samba financial group · 2020-02-26 · samba financial group (“samba”or the “bank”)is a...
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PUBLIC
Samba Financial Group
Q3 2019 Financial Results
Investor PresentationNovember, 2019
The information contained in this document and any other information presented or discussed in connection therewith (together, the “Information”)is being provided on basis concerning Samba Financial Group (Company). Please refer to slide no 13 for important disclaimers and relatedinformation.
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Table of Contents
Overview
Key Strategic Themes
Income Statement
Balance Sheet
Business Segments
Awards & Recognition
Appendix: Balance Sheet & Income Statement
2
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3,463Employees
SAR
125.5 BLoans
SAR
237.3 BAssets
Net Income (after Zakat / Tax)
4.45 4.40 4.88
3.65 3.23
2016 2017 2018 9M 2018 9M 2019
22.91%
15.39%
10.08%
51.62%
Public Investment Fund Public Pension Agency
GOSI General Public
Samba Financial Group (“Samba” or the “Bank”) is a leading bank established in 1980 as the Saudi American Bank, later renamed Samba Financial Groupin 2003
A well diversified franchise which operates through four segments and led by an experienced and cohesive management team:
(i) Consumer Banking, (ii) Corporate Banking, (iii) Treasury and (iv) Investment Banking
Forerunner in corporate, consumer, private & priority banking, ATMs, Debit & Islamic Credit Cards, FX Derivatives etc. in KSA
Has major market share both in assets and deposits in Saudi Banking Industry
A strong corporate governance structure is in place in line with global standards, which oversees the operations of the bank
A solid set of credit ratings comparable to any major banking institution in the region
Shareholding
SAR
165.5 BDeposits
SAR
44.6 BEquity
SAR
83.0 BInvestments
72Branches
534ATMs
A1 A+ BBB+ A-
Overview
SAR bln
3Shareholding includes Al-Raidah with PPA and Hassana with GOSI
Net Income (pre provision)
5.21 5.31 5.68
3.78 4.10
2016 2017 2018 9M 2018 9M 2019
8.5%
SAR bln
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Key strategic themes that will drive Samba
Accelerating customer acquisition & cross-sell across
businesses
Productivity
Launching new propositions to scale up key segments; Mass,
SME, Wealth
New segments
Transforming customer experience through digital
transformation
Digital
Technology
Building a modern, flexible data & technology foundation to support digitization
Capabilities
Strengthening core foundations through talent acquisition & partnerships
Health
Driving organization wide cultural and mindset change
4
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1968
491
1289
1038
1828
532
1372
881
975
402
115
1122
46
319
153
186
NRFF
NFI
Expenses
Net income
Consumer
Corporate
Treasury
Investment banking
Segmental Contribution (9M 2019)
5,382 5,732 6,152
4,564 4,817
-
2,000
4,000
6,000
8,000
2016 2017 2018 9M 2018 9M 2019
5.6% Net Special Commission
Net Income (pre provision)
8.4%
3,781 4,098
9M 2018 9M 2019
Management Analysis
Samba is performing strongly in challenging business
environment
The composition of income reflects Samba’s business
diversification and strength of its core business
Delivering consistent financial performance is a hallmark of
Samba
Despite significantly higher pre-provisioning profitability,
provisions led to decrease in net income during the period
under review
2,378 2,159
2,005
1,565 1,745
-
500
1,000
1,500
2,000
2,500
2016 2017 2018 9M 2018 9M 2019
Non-Special Commission
7,760 7,892 8,157
6,128 6,562
-1,500
500
2,500
4,500
6,500
8,500
2016 2017 2018 9M 2018 9M 2019
Revenues
Non-Special Commission/Total Revenue
2.22 2.20
2.44
1.821.61
0.00
0.50
1.00
1.50
2.00
2.50
3.00
2016 2017 2018 9M 2018 9M 2019
EPS
Income Statement
11.5%
Amounts in Million SAR
2,159 2,005 1,745
7,892 8,157
6,562
27%
25%27%
0%
5%
10%
15%
20%
25%
30%
-
2,000
4,000
6,000
8,000
10,000
2017 2018 9M 2019
Non Interest Income Total Revenue Ratio
5
7.1%
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Income Statement Analysis
Operating Income Growth
Management Analysis
Efficiency ratios above the Saudi
banking sector averages
Structurally, lower cost base is due to
focus on product distribution via
alternative delivery channels rather than
through a conventional large and
expensive branch network
Samba has one of the lowest cost to
income ratio in the sector
75 basis points cut in the interest rate,
contributing to 0.1% reduction in the Net
Interest Margin.
