Chairman's Statement

It gives me immense pleasure to present Riyad Bank’s 2021 Annual Report, including the Bank’s financial performance, its strategy, and successes over the year, its ambitions, and goals for the future.

The Bank’s achievements have given us the opportunity to expand its horizons and accelerate its growth on new levels. As a key contributor to the Kingdom’s digital banking revolution, we continuously seek to reinforce our position as the trusted, secure, and innovative choice for all our customers.

Saudi Arabia’s economy has been incredibly resilient in the face of COVID-19 and even grew at its fastest pace in nearly a decade during parts of 2021. Foreign investment and diversification have played a prominent role at a national level and set a positive tone for many businesses across almost all sectors, not least finance.

While many banks around the world saw their market value drop substantially during the pandemic, the decline among Saudi banks was much smaller and their recovery much swifter, many are now close to, if not above, pre-pandemic levels.

As one of the cornerstones of the Saudi economy, banking has proved itself to be among the main drivers of economic and commercial activities, and we are proud of our contributions at this level.

Saudi Arabia’s banking sector was guided to a large extent by the pillars of the Kingdom’s Vision 2030 and the desire to provide a more personal service to individual customers; a consolidated strong and multiple relationship with the corporate sector, in addition to providing enhanced and diversified support to small and medium-sized businesses. From the enormous rise in individual mortgages to the mass adoption of digitisation, Riyad Bank had the resources and expertise to lead many of those initiatives.

The objectives of achieving the Kingdom’s Vision 2030 have played a vital role in many of the strategies that were implemented throughout the year. Our focus on digital platforms, SMEs, green energy, and project financing with government entities are all geared towards the Vision, including our investment in sustainability, support of youth and commitment to homeownership.

In fact, our commitment to supporting and aligning with Vision 2030 and its goals has led us to launch a dedicated office to foster partnerships, initiatives, and projects to support the national agenda across a wide range of initiatives, in line with our Strategy 2025. During the year, five MoUs and ten execution agreements were signed, and four high-impact initiatives were launched in some key strategic sectors that contribute to 96 distinct Vision 2030 KPIs.

The Bank also engaged in providing financial consultations and designing creative initiatives and financial programmes, offers customised comprehensive financial solutions for the entities and designing financial business models between the entities and their individual and corporate clients, to align and support the goals of Saudi Vision 2030.

Our inspiration to enhance and develop existing and new businesses was also key to launching the Business Initiatives and Enablers Development Center, the first of its kind in the Kingdom

Our wholehearted commitment to SMEs has continued throughout 2021, a year in which the Bank received the Outstanding Performance Award and the award for the Best Small and Medium Enterprises Bank by international magazine Euromoney.

We also expanded our operations for smaller businesses by adding 29 dedicated centres across the Kingdom, while fully digitising the lending process for SMEs.

As ever, social responsibility has been a core strategy at the Bank. We believe our contribution extends far beyond delivering customer excellence, we are also at the heart of the community’s wellbeing and quality of life. With a Vision to be a leading member of sustainable practices that would add value to employees, customers, stakeholders, and the community of Saudi Arabia, Riyad Bank aligns its practices with The Guidance on Social Responsibility (ISO 26000), Accountability Principles Standard (AA1000), The Global Report Initiative (GRI), the UN Global Compact. We work to continuously measure, report, and improve our programmes, in line with our overall ESG strategy and focus.

In 2021, the Bank made substantial progress in our objectives, initiatives, and programmes in this field. Our commitment was highly valued by the community and recognised through a number of awards, recognitions and certifications related to this activity.

In recognition of Riyad Bank’s tangible efforts in promoting the environment value, the Bank received the award for the ‘Best sustainable educational program’, presented by the Gulf Sustainability Awards. It is a source of great pride that pushes us to continue our commitment to the highest levels of social responsibility in the Kingdom, and to adopt new programmes in this field. Riyad Bank’s acquisition of its iconic new office tower at King Abdullah Financial District, the new general management headquarters, has not just been a strategic and practical move, it is also symbolic of our ongoing success. Our employees have been exceptional in 2021 and in turn we have endeavoured to increase their skills, provide greater incentives, possibilities and further reward their efforts and outstanding performance.

