Climate change

Al Rajhi Bank continued to reduce its operational carbon footprint during 2023, creating awareness and exploring new avenues minimise natural resource consumption at organisational level, while also contributing at a national scale through sustainable financing.

Carbon footprint

The year in review saw Al Rajhi Bank proactively reducing its operational carbon footprint across the Bank and its subsidiaries; Tuder Real Estate – the real estate arm that also overlooks the property and facility management of the Al Rajhi Group – continued a series of initiatives to enhance power and energy efficiencies across Al Rajhi properties and subsidiaries.

Ongoing projects included air-conditioner and temperature control upgrades for energy saving, the introduction of power-down equipment, window film installation, and the adoption of LED lighting. Medium voltage distribution feeders were added to the Bank’s Building Management System (BMS) for better energy monitoring and conservation. A number of initiatives were carried out at the Bank’s new headquarters - the Al Rajhi Tower - including the utilisation of fresh water for chillers to improve energy efficiency in chillers and cooling systems, the monitoring of lighting distribution, and fresh air distribution at the Tower and the Operations Building.

These strategic measures have resulted in an overall decrease of the Bank’s operational carbon footprint, with an estimated savings of up to SAR 2.3 Mn. from the total annual energy bill compared to 2022, a significant year-on-year reduction in expenses.

The Bank also continued its own investments in renewable energy with more solar installations at Al Rajhi properties across the Kingdom, which is further elaborated under Renewable Energy Opportunities section on Digital Footprint and Technology Transformation.

Financing environmental impact

Cognisant of the growing global concerns around climate change and the critical role of financial institutions in endorsing sustainable financing, Al Rajhi Bank continued to integrate and highlight ESG risk as a key evaluation criterion in its overall approval process to finance projects and/ or business during 2023.

The Bank actively engages with leading external environmental consultants for assessments of projects from an environmental (and social) perspective, and ensures that the projects meet internationally recognized environmental guidelines such as the Equator Principles and Green Loan Principles.

This commitment to sustainable financing has also strengthened Al Rajhi Bank’s reputation as a financier that actively pursues green financing deals that are largely focused on meeting future energy needs of the Kingdom. This includes taking the responsibility of financier and advisor to clean energy projects such as green ammonia and hydrogen production assets currently being developed in the region. The Bank also continued to explore new financing and refinancing opportunities for renewable energy projects, contributing towards the ambitious targets of the Saudi Green Initiative to achieve an optimal energy mix with the goal of reducing carbon emissions.

During the three-year cycle of Al Rajhi’s BOTF Strategy, the Bank identified and financed a number of large-scale, high-impact green energy projects across the Kingdom, to enable the generation of over 2,100 MW in cumulative power.

Project Name	Project Description	Deal Closing Year	Status
Jubail 3A Independent Water Plant (IWP)	A greenfield seawater reverse osmosis desalination project, which also includes a solar power station. Solar Power Capacity: 45MW	2020	Deal Closed
Rabigh Solar PV Independent Power Producer (IPP) Project	A solar PV plant located in the Rabigh Industrial City of Makkah Province. Solar Power Capacity: 300 MW	2021	Deal Closed
Sudair Solar PV Independent Power Producer (IPP) Project	First project under The Public Investment Fund’s (PIF) renewable energy programme, this is the largest Solar IPP in the world at its inception. Solar Power Capacity: 1.5 GW	2021	Deal Closed
Helios Green Fuel Project by NEOM Green Hydrogen Company	The world’s first and largest green hydrogen production facility Integrated Solar and Wind Power Capacity: 4GW	2023	Deal Closed

A Sustainable Finance Framework was launched by Al Rajhi Bank as a basis to issue Green, Social or Sustainable Sukuk, Loans and other sustainable financing Instruments, and obtained a Second Party Opinion (SPO) on the Framework, which concluded that it aligned with International Capital Market Association (ICMA), Loan Market Association (LMA), Loan Syndications and Trading Association (LSTA) and Asia Pacific Loan Market Association (APLMA) principles. The Bank also remains aligned with the Green Bond Principles (GBP) and Sustainability Bond Guidelines (SBG) issued by ICMA, which recommends transparency and disclosure to promote integrity in developing the global Green Bond and Sustainability Bond markets respectively.