Net Interest Income Growth
2.7%2.9% 2.9%
2.8%2.9% 3.0% 3.0% 3.1% 3.2% 3.1% 3.0%
0.2%
0.7%
1.2%
1.7%
2.2%
2.7%
3.2%
3.7%
Q1,'17 Q2,'17 Q3,'17 Q4,'17 Q1,'18 Q2,'18 Q3,'18 Q4,'18 Q1,'19 Q2,'19 Q3,'19
Net Interest Margin
5%
0%
2%
3%
7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2015 2016 2017 2018 9M 2019 *
5,382 5,732 6,152
4,564 4,817
-
2,000
4,000
6,000
8,000
2016 2017 2018 9M 2018 * 9M 2019 **
2016 2017 2018 9M 2018 * 9M 2019 **
Amounts in Million SAR
32.92% 32.69%
30.31%31.37%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
2016 2017 2018 9M 2019
Cost to Income Ratio
* Compared to 9M 2018
*Compared with 9M 2017
**Compared with 9M 2018
6
6%
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Equity
5.4%42.2 44.52018 Q3 2019
AssetsManagement Analysis Balance sheet grew more than 3% at the back of loan growth
Increase in equity – robust ratios indicating strength and strong
profile
Strong capital base and Capital Adequacy Ratios built on
robust internal capital generation
Samba has successfully been able to improve its assets and
loan base
Has exhibited growth in NIB deposits
3.2%229.9 237.3
2018 Q3 2019
NIB-Deposits
0.7%
Balance Sheet Growth
231.5
227.5229.9
237.3
200.0
205.0
210.0
215.0
220.0
225.0
230.0
235.0
240.0
2016 2017 2018 Q3 2019
19.5%
21.8%
20.6%
22.1%
21.1%20.1%
22.5%
21.1%
22.7%
21.8%
17.0%
18.0%
19.0%
20.0%
21.0%
22.0%
23.0%
2015 2016 2017 2018 Q3 2019
Tier 1 Tier 1+ Tier 2 Capital ratio
Capital Adequacy Ratios
Balance Sheet
100 101
70 65
2018 Q3 2019NIB IB
Amounts in Billion SAR
7
5,214 5,006 5,024
5,529
2,249 2,334 2,434
3,614
4,235
1,686
45%49%
72%77% 75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
-
1,000
2,000
3,000
4,000
5,000
6,000
2015 2016 2017 2018 H1 2019
Net Income Gross Dividend Payout %
Dividend Payout
Net Loan Growth
(4.8)
(7.5)
(4.0)
11.8
(8.0)
(6.0)
(4.0)
(2.0)
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2016 2017 2018 Q3 2019
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Balance Sheet – Assets & Liabilities Profile
Management Analysis
Loan to Deposit ratio stood at 75%, which remains one of the strongest in Saudi
banking sector, leaving the Bank well positioned to pursue its growth strategy
Samba’s diversified balance sheet is a key source of its competitive strength
Loans vs Deposits
Net Borrowings and % of Total Balance Sheet
Loan to Deposit Ratio*
Placements and Borrowings
72.8%
70.1%
66.8%
74.9%
62.0%
64.0%
66.0%
68.0%
70.0%
72.0%
74.0%
76.0%
2016 2017 2018 Sep-19
10,881
6,551 7,872
19,346
35,583
25,105
32,787
10,144
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2016 2017 2018 Q3 2019
Borrowings Placements
Amounts in Million SAR
* LDR is calculated based on published financial statements. 8
Gross Loans
10.4%
116.3 128.4
2018 Q3 2019
125,234
117,685 113,709
125,495
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
111,659 105,813
100,009 100,738
60,417 62,109 70,161
64,752
2016 2017 2018 Q32019
Loans
IB
NIB
-24,702-18,553
-24,915
9,202
-10.7%
-8.2%
-10.8%
3.9%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
-30,000
-25,000
-20,000
-15,000
-10,000
-5,000
0
5,000
10,000
15,000
2016 2017 2018 Sep-19
Net borrowing / (placements) % of the total balance sheet
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Management Analysis Samba has ample liquidity to support its customer’s loan growth requirements
Almost 2/3rd of the customer deposits are non-interest bearing and granular in nature, allowing a favorable deposits
mix.
