NCB Investor Presentation 3Q 2017 FINAL · Investor Presentation 3Q 2017 Results. NCB Investor...

NCB Investor Relations3Q 2017 Investor Presentation 1

National Commercial Bank

Investor Presentation

3Q 2017 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

28

48

54

NCB – The leading KSA bank

Grow with KSA. Grow with NCB.

Strategy Overview

Financial Results Highlights

Segmental Overview

Additional Information

34 Financial Results Details



The Leading KSA Bank

3Q 2017 Results


NCB is the leading banking group in Saudi Arabia

Established in 1953; IPO in 2014

NCB Snapshot

Jeddah HQ

>8m Clients12,310

Employees441bn

Assets316bn

Deposits>100bn

Market Cap

Wholesale branch in BahrainOffices: Singapore, Seoul, Shanghai

Subsidiary in Turkey:Türkiye Finans Katılım Bankası

Subsidiary in KSA:NCB Capital


NCB is the leading banking group in Saudi Arabia

NCB has a strong market and financial position (FY2016)

Financial Position KSA GCC

Assets #1 #4

Financing #1 #4

Deposits #1 #3 tied

Investments #1 #1

Total Operating Income #1 #3

Net Income #1 #3

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

441

340

231 218 203

0

100

200

300

400

500

NCB Rajhi Samba Riyad BSF

Assets (SRbn)

254 225

143 129 125

0

50

100

150

200

250

300

NCB Rajhi Riyad BSF Samba

Financing (SRbn)

316

273

172 158 157

0

50

100

150

200

250

300

350

NCB Rajhi Samba BSF Riyad

Deposits (SRbn)


NCB has a well-diversified business model

Total operating income contribution FY2016

Capital Markets

Largest Asset Manager in KSALargest Shariah-compliant Asset Manager worldwide

Top 3 Broker17 locations

286 Employees

SR 15.8bn85%

NCB

374 branches, 3,477 ATMs148 Remittance centers

8,035 Employees

7.5bn40%

4.6bn25%

3.7bn20%

RETAIL

CORPORATE

TREASURY

2.2bn12%

581mn3%

International

Türkiye Finans Katılım Bankası (TFKB)286 branches, 572 ATMs

3,989 employees


NCB has a strong financial position

Key KPIs

14.7% 15.1%

16.9%17.5% 17.1% 17.2% 17.2%

19.2%

16.5% 16.2%

13.5%

15.3%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

20.0%

2012 2013 2014 2015 2016

Capital Ratios (%)

T1 ratio TC ratio CET1 ratio

39 43 47 56 60

+11%

0

20

40

60

80

100

2012 2013 2014 2015 2016

Total Equity (SRbn)

345 377 435 449 441

+6%

0

100

200

300

400

500

600

700

2012 2013 2014 2015 2016

Total Assets (SRbn)

CAGR CAGR

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

Capital ratios are based on Pillar I RWA

152.3%172.5%

59.8% 62.4% 66.3%78.1% 80.3%

0

0

0

1

1

1

1

1

2

2

2

2012 2013 2014 2015 2016

Liquidity Ratios (%)

Liquidity coverage ratio (LCR) Financing to customer deposit ratio


NCB has a strong performance track record

Key KPIs

9.0 10.1 11.4 12.6 13.6 4.5 4.8 4.8 4.9 5.1 13.5 14.9 16.2 17.5 18.6

+8%

0

5

10

15

20

25

30

2012 2013 2014 2015 2016

Total Operating Income (SRbn)

Net special commission incomeFee and other income

2.92% 2.95% 2.87% 3.00%3.31%

0

0

0

0

0

0

2012 2013 2014 2015 2016

Net Special Commission Margin (%)

38.7% 39.0% 39.0% 37.4% 37.7%

0

0

0

0

0

1

1

2012 2013 2014 2015 2016

Cost to Income Ratio (%)

CAGR CAGR

6.5 7.9 8.7 9.1 9.3

+10%

0

2

4

6

8

10

12

14

16

18

2012 2013 2014 2015 2016

Net Income attributable to equity holders (SRbn)

18.0%

20.0% 20.1%19.2%

17.8%

2.0% 2.2% 2.2% 2.1% 2.1%

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

2012 2013 2014 2015 2016

Returns (%)

ROE common shares (%) ROA (%)


NCB has outperformed the Saudi banking sector

Key KPIs compared to Saudi Arabian banking peers

SR (bn)

Financing and advances, net

Total operating income

Net income attributable to equity holders

Source: Company financials

CAGR

163 254

+12%

0

100

200

300

400

500

2012 2016

172 225

+7%

0

100

200

300

400

500

2012 2016

117 143

+5%

0

100

200

300

400

500

2012 2016

103 129

+6%

0

100

200

300

400

500

2012 2016

103 125

+5%

0

100

200

300

400

500

2012 2016

13.5 18.6

+8%

0

5

10

15

20

25

30

35

40

2012 2016

14.0 15.3

+2%

0

5

10

15

20

25

30

35

40

2012 2016

6.8 7.7

+3%

0

5

10

15

20

25

30

35

40

2012 2016

5.0 6.4

+6%

0

5

10

15

20

25

30

35

40

2012 2016

6.7 7.8

+4%

0

5

10

15

20

25

30

35

40

2012 2016

7.9 8.1

+1%

0

2

4

6

8

10

12

14

16

18

20

2012 2016

3.5 3.3

-1%

0

2

4

6

8

10

12

14

16

18

20

2012 2016

3.0 3.5

+4%

0

2

4

6

8

10

12

14

16

18

20

2012 2016

4.3 5.0

+4%

0

2

4

6

8

10

12

14

16

18

20

2012 2016

6.5 9.3

+10%

0

2

4

6

8

10

12

14

16

18

20

2012 2016

842 1,141

+8%

0

500

1,000

1,500

2,000

2,500

2012 2016

51 64

+6%

0

20

40

60

80

100

120

140

2012 2016

29 32

+3%

0

10

20

30

40

50

60

70

2012 2016

Industry Peers(ex NCB)


NCB Group listed on Tadawul in November 2014

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

MSCI GCC Index Float Adj. Mcap (USD) Weighting (%)

Al Rajhi Bank 21.42 8.80SABIC 20.56 8.44National Commercial Bank 10.97 4.50Etisalat 8.19 3.36Emaar Properties 8.11 3.33Qatar National Bank 7.74 3.18Saudi Telecom 7.55 3.10National Bank of Kuwait 7.31 3.00Samba Financial Group 7.04 2.89Almarai 6.85 2.81