Having established its reputation as the first Islamic Bank in the world to raise a sustainable syndicated loan during the preceding financial year, Al Rajhi Bank also tapped the international debt capital market for the first time in 2023, with the debut issuance of a five-year sustainable sukuk of USD 1 Bn. The proceeds from the issuance will be used to enhance the Bank's liquidity and support its business growth, especially on the ESG financing goals aligned with the Vision 2030 targets set by the Kingdom of Saudi Arabia.

Following the issuance until full allocation, ARB will publish an Allocation Report and an Impact Report on an annual basis, detailing environmental and social benefits of the funded / eligible projects.

Al Rajhi Bank Malaysia (ARBM) upheld its membership with the Value-Based Intermediation (VBI) Community of Practitioners (CoP) of Malaysia, drafting an ESG Assessment checklist, with ESG classification required for all customer entries in the corporate banking book. ESG Considerations were also integrated into the onboarding questionnaire. A “Customer Declaration Form” was drafted and introduced for all Corporate and Investment Banking, Commercial and SME customers to complete to indicate that the company does not partake in any form of prohibited activities, or their business activity does not adversely impact the Bank’s ESG key components.

Sectoral guidelines were incorporated into ARBM's existing evaluation, assessment and financing processes. The overseas branch now requires Malaysian Sustainable Palm Oil (MSPO) or Roundtable on Sustainable Palm Oil (RSPO) certification for all clients requesting financing for palm oil plantations and crude palm oil-related activities.

Additionally, the Procuring System of ARBM has been enhanced to automatically score corporate customers in terms of their ESG profile, emissions, and climate adjusted probability of defaults. Furthermore, the overseas branch developed ESG and Climate related Key Risk Indicators, to be included as part of its regular reporting cycles.

ARBM was also a sponsor of the inaugural National Climate Governance Summit of Malaysia 2023 presented by Climate Governance Malaysia, which aimed to provide a platform for SMEs to enhance their knowledge and understanding of climate action and best practices to build resilient businesses.

Natural resources

Optimising natural resource consumption is a key contributor to Al Rajhi Bank’s ESG agenda, with the Bank implementing multiple practices and initiatives to conserve natural resources while at the same time managing environmental impact from banking operations.

Land use and biodiversity

In 2023, the Bank continued to manage any adverse impacts of its operations on biodiversity; the Bank’s property management arm, Tuder continued to take necessary measures and be mindful of the natural ecosystems in the use of land for new or redesigned bank branches during the reporting period.

Water stress

A number of initiatives were implemented by the Bank for optimised water consumption and management due to its status as a highly scarce resource in the region; this included the installation of ultrasonic water flow metres as part of the BMS, to strictly monitor and control water utilisation. The Reverse Osmosis system installed at the Al Rajhi Tower was upgraded during the year, to enable the utilisation of purified wastewater for irrigation purposes for landscaping.

Material sourcing

With over 200,000 daily transactions, Al Rajhi Bank runs a largely paperless operation powered by the latest technology, in its commitment to “Creating a Digital Future”. Notably, 95% of all new current accounts opened during the year were done so digitally, while around 60% of personal financing was also carried out across end-to-end digital channels.

Pollution and waste

Al Rajhi Bank generates a volume of approximately 10,000 cubic metres of waste annually, and ensures waste management best practices are followed regarding the reuse, recycling, storage, treatment of the waste collected. The waste management function has been subcontracted to a vendor registered with the Riyadh Municipality, who through the formalisation of their agreement is committed to upholding waste management standards required by the municipality.

Electronic waste

In 2023, Al Rajhi Bank continued to voluntarily adhere to strict recycling practices; In addition to standard disposals, the Bank donated electronic devices such as laptops, printers and full PC setups, with plans underway to develop policy to activate an annual donation of electronics.

Environmental opportunities

Environmental financing is gaining momentum within the GCC region, with neighbouring countries such as the UAE and Oman also initiating renewable energy programmes, while continuing to diversify the economy from the conventional hydrocarbon base. The Kingdom’s Energy Ministry too, along with the Public Investment Fund (PIF) are aiming to drive renewable sources to account for 50% of electricity production in KSA by 2030, displacing liquid fuels with natural gas accounting for the remaining 50%.