Funding profile further diversified through issue of a 3 years syndicated loan facility. Subsequent to period end, the
Bank has also raised US$ 1 billion bond under the recently established US$ 5 billion EMTN program. This will help
to diversify the funding sources and improve the tenor mismatch.
Maintaining strong loan/core funding ratio differentiate Samba from other banks in the region
Net Loans & Advances vs Core Funding
Funding Breakdown
Balance Sheet – Funding Analysis
Core Funding = Customer Deposits + Term Loans + Equity
165,490
17,176
2,169 7,930
44,487
Customer Deposits Inter-Bank Deposits Long Term Borrowing Other Liabilities Equity
130,001 125,234117,685 113,709
125,945
211,646 214,519 212,570 212,383 212,147
0
50,000
100,000
150,000
200,000
250,000
2015 2016 2017 2018 Q3 2019
Net Loans & Advances Core Funding
Amounts in Million SAR
170,170
7,871
9,591
42,213
Customer Deposits Inter-Bank Deposits Other Liabilities Equity
Q3 2019
2018
9
2015 2016 2017 2018 Sep-19
Loans & Adv Net / Core Funding 61.3% 58.4% 55.4% 53.5% 59.2%
IB Borrowing / Total Liabilities 9.8% 5.8% 3.6% 4.2% 8.9%
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Balance Sheet – Risk Management
Management Analysis Asset quality remains strong, underpinned by a low infection ratio and high coverage ratio
Proactive risk classification & management – Lowest infection ratio of 1.5% in the industry
Maintaining adequate loan loss coverage – 150%
Samba has robust credit evaluation system which is corroborated by historical
performances
Cumulative impairment charges over the years have remained low compared to peer
group
Ample cushion available against non-performing loans which signifies balance sheet
strength and ability to meet challenging circumstances
Equity/Assets
NPL Coverage Ratio
1,114 1,076 1,127
1,489
1,921 2,018
1,872 1,975
2,610
2,876
181%174% 175% 175%
150%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2015 2016 2017 2018 Q3 2019
Non-Performing Loans Loan Loss Reserve NPL Coverage
40,251 42,443 44,583 42,213 44,487
235,243 231,489 227,546 229,938 237,342
17%
18%
20%
18%19%
16%
16%
17%
17%
18%
18%
19%
19%
20%
20%
-
50,000
100,000
150,000
200,000
250,000
2015 2016 2017 2018 Q3 2019
Equity Assets Equity/Assets
NPLs/Gross Loans (Portfolio Infection ratio)
Credit Impairment/Average Loans
0.8% 0.8%0.9%
1.3%
1.5%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2015 2016 2017 2018 Q3 2019
Amounts in Million SAR 10
1634 27 26 24
4 11 15 13
112
137
97
0
20
40
60
80
100
120
140
160
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19
BPS
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14.4%
44.6%
41.0%
Consumer banking Corporate banking Treasury Investment banking
47.5%
41.5%
11.0%
37.5%
36.0%
21.0%
5.6%
Liabilities by Segments (Q3 2019)Total Assets by Segments (Q3 2019)
Corporate Banking Consumer Banking Treasury Investment Banking
Leading corporate banking business targeting a
wide spectrum of clients.