Ratings LT ST Outlook


Moody’s* A1 P-1 StableS&P BBB+ A-2 StableFitch A- F1 StableCapital Intelligence A+ A1 StableGovernment of Saudi Arabia

Moody’s A1 StableS&P A- StableFitch A+ StableCapital Intelligence A+ Stable

*Moody’s rating is unsolicited

[Source: MSCI, 6 July 2017]

Source: Bloomberg

Source: NCB, Bloomberg

0

10

20

30

40

50

60

70

80

Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17

Share Price Performance since IPO (SR)

Share parameters 30 Sept 2017

Closing Price 51.4252 week range (SR) 32-58Free Float 36%Shares issued (m) 2,000Tangible Book Value (SRm) 54,109Tangible BVPS 27.05P/TBV Ratio 1.9 xP/E Ratio 10.97xDiv Yield 3.11%3m Avg Daily Volume (Shares) 600,220

NCB Investor Relations3Q 2017 Investor Presentation


Grow with KSA. Grow with NCB.

3Q 2017 Results


Saudi banking sector

The Saudi banking sector has been maneuvering challenges

Source: Thomson Reuters, SAMA, Banks’ Annual Reports, and NCB Economics Estimates

0.52% 0.49% 0.47% 0.48%

1.01%0.88%

0

0

0

0

0

0

0

2012 2013 2014 2015 2016 1H 2017

Cost of Funds (%)

Cost of Funds

960 1,076 1,205 1,323 1,351 1,365

16.4%

12.1% 11.9%9.8%

2.2%-1.7%

-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

2012 2013 2014 2015 2016 1H 2017

Lending Market (SRbn)

FinancingCredit Growth Rate (YoY%)

0.9%

1.8%

0.5%

1.3%

13.6%

2.4%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

(0)

0

0

0

0

0

0

0

2012 2013 2014 2015 2016 2017

Liquidity (%)

3M SAR SAIBOR 3M USD LIBOR M3 YoY Growth

Aug 2017

23 23

35 38 41 44 41

11.0%

7.2%

10.2%

5.4%

-5.4%

-1.5%

-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

2012 2013 2014 2015 2016 1H 2017

Profits (SRbn)

Profits (1H)Profits (FY)Annual Growth (%)


Economic headwinds

The oil market decline impacted the Kingdom financially

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

0

20

40

60

80

100

120

140

0

2

4

6

8

10

12

2009 2010 2011 2012 2013 2014 2015 2016 2017USD/bblMMBD

Oil Market

Saudi Oil Production, LHSArabian Light Spot Price, RHS

13.6%6.4%

-2.3%

-14.8% -12.8%-5.8%

22.4%18.1%

9.7%

-8.7%-4.3%

2.3%

-25.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

2012 2013 2014 2015 2016P 1H 2017P

Twin Balances (%)

Budget Balance / GDPCurrent Account Balance / GDP

648 718 725 610 529 501

36 36 43

60 39 43

684 754 768

670 568 544

0

100

200

300

400

500

600

700

800

900

2012 2013 2014 2015 2016 1H 2017

Foreign Reserves (USDbn)

SAMABanks

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17

Stock Market

Tadawul Index


Vision 2030

The Kingdom of Saudi Arabia has responded with a bold vision to reduce oil dependency…

Economic reformMove from a government

driven economy to one that is market based

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

§ Focus on strategic sectors: Mining and Minerals, Petrochemicals,

Manufacturing, Retail and Trade, Tourism, Finance and Healthcare

Fiscal sustainabilityCreating sustainable fiscal

management

§ Raise non-oil revenue to SAR 530bn by 2020

§ Reduce public wages to 40% of Budget

§ Create USD 2trn Public Investment Fund

ProductivityLeverage our young population,

50% being younger than 25

§ Lower the rate of unemployment from 11.6% to 7%

§ Increase SME contribution to GDP from 20% to 35%

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

§ Improve education with an uplift of 15% on Math and English attainment

Areas of Focus Selected Commitments / KPIs


Economic upturn

…leading to an expected economic rebound in 2018F

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

690 820 855 860 840

183 156 245 118

(15)

873 976

1,100 978

825 890 928 950 953

26.6%

19.0%

28.7%

13.7%

-1.8%0.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

(150)

50

250

450

650

850

1,050

1,250

2012 2013 2014 2015 2016P 2017F 2018F 2019F 2020F

Fiscal Discipline (SRbn)

BudgetActualBudget Overrun (%)

99 60 44 142

317 432

549 631 612

4% 2% 2%6%

13%17%

21%23% 21%

-10%

-5%

0%

5%

10%

15%

20%

25%

0

200

400

600

800

1,000

1,200

2012 2013 2014 2015 2016P 2017F 2018F 2019F 2020F

Utilizing Untapped Debt Markets (SRbn)

Domestic Public DebtDebt to GDP Ratio (%)

(

1,145 1,035 913 446 334 477 470 491 521

103 121 131

169 186

200 243 295 359

1,247 1,156 1,044

616 519 677 713 786 880

(100)

100

300

500

700

900

1,100

1,300

1,500

1,700

2012 2013 2014 2015 2016P 2017F 2018F 2019F 2020F

Revenue Diversification (SRbn)

Oil Revenues

Non-oil Revenues

5.3%

2.7% 3.6% 4.1%

1.8%

-1.2%

0.6% 1.2%1.9%

(0)

(0)

(0)

0

0

0

0

0

0

0

0

2012 2013 2014 2015 2016P 2017F 2018F 2019F 2020F

Economic Rebound (%)

OilNon-oil PublicNon-oil PrivateReal GDP


NCB is aligned with Government priorities

NCB has already made significant contributions to the economic welfare of Saudi Arabia

Government aims to mobilize capital and channel to target

sectors

NCB plans to target sectors where we have

competitiveness and scale

NCB supports +70,000 SME across Saudi Arabia with leading

market share

Only local and joint lead manager for KSA’s inaugural USD 17.5bn bond issuance

and numerous sukukissuances.

NCB is a large investorin Saudi Government Bonds with a portfolio SR 42bn.