Opportunities in renewable energy

Having financed multiple large-scale renewable energy projects over the years as elaborated in the Financing Environmental Impact on page 151, the Bank focused on its own efforts to develop renewable power generation capacities, as Tuder successfully entered the third year of the solar installation project, with 61 different Al Rajhi properties across the Kingdom equipped with solar panels at the close of 2023. The solar installations costing SAR 16 Mn., are projected to reduce energy costs by approximately SAR 3 Mn. per year for the Al Rajhi Group, a long-term, high-impact investment in green energy by Al Rajhi to reduce the Group’s operational carbon footprint.

Opportunities in cleaner hydrocarbon energy

The year in review also saw Al Rajhi Bank becoming the sole financial advisor to the first integrated green steel project in the MENA region at an estimated USD 4.5 Bn., with construction planned for 2024. The proposed technology configuration for the project would result in one of the lowest carbon emission levels for a mega steel complex, and a plan is being developed to further reduce carbon emissions through Carbon Capture Utilisation Sequestration (CCUS) and renewable energy.

The Bank has also ventured into financing cleaner hydrocarbon energy projects and initiatives, even though they are a relatively new vertical in the GCC region. At the end of the reporting period, Al Rajhi Bank had initiated the evaluation process of a tail gas treatment project for the national petroleum company Saudi Aramco, which looks to reduce sulphur dioxide emissions from its gas plants.

The year 2023 saw Al Rajhi Bank’s continued efforts in cultivating rewarding relationships with all stakeholders across the Bank’s sphere of influence.

Human capital

Labour management

Al Rajhi Bank abides by all applicable Saudi labour laws and regulations, with the Bank revamping and updating internal bylaws in 2023 to allow more flexibility to employees, and greater clarity across their roles, responsibilities and expectations.

The Bank also recently set up a comprehensive behaviour and ethical framework aimed at providing guidelines for all Al Rajhi Bank staff to follow in their role as brand ambassadors of the Bank. Employees were educated on the consequences of violating the guidelines, including disciplinary action such as warnings and suspension for failure to adhere to the behavioural framework, or the potential for legal / disciplinary action, or termination of employment in cases of severe non-compliance.

Coupled with this framework, all employees were required to acquaint themselves with the Al Rajhi Bank Code of Conduct in 2023, which covered a wide range of topics and mandatory considerations including human rights, non-discrimination, fair dealing, anti-bribery, fraud, embezzlement, theft, money laundering, financing terrorism, insider trading, harassment or extortion, unethical behaviour of any colleague(s) such as breach of honesty and integrity.

With the understanding that employees may not always feel comfortable to raise the above concerns through conventional, open communication channels, the Bank continues to provide secure and innovative whistle-blowing channels fortified by an effective Whistle-Blowing Policy, empowering them to fearlessly and safely speak up, raise concerns confidentially and, if preferred, anonymously, bring any discrepancies to the attention of the management and senior leadership.

Health and safety

Al Rajhi Bank maintains the highest standards of occupational health and safety (OHS) standards across its Kingdom-wide branch and subsidiary network, including:

• Continuous awareness of risks
• Emergency exit systems
• Firefighting systems
• Periodic testing procedures

Employees are also encouraged to follow a series of OHS modules made available on the Al Rajhi Bank Academy’s online platform, with the ability to choose their own learning plan for more effective learning.

In 2023, the Bank’s Human Resource Department together with the Medical Services Department initiated a multi-faceted approach towards promoting a strong culture of workplace health and safety. This approach comprised internal communications, online sessions as well as dedicated events to improve the collective employee knowledge and awareness of specific topics, medical conditions as well as physical activities and best practices to promote a well-balanced, healthy, active lifestyle. All programmes and initiatives were well received and commended by employees across the Al Rajhi Bank network.

Awareness through Internal Communications	Online Sessions	Events
World Cancer Day World Down Syndrome Day World Asthma Day Blood Pressure World Heart Day Child Vaccinations Breast Cancer Month World Diabetes Day	Autism Awareness Session Smoking and Blood Pressure Awareness Session Diabetes Awareness Session The Saudi Society for Attention Deficit Hyperactivity Disorder (Ishraq) Session	Open Health day (Al Rajhi Tower/NRR) Stay Fit (Weight Management competition) Yoga session (Dedicated to Ladies) First Aid Course Breast Cancer Campaign Seasonal Flu Campaign Live Right Event (health/sport/awareness/services) World Coeliac Disease Awareness Day World Alzheimer's Month

The Bank ensures it remains fully compliant with new or revised rules and regulations pertaining to national OHS requirements. The in-house gyms at the Al Rajhi Tower and Operations Centre continue to be well-utilised by employees, with the Bank collaborating with external vendors of wellness and fitness businesses to offer special offers to Al Rajhi employees.

