4810 9 9380 389 396

+4%

0

100

200

300

400

500

600

700

4Q 17 2Q 18 3Q 18

Total Liabilities (SARbn)

Customers' depositsDue to banks and other financial institutionsDebt securities issuedOther liabilities

380 396

0

50

100

150

200

250

300

350

400

450

500

4Q 17 3Q 18

231 244 251

7 7 743 40 4415 13 1113 13 12309 318 325

+5%

0

100

200

300

400

500

600

4Q 17 2Q 18 3Q 18


CASA - DomesticCASA - InternationalTime - DomesticTime - InternationalOthers


Liquidity

NCB maintained a strong liquidity profile


As at 3Q 2018, the financing to customers’ deposit ratio was 82.4% and comfortably below the regulatory guidelines.

HQLA balances rose by 3% compared to 4Q 2017.

The average quarterly LCR improved to 184.4% in 3Q 2018 from 177.3% in 4Q 2017.

Basel III leverage ratio was stable at 12.9% as at 3Q 2018 relative to 13.0% at 4Q 2017.

Quarterly averages

102 96 91 95 97 99 98

163.8% 166.1% 172.5% 177.3%198.6% 211.9%

184.4%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

0

50

100

150

200

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

HQLA and Average Liquidity Coverage (SARbn/%)

High quality liquid assets (HQLA)Liquidity coverage ratio (LCR)

81.0% 81.6%84.9%

80.7% 81.8% 83.8% 82.4%

1

1

1

1

1

1

1

1

1

1

1

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Financing to Customer Deposit Ratio (%)

12.4% 12.2% 12.7% 13.0% 13.5% 13.1% 12.9%

0

0

0

0

0

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Basel III leverage Ratio (%)


72 72

0

10

20

30

40

50

60

70

80

90

100

4Q 17 3Q 18 Common equity tier 1 capital (CET1)

79%

Additional tier 1 capital (AT1)10%

Tier 2 capital (T2)11%

Total Capital Composition (SARbn) Management Commentary

Capitalization remained strong and comfortably above the regulatory minima with CET1 at 15.9% and T1 at 17.8%

Pillar I risk weighted assets remained stable in YTD 2018 despite growth in financing, which was offset by lower charge on residential real estate financing as recently allowed by SAMA, and Turkish Lira depreciation.

Common equity Tier 1 capital (CET1) is impacted by one time IFRS9 adjustment adoption.

50

Capital

Capital position comfortably above regulatory minima

Capital ratios are based on Pillar I RWA

57 58 57

7 7 78 8 8

72 73 72

+0%

0

20

40

60

80

100

120

140

4Q 17 2Q 18 3Q 18

Capitalisation (SARbn)

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

318 315 314

34 35 359 12 12361 361 361

-0%

0

100

200

300

400

500

600

700

4Q 17 2Q 18 3Q 18

Pillar I Risk Weighted Assets (SARbn)

Credit riskOperational riskMarket risk

14.6% 14.1% 14.5%15.7% 16.2% 16.2% 15.9%

16.1% 16.0% 16.4%17.7% 18.2% 18.1% 17.8%18.2% 18.2% 18.5%

20.0% 20.4% 20.3% 20.0%

0

0

0

0

0

0

0

0

0

0

1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18

Capital Ratios (%)

CET1 ratioT1 ratioTC ratio


National Commercial Bank Segmental Review3Q 2018 Results


NCB Bank (standalone)Strong 9% 9M 2018 net income growth resulting from operating income growth and lower impairment charge


9M 2018 net income rose 9% YoY driven principally by 2% operating income growth and a 49% improvement in the impairment charge, while operating expenses increased by 6% mainly due to VAT, Cost of living allowances and business growth.

NSCI for 9M 2018 improved by 4% YoY due to increase in average earning assets and better margins from higher CAs growth.

3Q 2018 net income rose 17% YoY driven principally by 6% operating income growth and a 25% improvement in the impairment charge.

