Retail Bank Strategy Formulation and Execution April 18, th Middle East Retail Banking Forum 2016

© 2016 Alinma Bank 31 December 2015 Financial PositionSR Assets (Financing)56 B Customers’ Deposits65 B Net Income1.5 B SR 15 B Capital 120 Branches 1200 ATMs Alinma Bank Overview Page 2

© 2016 Alinma Bank Best Debit Card in KSA – 2016 by Banker Middle East magazine Best in Customer Service in KSA 2016 by Banker Middle East magazine Fastest growing bank in KSA 2015 – 3 rd time by Banker Middle East magazine Best Retail Bank in KSA – 2015 by Islamic Business & Finance magazine Latest Awards & Achievements Best Debit Card in KSA – 2015 by Banker Middle East magazine Best Islamic Financial Institution in KSA by the Islamic Conferences Group One of the top 100 brands in KSA Page 3

© 2016 Alinma Bank Strategy Definition Strategy Formulation using Strategy Maps Strategy Failure Strategy as Direction Communication Retail Bank Strategy: Formulation and Execution Page 4

© 2016 Alinma Bank Page 5 An organization’s strategy describes how it intends to create value for its shareholders, customers, and citizens. Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank “Our strategy is to be the low-cost provider.” “We’re pursuing a global strategy.” “The company’s strategy is to integrate a set of regional acquisitions.” “Our strategy is to provide unrivaled customer service.” “Our strategic intent is to always be the first mover.” Which One is Valid Strategy Statement? Page 6

© 2016 Alinma Bank Strategy Formulation using Strategy Maps The strategy map provides the specificity needed to translate general statements about high-level direction and strategy into specific objectives that are more meaningful for all employees and that they can act on. Page 7 Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank Financial Perspective Retail Banking Strategy Map Based on Strategy Maps, by Robert Kaplan & David Norton Page 8 Build Strong Acquisition Platform Focus on segmentation & strengthen Customer Management Shareholder’s Value Growth Set up Shariah Board With Reputable Scholars Implement Best Product Development Practices Acquire and Retain Motivated and Skilled Individuals Build Dynamic Culture with High Sense of Ownership Implement Effective Knowledge Transfer and Management Acquire Customers Improve Asset Utilisation Increase Customer Value Optimize Cost Structure Provide Peace of mind Set Competitive Rates Provide Speedy, Consistent & Convenient Service Offer Services Over Wide Network of Outlets and Self- service Channels Customer Perspective Internal Process Perspective Learning & Growth Productivity

© 2016 Alinma Bank The Financial Perspective Financial performance indicates whether a company’s strategy, including its implementation and execution, is contributing to bottom-line improvement. Page 9 Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank Financial Perspective Retail Banking Strategy Map Page 10 Based on Strategy Maps, by Robert Kaplan & David Norton Shareholder’s Value Growth Improve Asset Utilisation Increase Customer Value Optimize Cost Structure Acquire Customers Productivity

© 2016 Alinma Bank Page 11 The Customer Perspective Strategy is based on a differentiated value proposition, how the organization will create differentiated, sustainable value to targeted segments Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank Page 12 Provide Peace of mind Set Competitive Rates Provide Speedy, Consistent & Convenient Service Customer Perspective Retail Banking Strategy Map Based on Strategy Maps, by Robert Kaplan & David Norton

© 2016 Alinma Bank Internal Perspective Internal processes accomplish two vital components of strategy: Produce and deliver the value proposition for customers Improve processes and reduce costs for the productivity component in the financial perspective Page 13 Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank Based on Strategy Maps, by Robert Kaplan & David Norton Page 14 Build Strong Acquisition Platform Focus on segmentation & strengthen Customer Management Set up Shariah Board With Reputable Scholars Implement Best Product Development Practices Offer Services Over Wide Network of Outlets and Self- service Channels Internal Process Perspective Retail Banking Strategy Map

© 2016 Alinma Bank Learning and Growth The organization’s intangible assets and their role in strategy Page 15 Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank Based on Strategy Maps, by Robert Kaplan & David Norton Page 16 Acquire and Retain Motivated and Skilled Individuals Build Dynamic Culture with High Sense of Ownership Implement Effective Knowledge Transfer and Management Learning and Growth Retail Banking Strategy Map

© 2016 Alinma Bank Financial Perspective Retail Banking Strategy Map Based on Strategy Maps, by Robert Kaplan & David Norton Page 17 Build Strong Acquisition Platform Focus on segmentation & strengthen Customer Management Shareholder’s Value Growth Set up Shariah Board With Reputable Scholars Implement Best Product Development Practices Acquire and Retain Motivated and Skilled Individuals Build Dynamic Culture with High Sense of Ownership Implement Effective Knowledge Transfer and Management Acquire Customers Improve Asset Utilisation Increase Customer Value Optimize Cost Structure Provide Peace of mind Set Competitive Rates Provide Speedy, Consistent & Convenient Service Offer Services Over Wide Network of Outlets and Self- service Channels Customer Perspective Internal Process Perspective Learning & Growth Productivity

© 2016 Alinma Bank Strategy Failure Page 18 90% Failure 70% of failures due to execution Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank Factors That Lead to Failure in Execution Poor communication and coordination o 70% - Middle management not linked to incentives o 86% less than one hour per month discussion Ill-defined strategic goals o 95% of workforce do not understand strategy Strategy and culture misalignment Source: Strategy Execution, by Joe Evans Page 19 Source: Management Strategy Measurement, by Howard M. Armitage & Cameron Scholey

© 2016 Alinma Bank “The most difficult part of strategy execution” Strategy as Direction Communication Page 20

© 2016 Alinma Bank Financial Perspective Retail Banking Strategy Map Based on Strategy Maps, by Robert Kaplan & David Norton Page 21 Build Strong Acquisition Platform Focus on segmentation & strengthen Customer Management Shareholder’s Value Growth Set up Shariah Board With Reputable Scholars Implement Best Product Development Practices Acquire and Retain Motivated and Skilled Individuals Build Dynamic Culture with High Sense of Ownership Implement Effective Knowledge Transfer and Management Acquire Customers Improve Asset Utilisation Increase Customer Value Optimize Cost Structure Provide Peace of mind Set Competitive Rates Provide Speedy, Consistent & Convenient Service Offer Services Over Wide Network of Outlets and Self- service Channels Customer Perspective Internal Process Perspective Learning & Growth Productivity Grow By Service

© 2016 Alinma Bank Thank You.. Page 22