National Commercial Bank Investor Presentation FY 2018 Results€¦ · Al Rajhi Bank 18.57. 13.93: National Commercial Bank 15.31 11.48 Saudi Telecom (STC) 9.79. 7.34: Samba Financial

NCB Investor RelationsFY 2018 Investor Presentation 1

National Commercial Bank Investor PresentationFY 2018 Results


Investor Presentation

Contents

03

10

17

27

49

56

NCB Group Profile

KSA Economic Outlook

Strategy Overview

Financial Results Highlights

Segmental Review

Additional Information

35 Financial Results Details


NCB Group ProfileFY 2018 Results

National Commercial Bank


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

Established in 1953; IPO in 2014

NCB Snapshot (FY 2018)

Jeddah HQ

7mn Clients13,058

Employees*

SAR

453bn Assets

SAR

319bn Deposits

SAR

144bn Market Cap

Wholesale branch in BahrainOffices: Singapore, Seoul, Shanghai

Subsidiary in Turkey:Türkiye Finans Katılım Bankası

Subsidiary in KSA:NCB Capital

*Includes Alahli Esnad (1,520 employees) - fully owned subsidiary engaged in recruitment services within KSA


NCB is the leading banking group in Saudi Arabia (2)

NCB has a strong market and financial position (9M 2018)

459

356

228 226 189

050

100150200250300350400450500

NCB Rajhi Samba Riyad BSF

Assets (SARbn)

268 234

146 124 115

0

50

100

150

200

250

300

NCB Rajhi Riyad BSF Samba

Financing (SARbn)

325 289

170 159 147

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 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

281 Employees

16.7bn88%

NCB

401 branches, 3,661 ATMs150 Remittance centers

7,596 Employees97% Saudization

100% CEO DRs are Saudi

8.9bn47%

3.9bn21%

3.9bn20%

RETAIL

CORPORATE

TREASURY

1.5bn8%

720mn4%

International

Türkiye Finans Katılım Bankası (TFKB)306 branches, 610 ATMs

3,661 employees

Notes: KSA based recruitment services firm Alahli Esnad (fully owned subsidiary) employs 1,520 personsOperating Income as of FY 2108

SAR bn


NCB has a strong financial position

Key KPIs

CAGR CAGR

LCR is based on average quarterly numbersLCR was not reported before 2015

Capital ratios are based on Pillar I RWA

435 449 443 445 453

+1%

0

100

200

300

400

500

600

700

800

2014 2015 2016 2017 2018

Total Assets (SARbn)

47 56 60 64 66

+9%

0

20

40

60

80

100

120

2014 2015 2016 2017 2018

Total Equity (SARbn)

17.2% 17.2%

19.2%20.0%

20.6%

16.9%17.7%

18.5%

14.7%13.5%

15.3% 15.7%16.6%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

2014 2015 2016 2017 2018

Capital Ratios (%)

TC ratio T1 ratio CET1 ratio

152.3%172.5% 177.3% 176.0%

66.3%78.1% 80.3% 80.7% 83.3%

0

0

0

1

1

1

1

1

2

2

2

2014 2015 2016 2017 2018

Liquidity Ratios (%)

Liquidity coverage ratio (LCR) Financing to customers' deposit ratio


NCB has a strong performance track record

Key KPIs

CAGR CAGR

11.4 12.6 13.5 13.7 14.4

4.8 4.9 5.1 4.7 4.6 16.2 17.5 18.6 18.3 18.9

+4%

0

5

10

15

20

25

30

35

2014 2015 2016 2017 2018

Total Operating Income (SARbn)

Net special commission incomeFee and other income

8.7 9.1 9.3 9.8 10.7

+5%

0

2

4

6

8

10

12

14

16

18

2014 2015 2016 2017 2018

Net Income Attributed To Equity Holders (SARbn)

2.91% 3.04%3.35% 3.48% 3.61%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2014 2015 2016 2017 2018

Net Special Commission Margin (%)

39.0% 37.4% 37.7%35.0% 34.1%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

2014 2015 2016 2017 2018

Cost to Income Ratio (%)

20.1%19.2%

17.8% 17.4%18.1%

2.2% 2.1% 2.1% 2.2% 2.4%

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

2014 2015 2016 2017 2018

Returns (%)

ROE common shares (%) ROA (%)


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 23.23 17.42

Al Rajhi Bank 18.57 13.93

National Commercial Bank 15.31 11.48

Saudi Telecom (STC) 9.79 7.34

Samba Financial Group 8.2 6.15

Ratings LT ST Outlook

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

*Moody’s rating is unsolicited

Source: MSCI, 31 December 2018Source: NCB, Bloomberg

Source: Bloomberg

Share parameters 31 Dec 2018

Closing Price (SAR) 47.8552 week range (SAR) 37-49Free Float 35.4%Shares issued (mn) 3,000Tangible Book Value (SARmn) 57.737Tangible BVPS 19.25P/TBV Ratio 2.5xP/E Ratio (FY 2018 earnings) 13.57xDiv Yield (FY 2018 dividends) 4.39%3m Avg Daily Volume (shares) 1,.85.721

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

05

10152025303540455055

Nov-14 Aug-15 May-16 Feb-17 Nov-17 Aug-18

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

Dec–18

NCB Investor RelationsFY 2018 Investor Presentation

National Commercial Bank KSA Economic OutlookFY 2018 Results


Vision 2030Saudi Arabia continues to drive economic growth through it’s comprehensive Vision 2030 program

A Thriving Economy An Ambitious NationA Vibrant SocietyPillars

Vision Realization Programs

• National Transformation Program• Fiscal Balance Program• PIF Program• Financial Sector Development Program• Privatization Program• Quality of Life Program

• The Housing Program• Enriching the Hajj and Umrah Experience• Strategic Partnerships Program• National Industrial Development and Logistics Program• Saudi Character Enrichment Program• National Companies Promotion Program

Private sector contribution to GDP to reach 65%

Balancing the budget by 2023

Public debt to GDP to remain below 30%

Raise Saudi home ownership to 60% by 2020

SME Contribution to GDP targeted to reach 23% by 2020

Increase financial sector assets to SAR6.3 trillion by 2020

Foreign Direct Investment to reach 1.46% of GDP by 2020 (~SAR45 billion)

Key Milestones Towards 2030


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 15%

Corporate market share (3Q 2018) and a portfolio of

SAR 131bn;

A leader in the SME segment, working with over

130,000 SMEs across KSA

Provided home financing for 34,000 Saudi families

with a portfolio of SAR 23.5bn

Primary Dealer in local government securities with a

SAR 55bn KSA Government Bond investment portfolio

Trusted partner and lead advisor in Capital Markets

and M&A Activities (KSA Government, ARAMCO,

Ma’aden)

Largest Corporate Savings Advisor, with more than

50,000 individual participants and full suite of Takaful

protection and savings products

Expanding participation in the financial services sector

with 6 million KSA based customers through a

comprehensive physical and digital distribution

network


Record Saudi Budget in 2019

Fiscal expansionary policy to underpin economic growth

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

-100

-389-311

-238-136 -131

-3.5%-15.8% -12.9% -9.2% -4.6% -4.2%

-90.0%

-80.0%

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

(900)