Summary Financial PerformanceSAR (mn) 3Q 2018 2Q 2018 3Q 2017 YoY %


Total assets 426,410 418,494 405,667 +5% 426,410 405,667 +5%

Total operating income 4,176 4,057 3,932 +6% 12,413 12,180 +2%Net special commission income 3,310 3,224 3,095 +7% 9,645 9,260 +4%Fee income from banking services, net 610 582 576 +6% 1,760 1,724 +2%

Operating expenses (1,368) (1,400) (1,294) +6% (4,137) (3,885) +6%Impairment charge (473) (228) (629) -25% (716) (1,393) -49%Other income (expenses) (14) (17) (20) -29% (54) (46) +18%Net income for the period 2,321 2,412 1,989 +17% 7,506 6,857 +9%

% of total assets 92.9% 92.1% 90.9% +2% 92.9% 90.9% +2%Cost to income (%) 32.8% 34.5% 32.9% -0% 33.3% 31.9% +4%NCL (%) 0.7% 0.4% 1.1% -31% 0.3% 0.8% -58%ROA (%) 2.2% 2.4% 2.0% +13% 2.4% 2.3% +6%

NIM (%) 3.5% 3.6% 3.4% +3% 3.6% 3.5% +2%

NPL (%) 1.6% 1.4% 1.3% +18% 1.6% 1.3% +18%NPL Coverage Ratio (%) 170% 185% 169% +1% 170% 169% +1%

223 242 248

+11%

0

50

100

150

200

250

300

350

400

450

4Q 17 2Q 18 3Q 18


287 298 307

+7%

0

100

200

300

400

500

4Q 17 2Q 18 3Q 18



Retail Banking

Higher 9M 2018 net income from higher operating income and lower impairment charge


9M 2018 net income increased by 25% YoY driven principally by 10% higher operating income and a 76% improvement in impairment charges.

NSCI for 9M 2018 improved by 8% YoY due to a 7% increase in retail financing and better margins driven by higher current account growth.

Fee income increased by 16% in 9M 2018 YoY, mainly from financing-related activity.

9M 2018 operating expenses increased 9% YoY and the cost to income ratio reached 46.6% from 47.1% a year earlier due to strong operating income growth.

3Q 2018 net income increased by 56% YoY driven by 23% higher operating income and an 84% improvement in impairment charges.



Total assets 123,856 118,068 111,565 +11% 123,856 111,565 +11%

Total operating income 2,427 2,188 1,975 +23% 6,590 5,970 +10%Net special commission income 2,002 1,796 1,723 +16% 5,441 5,026 +8%Fee income from banking services, net 390 343 307 +27% 1,043 897 +16%

Operating expenses (1,035) (1,055) (927) +12% (3,071) (2,810) +9%Impairment charge (26) (117) (167) -84% (99) (416) -76%Other income (expenses) (5) (7) (7) -23% (18) (13) +39%Net income for the period 1,360 1,009 874 +56% 3,402 2,731 +25%

% of total assets 27.0% 26.0% 25.0% +8% 27.0% 25.0% +8%Cost to income (%) 42.6% 48.2% 47.0% -9% 46.6% 47.1% -1%CoR 0.1% 0.5% 0.7% -86% 0.1% 0.6% -78%ROA (%) 4.5% 3.6% 3.1% +45% 3.8% 3.3% +16%

93 95 99

+7%

0

20

40

60

80

100

120

140

160

4Q 17 2Q 18 3Q 18


237 242 247

+4%

0

50

100

150

200

250

300

350

400

450

4Q 17 2Q 18 3Q 18



Corporate Banking

9M 2018 net income reduced by 9% mainly on volume as average balances declined 5%


9M 2018 net income decreased 9% YoY due to lower operating income (-18%) despite lower impairments (-42%) and operating expenses (-2%).

NSCI for 9M 2018 declined 18% YoY as a result of repayments in 4Q 2017 that reduced average balances during the period by 5% compared with 9M 2017.

Fee income decreased by 17% YoY mainly on lower lending and trade fees.

The 9M 2018 impairment charge declined 42% YoY due mainly to a significant recovery and one-time IFRS9 adoption adjustment to retained earnings permissible by IFRS9.

3Q 2018 net income decreased 31% YoY due to lower operating income (-10%) and higher impairments (+5%), partly offset by lower operating expenses (-16%).



