POSITIONING FOR GROWTH ANNUAL REPORT 2020 The Custodian of the Two Holy Mosques His Royal Highness Crown Prince King Salman Bin Abdulaziz Al Saud Mohammad Bin Salman Bin Abdulaziz Al Saud SABB | ANNUAL REPORT 2020 POSITIONING FOR GROWTH 3 A JOINT HISTORY OF OVER 160 YEARS 1926 1928 1939 1977 Netherlands Assists the Kingdom Facilitates payment Saudi Hollandi Trading Society in issuing its first for first oil export Bank established opens in Jeddah independent currency as a JV bank In a year when the world faced unprecedented challenges, we 2017 2016 2004 2003 Launches first digital Rebrands to Alawwal Issues first Issues first smart maintained our progress in the branch IBDA Bank subordinated bond credit card in the in the Kingdom Kingdom Best Digital Bank in Bank of the Year in integration of SABB and Alawwal Bank. Saudi Arabia KSA (The Banker) With the merger of our institutions (Banker Middle East) 2018 approaching completion, and the 2019 2018 Best Trade Finance Provider conclusion of the Strategy 2025 we have (Euromoney) Most Innovative Merger Best Treasury and Cash Bank in KSA Management Provider positioned ourselves for growth. (Banker Middle East) (Global Finance) SABB Ms. Lubna S. Olayan Board Chair 1991 2002 2005 2016 Issuance of SABB’s First Saudi bank First Saudi bank to Best Bank in Saudi first credit card to launch a Home issue international Arabia (Asiamoney) Finance Programme bonds 1990 1978 1950 SABB’s first Royal Decree SABB’s origins begin ATM launched establishing SABB at a branch of BBME in Alkhobar SABB | ANNUAL REPORT 2020 POSITIONING FOR GROWTH 5 24% CUSTOMER LENDING SAR 160.4 BY BUSINESS bln AT A GROSS LOANS 76% RBWM VS. CIB Retail Banking and Corporate and GLANCE Wealth Management Institutional Banking NET INCOME AFTER ZAKAT TOTAL ASSETS (SAR mln) AND INCOME TAX 1 (SAR mln) 9.2% SAR 2020 276,452 2020 2,790 Underlying return on 2019 265,987 2019 2,736 420 tangible equity (2.01) 2018 174,677 82,028 2018 2,698 878 EPS 2017 187,615 99,870 2017 3,575 950 2016 186,056 104,990 2016 3,521 945 18.96% 21.82% CET1 ratio Total Capital SABB Alawwal Bank SABB Alawwal Bank Adequacy ratio LOANS AND ADVANCES, NET (SAR mln) CUSTOMER DEPOSITS (SAR mln) 1.7 mln 6% retail customers 2020 153,243 2020 189,110 Mortgage market 8.8k share 2019 152,075 2019 192,167 corporate customers2 2018 110,326 57,767 2018 130,507 64,573 2017 117,006 63,639 2017 140,240 78,275 23% 10% 2016 120,965 72,743 2016 140,640 85,359 Trade market share FX market share SABB Alawwal Bank SABB Alawwal Bank SHAREHOLDERS’ EQUITY (SAR mln) DIVIDEND PER SHARE (SAR) Top 3 8% 2020 50,707 2020 - corporate bank by POS market share revenue 2019 55,994 2019 1.20 2018 32,467 2018 1.96 2017 33,345 2017 1.42 2016 31,279 2016 0.70 SABB SABB 2Excludes Micro, Small and Medium-sized Enterprises (‘MSME’) 1Excludes goodwill impairment and associated tax impact SABB | ANNUAL REPORT 2020 POSITIONING FOR GROWTH 7 TABLE OF MORE CONTENTS AWARDS At a glance 06 FROM About SABB 10 BANK PROFILE 12 Business model 14 2020 Year in review 16 Our market 18 SABB and Vision 2030 20 Global Finance Investment case 22 Best Foreign Exchange Provider Best Private Bank STRATEGIC REPORT Best Trade Finance Provider Board Chair’s statement 26 Best Treasury and Cash Management Provider Strategy & KPIs 28 Best Bank in KSA Managing Director’s message 30 Best Consumer Digital Bank Positioning for growth 32 Best Mobile Banking App Customer experience and digital banking 34 Safest Bank in KSA Environmental, Social and Governance focus 36 Chief Financial Officer’s review 42 Euromoney Operating review 44 No 1 Bank in KSA for Mega High Net Worth Clients 24 Capital overview 58 No 1 Bank in KSA for Philanthropic Advice Supporting Micro, Small and Medium-sized Enterprises 60 No.1 Rank for Market Leader No. 1 Rank for Best Service Market Leader Best Service GOVERNANCE The Board of Directors 64 Saudi Trade Finance Biographies of Board members 66 Best Trade Finance Bank Biographies of Executive Management 70 Best Supply Chain Finance Bank Changes to the Board during 2020 74 Board sub-committees 75 GTR Leader in Trade MENA Risk governance 82 Product of the Year MENA – SABB Waafer Account Internal controls 87 Best Domestic Bank in KSA Board assurance 90 Best Bank for Customer Experience in KSA SABB General meetings 93 Directors’ and Senior Executives’ interests 94 Remuneration 95 Legal Entity structure 99 Appointment of external auditors 100 Debt securities in issue and other borrowings 101 Statutory payments 102 62 Penalties 103 SABB | ANNUAL REPORT 2020 POSITIONING FOR GROWTH 9 ABOUT SABB Our vision To bring a world of financial opportunities to an ambitious Kingdom We enjoy a unique position as the leading Our merger with Alawwal Bank international bank in the Kingdom of Saudi The merger between SABB and Alawwal Bank, Arabia. We give our customers the highest completed in June 2019, brought together two of quality service and an