BOARD CHAIR’S
STATEMENT
“ In 2020, we completed the integration of our Corporate & Institutional Banking and Treasury businesses. Our Retail & Wealth Management business will complete its customer integration, referred to as ‘Customer Day 1’, in the first quarter of 2021. Following Customer Day 1, we will be one bank, with one branch network, one IT system, one website and one shared culture.
It is my pleasure to introduce the SABB Annual Report for the year ended 31 December 2020. It would be an understatement to say that 2020 was an eventful year, both regionally and globally. It was a truly extraordinary year that will certainly remain in our memories for some time to come. The COVID-19 pandemic has created, and continues to create, challenges and uncertainty for the Kingdom, the global economy and the banking sector. We experienced periods of lockdown and curfews, travel to and from the Kingdom was impacted, the price of oil turned negative for the first time ever, and we transitioned to operating remotely, an entirely new way of working.
I am proud of how our Bank dealt with the challenges and navigated the uncertainty, while continuing to pursue our 2020 priorities. Much of our effort focused on advancing our integration efforts in the midst of one of the most globally challenging crises and on supporting our staff, who had to adjust to working remotely while continuing to put our customers first, supporting and serving their needs. Our management and staff stayed focused and often sacrificed, brilliantly exploiting the investments in our technological know-how to shift much of our business to a digital platform seamlessly and efficiently. And the board and management completed the task of finalising our new strategic plan: ‘Strategy 2025’.
As a result, SABB entered 2021 well positioned for the many opportunities that lie ahead as we anticipate emerging from the shadow of the pandemic over the course of the year.
Positioning for growth
In 2020, we completed the integration of our Corporate & Institutional Banking and Treasury businesses. Our Retail & Wealth Management business will complete its customer integration, referred to as ‘Customer Day 1’, in the first quarter of 2021.
Following Customer Day 1, we will be one bank, with one branch network, one IT system, one website and one shared culture.
As we transition to life as truly one bank, our Strategy 2025 provides a roadmap to deliver on our Vision of ‘bringing a world of financial opportunities to an ambitious Kingdom.’ We are especially eager to continue supporting the ambitious growth plans of the Kingdom’s Vision 2030 transformation plan.
Our operating environment
The onset of COVID-19 and the measures taken around the world to contain the virus led to a sharp fall in the global price of oil. As a result, GDP growth in the Kingdom decelerated. While showing remarkable leadership throughout its 2020 Presidency of the G20, culminating in a very successful first ever virtual G20 Summit, the Saudi government also implemented wideranging countermeasures to protect the economy and mitigate the negative impact of the COVID pandemic, with significant fiscal support for the private sector and monetary support for the financial sector. These measures have proven very effective by global standards.
Although progress against Vision 2030 came under pressure in light of difficult macroeconomic conditions, its fundamental soundness was further evidenced by its close alignment with the G20’s core objectives of macroeconomic stability, sustainable development, empowerment of women, enhanced human capital and increased flow of trade and investment. Our country’s commitment to reform and growth clearly remains undimmed, and so does that of SABB.
Against the backdrop of a challenging year, SABB once again has proved resilient. However, headline financial results for the year were disappointing, with a loss before Zakat and income tax of SAR 4.3 bln, which included our non-cash impairment of goodwill of SAR 7.4 bln during the second quarter. Excluding this impairment, net income before Zakat and income tax for 2020 was SAR 3.1 bln.
While disappointing that we were required to take the impairment charge, it is worth noting that this was a one-off accounting event under unprecedented circumstances. It does not affect the Bank’s capital, liquidity, or funding; nor does it affect our strategic strengths and competitive advantages, our ability to lend to customers, or our customer service standards.
In light of the reported loss for the period due to the impairment, the Board has not recommended a dividend for 2020.
Sustainability
In December, SABB published its first ever ‘Environmental, Social and Governance Focus’, which is available on our website, to highlight the importance of sustainability to our Bank and our accomplishments to date in that area. ESG will be an important focus of our Strategy 2025, and we look forward to reporting more on it in the future.
Board governance
Following best governance practices, our Board brings together considerable local and international expertise and included four independent members at the end of 2020.
In a year that necessitated many more meetings and discussions than in previous years, I am especially grateful for the diligence and professionalism of my board colleagues. They each devoted much time and effort to ensuring we met regularly to discuss key matters, such as integration, strategy, risk management, culture, talent, and customer experience, while dealing with the challenges and demands of the unprecedented pandemic crisis we faced in 2020.
I would like to thank Maria Ramos who joined our new Board at its inception in June 2019, and who stepped down as a member of our Board at year end. In addition to her Board position, Maria chaired our Nomination and Remuneration Committee. As we grappled with integration and other issues in the midst of the pandemic’s challenges, she provided the Board with wise counsel and insightful advice.
Some additional notes of gratitude
I would like to express my sincere gratitude and appreciation to our customers, shareholders, management, staff, and our longstanding global partner, HSBC Group, for their continued support. We are equally grateful to Saudi regulators and government agencies for the support they have shown during these difficult times, and to the government of Saudi Arabia for implementing measures that prioritise our safety and mitigate the headwinds faced by our economy.
Finally, we announced in February that, after leading SABB for 11 years as Managing Director, David Dew has decided to retire, effective from May 2021. We are pleased, though, that David has agreed to remain as an advisor to the Board until May of 2022. The Board has approved the appointment of Tony Cripps as David’s successor; Tony has enjoyed a long and successful career with HSBC, joining us from his most recent position as CEO of HSBC, Singapore. I would like to pay tribute to David’s invaluable contributions to SABB’s growth and success over his long career and to welcome and congratulate Tony on his appointment.
With SABB on a solid footing and with its strategic direction clear, we approach 2021 with confidence, and with the same heightened level of commitment and determined perseverance that SABB, its management and all its staff have consistently shown in meeting the many challenges of the past year and serving our clients’ needs.
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