NCB has provided home financing for more than 20,000 Saudi families with a portfolio of

SR 19bn

Achieving fiscalsustainability

Opening up the Saudi economy

Increase SME contribution to GDP

Increase homeownership

Reduce Saudi unemployment

Diversify economyNCB is the leading lender for

KSA companies with a portfolio of SR 137bn; 15% market share

NCB is the number one financial institution in

Saudization (95%) and has a 100% Saudi top management

team



Strategic overview

3Q 2017 Results


NCB’s strategic plan is about execution

Domestic leadership position drives strategic priorities

Retail Banking Expand share of retail profits

Corporate Banking Grow selectively and increase risk-adjusted returns

TFKB Increase profit contribution

Treasury Diversify funding, sustain investment returns and cross-sell

NCBC Generate AUMs and cater to GRE’s growing needs

Lean Distribution

Digitization

Expand reach with lean branches

Anywhere, anytime, instant banking


Distribution expansion

We accelerated expansion of our distribution platform in Saudi Arabia…

299 322 342 352 374

+6%

0

100

200

300

400

500

600

700

2012 2013 2014 2015 2016

Number of branches

28 57

97

138 148

+52%

0

50

100

150

200

250

2012 2013 2014 2015 2016

Remittance Centers

1,960 2,252 2,643

3,107 3,477

+15%

0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2013 2014 2015 2016

Number of ATMs

12,775 14,075

26,514 30,803

39,132

+32%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2012 2013 2014 2015 2016

Point of Sale

CAGR CAGR

CAGR CAGR


60%69%

+15%

0

0

0

1

1

1

1

2014 2016

Front / Back Office Ratio (%)

21

Lean distribution

…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% 37.7%

+3%

0

0

0

0

0

1

1

1

2014 2016

Cost / Income Ratio (%)

1.35

1.78

+32%

0

1

1

2

2

3

2014 2016

Operating Income / FTE (SRm)

12.1 11.0

-9%

0

2

4

6

8

10

12

14

16

18

20

2014 2016

FTE / Branch

8,021 8,035

+0%

(1,000)

1,000

3,000

5,000

7,000

9,000

11,000

13,000

15,000

2014 2016

Bank Headcount (NCB employees)


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

10%

29%

+70%

0

0

0

0

0

1

1

2014 2016

Digital Transactors(% of total base)

CAGR CAGR CAGR

13.0 17.5

2.8

17.9 15.8

35.4

+50%

0

10

20

30

40

50

60

2014 2016

Digital Transactions (mn)

OnlineMobile

8%

4%

-29%

0

0

0

0

0

0

0

2014 2016

Branch Financial Transactions (% of total)


5.7

7.5

+15%

0

2

4

6

8

10

12

14

2014 2016


Retail Banking

We are transforming retail distribution to increase share of profits


§ Grow market share in consumer finance§ Grow in high deposit segments (Affluent/ HNW / GRE) § Expand and optimize branch network§ Drive digital migration§ Continue improving customer satisfaction

CAGR CAGR CAGR

1.6

3.2

+43%

0

1

2

3

4

5

6

2014 2016

Net Income (SRbn)

23

72 85

17.4% 19.7%

+8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

0

20

40

60

80

100

120

140

160

2014 2016

Consumer Financing & Advances, net (SRbn)

Consumer Financing & Advances, net (SRbn)Market Share (%)


3.7 4.6

+11%

0

1

2

3

4

5

6

7

8

2014 2016


108 130

+10%

0

50

100

150

200

250

2014 2016

Corporate Financing & Advances, net (SRbn)

24

Corporate Banking

Grow selectively and increase risk-adjusted returns


§ Focus on portfolio quality and proactively manage risk§ Build a deal pipeline in V2030 target sectors § Cross sell treasury and cash management§ Drive migration to digital channels§ Expand collection capacity and increase recoveries

CAGR CAGR CAGR

3.2 2.7

-9%

0

1

1

2

2

3

3

4

4

5

5

2014 2016

Net Income (SRbn)


35%

25%

-15%

0

0

0

0

0

0

0

0

0

0

1

2014 2016

Investments as % of Total Assets

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

100 104

152.3%172.5%

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 2016

HQLA and Liquidity Coverage (SRbn/%)

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

CAGR CAGR

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

99% 96%

-2%

0

0

0

1

1

1

1

1

2

2

2014 2016

Saudi Government and Investment Grade Investments as % of Total

London

Bahrain

Singapore

Jeddah

Established

Under consideration

FrankfurtNew York

Hong Kong


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

57

115

+102%

0

50

100

150

200

250

2014 2016

NCBC Assets under Management (SRbn)

4,294

2,314

8,333 7,210

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2014 2016

Tadawul Traded Value (SRbn) & TASI Index

Traded Value TASI Index

490

283

11.4%12.2%

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

2014 2016

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

10.1%13.0%

+2.9ppt

0

0

0

0

0

0

2014 2016

NCBC Share of Sector Net Income (%)


4.1%

3.0%

-15%

0

0

0

0

0

0

0

0

0

2014 2016

TFKB Contribution to NCB Net Income (%)

1,446

2,066

+20%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2014 2016

Total Operating Income (TRYmn)

334 296

-6%

0

100

200

300

400

500

2014 2016

Net Income (TRYmn)

33.5 38.8

+8%

0

10

20

30

40

50

60

70

2014 2016

Total Assets (TRYbn)

27

Türkiye Finans Katılım Bankası

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

Long-term strategic investment in TFKB

§ High-growth and profitable banking sector§ Strong position in participation banking and scalable platform§ Large, young and skilled workforceStrategic Focus Areas

§ Strengthen underwriting and improve collections§ Resume branch expansion and expand digital channels § Increase automation and drive capacity optimization § Instill NCB’s principles (Customer excellence, robust

governance, best-in-class technology)

CAGRCAGRCAGRCAGR



Financial Results Highlights

3Q 2017 Results


Key messages

3Q 2017 Results

Profitability

BalanceSheet

Asset Quality, Capitalisationand Liquidity

§ 1% total assets and financing growth YTD reflective of subdued environment (domestic financing +2%; international -6%)

§ 5% YTD investments growth through Saudi Government debt issuance participation and portfolio re-balancing

§ 4% YTD decline in deposits as the funding mix was optimized by reducing time deposits, but CASA growth of 4%

§ 1% NSCI growth in 3Q YTD as NSCI margin improved by 13bps while average earning assets declined by 3% attributable to international

§ 7% decline in fee and other income in 3Q YTD due to lower fees primarily from financing, credit cards and trade finance