(700)

(500)

(300)

(100)

100

300

2014 2015 2016 2017 2018P 2019F

Fiscal Balance

Fiscal Balance Fiscal Balance as % of GDP

((

142 247 260 305 38270

184255

296

44142

317443

560678

1.6%

5.8%

13.1%

17.2%19.1%

21.7%

-8.0%

-3.0%

2.0%

7.0%

12.0%

17.0%

22.0%

0

200

400

600

800

1,000

2014 2015 2016 2017 2018P 2019F

Government Debt (SARbn)

Domestic International Debt to GDP Ratio (%)

725 610 529 490 490

43

60 39 39 34

768 670

568 529 524

0

100

200

300

400

500

600

700

800

900

2014 2015 2016 2017 2018

Foreign Reserves (USDbn)

SAMA Banks

97

50 41

52

70 65

0

20

40

60

80

100

120

2014 2015 2016 2017 2018 2019F

Average Oil Price (USD)

Average Oil Price (USD)

913

446 334 436 607 662

131

169 186

256

288 313

1,044

616 519

692

895 975

0

200

400

600

800

1,000

1,200

2014 2015 2016 2017 2018P 2019F

Government Revenue (SARbn)

Oil Revenues Non-oil Revenues

370 264 134 208 205 246

740714

696722 825 860

1,110 978

830 930

1,030 1,106

0

200

400

600

800

1,000

1,200

2014 2015 2016 2017 2018P 2019F

Government Expenditure (SARbn)

Capex Current Expenditure (Opex)


Economic growth momentum continuesNon-Oil GDP pickup expected, supported by progress of ongoing Government Vision Realization Programs

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

9.7 10.2 10.5 10.010.3 10.4

97.2

50.240.9

52.470.1 65.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

0

5

10

15

20

25

2014 2015 2016 2017 2018P 2019F

Oil Production

Oil Production Oil Price

11.9%

2.5%0.8% 0.2%

2.8%4.5%

(0)

0

0

0

0

2014 2015 2016 2017 2018 2019F

Monetary Supply growth

(M3) Monetary Supply growth

2.1%1.3%

0.6% 0.7%

0.6%

0.5%

0.1%

0.1% 0.5%

2.7%1.8%

0.1%0.7%

1.2%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

0

0

0

0

0

0

0

2014 2015 2016 2017 2018P

Real non-oil GDP

Non-oil Private Non-oil Public Real non-oil GDP

-2.3%

-14.8% -12.9%-9.2%

-4.6% -4.2%

9.7%

-8.7%-3.7%

2.2%

10.6% 10.5%

-25.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

2014 2015 2016 2017 2018P 2019F

Twin Balances (%)

Budget Balance / GDP Current Account Balance / GDP

0.9%2.3%

1.6%

-1.4%

1.2%

2.7%

1.8%

0.1%

0.7%

1.2%

-0.1%

-0.2%

3.7% 4.1%

1.7%

-0.7%

2.2% 2.6%

-9.0%

-7.0%

-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

(0)

(0)

0

0

0

0

0

0

2014 2015 2016 2017 2018P 2019F

Real GDP

Oil Sector Non-oil Sector

Import Duties Real GDP

2.2%

1.3%

2.0%

-0.9%

2.5% 2.3%

(0)

(0)

(0)

0

0

0

0

0

0

0

2014 2015 2016 2017 2018 2019F

Inflation, %

General Index…


Saudi banking sector growth capacity Lending capacity enables KSA banks to capture opportunities as fiscal policy offsets monetary drag from rising interest rates

Source: Thomson Reuters, SAMA, Banks’ Annual Reports

0.9%

2.98%

0.3%

2.78%

0

0

0

0

0

0

0

0

2014 2015 2016 2017 2018

Interbank Rates (%)

3M SAR SAIBOR 3M USD LIBOR

234 262 280 291 301

8%

11% 12% 11%10%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

0

100

200

300

400

500

600

700

2014 2015 2016 2017 2018F

Retail Mortgages (SARbn)

Retail Mortgage Size Mortgages to GDP, %

1,576 1,605 1,617 1,619 1,661

12.4%

1.9% 0.8% 0.1%2.6%

-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

2014 2015 2016 2017 2018

Bank Deposits (SARbn)

Deposits Growth Rate (YoY%)

75%

80%81%

80%

77%

1

1

1

1

1

1

1

1

1

1

1

1

2014 2015 2016 2017 2018

Loans to Deposits Ratio (%)

803 903 912 888 903

402 420 440 452 4761,251 1,362 1,400 1,387 1,426

11.6%8.9%

2.9%-1.0%

2.8%

-30.0%

-25.0%

-20.0%

-15 .0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

0

500

1000

1500

2000

2500

3000

3500

2014 2015 2016 2017 2018F

Bank Lending (SARbn)

Corporate Retail Growth Rate (YoY%)


Saudi banking sector resilienceStrong capitalization, high credit quality, adequate coverage and a prudent regulatory environment expected to sustain banking sector profitability

Source: Thomson Reuters, SAMA, Banks’ Annual Reports

34.3 37.7

41.5 43.7 41.3 45.0

10.2%

5.4%

-5.4%

8.7%

9.9%

-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

2014 2015 2016 2017 2018

Profits (SARbn)

Profits (9M) Profits Growth Rate (YoY%)

64.7 68.0

75.8 80.0 83.1 86.6

9.1%

5.7%3.8% 4.3% 5.1%

-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

2014 2015 2016 2017 2018


Revenue (9M) Revenue (FY) Growth Rate (YoY%)

9M growth

9M growth

16.2% 16.2%

17.5%

18.3%18.1%

0

0

0

0

0

0

0

0

0

2014 2015 2016 2017 9M 2018

Tier 1 Capital Adequacy Ratio (%)

1.12% 1.13%1.24%

1.45%

1.63%

183% 172%

178%

162%

185%

0

0

0

0

0

0

0

0

0

0

0

2014 2015 2016 2017 9M 2018

NPL & Coverage Ratios (%)

NPL Ratio NPL Coverage Ratio


National Commercial Bank Strategy OverviewFY 2018 Results


Grew Corporate loan portfolio by 9%

18

2018 Strategy update and 12M highlights

NCB delivered strong performance in 2018 in line with its strategy

Grow Residential Finance

Current Account and Capital Base Focus

Position Corporate Banking for growth

12M Updates

Grew mortgage portfolio by 19%

Grew Current Accounts by 7%

2018 Strategic Priorities

Continued to improve Branch FTE density; newest branches at an average of 6 FTEsLean Distribution

Online and Mobile transactions increased 44%; 105 Self-Service Kiosks installed in network; digital sales comprised 29% of total retail sales

Digitization

Maintained strong liquidity and capitalization levels; improved branch and employee productivityTFKB