Human capital development

The Bank follows a structured talent management and succession practice with individual development plans for overall training and development, further strengthened by a market and performance driven compensation strategy. The Al Rajhi Bank Academy clocked in a total of 600,000+ training hours for the year 2023, delivering best in class leadership, banking, operational and technology certifications to nurture a talent pool with required skills and knowledge to perform emerging and evolving job roles effectively. Please refer to the Learning and Development section from Human Resources for more details.

Al Rajhi Bank continued its efforts to enhance organisational capability and understanding of ESG principles and practices in 2023; following the success and positive feedback received on the “Academy Talk Series” session on Sustainability and ESG, the Al Rajhi Bank School of Leadership – the leadership development arm of Al Rajhi Bank Academy – produced a video version of the training session with the intent of reaching a bigger audience with an easily accessible visual medium. The session presents pertinent ideas about ESG standards, which are playing a crucial role in the Bank’s ability to function as a sustainable financing institution. This session clocked in a total of 111,000 training hours from the Bank’s leadership from <seniority level> upwards.

ESG training sessions have been made mandatory for all employees, with confirmation required once they complete the sessions. Digitising content has enabled the ARB Academy to deliver ESG-related training and awareness sessions as part of its Leadership Development Agenda.

Supply chain labour standards

Al Rajhi Bank introduced an Online Procurement Portal in 2020 at the very onset of the BOTF Strategy, to increase transparency as well as to improve efficiencies, cost-savings and data-driven decision-making. The Portal was further enhanced with a number of upgrades. The Spend Dashboard was upgraded to provide accurate and customizable analytical reporting, generated by spend category, by individual or group of suppliers, or by timeline. The Procurement Transactions Dashboard provided a complete overview of all macro and micro levels of the procurement process, including turnaround times, tenders, procurement service level agreements (SLAs) and Procurement Committee functions.

The portal also implemented the ‘Clarity’ feature - an enhancement that allowed the Bank to fully automate all functions of the Project Approval Committee; this includes sending out meeting agendas, member and project manager details, as well as high level views of projects. Clarity also allows the Committee to circulate projects status to members and finalise the minutes of meetings.

As part of the Bank’s initiatives aimed at supporting local suppliers, 90% of the total procurement spend was directed towards locally-owned businesses in 2023. Local suppliers were encouraged to register on the Procurement Portal to further improve the statistics.

	2023	2022	2021	2020	2019
Total number of suppliers engaged	301	340	384	335	332
Total procurement spending (SAR Bn.)	4.5	4.2	3.7	3.1	3.1
Total number of local suppliers engaged	205	263	285	263	261
Procurement spending on local suppliers (SAR Bn.)	4.1	4.0	3.4	2.9	2.9
Percentage of spending on local suppliers (%)	90	95	92	93	92

* Certain businesses are partially owned by females based on Memorandum of Association

Product liability

Privacy and data security

Data is considered a valuable asset at Al Rajhi Bank, one that plays a vital role in improving performance and productivity. With the intent of ensuring all applicable data standards are met, and recommended practices in Data Governance and Privacy are applied to not only increase compliance, but to effectively manage data and maximise its value, thereby enhancing customer privacy and experience. The oversight of data privacy at the Bank falls under the Chief Digital and Data Officer, while cybersecurity falls under the purview of the Chief Risk Officer at Al Rajhi Bank.

The Kingdom’s first data protection law – the Personal Data Protection Law (PDPL) - was declared effective during the year in review by the Saudi Data and Artificial Intelligence Authority (SDAIA). Al Rajhi Bank worked closely with the National Data Management Office (NDMO) – the Kingdom’s national data regulator – to set up personal data controls that are also in compliance with data privacy guidelines issued by SAMA, to regulate the collection, processing, storage and transfer of personal data of Al Rajhi Bank customers. The update on the Bank’s Privacy Policy remains on schedule, powered by key achievements accomplished during the reporting period:

• A systematic process prepared to assess and evaluate the potential impact of data processing activity on an individual's privacy and data protection rights.
• Documenting the Bank’s data processing activities, and creating a central repository of information regarding the processing of personal data.
• A new process prepared for any data breach where the personal information of customers has been compromised.
• Completion of assessment for data subject rights that the Bank undertakes to evaluate compliance as required by data protection regulations.