§ Expenses for 3Q YTD improved 8% due to ongoing digitization and productivity initiatives

§ 3% growth in 3Q YTD net income

§ Impairment charge for 3Q YTD improved 6% on lower retail & international credit charges

§ Group NPL ratio at 1.8% at 3Q 2017 vs. 1.5% at beginning of year and adequate NPL coverage at 142%

§ Capital position comfortably above regulatory minima with CET1 of 14.5% and T1 of 16.4% at 3Q 2017

§ Strong liquidity with LTD ratio of 85%, average 3Q LCR of 172% and Leverage Ratio of 12.7% at 3Q 2017

254 257

+1%

0

100

200

300

400

500

600

4Q 16 3Q 17

Financing (SRbn) Deposits (SRbn)

316 303

-4%

0

100

200

300

400

500

600

700

800

4Q 16 3Q 17

7.03 0.06

(0.27)

0.41 0.10

(0.08)

7.25

0

0

0

1

1

1

1

1

3Q 1

6YT

D

NSC

I

Non

-SC

I

Expe

nses

Impa

ir-m

ents

Othe

r

3Q 1

7YT

D

Net income movement (SRbn)

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

1.5%1.8%

0.7% 0.8%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

0

0

0

0

0

0

4Q 16 3Q 17

NPL CoR (YTD)

15.3% 14.5%80% 85%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

0

0

0

0

0

0

0

4Q 16 3Q 17

CET1 LTD


Profitability

Profitability Trends

SR (mn) 3Q 2017 2Q 2017 3Q 2016 YoY % change 3Q 2017 YTD 3Q 2016 YTD YoY %

change

Net special commission income 3,449 3,473 3,442 +0% 10,283 10,226 +1%

Fee and other income 1,042 1,005 1,221 -15% 3,546 3,821 -7%

Total operating income 4,492 4,478 4,663 -4% 13,830 14,047 -2%

Operating expenses (1,602) (1,521) (1,702) -6% (4,811) (5,222) -8%

Total impairment charge (695) (475) (956) -27% (1,593) (1,698) -6%

Income from operations, net 2,195 2,483 2,005 +9% 7,426 7,127 +4%

Net income attributed to equity holders 2,126 2,417 1,962 +8% 7,246 7,030 +3%

YTD Net income growth from improved impairments and efficiency, partly offset by lower fee and other income

4.72 4.66 4.66 4.60 4.86 4.48 4.49

-4%

0

1

2

3

4

5

6

7

8

9

10

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17


14.0 13.8

-2%

0

5

10

15

20

25

3Q 16YTD

3Q 17YTD

2.63 2.44 1.96

2.29 2.70 2.42

2.13

+8%

0

1

2

3

4

5

6

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Net Income Attributed to Equity Holders (SRbn)

7.0 7.2

+3%

(1)

1

3

5

7

9

11

13

15

3Q 16YTD

3Q 17YTD


Balance Sheet

Balance Sheet Trends

SR (mn) 3Q 2017 2Q 2017 3Q 2016 YoY % change FY 2016 YTD %

change

Investments, net 116,900 114,634 111,487 +5% 111,509 +5%

Financing and advances, net 256,852 256,901 259,915 -1% 253,592 +1%

Total assets 444,679 449,776 438,765 +1% 441,491 +1%

Customers' deposits 302,593 314,690 311,225 -3% 315,618 -4%

Debt securities issued 10,166 9,926 10,204 -0% 9,918 +3%

Total liabilities 381,944 388,623 379,696 +1% 381,566 +0%

Equity attributable to shareholders 54,433 52,876 51,954 +5% 53,038 +3%

Total equity 62,736 61,152 59,069 +6% 59,926 +5%

Growth constrained by economic environment

136 137 135 130 134 135 135

80 83 84 85 85 87 88 38 37 33 28 27 27 27

265 265 260 254 254 257 257

+1%

0

50

100

150

200

250

300

350

400

450

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Financing and Advances, net (SRbn)

CorporateConsumer and credit cardInternationalOthers

231 220 217 224 236 248 232

81 81 78 79 66 55 59

326 315 311 316 314 315 303

-4%

0

100

200

300

400

500

600

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Customers' Deposits (SRbn)

CASA

Time

Others


Retail44%

Corporate24%

Treasury20%

Capital Market3%

International9%

Total Operating Income by Segment (SRbn)

32

Segmental Information YTD Total operating income lower due to depreciation of Turkish Lira, partly offset by higher Retail and Corporate operating income

14.0 13.8

0

5,000

10,000

15,000

20,000

25,000

3Q 16YTD

3Q 17YTD

4,663

159

(111)

(62)40

(197)

4,492

0

100

200

300

400

500

600

700

800

3Q 16 Retail Corporate Treasury Capital Market International 3Q 17

QTR Total Operating Income Growth by Segment (SRbn)

14,047

161

185

(65)

41

13,830

(539)

0

200

400

600

800

1,000

1,200

3Q 16YTD

Retail Corporate Treasury Capital Market International 3Q 17YTD

YTD Total Operating Income Growth by Segment (SRbn)

104 109 107

143 143 143

152 156 154

41 39 39

441 450 445

+1%

0

100

200

300

400

500

600

700

4Q 16 2Q 17 3Q 17

Total Assets by Segment (SRbn)

RetailCorporateTreasuryCapital MarketInternational

85 87 88

130 135 135

28 27 27

254 257 257

+1%

0

50

100

150

200

250

300

350

400

450

4Q 16 2Q 17 3Q 17

Financing and Advances, net by Segment (SRbn)

RetailCorporateInternationalOther


Retail32%

Corporate23%

Treasury38%

Capital Market3%

International4%

Net Income by Segment (SRbn)

33

Segmental Information3Q YoY and YTD net income growth in most segments, except Corporate which was impacted by rising impairments

7.1 7.3

0

2

4

6

8

10

12

3Q 16YTD

3Q 17YTD

1,976

476

14

(404)

43 54 2,159

0

200

400

600

800

1,000

1,200

3Q 16 Retail Corporate Treasury Capital Market International 3Q 17

QTR Net Income Growth by Segment (SRmn)

7,089

363

(436)

180 40 7,344 108

0

200

400

600

800

1,000

1,200

3Q 16YTD

Retail Corporate Treasury Capital Market International 3Q 17YTD

YTD Net Income Growth by Segment (SRmn)

Management Commentary

§ YTD Total operating income declined 2% YoY due to depreciation of the Turkish Lira impacting International income (-31%), partly offset by growth in Retail (+3%) and Corporate (+6%).