As a reflection of the Bank’s continuous interest in the competencies of its young Saudi national employees, Riyad Bank Academy was officially inaugurated this year to empower young and promising talent. We also continued to drive diversity and were recognised for our dedication to gender equality in job benefits and opportunities by winning the ‘Best Work Environment Award for Women in Saudi Arabia’ and achieving the ‘Mowaamah Golden Certificate’ for our commitment to creating work in an environment suitable for people with disabilities.

We constantly strive to maintain our philosophy as the best work environment and achieve our goal as Bank of Choice for Employees by 2025.

Our digital transformation in 2021 was one of the Bank’s largest undertakings. The sheer scale and sophistication of the technology we have put in place has enabled us to expand our services in a highly efficient and capable manner.

The effective inter-departmental coordination and meaningful cooperation in the various Bank sectors has led to optimised solutions for challenges and created the potential for many mutual opportunities, perfectly aligning with our own 2025 Strategy and contributing to the achievement of Saudi Vision 2030.

Our overriding goal for 2021 was to support our existing customers, attract new customers and develop the Bank’s activities and business, in accordance with Phase 2 of our 2025 Strategy, where value through innovation, enablement through the next-gen operating model and efficiency through digitisation are key pillars.

Our strategic focus for 2022 is to increase the digital routes we have laid down while adding more partners and projects to the Bank’s portfolio. Ultimately, we will intensify the Bank’s operations, consolidate our position as one of the Kingdom’s most innovative financial institutions and upgrade the standards of the business environment and its surroundings in accordance with our 2025 Strategy. We have laid the foundations to not just meet but exceed our expectations.

Over the year, in a new regional achievement for the Saudi banking sector, Riyad Bank received the Outstanding Winner Award for Customer Excellence, which was presented for the first time under the umbrella of the Mohammed bin Rashid Al Maktoum Business Award. The Bank also received the Mohammed bin Rashid Award for Customer Excellence.

These prestigious awards confirm the outstanding level and high strategic efficiency enjoyed by Riyad Bank in the field of customer experience development, raising service delivery standards and meeting banking needs to contribute to the development of banking industry standards in accordance with the objectives of the Kingdom’s Vision 2030.

The Sheikh Mohammed bin Rashid Al Maktoum Business Award is distinguished by its moral value and esteemed reputation due to its tight criteria in selecting the best performing entities in various business sectors.

We, at Riyad Bank, have the honour to extend our deepest thanks and gratitude to the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud and his Crown Prince, His Royal Highness Prince Mohammed bin Salman bin Abdulaziz – may Allah protect them and grant them success.

Further, Special thanks to all government and regulatory bodies, especially the Saudi Central Bank, Ministry of Finance and Capital Market Authority for their efforts in supporting and developing the Saudi banking sector.

We also extend our thanks and appreciation to the Members of the Board of Directors for their support; to our shareholders for their trust and loyalty; and to all Riyad Bank employees for their dedication and outstanding performance during this eventful year of achievements.

Responsive image — Abdullah Mohammed Al-Issa

Chairman of the Board

CEO’s Message

It has been a truly remarkable year for Riyad Bank as we developed our technology, introduced new operations and capitalized on our advantages, in line with the ambitions of our 2025 Strategy. We continued to enhance our performance-driven culture and our ability to collaborate for success, while expanding our services with unprecedented speed and agility and maintaining our customer-centric philosophy. The results have been remarkable – including the highest net income in the Bank’s history.

Our strategic aim for 2021 was primarily to focus on delivering better and broader services for our existing customers, attracting new customers and expanding our reach with an emphasis on technology, SMEs, sustainability and collaboration with government entities.

Through a comprehensive digital restructure, each of our business divisions was able to work both independently and collectively. Our innovation in 2021 was exceptional and gave the Bank an enormous advantage in achieving our strategic targets.

Robust financial performance

Riyad Bank delivered a landmark financial performance in 2021, posting our highest net income in history at SAR 6.0 Bn, reflecting increases in net investments by 3.9%, total assets by 5.0% and net loans and advances by 13.6%.