Al Rajhi Bank’s Data Governance Policy was introduced during the previous year in review, and ensures privacy and protection that is aligned with regulatory requirements. The Bank’s Data Governance Policy covers 14 Data Governance Domains:

1. – Data governance office
2. – Data catalogue and metadata
3. – Data quality
4. – Data operations
5. – Document and content management
6. – Data architecture and modelling
7. – Reference and master data management
8. – Business intelligence and analytics
9. – Data sharing and interoperability
10. – Data value realisation
11. – Open data
12. – Freedom of information
13. – Data classification
14. – Personal data protection

The Policy ensures that applicable data standards and recommended practices are aligned with the overall objective of increasing compliance with relevant laws, enhancing customer experience and becoming more effective in managing data. The Bank also continued to improve the overall quality of critical data elements within its data ecosystem during the reporting period, to enable improved decision making.

The Bank employs dynamic defences via a number of countermeasures for the prevention, detection and response in an effort to proactively address current and emerging cybersecurity challenges. By applying the best cybersecurity standards recommended by national cybersecurity and financial sector regulators, the Bank has reinforced its current cybersecurity governance procedures and ensured the confidentiality, integrity, privacy, and availability of all business and technological processes.

To make sure that all of its business services are trustworthy and secure, the Bank continuously conducts cybersecurity assurance assessments on its systems, apps, and networks. Additionally, the Bank regularly engages recognised vendors in independent internal and external audits to confirm the efficiency of installed cybersecurity controls and compliance with national and international standards including the Payment Card Industry Data Security Standard (PCI DSS), SAMA, SWIFT, SARIE, and the Saudi National Cybersecurity Authority (NCA).

The Bank has a Security Operation Centre that is operational around-the-clock, 365 days a year, continuously monitoring and promptly addressing cybersecurity threats and attacks. Al Rajhi Bank continued to demonstrate resilience against cyberattacks in 2023 as a result of the implementation of such comprehensive cybersecurity measures, with no cybersecurity-related breaches or operational impact during the reporting period.

Social opportunities

Access to finance

As the largest Islamic bank in the world, Al Rajhi Bank lays claim to the most extensive network distribution in the Kingdom and the Middle East region, supported by 509 branches, 142 remittance centers, 4,552 ATMs, and 601,153 Point of Sale (POS) terminals to service customers and provide access to financial services. This widespread network of access points has resulted in Al Rajhi Bank also claiming the largest active customer base in the region, with over 15 million customers in total across the Kingdom.

The Bank’s rapid adoption and scalability of digital infrastructure including virtual and mobile banking platforms, has also greatly contributed to the introduction of innovative approaches to increasing financial inclusion, especially with underserved demographics. Al Rajhi Bank continues to be the leading bank enabling the largest subsidy home ownership for Saudi Nationals with a mortgage market share of 41.3%, and contributing to achieving the Kingdom’s Vision 2030 targets.

Al Rajhi Bank also promotes financial inclusion by equipping all branches to serve persons with disabilities, upgrading ATMs with disability access by introducing technologies such as voice assistance and sign language to support the blind and visually impaired, the deaf and hard-of-hearing, as well as persons with mobility impairment. A majority of Al Rajhi Bank branches have reserved disabled parking spaces with all branches ready to serve customers with disabilities. Accessibility to financial services was further improved during 2023 with the Bank updating its mobile app with locations of branches that service people with special needs via the help of a sign language interpreter - a project still in progress as at the close of 2023.

All such efforts carried out by Al Rajhi Bank also aligns with the Saudi Vision 2030 objective of supporting the disabled with tools and facilities to become more independent and be integrated into society.

In 2023, Al Rajhi Bank continued to grow its market share across the Small and Medium Enterprises (SMEs) sector in the Kingdom, providing a range of financial solutions through its dedicated SME Business Unit, aligned with the Kingdom’s Vision 2030 objectives to increase SME contribution to the Saudi GDP. The Bank also serviced micro businesses through its dedicated Micro and Small Business (MSB) Unit, strongly encouraging entrepreneurial culture in the Kingdom with financial assistance.