§ YTD Net income improved 3% YoY respectively due to growth in Retail (+19%) and Treasury (+7%), partly offset by a decline in Corporate net income (-20%) as a result of higher impairments.



Financial Results Details

3Q 2017 Results


Income Highlights


§ 3Q 2017 total operating income declined 4% YoY despite stable net special commission income due to lower investment-related income and Turkish Lira depreciation.

§ 3Q 2017 YTD total operating income declined 2% YoY despite 1% growth in net special commission income due to lower fees from banking services and Turkish Lira depreciation.

§ Excluding the International business, 3Q 2017 total operating income grew 1% YoY (+3% 3Q 2017 YTD YoY).

Lower YTD and QTR total operating income largely attributable to lower fee and other income and Turkish Lira depreciation

3.44 3.47 3.45

1.22 1.00 1.04

4.66 4.48 4.49

-4%

0

1

2

3

4

5

6

7

8

3Q 16 2Q 17 3Q 17



10.2 10.3

3.8 3.5

14.0 13.8

-2%

0

5

10

15

20

25

3Q 16YTD

3Q 17YTD

14.05

0.47

(0.15)

14.37

(0.54)

13.83

0

1

1

2

2

3

3

3Q 16YTD

NSCI Non-NSCI Income

Excl. Intn'l International 3Q 17YTD

YTD Total Operating Income Movement (SRbn)

4.66 0.12

(0.09)

4.69

(0.20)

4.49

0

0

0

1

1

1

1

3Q 16 NSCI Non-NSCI Income

Excl. Intn'l International 3Q 17

QTR Total Operating Income Movement (SRbn)


Net special commission income trendsYTD and QTR commission income stable as domestic margin improvement offset by Turkish Lira depreciation


§ The 3Q 2017 net special commission margin was stable at 3.43% as improved funding costs were offset by lower commission yields.

§ Special commission expense for 3Q 2017 was 11% lower YoY due to lower SAIBOR rates and a more optimal funding mix.

§ Excluding the International business, where NSCI was impacted by currency depreciation, domestic NSCI grew by 4% in 3Q 2017.

Net Special Commission Income

SR (mn) 3Q 2017 2Q 2017 3Q 2016 YoY % change 3Q 2017 YTD 3Q 2016 YTD YoY %

change

Special commission income 4,282 4,268 4,377 -2% 12,771 13,103 -3%

Special commission expense (833) (794) (935) -11% (2,488) (2,877) -14%

Net special commission income 3,449 3,473 3,442 +0% 10,283 10,226 +1%

Net special commission margin (%) 3.43% 3.47% 3.40% +1% 3.46% 3.33% +4%

3.35% 3.24%3.40%

3.24%3.48% 3.47% 3.43%

0

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Net Special Commission Margin (%)

4.29% 4.19% 4.32% 4.31% 4.37% 4.27% 4.25%

1.00% 1.02% 0.96% 1.12% 0.95% 0.84% 0.85%

(0)

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Commission Yield and Funding Cost (%)

Commission yield (%) Funding cost (%)

1.80%

2.22% 2.36%2.04%

1.74% 1.78% 1.79%

0.63% 0.65%0.85%

1.00%

1.15%1.30% 1.33%

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

SAIBOR and LIBOR Rates (%)

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


754 790 793

288 285 280 335 78 101

1,221 1,005 1,042

-15%

(200)

300

800

1,300

1,800

2,300

2,800

3Q 16 2Q 17 3Q 17

Fee and Other Income (SRmn)

37

Fee and other income trends


§ 3Q 2017 fee and other income declined 15% YoY as 5% growth in fees from banking services was more than offset by a 70% decline in investment-related income.

§ The higher fees from banking services in 3Q 2017 were mainly driven by higher fees from investment management services.

§ 3Q 2017 YTD fee and other income declined 7% YoY mainly resulting from an 8% reduction in fees from banking services.

§ The lower fees from banking services in 3Q 2017 YTD were mainly driven by lower financing, credit card and trade finance fees, partly offset by higher fees from investment management services.

Lower YTD and QTR fees and investment related income

754

48 15

(16) (7)

793

0

20

40

60

80

100

120

140

160

3Q 16 Invmnt. Mgmnt. Financing Credit Cards Others 3Q 17

QTR Key Drivers of Fee Income from Banking Services Movement (SRmn)

2,584 69

(129)(57)

(50) (32)

2,385

(50)

50

150

250

350

450

550

650

750

3Q 16YTD

Invmnt. Mgmnt.

Financing Credit Cards Trade Finance

Others 3Q 17YTD

YTD Key Drivers of Fee Income from Banking Services Movement (SRmn)

2,584 2,385

856 890 687 637

3,821 3,546

-7%

(400)

600

1,600

2,600

3,600

4,600

5,600

6,600

7,600

3Q 16YTD

3Q 17YTD


Expense highlights

Digitization and productivity enhancement delivered expense savings in 3Q 2017 YTD


§ 3Q YTD operating expenses improved by 8% YoY.§ The YTD cost to income ratio improved by 2.4% YoY to 34.8%. § The cost base improvement was relatively broad-based, reflecting

the continued strides made in digitisation and productivity initiatives, and further benefited from the cessation of intangible assets amortisation as well as currency depreciation in the Turkish subsidiary.

5,222

(80) (10)

(147)

(175)

4,811

0

200

400

600

800

1,000

1,200

3Q 16YTD

Employee-related

Rent & premises Depreciation & amortisation

Other G&A 3Q 17YTD

Operating Expenses Movement Drivers (SRmn)

2,552 2,472

578 568 648 501

1,444 1,269

5,222 4,811

-8%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

3Q 16YTD

3Q 17YTD

36.0%37.5% 37.2% 37.7%

34.7% 34.4% 34.8%

33.2%

35.1% 34.9%36.2%

32.9% 32.4% 32.9%

0

0

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Cost to Income Ratio (YTD %)

Group (%) Excluding International (%)

786 835 797

194 188 197 219 154 153 502 345 455

1,702 1,521 1,602

-6%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

3Q 16 2Q 17 3Q 17

Operating Expenses (SRmn)

Employee-relatedRent & premisesDepreciation & amortisationOther G&A


Retail24%

Corporate32%

Treasury35%

Capital Market0%

International9%

Total Assets by Segment (SRbn)

39

Asset highlights and compositionBalance sheet growth reflective of a more subdued economic environment and Turkish Lira depreciation

254 257 257

112 115 117 63 60 52

441 450 445

+1%

0

100

200

300

400

500

600

700

800

4Q 16 2Q 17 3Q 17

Total Assets (SRbn)

Financing and advances, netInvestments, netCash and bank balancesOther assets

Financing and advances, net58%

Investments, net26%

Cash and bank balances12%

Other assets4%

Total Assets Mix (SRbn)


§ Total assets grew by 1% during 3Q 2017 YTD due to limited growth in financing (+1%) and moderate growth in investments (+5%).