We delivered the second highest return on assets in the Kingdom’s banking industry this year, moving up from third last year, while also rising one spot in return on equity after Zakat, to reach third place in the Kingdom.

SAR Sukuk program was established with a value of SAR 10 billion. And in 2021, the first issuance of that program, SAR 3 billion, was oversubscribed 1.9x, demonstrating the strength of our financial position and brand quality with investors.

Exceptional achievements across our Bank

We made great progress across our operations this year, with continuous investment in people, products, processes and platforms to delight customers at every stage of their banking journey, which is critical in delivering on the aspirations of our 2025 Strategy.

Retail Banking

A significant addition to our high priority services was to offer our customers a greater variety of mortgage options, including a range of off-plan variants, self-construction and refinancing.

In line with our family finances strategies, we launched the Kingdom’s first mobile banking platform for children which enables them to enhance their financial literacy and build a habit of saving.

Continuing the drive to make technology the hub of our retail division, cash withdrawal transactions at ATMs declined in relation to pre-pandemic banking. By the same token, POS contribution in monthly transactions increased significantly reaching approximately 80%. Similarly, the ease and efficiency of banking led us to deploy 80 self-service kiosks.

Our digital restructure in terms of Retail Banking was a huge triumph in client recruitment – 70% of new customers were acquired through digital channels.

In our 2021 retail Net Promoting Score, ratings of the call centre score rose by 457% compared to 2020 and 94% of calls were answered within seven seconds, demonstrating the satisfaction of our customers in our products and service.

Corporate Banking

Corporate Banking had another busy and successful year driving positive change and supporting our customers. Corporate Finance submitted 22 proposals and initiatives related to Vision 2030 to various entities during the year.

Reinforcing our strategic focus on green investments, we successfully closed several major syndicated facilities for solar projects and energy players and supported the green-funded giga- projects.

With regards to institutional fund lending, we signed five major loans and successfully completed a financial advisory mandate for another major energy player. We supported many of the largest tourism initiatives, including the Red Sea Project, and recently launched the Tourism Partners Program with the Tourism Development Fund (TDF).

SMEs

Riyad Bank expanded its operations for smaller businesses by adding 29 dedicated SME centres across the Kingdom, while building an end-to-end digital platform to fully digitize the lending process for small and medium-sized enterprises.

Riyad Bank enhanced the Bank’s workforce capacity and capabilities to better serve SMEs by: increasing the number of employees dedicated to serving SMEs, expanding the number of dedicated SME centres across the Kingdom, increasing the man-days of training provided to SME staff, investing in training SME customers to improve their business capabilities, and initiating workshops held for SMEs and entrepreneurs.

Treasury and Investments

Consistent with the business growth in our private banking and retail customers, T&I dedicated specific units to work with ultra-high-net-worth customers and better understand and serve their needs with customised products and solutions.

In recognition of Riyad Bank successful USD 1.5 Billion Sukuk issuance, T&I has been awarded with the “Financial Institutions Deal of the year” award by GFC Media , out of more than 300 submissions.

Riyad Capital

2021 was a remarkable year for Riyad Capital, with 42% growth of net profit reaching SAR 512 Mn. Assets under management grew remarkably from SAR 67 Bn to SAR 91 Bn (a growth of 36%).

Along with that, Riyad Capital acted as a Financial Advisor, Lead Manager and Book Runner to the landmark Acwa Power IPO transaction where bids from interested investors reached a historic order size of above 1 trillion SAR.

Diversification of offerings continued in all asset classes as it launched the first of its kind “indirect financing fund” along with other alternatives products.

Riyad Capital partnered with BNP Paribas Securities Services to provide global custody, fund services and consolidated data management services in the Kingdom of Saudi Arabia under a unique, and first of its kind in the region, joint servicing model.

Driving Bank-wide transformation

It was an extraordinary year for technology at Riyad Bank. We overhauled our digital services and internal network to produce some of the most efficient operations in the Kingdom’s banking community.

In building the framework in a collaborative model for engaging all stakeholders, we created a digital strategy powered by innovation for the first time at the Bank.