Total assets 142,725 142,800 139,843 +2% 142,725 139,843 +2%

Total operating income 878 773 974 -10% 2,572 3,121 -18%Net special commission income 665 632 700 -5% 1,950 2,368 -18%

Fee income from banking services, net 201 201 243 -17% 623 753 -17%

Operating expenses (225) (228) (267) -16% (720) (737) -2%Impairment charge (488) (116) (465) +5% (563) (972) -42%Other income (expenses) (4) (6) (6) -37% (17) (14) +21%Net income for the period 162 424 236 -31% 1,272 1,398 -9%

% of total assets 31.1% 31.4% 31.3% -1% 31.1% 31.3% -1%Cost to income (%) 25.6% 29.4% 27.4% -7% 28.0% 23.6% +19%CoR 1.4% 0.3% 1.4% +2% 0.5% 1.0% -44%ROA (%) 0.5% 1.2% 0.7% -33% 1.3% 1.4% -7%

42 47 52

+23%

0

10

20

30

40

50

60

70

80

90

100

4Q 17 2Q 18 3Q 18


120 131 133

+11%

0

50

100

150

200

250

4Q 17 2Q 18 3Q 18



Treasury

Higher 9M 2018 net income driven by operating income growth


9M 2018 net income improved by 4% YoY driven by 5% operating income growth, partly offset by 2% higher expenses and higher investment impairment.

3Q 2018 net income decreased by 9% YoY driven by lower non recurring revenues, partly offset by reversal of credit losses.



Total assets 159,829 157,626 154,259 +4% 159,829 154,259 +4%

Total operating income 871 1,096 983 -11% 3,251 3,090 +5%Net special commission income 643 797 672 -4% 2,254 1,866 +21%Fee income from banking services, net 20 37 26 -24% 94 74 +27%

Other operating income 209 262 285 -27% 903 1,150 -21%Operating expenses (109) (118) (100) +9% (346) (338) +2%Impairment charge 41 5 2 +1664% (54) (5) +1084%Other income (expenses) (5) (4) (7) -30% (19) (19) +2%Net income for the period 798 979 879 -9% 2,833 2,728 +4%

Cost to income (%) 12.5% 10.8% 10.1% +23% 10.6% 10.9% -3%% of total assets 34.8% 34.7% 34.6% +1% 34.8% 34.6% +1%ROA (%) 2.0% 2.5% 2.3% -11% 2.3% 2.3% -0%

115 115 117

+2%

0

50

100

150

200

4Q 17 2Q 18 3Q 18

Investments, net (SARbn)

672 797 643

311 300228

983 1,096871

-11%

0

500

1,000

1,500

2,000

3Q 17 2Q 18 3Q 18

Total Operating Income (SARmn)

Net special commission incomeFee and other income


Capital Markets

Higher 9M 2018 net income growth, driven by asset management


9M 2018 operating income increased by 21% from higher AUM related and other fees, which combined with improving operating efficiency drove strong 40% net income growth YoY.

3Q 2018 net income decreased by 9% YoY due to higher operating expenses (+7%) on stable total operating income.



Assets Under Management 140,269 143,850 139,660 +0% 140,269 139,660 +0%Brokerages Volume 30,047 48,510 39,500 -24% 125,547 148,920 -16%

Total operating income 155 176 154 +0% 559 462 +21%AUM Related Fee Income 118 123 108 +8% 397 315 +26%Brokerage Related Fee Income 23 38 31 -26% 100 111 -10%Other fee income 7 6 8 -11% 40 21 +90%

Fee income, net 148 167 148 +0% 537 447 +20%Operating expenses (85) (88) (79) +7% (262) (254) +3%Other income (expenses) 0 (0) 1 -100% 0 2 -100%Net income 70 88 76 -9% 296 210 +41%Non-controlling interests (2) (4) (2) +6% (9) (5) +72%Net income attributed to equity holders 68 84 74 -9% 287 205 +40%

Cost to income (%) 55.0% 50.1% 51.4% +7% 46.9% 54.9% -15%

129 144 140

+9%

0

50

100

150

200

250

4Q 17 2Q 18 3Q 18

Assets Under Management (SARbn)

4049

30

-24%

0

10

20

30

40

50

60

70

80

90

3Q 17 2Q 18 3Q 18

Brokerages Volume (SARbn)


International (in SAR)9M 2018 net income improved 23% YoY due to slightly higher operating income and improved operating efficiency


9M 2018 net income rose by 23% driven by modest 1% operating income growth and 12% lower operating expenses, despite 45% higher impairment charges.

The financial performance was impacted by a 40% drop YoY in the 9M average TRY/SAR rate, and 15% decline in the TRY/SAR spot rate since 4Q 2017.

3Q 2018 net income improved 4% YoY on stable operating income and improved operating efficiency.