§ Overall balance sheet and financing growth was reflective of a more subdued economic environment domestically, and further muted by Turkish Lira depreciation and de-risking at TFKB.

441 445

0

100

200

300

400

500

600

4Q 16 3Q 17

441 445

0

100

200

300

400

500

600

4Q 16 3Q 17


Consumer financing and credit cards34%

Commerce16%Manufacturing

12%

Services8%

Utilities & health services8%

Building and construction8%

Others across 6 sectors14%

Financing and Advances, gross by Economic Sector ) (SRbn)

40

Financing and advances

Financing growth diluted by decline in Turkish subsidiary


§ Domestically, financing grew for the Corporate (+3%) and Consumer (+4%) segments during 3Q 2017 YTD.

§ International financing declined 6% YTD due to both organic decline and weakened Turkish Lira.

257 260

0

50

100

150

200

250

300

350

400

4Q 16 3Q 17

130 135 135

85 87 88 28 27 27

254 257 257

+1%

0

100

200

300

400

500

600

4Q 16 2Q 17 3Q 17

Financing and Advances, net (SRbn)


254 257

0

50

100

150

200

250

300

350

400

4Q 16 3Q 17

Corporate52%

Consumer and credit card34%

International11%

Others3%

Financing and Advances, net by Type (SRbn)


Financing and advances credit quality (1)

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

1.57 1.65 1.73 1.93 2.13 2.34 2.63 0.53 0.56 0.63 0.51 0.49 0.49 0.52 1.86 1.62 1.82 1.48 1.48 1.50 1.52 3.96 3.83 4.17 3.93 4.10 4.33 4.67

+12%

0

1

2

3

4

5

6

7

8

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

NPL (SRbn)


0.08 0.15 0.19 0.19 0.26 0.25 0.47

0.11 0.02

0.41 0.08 0.17

0.15

0.15 0.21

0.24

0.21 0.08 0.05

0.08 0.35 0.38

0.84

0.36 0.42 0.47

0.69

-17%

0

0

0

1

1

1

1

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Impairment Charge (SRbn)


2.88 2.93 3.13 3.41 3.68 3.92 3.99 1.38 1.27 1.45 1.22 1.16 1.24 1.29 1.49 1.32 1.50 1.26 1.27 1.29 1.33 5.79 5.56 6.12 5.93 6.15 6.50 6.65

+9%

0

2

4

6

8

10

12

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Impairment Allowances (SRbn)


2.77 2.72 3.15 3.03 3.06 3.23 3.16

3.02 2.84 2.97 2.90 3.09 3.27 3.49

5.79 5.56 6.12 5.93 6.15 6.50 6.65

+9%

0

2

4

6

8

10

12

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Impairment Allowances (SRbn)

Portfolio (collective) allowancesSpecific allowances



Rise in NPL ratio but continued strong NPL coverage


§ Rising NPL ratio driven by the Corporate segment.§ Consumer credit quality remains stable.§ International NPL ratio deteriorated over last year, but has been

stable since 3Q 2016.§ Provision coverage was comfortable at 142% as at 3Q 2017.

0.9% 1.0% 1.0% 1.1% 1.1% 1.2% 1.3%

4.7%4.3%

5.3% 5.0% 5.3% 5.4% 5.4%

1.5% 1.4% 1.6% 1.5% 1.6% 1.6% 1.8%

(0)

(0)

0

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

NPL Ratios (%)

Domestic International Total NPL ratio

205%192% 196% 191% 186% 184%

169%

80% 81% 83% 85% 86% 86% 87%

146% 145% 147% 151% 150% 150% 142%

(0)

0

1

1

2

2

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

NPL Coverage Ratios (%)

Domestic International Total NPL coverage ratio

0.3% 0.3%0.6% 0.5% 0.6% 0.6% 0.8%

1.5%1.9%

2.3%2.7%

1.2% 1.0% 1.0%0.5% 0.5%

0.8% 0.7%

0.6% 0.7%0.8%

(0)

(0)

(0)

(0)

0

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

CoR Ratios (YTD %)

Domestic International Total CoR ratio



Consumer NPLs declined while Corporate NPLs increased

1.1% 1.2% 1.3%1.4%

1.5%1.7%

1.9%

0.7% 0.7% 0.7%0.6% 0.6% 0.6% 0.6%

0

0

0

0

0

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

NPL Ratios (%)

Corporate Consumer and credit card

184% 177% 181% 177% 173% 168%152%

260%

229% 232% 237% 238%254% 246%

1

1

1

2

2

2

2

2

3

3

3

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

NPL Coverage Ratios (%)


0.2% 0.3% 0.4% 0.5%

0.8% 0.7%0.9%

0.6%0.3%

0.8%0.6%

0.4%0.6% 0.6%

(0)

(0)

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

CoR Ratios (YTD %)



§ Rising Corporate NPL ratio but coverage remains strong at 152% as at 30 September 2017.

§ Consumer NPL ratio and coverage remain stable.


Saudi Arabia51%

GCC and Middle East19%

Europe1%

Turkey4%

Other countries25%

Investments by Geography (SRbn)

Investments trends and compositionInvestments rose through participation in Saudi Government debt issuance and ~90% of the investment portfolio remains Saudi Government or investment grade

112 117

0

20

40

60

80

100

120

140

160

4Q 16 3Q 17


§ The investment portfolio is built on high quality securities with ~90% being 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 during the year in light of the rising interest-rate environment.