Focused on recurring revenue; 11% increase in NSCITreasury

Net Income growth driven by AUM increase and cost disciplineNCBC

Additional Strategy Highlights 12M Updates

18


NCB’s 2019 Strategy Framework

Sustaining Leadership

Increase returns in Corporate Banking

Sustain Treasury revenues &

diversify funding

Expand market share in Retail

Banking

Strategic Priorities Focus Areas

Vision 2030 Targeted Sectors

Transaction banking

Credit Lifecycle Management

Investment returns

Cross sell & liability products

Continental hubs

Current accounts

Mortgage / REDF

Credit Card

Guiding Principles

Cost efficiency

Time to market

Customer service

Strategic Enablers

Lean Distribution

Digitization

Operational Excellence

Grow value contribution of subsidiaries

NCBC: AUMs and GRE related business

TFKB: Productivity


93 99

19.5%20.8%

+7%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0

20

40

60

80

100

120

140

160

180

FY 17 FY 18

Retail Financing & Advances, net (SARbn)

Performing Market Share (%)

Retail Banking

We are positioning the retail business to expand market share

Strategic Focus Areas

Grow core deposits

Grow Lending Market Share; focus on mortgages and Credit Card

Expand branch network with lean formats enabled by digital migration

Continue to enhance customer service across all channels

20

8.1 8.9

+10%

0

2

4

6

8

10

12

14

16

FY 17 FY 18

Operating Income (SARbn)

3.9 4.6

+18%

0

1

2

3

4

5

6

7

8

FY 17 FY 18

Net Income (SARbn)

(9M)


Corporate Banking

Grow selectively and increase risk-adjusted returns


Grow lending in V2030 target sectors

Increase cross sell focus to capture full value of relationships

Grow Kafalah-based lending

Expand collections capabilities and strengthen credit lifecycle management

Enhance client servicing model via credit process digitization

120 131

+9%

0

50

100

150

200

FY 17 FY 18

Corporate Financing & Advances, net (SARbn)

4.1 3.9

-5%

0

1

2

3

4

5

6

7

8

FY 17 FY 18


2.0 2.2

+13%

0

1

2

3

4

5

FY 17 FY 18

Net Income (SARbn)


91% 91%

-0%

0

0

0

1

1

1

1

1

2

2

2

FY 17 FY 18

Saudi Government and Investment Grade Investments as % of Total

22

Treasury

Broaden and deepen liquidity access while sustaining revenues


Increase recurring revenues

Optimize investment portfolio to enhance quality, liquidity and returns

Launch continental hubs to expand coverage (Singapore, UK)

Introduce innovative Shariah compliant products to diversify liquidity sources and enhance cross sell

2.4 2.7

+11%

0

1

2

3

4

5

6

FY 17 FY 18

NSCI (SARbn)

3.9 3.9

-1%

0

1

2

3

4

5

6

7

8

9

FY 17 FY 18



Lean distributionWe will continue to expand with lean distribution in Saudi Arabia by adopting a smaller branch

format and implementing extensive digitization

Strategic Imperatives

Continue to expand the network in strategic locations to acquire new customers and expand market share

Expand with smaller branch format with sales and advisory focus

Digitize branch experience and implement assisted self service technologies

Optimize the cost of branch network

7,991 7,596

-5%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

FY 17 FY 18

Bank Headcount (NCB employees)

10.4 9.9

-5%

0

5

10

15

20

FY 17 FY 18

FTE / branch

71% 71%

+0%

0

0

0

1

1

1

1

1

FY 17 FY 18

Front / Back Office Ratio (%)

2,019 2,196

+9%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

FY 17 FY 18

Operating Income / FTE (SARmn)


DigitizationContinue to migrate to digital, drive up digital sales and improve operational excellence to deliver

superior customer experiences


Mobile first

Expand subscription base and grow usage

Leverage advanced data analytics and grow digital sales

Implement “digital branch” and improve customer journeys through agile digitization

Automate back office processes including robotics process automation

39%50%

0

0

0

0

0

1

1

1

1

1

1

FY 17 FY 18

Digital Penetration

60.8% 53.2%

9.6%7.6%

3.0%2.6%

26.6% 36.6%

0

0

0

1

1

1

1

FY 17 FY 18

Financial Transaction Channel Migration

ATM Phone Banking Branch Online/Mobile

12%

29%

0

0

0

0

0

0

0

0

0

FY 17 FY 18

Digital Sales as a % of Total Retail Sales


21.9% 21.3%

-0.6ppt

0

0

0

0

0

0

0

0

0

0

1

9M 17 9M 18

NCBC Share of Sector Net Income (%)

198 183

11.8%10.5%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0

50

100

150

200

250

300

350

400

450

FY 17 FY 18

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

NCBC Traded ValueMarket Share (%)

25

NCB Capital

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


Sustain and grow market leadership in Asset Management through fundraising and product innovation

Grow recurring revenues by increasing AUMs

Grow share of brokerage revenue pool

Continue to enhance efficiency and productivity

836 871 7,226

7,827

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

FY 17 FY 18

Tadawul Traded Value (SARbn) & TASI Index

Tadawul Traded ValueTASI Index

123 144

+17%

0

50

100

150

200

250

300

350

FY 17 FY 18

NCBC Assets under Management (SARbn)


39 46

+20%

0

10

20

30

40

50

60

70

80

90

FY 17 FY 18

Total Assets (TRYbn)

1,508 1,839

+22%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

FY 17 FY 18

Total Operating Income (TRYmn)

370 445

+20%

0

200

400

600

800

1,000

FY 17 FY 18

Net Income (TRYmn)

26

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)


National Commercial Bank Financial Results HighlightsFY 2018 Results


Key messages

FY 2018 Results

2% increase in total assets

6% financing growth

3% investments growth

3% growth in customers’ deposits

CASA at 80% of deposits

9% growth in 2018 net income, 5% growth in NSCI

3% Fee and other income decline on lower capital gains

Stable operating expenses

Impairments improved by 17%, goodwill written – off during Q4 2018

CoR at to 52bps

Group NPL ratio at 1.9% and NPL coverage at 142%

Capital: CET1 of 16.6% and T1 ratio of 18.5%; Leverage Ratio 13.5%

Liquidity; LTD ratio 83%, Average Q4 LCR 176%

Financing (SARbn) Deposits (SARbn)

Net Income Attributed to Equity Holders Movement (SARbn)

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

249 265

+6%

0

100

200

300

400

500

600

4Q 17 4Q 18

309 319

+3%

0

100

200

300

400

500

600

700

800

4Q 17 4Q 18

1.9% 1.9%

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 4Q 18Group NPL ratioGroup CoR YTD

15.7% 16.6%

81% 83%

20%

30%

40%

50%

60%

70%

80%

90%

0

0

0

0

0

0

0

0

4Q 17 4Q 18CET1LTD

9.80 0.71

(0.13) (0.02)

0.33

(0.03)