Digital services and our innovative infrastructure are now crucial to the Bank’s expansion at a rapid pace. The transformation has enabled customers to bank with ease and extended the potential of new services to them.

To fully connect Riyad Bank with the Kingdom’s fintech and start-up community, we launched WSL in June, which is the only open innovation platform and service for the financial industry in Saudi Arabia. It will power close collaboration and innovation to allow the Bank to empower innovators to envision and build the financial (or finance dependent) products and services of the future in a seamless way.

We also established our Partnership Centre to serve as a one-stop-shop to manage the Bank’s diverse and growing relationships with disruptive Fintechs, and launched our internal innovation programme (Mulhim), a full-fledged digital innovation boot camp with wide participation of the bank community.

In one of the many steps to further its capabilities, the Global Transaction Banking business signed an MOU with Channels by STC for providing collection, payment services, and signed and executed Dividend Distribution Agreements with two major telecommunication companies.

Delivering customer experience improvements

There is no doubt that the customers in any or the Bank’s business units will benefit enormously from the digital technology we have put in place, from the speed of their services to the range of products to explore. The outstanding changes in our internal communication channels will ensure that we are 100% connected and able to offer the best results, advice and rewards to our customers in the optimum time.

Our success and commitments to supporting and serving our customers were recognised this year when we received two prestigious awards from The Sheikh Mohammed bin Rashid Al Maktoum Business Award, including the inaugural ‘Outstanding Winner Award for Customer Excellence’.

Committed to the ESG journey

Riyad Bank remains committed to creating value for all our stakeholders through a commitment to ESG. This year we continued to progress our journey and build momentum through a range of initiatives across environment, society and governance.

Our donations accounts, opened by various Charities and Associations to supply essential items to the needy, saw almost 320,000 transactions.

We extended our support agreement for the Autism Research Center at King Faisal Specialist Hospital and Research. The total value of the support provided by Riyad Bank to the centre amounted to more than SAR 42 Mn.

We signed a memorandum of understanding with Bab Al Khair Medical Services to establish the first non-profit hospital in the Kingdom.

Riyad Bank also launched a Green Banking initiative to examine and monitor its participation towards ESG compliance, and implemented a pilot launch of our paperless project, making us the first Bank to offer an end-to-end paperless journey for Retail account opening and updates.

Supporting and developing our people

As ever, the teams at Riyad Bank are at the very heart of our operations and thanks to their consistent support, we have managed to break new boundaries and accelerate our growth beyond our own ambitions. In order to ensure we can maintain that momentum and harvest the very best talent, we inaugurated the Riyad Bank Academy to empower young and promising individuals to share the latest developments in banking and finance, and enhance their capabilities and performance. The Academy will continue to educate and connect more than 6,000 ambitious professionals from different Riyad Bank divisions and branches in various regions.

As a fair and caring employer, we conducted industry salary surveys followed by an annual pay review that benchmarked employees’ compensation against the market and best practices. Meanwhile, our performance-based system encourages a highly effective achievement and reward system.

In another effort to build a base of next generation employees, the Human Resources Development trained 75 recruits through its on-the-job training to Saudi youth through its Tamheer Programme.

Having had a hugely successful launch of the Fursan program, we launched two further versions. The first intended for treasury and investment, corporate banking and retail credit, and Fursan 3 which targets retail banking, risk management and finance.

Acknowledgements

In conclusion, we at Riyad Bank have the honour to extend our deep gratitude to the wise leadership, represented by the Custodian of the Two Holy Mosques and his trusted Crown Prince – may God protect them and take care of them.

I would also like to extend my sincere thanks and appreciation to the Saudi Central Bank (SAMA), the Capital Markets Authority of Saudi Arabia (CMA), and the Chairman and all Members of our outstanding Board of Directors for their vision, support and guidance.

Furthermore, I would like to thank our shareholders and customers for their trust, and every member of the Riyad Bank family for their dedication and contributions during this successful year.

We are all looking forward to another year full of success and achievements to make further progress towards becoming the preferred bank in the Kingdom by 2025, through our combined effort, service and commitment.

CEO’s Message - Riyad Bank Annual Report

Leadership