Saudi Government Securities

36%

Other investment grade54%

Non-investment grade5%

Unrated5%

Investments by Credit Grade (SRbn)

44

71 65 66

35 44 44

112 115 117

+5%

0

50

100

150

200

250

4Q 16 2Q 17 3Q 17

Investments (SRbn)

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

112 117

0

20

40

60

80

100

120

140

160

180

4Q 16 3Q 17


Due to banks and other financial institutions15%

Customers' deposits79%

Debt securities issued3%

Other liabilities3%

Total Liabilities Mix (SRbn)

45

Liabilities trends and composition

Stable total liability base and improving deposit mix towards CASA balances


§ Customers’ deposits are the main source of funding and remained stable during 1H 2017 but declined by 4% during 3Q 2017 as the funding mix was optimized by reducing time deposits.

§ CASA balances grew by 4% YTD and account for 77% of customers’ deposits.

316 315 303

45 51 58

382 389 382

+0%

0

100

200

300

400

500

600

700

4Q 16 2Q 17 3Q 17

Total Liabilities (SRbn)

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

382 382

0

100

200

300

400

500

600

4Q 16 3Q 17

218 225

6 7 79 59

316 303

-4%

0

100

200

300

400

500

600

4Q 16 3Q 17

Customers' Deposits (SRbn)

CASA - DomesticCASA - InternationalTimeOthers


Liquidity

NCB maintained a strong liquidity profile


§ As at 3Q 2017, the financing to customer deposits ratio was 84.9% and comfortably below the regulatory guidelines.

§ HQLA balances declined compared to 2Q 2016, but average quarterly LCR improved to 172.5% from 159.8% in 3Q 2016.

§ Basel III leverage ratio improved to 12.7% from 12.1% in 3Q 2016.

LCR is quarterly average

94 101 97 104 102 96 91

145.3%156.1% 159.8%

172.5% 163.8% 166.1% 172.5%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

200.0%

0

50

100

150

200

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

HQLA and Liquidity Coverage (SRbn/%)

High quality liquid assets (HQLA)

Liquidity coverage ratio (LCR)

81.4%84.1% 83.5%

80.3% 81.0% 81.6%84.9%

1

1

1

1

1

1

1

1

1

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Financing to Customer Deposits Ratio (%)

11.5%11.6%

12.1% 12.2%12.4%

12.2%

12.7%

0

0

0

0

0

0

0

0

0

0

0

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Basel III Leverage Ratio (%)



§ As at 3Q 2017, capitalization remained strong and comfortably above the regulatory minima.

§ Pillar I risk weighted assets increased by 8% YTD as revised regulatory requirements for the calculation of certain credit risk weighted assets came into effect during 1Q 2017.

§ During 2Q 2017, additional Tier 1 Sukuk of SR 1.3bn were issued, taking the total to SR 7bn as at 30 September 2017.

Common equity tier 1 capital (CET1)78%

Additional tier 1 capital (AT1)10%

Tier 2 capital (T2)12%

Total Capital Composition (SRbn)

47

Capital

Capital position comfortably above regulatory minima

67.7 70.4

0

10

20

30

40

50

60

70

80

90

100

4Q 16 3Q 17

Capital ratios are based on Pillar I RWA

54 54 55

6 7 7 8 8 8 68 69 70

+4%

0

20

40

60

80

100

120

4Q 16 2Q 17 3Q 17

Capitalisation (SRbn)

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

312 336

33 34 353 380

+8%

0

100

200

300

400

500

600

700

800

4Q 16 3Q 17

Pillar I Risk Weighted Assets (SRbn)

Credit riskOperational riskMarket risk

15.5%16.1%

16.7% 16.9%16.1% 16.0% 16.4%

17.5%18.2%

19.0% 19.2%18.2% 18.2% 18.5%

13.9%14.5%

15.1% 15.3%14.6%

14.1% 14.5%

12.0%

13.0%

14.0%

15.0%

16.0%

17.0%

18.0%

19.0%

20.0%

1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Capital Ratios (%)

T1 ratioTC ratioCET1 ratio



Segmental Review

3Q 2017 Results


Retail BankingStrong YTD and QTR net profit growth resulting from operating income growth, improved efficiency and lower impairments


§ 3Q 2017 net income rose 116% YoY driven principally by 8% operating income growth, a 6% improvement in operating efficiency and 64% lower impairments.

§ NSCI for 3Q 2017 improved by 6% YoY due to a 4% increase in retail financing.§ Fee income increased by 7% in 3Q 2017 YoY, mainly resulting from financing-related

activity. § 3Q 2017 operating expenses improved by 6% and the cost to income ratio improved

13% YoY to 44.7%. This improvement was relatively broad-based across most expense categories, reflecting the continued strides made in digitisation and productivity initiatives.

§ 3Q 2017 impairments improved by 64% YoY due higher recoveries and improved risk management.

1,625 1,688 1,722

342 331 404 1,967 2,019 2,126

+8%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

3Q 16 2Q 17 3Q 17

Total Operating Income (SRmn)


409

768 885

+116%

0

200

400

600

800

1,000

1,200

1,400

3Q 16 2Q 17 3Q 17

Net Income (SRmn)

Summary Financial PerformanceSR (mn) 3Q 2017 2Q 2017 3Q 2016 YoY %

change 3Q 2017 YTD 3Q 2016 YTD YoY % change

Total assets 106,939 109,354 109,687 -3% 106,939 109,687 -3%

Total operating income 2,126 2,019 1,967 +8% 6,083 5,923 +3%Net special commission income 1,722 1,688 1,625 +6% 4,979 4,684 +6%Fee income from banking services, net 307 311 288 +7% 897 1,039 -14%

Operating expenses (950) (911) (1,013) -6% (2,825) (3,041) -7%Impairment charge (148) (171) (408) -64% (397) (542) -27%Other income (expenses) (142) (168) (136) +5% (546) (387) +41%Net income 885 768 409 +116% 2,315 1,952 +19%

Cost to income (%) 44.7% 45.1% 51.5% -13% 46.4% 51.3% -10%% of total assets 24.0% 24.3% 25.0% -4% 24.0% 25.0% -4%ROA (%) 3.3% 2.9% 1.5% +120% 2.9% 2.5% +18%


Corporate Banking

YTD and QTR Net profit impacted by higher impairments


§ 3Q 2017 net income dropped 57% YoY due to a 6% decline in total operating income and a 148% rise in impairments.

§ NSCI for 3Q 2017 declined 8% YoY despite stable corporate financing balances due to lower commission margins resulting from a drop in SAIBOR in 2Q and 3Q 2017 compared with 2016.