10.67

0

1

2

3

4

5

6

FY 1

7

NSC

I

Non

-NSC

I

Expe

nses

Impa

ir-m

ents

Oth

er

FY 1

8

BalanceSheet

Income Statement

Asset Quality, Capital & Liquidity


Income Statement

Profitability Trends

SAR (mn) 4Q 2018 3Q 2018 4Q 2017 YoY % change FY 2018 FY 2017 YoY % change

Net special commission income 3,741 3,637 3,375 +11% 14,370 13,661 +5%

Fee and other income 1,015 1,094 1,140 -11% 4,557 4,684 -3%

Total operating income 4,756 4,732 4,516 +5% 18,927 18,345 +3%

Operating expenses (1,475) (1,606) (1,632) -10% (6,446) (6,424) +0%

Total impairment charge (601) (616) (357) +68% (1,635) (1,969) -17%

Income from operations, net 2,680 2,510 2,526 +6% 10,846 9,953 +9%

Net income attributed to equity holders 2,647 2,454 2,556 +4% 10,667 9,802 +9%

2018 Net income growth from higher NSCI and lower impairments

2,445 2,908 2,496 2,388 2,763

11178

83 65

2,5562,987

2,579 2,4542,647

+4%

0

1,000

2,000

3,000

4,000

5,000

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

Net Income Attributed to Equity Holders (SARmn)

International net incomeDomestic net income

4,125 4,407 4,234 4,331 4,429

390 372 427 401 3274,516 4,779 4,661 4,732 4,756

+5%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

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

Total Operating Income (SARmn)

International Operating IncomeDomestic Operating Income


Domestic Deposits94%

International Deposits6%

Customers' Deposits Mix (SARbn)

309 319

0

100

200

300

400

500

4Q 17 4Q 18

30

Balance Sheet

Balance Sheet Trends

SAR (mn) 4Q 2018 3Q 2018 4Q 2017 YoY % change

Investments, net 118,090 116,504 114,578 +3%

Financing and Advances, net 265,317 268,245 249,234 +6%

Total assets 453,390 459,080 444,792 +2%

Due to banks and other financial institutions 45,963 48,112 48,558 -5%

Customers' deposits 318,699 325,461 308,942 +3%

Debt securities issued 9,431 8,636 10,250 -8%

Total liabilities 387,721 395,805 380,516 +2%

Equity attributable to shareholders 57,737 55,504 56,041 +3%

Total equity 65,669 63,274 64,276 +2%

2% increase in total assets; excluding 20% Turkish Lira depreciation the growth would have been 5%

120 123 131 133 131

93 93 95 99 9910 12 16 16 1426 25 24 20 21

249 253 266 268 265

+6%

0

50

100

150

200

250

300

350

400

450

500

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

Financing & Advances, net (SARbn)

CorporateConsumer and credit cardOthersInternational

238 237 251 258 255

58 61 53 55 5013 11 13 12 14309 309 318 325 319

+3%

0

100

200

300

400

500

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

Customers' Deposits (SARbn)

CASATimeOthers


Retail49%

Corporate24%

Treasury17%

Capital Market3%

International7%


Retail47%

Corporate21%

Treasury20%

Capital Market4%

International8%


31

Segmental Information (1/3)

FY 2018 Total operating income growth mainly from retail and Capital Market segment

18,345

777

(205) (23)

84

(51)

18,927

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

FY 17 Retail Corporate Treasury CapitalMarket

International FY 18

FY 18 Total Operating Income Movement (SARmn)

4,516157

144 15

(12) (63)

4,756

0

200

400

600

800

1,000

1,200

4Q 17 Retail Corporate Treasury CapitalMarket

International 4Q 18

4Q 18 Total Operating Income Movement (SARmn)

18.3 18.9

0

5

10

15

20

25

FY 17 FY 18

4.5 4.8

0

1

2

3

4

5

4Q 17 4Q 18


Retail42%

Corporate26%

Treasury25%

Capital Market3%

International-4%

Net Income Attributed to Equity Holders (SARbn)

2.6 2.6

0

1

1

2

2

3

3

4

4Q 17 4Q 18

Retail43%

Corporate21%

Treasury31%

Capital Market4%

International1%

Net Income Attributed to Equity Holders (SARbn)

32

Segmental Information (2/3)FY 2018 Net income growth driven by all segments apart from International due to Turkish Lira depreciation and goodwill written - off

9,802

713264 3 69

(183)

10,667

0

500

1,000

1,500

2,000

2,500

3,000

FY 17 Retail Corporate Treasury CapitalMarket

International FY 18

FY 18 Net Income Attributed to Equity Holders Movement (SARmn)

2,556 42

19199

(14)

(227)

2,647

0

100

200

300

400

500

600

700

800

900

4Q 17 Retail Corporate Treasury CapitalMarket

International 4Q 18

4Q 18 Net Income Attributed to Equity Holders Movement (SARmn)

9.8 10.7

0

2

4

6

8

10

12

14

16

18

FY 17 FY 18


Segmental Information (3/3)

FY 2018 financing growth mainly driven by Corporate and Retail segments

117 124 126126 143 138

163 160 15538 31 33

445 459 453

+2%

0

100

200

300

400

500

600

700

800

4Q 17 3Q 18 4Q 18


RetailCorporateTreasuryCapital MarketInternational

93 99 99

120 133 13126 20 21

249 268 265

+6%

0

100

200

300

400

500

4Q 17 3Q 18 4Q 18

Financing and Advances, net (SARbn)

Consumer and credit cardCorporateInternationalOther

Management Commentary

FY 2018 Total assets increased by 2% due to higher Corporate (+9%) and Retail (+7%) financing and investments (+3%).

Customers’ deposits increased by 3% from the Retail and Corporate segments.

Deposits mix improved with CASA balances at 80% of total deposits at 4Q 2018 compared with 77% at 4Q 2017.237 247 243

42 52 488 8 9

22 18 19309 325 319

+3%

0

100

200

300

400

500

600

4Q 17 3Q 18 4Q 18


RetailCorporateTreasuryInternational


Outlook

Improved macroeconomic environment expected to drive growth

Average Arabian light oil price of USD 65 per barrel

Up to 2 US Fed rate hikes of 25bps in 2019

2019’s expansionary fiscal policy is expected to underpin economic growth

20% increase in Capital expenditure will support domestic lending

The budget deficit projected to improve, reaching SAR131 billion

Real GDP growth is estimated to reach 2.6%

Inflation to ease to 2.3% as energy price subsidies remain unchanged

2019 Macroeconomic Outlook

Financing growth 5% to 8% 6% 4% to 6%

FY 2018Target

FY 2018Reported

FY 2019Guidance

Tier 1 CAR 16% to 18% 18.5% 16% to 18%

Group Cost of Risk 0.6% to 0.8% 0.52% 0.6% to 0.8%

BalanceSheet

Profitability

Capitalization and Asset

Quality

NSCI margin 3.53% - 3.63% 3.61% 3.65% - 3.69%

Cost to income Below 35% 34.1% Below 34%


National Commercial Bank Financial Results DetailsFY 2018 Results


Operating Income Highlights


FY 2018 total operating income increased by 3% YoY from 5% higher net special commission income, partially offset by the decrease in investment related income.