Products and Services− Current/time deposit accounts
− Liquidity management
− Payments & collection processing
− Cash delivery
− Electronic payment solutions
− Automated payroll processing
− Import/export related products
− Loan products
− Islamic Banking
Provides retail banking products and services to
individual clients
Products and Services− 24/7 telephone, mobile & online banking
− Islamic products
− Credit cards
− Personal finance
− Home finance / mortgages
− Branch account services
− Remittance business
− Wealth management services
− Private banking
Manages funding, liquidity and investment portfolio
Products and Services− Money market
− Primary dealer
− Foreign exchange
− Rates trading
− Derivatives trading
− Interest rate protection products
− Capital guaranteed structured deposits
− Customized solutions
− Islamic products
Samba Capital offers investment banking and
asset management services
Products and Services− Loan syndication
− Project finance
− Structured finance
− Real estate finance
− Equity capital markets
− Debt capital markets
− Advisory services
− Domestic IPOs
− Asset Management
− Brokerage
Operating Income by Segments (Q3 2019)
Business Segments
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Awards and recognition
Best Foreign Exchange Provider in Saudi Arabia for 2017, 2018
Best Bank in Saudi Arabia for 2017, 2018 & 2019
Best Integrated Consumer Bank Site in Saudi Arabia for 2018
Best Bank for Payments and Collections in the Middle East –2017 & 2018
Best Bank for Payments and Collections World Wide –2018
Best Integrated Corporate Banking Site in the Middle East –2017
Best Treasury & Cash Management Bank in Saudi Arabia - 2019
Best Web design in Saudi Arabia – 2018
Best SMS/Text Banking in Saudi Arabia – 2018
Best Private Bank in Saudi Arabia - 2019
Best Islamic Financial Institution for large Corporates - 2017
Best Trade Finance Services in Saudi Arabia – 2018 & 2019
Best Online Cash Management in Saudi Arabia - 2018
Best Islamic Retail Bank - 2017
Best Islamic Investment Bank – 2017 & 2019
Best Islamic Corporate Bank in the world - 2019
Best Corporate/Institutional Digital Bank In Saudi Arabia - 2017
Best Trade Finance Services in the Middle East – 2017
Best IPO in the Middle East: Middle East Healthcare
Company - 2017
Best Structured Finance House in the Middle East – 2017
Best Syndicated Loan House in Middle East –2017
Best refinancing in EMEA: Rabigh1 IPP’s US$1.8bn and
SAR facilities - 2017
Best refinancing in the Middle East: Dhuruma Electricity’s
US$1.138bn conventional and Islamic facilities – 2017
Equity Capital Markets: Best IPO in the Middle East:
Middle East Healthcare Company - 2017
Best Syndicated loan in the Middle East: DP World’s
US$2bn loan - 2017
Strongest Bank in the Middle East (2017)
Strongest Bank in Saudi Arabia (3 Years)
Samba ranked 119th globally and 6th in the Middle East and 3rd in Saudi
Arabia in the Banker Top 1000 banks list – 2017
Samba ranked 124th globally and 6th in the Middle East in the Banker Top
1000 banks list – 2018
Islamic Window (Global Winner) - 2019
Samba ranked 6th (by tier one capital) - 6th (by return on capital in the Arab
world 11.69%) - 3rd in Saudi Arabia (by tier one capital) - 3rd by assets - 1st by
soundness - 5th by return on capital - 2nd by return on assets in the Banker
Top 100 Arab banks list – 2017
Bank of the Year in Saudi Arabia (2019)
12
Banking CEO of the year in Saudi Arabia (2019)
Best Retail Bank in Saudi Arabia (2019)
Best Corporate Bank in Saudi Arabia (2019)
PUBLIC
Disclaimer
The Samba Financial Group (SAMBA) prepared this presentation on a proprietary basis as general background information about the activities of SAMBA. The information
contained herein is given in summary form and for discussion purposes only. Some of the information that is relied upon by SAMBA is obtained from sources believed to be
reliable, but SAMBA (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 SAMBA 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.
SAMBA 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 SAMBA, 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 SAMBA 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, SAMBA, 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.