The continued digitalisation of core banking platforms and automation of processes has also empowered this fast-growing customer base. Call Centres and dedicated channels for SME and MSB customers continue to strengthen the Bank’s reputation as the Kingdom’s leading bank for customer service. Please refer to the MSME Section for more details.

Al Rajhi Bank also served specific credit needs of consumer segments that were outside the Bank’s risk appetite through its fintech subsidiary Emkan Finance, increasing financial inclusion and simplifying access to microfinancing. Please refer to the Emkan Finance section in page 89 for more details. The Bank also introduced banking services to lower income labour workers, enabling them to transfer funds to their families through foreign remittance accounts.

The Corporate Social Responsibility (CSR) team together with the Marketing team executed a number of public service campaigns during the reporting period to increase financial literacy of varying demographics including an anti-fraud campaign for Hajj pilgrims, and the “Wise Banker” financial awareness workshop for university students at Prince Sultan University.

Access to healthcare

Al Rajhi Bank remained focused on supporting the healthcare sector through donations and philanthropic activities during 2023, working with the Ministry of Health as well as the independent civil Health Endowment Fund to contribute to medical facilities, treatments and general access to good healthcare.

In 2023, the Bank engaged in 6 projects, donating over SAR 100 Mn. across multiple healthcare-based sponsorships, initiatives and events, further strengthening the Bank’s commitment to ensure access to healthcare for all Saudi nationals.

Among the major healthcare initiatives carried out by the Bank include:

• Donation of SAR 6 Mn. to purchase and equip two mobile blood vehicles in collaboration with the “Wareef Charity”
• Contribution of SAR 10 Mn. for the construction of the Al-Rajhi Bank Cardiac Catheterization Center at Al Rass General Hospital
• Contribution of SAR 13.5 Mn. to establish the Al-Rajhi Diabetes Center in Buraidah, Qassim, which would also serve as a model for community service through collaboration
• Bringing the total of successful kidney transplant operations at the close of 2023 to 54, reaching a significant milestone of surpassing the halfway mark of the broader community-focused initiative launched in 2021 in collaboration with Dr. Sulaiman Al Habib Hospital, to complete a total of 91 kidney transplants at a total cost of SAR 18 Mn.
• Bi-annual blood donation campaign organised by Al Rajhi Bank to promote blood donation and community service by employees
• Al Rajhi Bank Jordan (ARBJ) organised a blood donation campaign in cooperation with the Ministry of Health, while also contributing through sponsorships to various medical institutions and events such as the Jordan Medical Association, and the Medical Day Event presented by the Saudi Cultural Bureau in Jordan.

Other social opportunities

Aside from healthcare, Al Rajhi Bank also focuses heavily on education, housing and overall community development. Key CSR projects carried out across these verticals in 2023 include:

• The successful continuation of one of the Kingdom’s largest educational and social initiatives – the Al Rajhi Bank Programme for Educational Orphans Care entered its second year of community service in 2023– with close to 100 male and female students studying qualitative specialisations to meet emerging market requirements, and formalising an agreement with the Adeid Association to strengthen the project and fully supervise the programme.
• Making history by participating in the largest online charitable subscription (Good Housing Charitable Subscription) according to the Guinness World Records for the “Jood Eskan” housing project in 2023 for families in need. A contribution of SAR 100 Mn. was made by the Bank together with its clients.
• National program campaign to reduce food loss and waste.
• Implementing a CSR platform at the Ministry of Human Resources and Social Development Registration.
• Participation in the Purple Saturday initiative organised by SAMA to provide offers and benefits for people with disabilities.
• Distributing 50 free ticket of Kidzania entertainment centre for Children with Disability Association in Jeddah centre.
• Al Rajhi Bank Malaysia (ARBM) donated over MYR 100,000 for a number of community initiatives including funds for earthquake victims of Turkiye as well as donations to orphanages and other families in need.
• Al Rajhi Bank Jordan (ARBJ), in cooperation with the “Royal Society for Nature Protection”, planted 400 pine trees in the Dibeen forest to combat desertification and drought.
• The Al Rajhi Bank, along with its international branches in Malaysia and Kuwait, distributed meals to underprivileged families as part of Holy Ramadan activities across multiple geographies during the reporting period.
• ARBM provided financial assistance to Asnafs by distributing the ARBM employees’ wakalah fund in the spirit of giving back to the community, with focus on autistic community members and Asnaf families in Kuala Lumpur for 2023.
• ARBM distributed employee zakat wakalah to provide financial assistance to 100 families via the Federal State Islamic Council in Malaysia.