International operating income decreased by 5% due to 22% depreciation of the average Turkish Lira rate as compared with FY 2017.

Excluding the International business, FY 2018 total operating income was 4% higher YoY.

4Q 18 total operating income YoY growth of 5% driven by higher NSCI.

Higher FY 2018 total operating income largely attributable to net special commission income

13.66 14.37

4.68 4.56

18.35 18.93

+3%

0

5

10

15

20

25

30

35

FY 17 FY 18

18.350.72

(0.09) (0.05)

18.93

17.40

1.53

16.77

1.58

0

2

4

6

8

10

12

FY 17 NSCI Fee and other income InternationalNOR

FY 18

FY 18 Total Operating Income Movement (SARbn)

Domestic

International

Domestic

International

3.38 3.64 3.74

1.14 1.09 1.024.52 4.73 4.76

+5%

0

1

2

3

4

5

6

7

8

9

10

4Q 17 3Q 18 4Q 18


Fee and other income

Net special commission income

4.520.33

(0.03) (0.06)

4.76

4.43

0.33

4.13

0.39

0

1

1

2

2

3

3

4Q 17 NSCI Fee and other income InternationalNOR

4Q 18

4Q 18 Total Operating Income Movement (SARbn)


Net special commission income trendsFY 2018 net special commission income growth of 5%, despite 19% increase in special commission expenses


FY 2018 NSCI improved by 5% on higher SCI (+8%), despite 19% increase in cost of fund due mainly to higher SAIBOR/LIBOR, while 4Q 2018 NSCI improved by 11%.

The 4Q 2018 net special commission margin increased by 23bps YoY to 3.64% due to improved yields (+48bps).

Funding cost for 4Q 2018 was 26% higher YoY mainly due to higher SAIBOR/LIBOR rates.

Net Special Commission Income

SAR (mn) 4Q 2018 3Q 2018 4Q 2017 YoY % change FY 2018 FY 2017 YoY %

change

Special commission income 4,936 4,700 4,291 +15% 18,306 16,981 +8%

Special commission expense (1,195) (1,063) (916) +31% (3,936) (3,320) +19%

Net special commission income 3,741 3,637 3,375 +11% 14,370 13,661 +5%

Commission yield (%) 4.81% 4.65% 4.33% +11% 4.60% 4.32% +6%

Funding cost (%) 1.25% 1.14% 0.99% +26% 1.06% 0.91% +17%

Net special commission margin (%) 3.64% 3.60% 3.41% +7% 3.61% 3.48% +4%

1.69%

2.31%

2.34% 2.40%

2.81%1.90%

2.27%

2.59% 2.72%2.98%

0

0

0

0

0

0

0

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

SAIBOR and LIBOR Rates (%)

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

3.94% 4.06% 4.10% 4.19% 4.32%

0.51% 0.51% 0.58% 0.71% 0.74%

8.54% 8.47%9.30%

11.07% 11.35%

5.94%5.01% 5.10%

6.40%7.51%

(0)

0

0

0

0

0

0

0

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

Commission Yield and Funding Cost (%)

Domestic Yields Domestic COFInternational Yields International COF

3.46% 3.59% 3.56% 3.53%

3.64%

3.41%

3.59% 3.62% 3.60%3.64%

2.89%

3.69%

4.44% 4.66%

3.87%

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

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

Net Special Commission Margin (%)

Domestic Group International


3,205 3,282

1,156 1,166802 514

(479) (405)

4,684 4,557

-3%

(500)

1,500

3,500

5,500

7,500

9,500

11,500

FY 17 FY 18

820 802 819

266 369 246164 22 48

(110) (100) (97)

1,140 1,094 1,015

-11%

(200)

300

800

1,300

1,800

2,300

4Q 17 3Q 18 4Q 18

Fee and Other Income (SARmn)

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

38

Fee and other income trends


Fee and other income for FY 2018 declined YoY as 2% growth in fee and FX income was more than offset by lower investment income.

4Q 2018 fee and other income decreased 11% YoY due to (-0.2%) lower fees from banking services, (-71%) investment-related income and (7%) lower Foreign exchange income, partly offset by lower other operating expense by 12% .

The higher fees from banking services in FY 2018 were mainly driven by higher fees from investment management services, credit Card and others, partly offset by lower trade finance fees.

Lower FY 2018 fee and other income mainly due to lower investment income partly offset by higher fee and exchange income and lower other operating expenses

Fee IncomeSAR (mn) 4Q 2018 3Q 2018 4Q 2017 YoY %

change FY 2018 FY 2017 YoY % change

Finance and lending 367 400 409 -10% 1,483 1,537 -4%Trade finance 79 109 137 -42% 447 537 -17%Investment management services 123 129 124 -0% 549 435 +26%

Shares brokerage 38 24 50 -23% 161 183 -12%Credit cards 16 35 8 +104% 139 120 +16%Others 194 106 94 +107% 504 393 +28%Fee income from banking services, net 819 802 820 -0% 3,282 3,205 +2%

3,205 92

(54)

19

(91)

111 3,282

0

212

2,925

281

0

500

1,000

1,500

2,000

2,500

3,000

3,500

FY 17 Brokerage& invmnt.Mngmnt.

Finance &lending

Credit cards Tradefinance

Other FY 18

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

Domestic

International


3,409 3,491

771 726654 607

1,589 1,622

6,424 6,446

+0%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

FY 17 FY 18

830 844 829

203 183 154153 153 144445 426 348

1,632 1,606 1,475

-10%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4Q 17 3Q 18 4Q 18

Operating Expenses (SARmn)

Other G&ADepreciation & amortizationRent & premisesEmployee-related

39

Expense highlights


FY 2018 stable operating expenses YoY, while 4Q 2018 operating expenses decreased by 10% YoY.

The cost to income ratio for FY 2018 was 34.06%, lower by 96bps compared to FY 2017.

The cost base was negatively impacted by cost of living allowances to employees announced this year and the impact of VAT. These were partly offset by lower depreciation and productivity initiatives driven by continued digitization.

35.0% 35.0%35.7%

35.1%

34.1%

33.1% 33.1%

34.1% 33.9%

31.6%

0

0

0

0

0

0

0

0

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

Cost to Income Ratio (YTD %)

Group (%) Excluding International (%)

6,424 82

(45) (47)

32 6,446

5,505

942

5,557

867

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

FY 17 Employee-related Rent & premises Depreciation &amortization

Other G&A FY 18

FY 18 Operating Expenses Movement Drivers (SARmn)

Domestic

International

Despite VAT and cost of living allowances, we maintained operating expenses in 2018


Financing and Advances, net58%

Investments, net26%

Cash, bank and SAMA balances11%

Other assets, net5%

Total Assets Mix (SARbn)

Retail28%

Corporate31%

Treasury34%

Capital Market0%

International7%

Total Assets by Segment (SARbn)

40

Asset highlights and composition

2% growth in balance sheet as a result of increase in financing and Investments.