Total assets 31,003 34,306 38,962 -20% 31,003 38,962 -20%

Total operating income 401 427 406 -1% 1,200 1,187 +1%Net special commission income 324 347 358 -9% 977 1,023 -4%Fee income from banking services, net 44 60 70 -36% 167 214 -22%

Operating expenses (153) (204) (214) -29% (573) (653) -12%Impairment charge (143) (112) (80) +79% (318) (219) +45%Other income (expenses) (8) 13 (17) -54% 30 (39) -177%Net income 97 124 94 +3% 339 277 +22%Non-controlling interests (32) (41) (31) +2% (112) (93) +21%Net income attributed to equity holders 65 83 63 +4% 227 184 +23%

% of total assets 6.8% 7.6% 8.7% -23% 6.8% 8.7% -23%Cost to income (%) 38.1% 47.8% 52.8% -28% 47.8% 55.0% -13%CoR (%) 2.6% 1.8% 1.1% +132% 2.0% 1.0% +90%ROA (%) 1.2% 1.4% 1.0% +24% 1.3% 0.9% +41%

NSCI margin (%) 4.7% 4.4% 4.0% +16% 4.2% 3.8% +10%NPL (%) 4.8% 5.1% 5.4% -10% 4.8% 5.4% -10%NPL Coverage Ratio (%) 93% 96% 87% +6% 93% 87% +6%

26 24 20

-22%

0

5

10

15

20

25

30

35

40

45

50

4Q 17 2Q 18 3Q 18


22 20 18

-18%

0

5

10

15

20

25

30

35

4Q 17 2Q 18 3Q 18



International (in TRY)9M 2018 net income grew by 50% YoY due to higher operating income despite higher credit costs


9M 2018 net income grew by 50% YoY driven by 19% higher NSCI, despite higher operating (+10%) and credit (+81%) charges.

Notwithstanding the higher operating expenses, the 9M 2018 cost to income ratio improved to reach 47.8% from 54.6% in 9M 2017 from very strong income growth.

3Q 2018 net income increased by 62% YoY due to 44% higher NSCI, partly offset by higher operating (+14%) and credit (+183%) costs.

FX translation also impacted credit costs

Summary Financial PerformanceTRY (mn) 3Q 2018 2Q 2018 3Q 2017 YoY %


Total assets 50,224 41,867 36,868 +36% 50,224 36,868 +36%

Total operating income 596 496 380 +57% 1,432 1,137 +26%Net special commission income 482 403 335 +44% 1,166 980 +19%Fee income from banking services, net 66 70 65 +1% 199 205 -3%

Operating expenses (227) (237) (199) +14% (684) (621) +10%Impairment charge (212) (130) (75) +183% (379) (209) +81%Other income (expenses) (12) 16 (16) -28% 36 (37) -195%Net income 145 145 89 +62% 404 270 +50%Non-controlling interests (48) (48) (29) +63% (134) (89) +50%Net income attributed to equity holders 97 97 60 +62% 271 181 +50%

Cost to income (%) 38.1% 47.8% 52.5% -27% 47.8% 54.6% -13%ROA (%) 1.3% 1.4% 1.0% +30% 1.2% 1.0% +27%

CAR % 19.4% 18.8% 18.3% +6% 19.4% 18.3% +6%Tier 1 CAR % 13.4% 13.7% 14.5% -8% 13.4% 14.5% -8%LTD ratio % 114% 119% 124% -8% 114% 124% -8%

Note: Figures according to IFRS accounting standards

1.2

5.2

FX translation impact

3Q 18 Reported

Growth at constant FX

4Q 17 Reported

3Q 18 Underlying

26.527.7

32.9

+5% +24%

Financing & Advances, net (TRYbn)

Customers’ Deposits (TRYbn)

0.7

6.6

4Q 17 Reported

3Q 18 Reported

FX translation impact

Growth at constant FX

3Q 18 Underlying

22.8 23.5

30.0

+3% +32%

43% 43%

49% 60%

% in foreign currency xx%


National Commercial Bank Additional Information3Q 2018 Results


Additional Information

Please don’t hesitate to contact NCB Group Investor Relations

More information

Download copies of National Commercial Bank’s:

Financial statements

Earnings release

Investor presentation

Financial data pack (Excel)

Visit: http://www.alahli.com/en-us/Investor_Relation

Mr. Abdulbadie Alyafi

Head, Investor Relations

P: +966 12 646 3988

E: [email protected]

National Commercial Bank

P.O. Box 3555

21481 Jeddah, Kingdom of Saudi Arabia

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

Documents

National Commercial Bank Investor Presentation 3Q …...NCB Investor Relations 3Q 2018 Investor Presentation 2 Disclaimer The National Commercial Bank (NCB) prepared this presentation