13
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Q&A
14
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Appendix : Balance Sheet & Income Statement
15
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Balance Sheet - Assets
16
CONSOLIDATED BALANCE SHEET
Amounts in SAR millions 2015 2016 2017 2018 Q3 2019
ASSETS
Loans & Advances
Gross Loans 132,019 127,106 119,659 116,319 128,371
Loan Loss Reserve 2,018 1,872 1,975 2,610 2,876
Net Loans & Advances 130,001 125,234 117,685 113,709 125,495
Other Earning Assets
Money Market Placements with SAMA 3,682 25,983 14,073 15,165 6,994
Deposits with Banks 14,416 9,600 11,031 17,622 3,150
Investments, net 69,952 51,393 63,912 66,350 82,972
Held for trading / FVIS 3,478 2,801 2,277 5,319 5,956
Available for sale 52,763 19,745 24,387 50,301 64,468
Other at Amortized Cost/HTM 13,711 28,846 37,249 10,731 12,549
Total Other Earning Assets 88,050 86,976 89,017 99,137 93,116
Non-Earnings Assets
Cash and balances with SAMA 11,618 11,361 11,122 10,255 10,583
Fixed Assets 2,267 2,510 2,639 2,693 3,130
Other Assets 3,306 5,407 7,083 4,143 5,018
Total Assets 235,243 231,489 227,546 229,938 237,342
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Balance Sheet – Liabilities & Equity
17
Amounts in SAR millions 2015 2016 2017 2018 Q3 2019
LIABILITIES
Customer Deposits
Demand 110,632 103,678 99,546 93,880 95,195
Savings 6,870 7,009 7,225 7,700 7,565
Time 46,974 53,408 54,884 62,461 57,187
Other 7,329 7,980 6,267 6,129 5,544
Total Customer Deposits 171,805 172,076 167,922 170,170 165,490
Due to Banks
Current accounts 647 460 581 1,953 6,268
Money market deposits 18,551 10,421 5,971 5,918 10,908
Total Due to banks 19,197 10,881 6,551 7,872 17,176
Term Loan - - - - 2,169
Other Liabilities (non-int bearing) 3,881 5,987 8,390 9,591 7,930
Total Liabilities 194,883 188,944 182,863 187,632 192,765
EQUITY
Share capital 20,000 20,000 20,000 20,000 20,000
Statutory reserves 13,304 14,555 15,811 17,193 17,193
General reserve 130 130 130 130 130
Other Reserves (841) (1,124) (923) (778) 1,661
Retained earnings 7,658 8,882 9,565 5,668 5,504
Minority Interest 109 101 99 93 89
Total Equity 40,360 42,545 44,682 42,306 44,577
PUBLIC
Income Statement
18
Amounts in SAR millions 2015 2016 2017 2018 Q3 2019
Special Commission Income 5,164 6,692 6,928 7,538 6,322
Special Commission Expense 501 1,309 1,196 1,386 1,504
Net Special Comm Income 4,663 5,382 5,732 6,152 4,817
Fee & Commission Income 1,683 1,585 1,423 1,363 955
Exchange, Trading & FVIS Income 616 599 543 451 531
Gains on Investment 426 36 29 10 78
Other Operating Income 366 159 164 180 180
Non Interest Income 3,092 2,378 2,159 2,005 1,745
Total Operating Income 7,755 7,760 7,892 8,157 6,562
Salary & Employee Expenses 1,363 1,339 1,310 1,245 1,053
Rent & Premises Expenses 306 351 354 358 231
Depreciation 126 121 124 112 140
Other Gen & Admin Expenses 603 744 792 757 634
Total Expenses 2,398 2,555 2,580 2,472 2,058
Pre-Provision Operating Profits 5,356 5,206 5,311 5,684 4,504
Provision for Credit Losses 142 200 287 156 872
Impairment on Investment
Post Provision Operating Profits 5,214 5,006 5,024 5,529 3,632
Minority Interest (2) (3) (3) (9) (2)
Net Income before zakat and taxation 5,212 5,003 5,021 5,520 3,630
Zakat and taxation (550) (558) (625) (653) (406)
Net Income after zakat and taxation 4,662 4,445 4,396 4,867 3,224