6% Financing increase driven by 9% increase in domestic financing, despite 19% decline in international financing impacted by 20% Turkish Lira depreciation.

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

Investments increased by 3% as participation in Saudi Government debt issuance continued.249 268 265

115 117 11860 55 48445 459 453

+2%

0

100

200

300

400

500

600

700

800

4Q 17 3Q 18 4Q 18


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

445 453

0

100

200

300

400

500

600

4Q 17 4Q 18

445 453

0

100

200

300

400

500

600

4Q 17 4Q 18


Consumer financing & credit cards

37%

Commerce13%

Manufacturing12%

Services10%

Utilities & health7%

Building & construction6%

Others, across 6 sectors15%

Financing and Advances, gross by Economic Sector (SARbn)

41

Financing and advances

6% Financing growth driven by Corporate and Consumer segments


Domestically, financing grew for the Corporate Segment (+9%) and Consumer segment (+7%).

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

International financing declined 19% in 2018 due principally to the weakened Turkish Lira.

93 99 99

120 133 13126 20 2110 16 14

249 268 265

+6%

0

50

100

150

200

250

300

350

400

450

500

4Q 17 3Q 18 4Q 18


Consumer and credit cardCorporateInternationalOther

256 273

0

50

100

150

200

250

300

350

4Q 17 4Q 18

256

4.9 3.8

(6.9)

4.9

6.5

0.1 3.3 273

0

5

10

15

20

25

30

35

4Q 17 Building &construction

Banking &financial

Services Consumerfinancing &credit cards

Transport &comms

Commerce Other 4Q 18

Movement Financing, gross by Economic Sector (SARbn)


Financing and advances credit quality (1/2)

Rise in Corporate NPLs and impairment allowances, while Consumer remains stable

2.80 2.80 2.94 3.51 3.400.57 0.52 0.53 0.51 0.561.40 1.40 1.26 1.03 1.234.77 4.72 4.75 5.06 5.25

+10%

0

2

4

6

8

10

12

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

NPL (SARbn)

CorporateConsumer and credit cardInternationalOthers

4.15 4.79 4.87 5.21 4.63

1.34 1.50 1.48 1.53 1.551.26 1.38 1.21 0.96 1.116.80

7.77 7.66 7.79 7.43

+9%

0

2

4

6

8

10

12

14

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

Impairment Allowances (SARbn)

CorporateConsumer and credit cardInternationalOthers

0.14(0.04)

0.120.49

0.160.03

(0.04)

0.12

0.03

0.180.080.06

0.11

0.14 0.050.29

(0.01)

0.34

0.610.40

+41%

(0)

0

0

1

1

1

1

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

Impairment Charge (SARbn)

Corporate Consumer and credit card International Others

4.77

0.27

0.17(0.01)

0.32 0.03

(0.03)

(0.28)

5.25

0

0

0

0

0

1

1

1

1

1

1

4Q 17 Building &construction

Utilities &health

Manufacturing Transport &comms

Services Consumerfinancing &credit cards

Other 4Q 18

Movement NPLs by Economic Sector (SARbn)


Financing and advances credit quality (2/2)

Slightly higher NPL ratio at YE 2018, but NPL coverage remained stable


NPL ratio slightly higher in 4Q 2018 vs 4Q 2017.

NPL coverage was comfortable at 142% as at 4Q 2018.

FY 18 cost of risk lower in part due to the IFRS9 adoption adjustments.

1.5% 1.4% 1.4% 1.6% 1.6%

5.1% 5.3% 5.1% 4.8%5.5%

1.9% 1.8% 1.7% 1.8% 1.9%

(0)

0

0

0

0

0

0

0

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

NPL Ratios (%)

Domestic International Group NPL ratio

164%

192% 185%170%

157%

90%99% 96% 93% 90%

143%

165% 161% 154%142%

0

1

1

1

1

1

2

2

2

2

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

NPL Coverage Ratios (%)

Domestic International Group NPL coverage ratio

0.7%

-0.1%0.1%

0.3% 0.4%

1.1% 1.0%

1.4%

2.0%1.6%

0.7%

0.0%0.3%

0.5% 0.5%

(0)

(0)

0

0

0

0

0

0

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

CoR Ratios (YTD %)

Domestic International Group CoR ratio


Domestic financing and advances credit quality

Corporate NPLs increased while Consumer NPLs were stable


Corporate NPL ratio increased, while COR and NPL coverage ratio dropped in 4Q 2018, in part due to higher NPL inflows during the year. The FY 2018 impact on COR was limited by IFRS9 adoption adjustments and write-offs during the period.

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

2.2% 2.2% 2.2%2.5% 2.5%

0.6% 0.5% 0.5% 0.5% 0.6%

(0)

(0)

0

0

0

0

0

0

0

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

NPL Ratios (%)

Corporate Consumer and credit card

148%171% 166%

149%136%

236%

290% 279%301%

276%

1

2

2

3

3

4

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

NPL Coverage Ratios (%)

Corporate Consumer and credit card

0.9%

-0.1%

0.1%

0.5% 0.5%

0.5%

-0.2%

0.2% 0.1%0.3%

(0)

(0)

0

0

0

0

0

0

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

CoR Ratios (YTD %)

Coorporate COR Consumer COR


Saudi Government securities47%

Other investment grade44%

Non-investment grade4%

Unrated5%

Investments by Credit Grade (SARbn)

115 118

0

20

40

60

80

100

120

140

4Q 17 4Q 18

Saudi Arabia62%

GCC and Middle East16%

Europe0%

Turkey2%

Other countries20%

Investments by Geography (SARbn)

Investments trends and compositionInvestments increased 3% 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 government 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.

45

67 64 63

43 46 495 6 6

115 117 118

+3%

0

50

100

150

200

4Q 17 3Q 18 4Q 18

Investments (SARbn)

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

115 118

0

20

40

60

80

100

120

140

4Q 17 4Q 18


Due to banks and other financial institutions

12%

Customers' deposits82%

Debt securities issued2%

Other liabilities4%

Total Liabilities Mix (SARbn)

46

Liabilities trends and composition

Higher total liability base and a improving deposit mix towards CASA balances (80%)


2% 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 3% during 2018.

CASA balances accounted for 80% of customers’ deposits compared to 77% at 2017.

Domestically, CASA balances grew by 7% and time deposits declined by 13% from 2017.

309 325 319

49 48 4610 9 9381 396 388

+2%

0

100

200

300

400

500

600

700

4Q 17 3Q 18 4Q 18

Total Liabilities (SARbn)

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

381 388

0

50

100

150

200

250

300

350

400

450

500

4Q 17 4Q 18

231 251 248

7 7 743 44 3815 11 1213 12 14309 325 319

+3%

0

100

200

300

400

500

600

4Q 17 3Q 18 4Q 18


CASA - DomesticCASA - InternationalTime - DomesticTime - InternationalOthers


Liquidity

NCB maintained a strong liquidity profile


As at 4Q 2018, the financing to customers’ deposit ratio was 83% and comfortably below the regulatory guidelines.