unmatchable breadth Saudi Arabia’s best established and most trusted and depth of experience and know-how from financial institutions, and was a milestone moment local and international best practice, delivered for the Saudi capital market. through digital and personalised service driven by customer preference. Our strategic partnership The merger was a compelling opportunity to with HSBC Group, one of the world’s leading create an institution with enhanced scale and financial institutions, positions us as a preferred balance sheet strength to support and play an banking partner. As a leader in key segments of instrumental role in the Vision 2030 economic the financial sector, we will be where the growth transformation programme, supporting is in Saudi Arabia. Our staff will see SABB as the financing of infrastructure projects, the the best place to work in Saudi Arabia, offering development of the capital market, the the best training and development, unparalleled prioritisation of public services and assets, and access to international best practices and the the creation and build out of new sectors of the most progressive working standards in tune with economy. the evolution of the Kingdom. The merged Bank has cemented its position as Our business a top-tier Saudi financial institution, with total Saudi British Bank (‘SABB’ or the ‘Bank’) was revenue in 2020 amounting to SAR 8.9 billion, established in 1978 as a Saudi Joint Stock more than 1.7 million retail customers and over Company. Today the Bank has in issue SAR 8.8k corporate and institutional customers. 38.1 billion of share capital and share premium, The combination of the two banks has created equating to 2,055 million shares with a nominal a substantial retail and wealth management value of SAR 10. SABB provides a comprehensive business, with increased resource to innovate and range of banking services to retail, corporate and connect with a young and tech-savvy customer institutional customers throughout the Kingdom. base. SABB continues to be one of the leading corporate banks in the Kingdom and the bank of Since its foundation, SABB has maintained its choice for international customers. strategic partnership with HSBC Group, one of the world’s largest and most geographically diverse SABB has SAR 276.5 billion of total assets, SAR financial services corporations. The partnership 160.4 billion of gross customer loans and SAR has provided SABB with a vital competitive 189.1 billion of customer deposits. As at 31 advantage, affording customers access to the December 2020, the market capitalisation of the best international services available in the Saudi Bank was SAR 50.8 billion. market. HSBC Group currently retains a 31% stake in SABB. SABB | ANNUAL REPORT 2020 POSITIONING FOR GROWTH 11 BANK PROFILE 14 Business model 16 Year in review 18 Our market 20 SABB and Vision 2030 22 Investment case SABB | ANNUAL REPORT 2020 POSITIONING FOR GROWTH 13 BANK PROFILE | STRATEGIC REPORT | GOVERNANCE BUSINESS CASE MODEL STUDY Client Following the SABB-Alawwal merger, the business model of our unified institution has been designed to ensure the Bank delivers value to customers, employees and shareholders, while delivering on our strategic priorities for supporting Saudi Founded in 1977, Almarai Company (‘Almarai’ or the ‘Company’) is the world’s largest vertically integrated dairy Arabia’s Vision 2030 development programme. The business model serves to build and deepen sustainable relationships company and the region’s largest food and beverage manufacturing and distribution company. Headquartered in the between the Bank and its stakeholders, taking advantage of the opportunities that have been created by the union of the Kingdom of Saudi Arabia, Almarai is ranked as the number one FMCG brand in the MENA region and a market two institutions. leader in all its categories across the GCC. Creating stakeholder value In addition to its high quality dairy products, the Company has diversified its product portfolio to include juices, bakery, poultry and others. Almarai also has successful joint ventures with Chipita and PepsiCo. Scale • Broader customer base With more than 40 years of sustainable growth, Almarai continues to provide nutritious and healthy products to • Larger market position consumers of all ages with growth stemming from its bedrock principle, ‘Quality you can trust’. • Size to support growth The challenge STRON Diversity G L OC • International network A 1 Almarai ran a decentralised treasury operation across multiple markets in the MENA region, using multiple banking L • Conventional and Islamic product suite across retail , FR relationships, currencies and numerous payable and receivable accounts. This resulted in higher operating costs and A corporate and treasury segments N • Access for local and global customers reduced ability to optimally manage working capital across these markets.