May 2013

SME Access to Finance - Global Slide 2 Source: IFC 50-60% of MSMEs in the world are either un-served or underserved. The MENA region as a whole provides better access to finance for SMEs, but with sizeable differences between individual countries. Number & percent of MSMEs Unserved or underserved:-

Small Business – The Big Opportunity Slide 3 Source: *Claims on Pvt Sect. SAMA April monthly Bulletin SME LOANS TO TOTAL LOANS Source: Union of Arab Banks/World Bank Financial Flagship Report Potential SME lending opportunity 60 bln SAR in KSA

SHB and SMEs – The Journey Slide Q122Q12 4Q12 1Q20132Q2013 Initiation of separate SME Credit Risk Policies/Procedures/ dedicated Ops SME Relationship teams present in three regions SME Income Statement & B/S separation Start roll-out of dedicated SME Business Centers Comprehensive plan covering business model, risk management etc SME Risk Acceptance Framework SME Credit Cards launched Regional managers of SME business on board Segmentation & MIS capabilities launched 1 st Bus Centre open in Riyadh 1 st Bus Centre open in WA & EATotal 7 Centers fully operational Parameter Based credit assessment SME Banking wins 2 Best SME Awards 2010Q2 13 Key Facts Number of Dedicated Staff 40 Dedicated Business Centers 7 Number of Relationships4,500+

Slide 5 Geographically Dispersed Clients Dedicated SME branches – hub and spoke Target Operating Model Portfolio / Scale – Process redesign Access to Reliable Data SIMAH Taqeem Customer Evaluation Template based assessment SHB’s Lessons Learned SME Banking – not SME Lending Holistic banking for SME and owner

Conclusions Increasing access to finance for SMEs requires a joint effort of many stakeholders, including the banks, the regulator, the government and industry groups For banks, SME banking presents a viable business proposition, in addition to it being a social obligation For SME banking to be a viable business proposition, banks need to redesign their policies, procedures and processes, across risk, operations, IT and front office The regulator and the government can help in providing the enabling infrastructure such as an effective credit bureau and a functioning guarantee scheme, and in considering preferential capital treatment for portfolios of SME exposures Industry groups such as the Chambers of Commerce could help in providing continuous education and development and training of SMEs SME Banking is a genuinely different business, which, if managed in the right way can be very beneficial for the SMEs, the Banks, and the development of the country Slide 6