HQLA balances rose by 1.5% compared to 4Q 2017.

The average quarterly LCR improved to 176% in 4Q 2018 from 177.3% in 4Q 2017.

Basel III leverage ratio was stable at 13.5% as at 4Q 2018 relative to 13.0% at 4Q 2017.

Quarterly averages

95 97 99 98 97

177.3%198.6% 211.9%

184.4% 176.0%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

0

50

100

150

200

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

HQLA and Average Liquidity Coverage (SARbn/%)

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

80.7%

81.8%

83.8%

82.4%83.3%

1

1

1

1

1

1

1

1

1

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

Financing to Customer Deposit Ratio (%)

13.0%

13.5%

13.1%

12.9%

13.5%

0

0

0

0

0

0

0

0

0

0

0

0

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

Basel III leverage Ratio (%)


72 74

0

10

20

30

40

50

60

70

80

90

100

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

80%

Additional tier 1 capital (AT1)10%

Tier 2 capital (T2)10%

Total Capital Composition (SARbn) Management Commentary

Capitalization remained strong and comfortably above the regulatory minima with CET1 at 16.6% and T1 at 18.5%.

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 adoption adjustment.

48

Capital

Capital position comfortably above regulatory minima

Capital ratios are based on Pillar I RWA

57 57 60

7 7 78 8 872 72 74

+3%

0

20

40

60

80

100

120

140

4Q 17 3Q 18 4Q 18

Capitalisation (SARbn)

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

318 314 312

34 35 359 12 13361 361 360

-0%

0

100

200

300

400

500

600

700

4Q 17 3Q 18 4Q 18

Pillar I Risk Weighted Assets (SARbn)

Credit riskOperational riskMarket risk

15.7% 16.2% 16.2% 15.9%16.6%

17.7% 18.2% 18.1% 17.8%18.5%

20.0% 20.4% 20.3% 20.0%20.6%

0

0

0

0

0

0

0

0

0

0

0

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

Capital Ratios (%)

CET1 ratioT1 ratioTC ratio


National Commercial Bank Segmental ReviewFY 2018 Results


NCB Bank (standalone)Strong 11% FY 2018 net income growth resulting from operating income growth and lower impairment charge


FY 2018 net income rose 11% YoY driven principally by 4% operating income growth and a 36% lower impairment charge, while limited growth in operating expenses came from VAT, Cost of living allowances and business growth partially offset by productivity initiatives driven by continued digitization.

NSCI for FY 2018 improved by 6% YoY due to increase in average earning assets and better margins from higher CAs growth.

4Q 2018 net income rose 15% YoY driven principally by 9% operating income growth and lower operating expenses by (-7%).

Summary Financial PerformanceSAR (mn) 4Q 2018 3Q 2018 4Q 2017 YoY %


Total assets 426,865 434,567 413,376 +3% 426,865 413,376 +3%

Total operating income 4,280 4,176 3,937 +9% 16,693 16,118 +4%Net special commission income 3,457 3,310 3,126 +11% 13,103 12,386 +6%Fee income from banking services, net 615 610 582 +6% 2,375 2,306 +3%

Operating expenses (1,230) (1,369) (1,328) -7% (5,367) (5,218) +3%Impairment charge (351) (473) (275) +28% (1,067) (1,667) -36%Other income (expenses) (0) (14) 7 -104% (54) (39) +39%Net income for the period 2,698 2,321 2,341 +15% 10,204 9,193 +11%

% of total assets 94.1% 94.7% 92.9% +1% 94.1% 92.9% +1%Cost to income (%) 28.7% 32.8% 33.7% -15% 32.2% 32.4% -1%NCL (%) 0.6% 0.7% 0.4% +60% 0.4% 0.7% -42%ROA (%) 2.5% 2.2% 2.3% +9% 2.5% 2.3% +8%

NIM (%) 3.6% 3.5% 3.5% +5% 3.6% 3.5% +3%

NPL (%) 1.6% 1.6% 1.5% +9% 1.6% 1.5% +9%NPL Coverage Ratio (%) 157% 170% 164% -4% 157% 164% -4%

223 248 244

+9%

0

50

100

150

200

250

300

350

400

450

4Q 17 3Q 18 4Q 18


287 307 299

+4%

0

100

200

300

400

500

4Q 17 3Q 18 4Q 18



Retail Banking

Higher FY 2018 net income from higher operating income and lower impairment charge


FY 2018 net income increased by 18% YoY driven principally by 10% higher operating income and a 39% improvement in impairment charges.

NSCI for FY 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 FY 2018 YoY, mainly from financing-related activities.

FY 2018 operating expenses increased 6% YoY and the cost to income ratio reached 45.0% from 46.4% a year earlier due to strong operating income growth.

4Q 2018 net income increased by 4% YoY driven by 7% higher operating income and lower operating expenses by (-3%).



Total assets 125,908 123,856 116,530 +8% 125,908 116,530 +8%

Total operating income 2,328 2,327 2,171 +7% 8,918 8,141 +10%Net special commission income 2,026 1,902 1,919 +6% 7,467 6,945 +8%Fee income from banking services, net 305 390 267 +14% 1,348 1,165 +16%

Operating expenses (944) (1,035) (970) -3% (4,015) (3,780) +6%Impairment charge (175) (26) (31) +463% (274) (447) -39%Other income (expenses) (0) (5) (2) -98% (18) (16) +18%Net income for the period 1,209 1,260 1,168 +4% 4,611 3,898 +18%

% of total assets 27.8% 27.0% 26.2% +6% 27.8% 26.2% +6%Cost to income (%) 40.5% 44.5% 44.7% -9% 45.0% 46.4% -3%CoR 0.7% 0.1% 0.1% +426% 0.3% 0.5% -43%ROA (%) 3.9% 4.2% 4.1% -5% 3.8% 3.5% +10%

93 99 99

+7%

0

20

40

60

80

100

120

140

160

4Q 17 3Q 18 4Q 18


237 247 243

+3%

0

50

100

150

200

250

300

350

400

450

4Q 17 3Q 18 4Q 18



Corporate Banking

Higher FY 2018 net income by 13% from lower operating expense and lower impairment charge.


FY 2018 net income increased 13% YoY due to lower impairments (-35%) and operating expenses (-8%).

NSCI for FY 2018 declined 2% YoY as a result of repayments in 4Q 2017 that reduced average balances during the period by 1% compared to 2017.

Fee income decreased by 12% YoY mainly on lower lending and trade fees.

The FY 2018 impairment charge declined 35% YoY due mainly to one-time IFRS9 adoption adjustment to retained earnings permissible by IFRS9.

4Q 2018 net income increased 33% YoY due to higher operating income 15% and lower operating expenses (-25%), partly offset by higher impairments by 12%.