§ Fee income remained stable YoY and QoQ.§ 3Q 2017 operating expenses rose by 7% and the cost to income ratio increased 14%

YoY to 25.0%. § The 3Q 2017 impairment charge rose 148% YoY due to adequate provision coverage

for non-performing corporate financing formation.

825 820 761

280 280 281

1,104 1,100 1,042

-6%

0

500

1,000

1,500

2,000

2,500

3Q 16 2Q 17 3Q 17



715 659

311

-57%

0

200

400

600

800

1,000

1,200

3Q 16 2Q 17 3Q 17

Net Income (SRmn)



Total assets 143,378 143,320 141,459 +1% 143,378 141,459 +1%

Total operating income 1,042 1,100 1,104 -6% 3,385 3,200 +6%Net special commission income 761 820 825 -8% 2,510 2,348 +7%Fee income from banking services, net 243 243 245 -1% 752 753 -0%

Operating expenses (260) (209) (243) +7% (741) (724) +2%Impairment charge (465) (247) (188) +148% (972) (418) +133%Other income (expenses) (6) 16 41 -114% 46 97 -52%Net income 311 659 715 -57% 1,719 2,154 -20%

Cost to income (%) 25.0% 19.0% 22.0% +14% 21.9% 22.6% -3%% of total assets 32.2% 31.9% 32.2% +0% 32.2% 32.2% +0%ROA (%) 0.9% 1.8% 2.0% -57% 1.6% 2.0% -21%


Treasury

Higher NSCI and lower investment impairments partly offset by lower investment gains


§ 3Q 2017 net income improved 2% YoY from a 16% improvement in NSCI and lower investment impairments, partly offset by lower investment gains.

§ Operating income in 3Q 2017 declined 13% YoY due to lower gains on non-trading investments from repositioning the investment portfolio.

§ Investment impairments were negligible during 3Q 2017, while the comparative quarter was impacted by SR 122mn relating to impairments of certain investments of a non-recurring nature.

521 615 607

353 205 156

874 820 763

-13%

0

500

1,000

1,500

2,000

2,500

3Q 16 2Q 17 3Q 17



778 872 792

+2%

0

500

1,000

1,500

2,000

3Q 16 2Q 17 3Q 17

Net Income (SRmn)



Total assets 153,802 156,203 139,529 +10% 153,802 139,529 +10%

Total operating income 763 820 874 -13% 2,709 2,774 -2%Net special commission income 607 615 521 +16% 1,768 1,758 +1%Fee income from banking services, net 26 22 22 +19% 73 80 -9%

Other operating income 130 183 331 -61% 867 936 -7%Operating expenses (97) (86) (61) +60% (338) (275) +23%Impairment charge (2) (2) (122) -98% (5) (139) -97%Other income (expenses) 128 140 88 +47% 457 283 +61%Net income 792 872 778 +2% 2,824 2,644 +7%

Cost to income (%) 12.7% 10.5% 7.0% +83% 12.5% 9.9% +26%% of total assets 34.6% 34.7% 31.8% +9% 34.6% 31.8% +9%ROA (%) 2.0% 2.2% 2.2% -6% 2.5% 2.4% +3%


Capital Markets

Growth driven by asset management


§ 3Q 2017 net income increased by 130% (SR 43mn) YoY due to higher operating income and improved operating efficiency.

§ Operating income in 3Q 2017 rose 35% (SR 40mn) YoY due to higher fee and other income, mainly resulting from asset management.

33 54

76

+130%

0

20

40

60

80

100

120

140

160

3Q 16 2Q 17 3Q 17

Net Income (SRmn)



Total assets 1,562 1,465 1,568 -0% 1,562 1,568 -0%

Total operating income 154 144 114 +35% 462 421 +10%Net special commission income 1 1 0 +125% 2 1 +240%Fee income, net 148 140 108 +37% 447 412 +9%

Operating expenses (79) (91) (81) -2% (254) (253) +0%Impairment charge 0 0 0 0 0 Other income (expenses) 1 1 (0) -1115% 2 3 -15%Net income 76 54 33 +130% 210 171 +23%

Cost to income (%) 51.4% 63.2% 70.9% -28% 54.9% 60.1% -9%% of total assets 0.4% 0.3% 0.4% -2% 0.4% 0.4% -2%ROA (%) 20.2% 15.2% 8.6% +136% 19.5% 13.3% +47%

114 143 153

114 144 154

+35%

0

50

100

150

200

250

300

3Q 16 2Q 17 3Q 17


Fee and other incomeNet special commission income


InternationalOperating income impacted by depreciating Turkish currency but strong net income growth from declining expenses and lower impairment charges


§ 3Q 2017 net income improved 135% YoY as a significant reduction in the cost base and improving credit quality more than offset declining operating income.

§ 3Q 2017 operating expenses fell 29%. This improvement resulted from the ongoing progress made in cost-optimisation initiatives as well as the cessation of intangible assets amortisation from the start of 2017.

§ The impairment charge for 3Q 2017 declined 66% due to limited new NPL formation in the Turkish subsidiary over the period, further aided by the Turkish Lira depreciation.



Total assets 38,998 39,433 46,522 -16% 38,998 46,522 -16%

Total operating income 406 396 603 -33% 1,190 1,729 -31%Net special commission income 358 350 471 -24% 1,024 1,435 -29%Fee income from banking services, net 70 73 92 -24% 214 299 -28%

Operating expenses (214) (223) (304) -29% (653) (929) -30%Impairment charge (80) (54) (238) -66% (219) (599) -64%Other income (expenses) (17) (20) (21) -17% (42) (33) +27%Net Income 94 98 40 +135% 276 168 +65%

Cost to income (%) 52.8% 56.4% 50.4% +5% 54.9% 53.7% +2%% of total assets 8.8% 8.8% 10.6% -17% 8.8% 10.6% -17%ROA (%) 1.0% 1.0% 0.3% +195% 0.9% 0.5% +98%

471 350 358

132 46 48

603

396 406

-33%

0

200

400

600

800

1,000

1,200

3Q 16 2Q 17 3Q 17



40

98 94

+135%

0

20

40

60

80

100

120

140

160

180

200

3Q 16 2Q 17 3Q 17

Net Income (SRmn)




3Q 2017 Results



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]


P.O. Box 3555

21481 Jeddah, Kingdom of Saudi Arabia

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