Total assets 138,203 142,725 126,184 +10% 138,203 126,184 +10%

Total operating income 1,117 998 974 +15% 3,889 4,094 -5%Net special commission income 823 785 671 +22% 2,972 3,040 -2%

Fee income from banking services, net 295 201 291 +1% 918 1,044 -12%

Operating expenses (192) (225) (255) -25% (912) (992) -8%Impairment charge (160) (488) (143) +12% (724) (1,115) -35%Other income (expenses) (0) (4) (1) -81% (17) (15) +11%Net income for the period 765 282 574 +33% 2,237 1,972 +13%

% of total assets 30.5% 31.1% 28.4% +7% 30.5% 28.4% +7%Cost to income (%) 17.2% 22.5% 26.2% -34% 23.4% 24.2% -3%CoR 0.5% 1.4% 0.5% +3% 0.5% 0.9% -40%ROA (%) 2.2% 0.8% 1.7% +26% 1.7% 1.5% +12%

4252 48

+13%

0

10

20

30

40

50

60

70

80

90

100

4Q 17 3Q 18 4Q 18


120 133 131

+9%

0

50

100

150

200

250

4Q 17 3Q 18 4Q 18



Treasury

Stable FY 2018 net income in treasury segment


Stable FY 2018 net income YoY mainly from lower (-1%) operating income, partly offset by lower impairment charges.

FY 2018 operating income declined 1% YoY due to lower gains on non-trading investments from repositioning the investment portfolio.

4Q 2018 net income increased by 16% YoY driven by lower non recurring revenues, partly offset by reversal of credit losses, and lower operating expenses.



Total assets 154,763 159,829 162,510 -5% 154,763 162,510 -5%

Total operating income 822 851 806 +2% 3,873 3,896 -1%Net special commission income 609 623 535 +14% 2,663 2,402 +11%Fee income from banking services, net 15 20 24 -34% 109 97 +12%

Other operating income 197 209 248 -20% 1,101 1,397 -21%Operating expenses (94) (109) (103) -9% (440) (441) -0%Impairment charge (16) 41 (101) -84% (70) (105) -34%Other income (expenses) 0 (5) 11 -99% (19) (8) +133%Net income for the period 712 778 614 +16% 3,345 3,342 +0%

Cost to income (%) 34.1% 34.8% 36.5% -7% 34.1% 36.5% -7%% of total assets 11.4% 12.8% 12.8% -11% 11.3% 11.3% +0%ROA (%) 1.8% 2.0% 1.5% +17% 2.1% 2.1% +1%

115 117 118

+3%

0

50

100

150

200

4Q 17 3Q 18 4Q 18

Investments, net (SARbn)

535 623 609

271 228 213806 851 822

+2%

0

500

1,000

1,500

2,000

4Q 17 3Q 18 4Q 18

Total Operating Income (SARmn)

Net special commission incomeFee and other income


Capital Markets

Higher FY 2018 net income growth, driven by asset management


FY 2018 operating income increased by 13% from higher AUM related and other fees, which combined with improving operating efficiency drove strong 23% net income growth YoY.

4Q 2018 net income decreased by 15% YoY due to lower operating income (-7%) due to lower fee income, offset by lower operating expenses (-9%).



Assets Under Management 144,096 136,659 123,329 +17% 144,096 123,329 +17%Brokerages Volume 57,580 30,052 48,990 +18% 182,949 197,910 -8%

Total operating income 162 155 174 -7% 720 636 +13%AUM Related Fee Income 115 118 127 -10% 512 443 +16%Brokerage Related Fee Income 37 22 39 -5% 135 150 -10%Other fee income 7 8 5 +23% 47 26 +80%

Fee income, net 158 148 172 -8% 695 619 +12%Operating expenses (81) (85) (90) -9% (344) (344) -0%Other income (expenses) (1) 0 8 -111% (1) 11 -108%Net income 79 70 92 -14% 376 303 +24%Non-controlling interests (3) (2) (3) +22% (13) (8) +56%Net income attributed to equity holders 76 68 90 -15% 363 295 +23%

Cost to income (%) 50.4% 55.0% 51.7% -3% 47.7% 54.1% -12%

123 137 144

+17%

0

50

100

150

200

250

4Q 17 3Q 18 4Q 18

Assets Under Management (SARbn)

49

30

58

+18%

(5)

15

35

55

75

95

115

4Q 17 3Q 18 4Q 18

Brokerages Volume (SARbn)


Türkiye Finans Katılım Bankası (TRY)FY 2018 net income increased by 20% YoY due mainly to higher operatingincome


FY 2018 net income increased by 20% YoY driven by higher operating income (+22%), which partially offset by higher operating expenses and impairment charge.

FY 2018 cost to income ratio reached to 50.0% from 55.5% in FY 2017.

4Q 2018 net income increased by 30% YoY due to (+47%) higher Operating income, and lower impairment charge by (-11%).

Summary Financial PerformanceTRY (mn) 4Q 2018 3Q 2018 4Q 2017 YoY %


Total assets 46,486 49,901 38,636 +20% 46,486 38,636 +20%

Total operating income 475 522 323 +47% 1,839 1,508 +22%Net special commission income 408 456 255 +60% 1,573 1,235 +27%Fee income from banking services, net 67 66 68 -1% 266 273 -3%

Operating expenses (238) (226) (216) +10% (920) (837) +10%Impairment charge (75) (189) (84) -11% (454) (293) +55%Other income (expenses) (32) 5 77 -142% (19) (8) +138%Net income 130 112 100 +30% 445 370 +20%

Cost to income (%) 50.1% 43.3% 66.9% -25% 50.0% 55.5% -10%

CAR % 16.8% 19.4% 18.2% -8% 16.8% 18.2% -8%Tier 1 CAR % 12.0% 13.4% 14.3% -16% 12.0% 14.3% -16%LTD ratio % 110.0% 112.5% 118.8% -7% 112.0% 118.8% -7%

Note: Figures according to IFRS accounting standards

0.2

3.4

Growth at constant FX

TFKB FX translation

impact

4Q 17 Reported

4Q 18 Reported

4Q 18 Underlying

26.4 26.6

30.0

+1% +14%

Financing & Advances, net (TRYbn)

Customers’ Deposits (TRYbn)

0.5

4.1

4Q 18 Reported

22.2

4Q 17 Reported

Growth at constant FX

TFKB FX translation

impact

4Q 18 Underlying

22.7

26.8

+2% +20%

42% 39%

49% 59%

% in foreign currency xx%


National Commercial Bank Additional InformationFY 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.


NCB Contacts

Please don’t hesitate to contact NCB Group Investor Relations

More information

Download copies of National Commercial Bank’s:

Financial statements

Earnings release

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Financial data supplement

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

NCB Investor Relations

+966 12 646 3988

[email protected]

National Commercial Bank

P.O. Box 3555

21481 Jeddah

Kingdom of Saudi Arabia

Documents

National Commercial Bank Investor Presentation FY 2018 Results€¦ · Al Rajhi Bank 18.57. 13.93: National Commercial Bank 15.31 11.48 Saudi Telecom (STC) 9.79. 7.34: Samba Financial