Given Al Rajhi Bank’s commitment towards community development and social philanthropy, the Bank was recognised and honoured with the “Majmaah University Award” for community service by His Highness, the Prince of the Riyadh region. Al Rajhi Bank also received the “National Excellence Award in Localization Initiatives” at the private sector level from His Highness, the Prince of Qassim region, for supporting the development of the localization sector in the Kingdom.

In order to encourage employee engagement with community development initiatives, and to promote a culture of volunteerism anchored to its founding Sharia principles, Al Rajhi Bank educates employees on its policy in place for availing ‘Volunteer Leave’. While increasing employee morale, improving their soft skills, and enabling them to build a strong relationship with the communities in which the Bank operates through volunteerism, the special leave also strengthens Al Rajhi’s brand value as a socially conscious employer, which also contributes towards attracting and retaining top talent.

Corporate governance

The governance framework at Al Rajhi Bank comprises the General Assembly, the Board of Directors, the Shariah Board, as well as five Board Committees, and Group Executive Management Committees of the first and second levels. For more information, please refer to the Corporate Governance Chapter.

In terms of Sustainability Governance - Al Rajhi has a dedicated ESG Committee that works to oversee the sustainability approach, agenda and integration of ESG in decision-making across the Bank. The responsibility for the oversight of the ESG Committee lies firmly with the Board of Directors. The Board therefore, through the ESG Committee, ensures relevant target-led ESG matters are incorporated into and aligned with the governance, business strategy, decision-making, and risk management aspects of the Bank, and disclosed through accountability reporting that meets the highest local regulatory standards.

The Board

Please refer to Board of Directors for detailed information on the Board of Directors.

Tax transparency and financial reporting

For the year 2023, Al Rajhi Bank continued to comply with globally accepted regulations on tax transparency and the disclosure of its financial statements, publishing its interim condensed and expanded consolidated financial statements both quarterly and annually. The statements are prepared in compliance with endorsed International Financial Reporting Standards (IFRS) as issued by the Saudi Organisation for Chartered and Professional Accountants (SOCPA), the provisions of Banking Control Law, the Regulations for Companies in the Kingdom of Saudi Arabia and the Bank’s by-laws. All standards, rules and regulations are consistently applied under the supervisory monitoring of the Saudi Central Bank (SAMA), to ensure proper disclosure and full financial reporting integrity has been met.

The Bank’s financial reporting function is also regulated by the Capital Market Authority (CMA), which ensures required levels of transparency are met, and investor information sessions are conducted. Among such regulated best practices is the appointment of two external auditors, approved solely by the shareholders’ general assembly, and selected from the four big global audit firms established in the Kingdom.

Al Rajhi Bank has a robust reporting platform for investors as well as the public, specifically designed to ensure financial information and public interest reports are generated through strongly validated financial data processing engines, financial standards compliance, and quality assurance policies and procedures. The Bank also has many internal governance committees and monitoring departments engaging and working together towards producing accurate, transparent financial information for all of investors and public users, which is in-line with the SAMA requirements.

All generated financial reports and other additional information is readily available for viewing and downloading on Al Rajhi Bank’s dedicated online Investor Relations page. The Bank also has a dedicated Investor Relations App with direct access to financial reports as well as Al Rajhi Bank stock information, dividend history, investment calculator and the latest announcements for an enriched investor experience.

The revenue recognition policy and procedures of Al Rajhi Bank are fully compliant with the international financial standards, and use the effective profit yield in driving the Bank’s income and fees. The Bank also provides several services to customers where the relevant fee and income are recognised as soon as those services are rendered.

Al Rajhi Bank makes a varied range of Zakat and tax payments to the Zakat, Tax and Customs Authority (ZATCA) of Saudi Arabia. The Bank employs qualified internal and external experts to ensure perfect compliance with all Zakat and tax rules and regulations applied in the Kingdom of Saudi Arabia. The Zakat paid for the year 2023 decreased by 3.2% YoY, and was one of the highest Zakat payments made by a Saudi corporate.

Equity ownership structure

Al Rajhi Bank follows the Capital Market Authority (CMA) regulations of one vote per share and disclosure of 5% or more ownership.

Employee remuneration, incentives and other benefits

The long-standing reputation earned by Al Rajhi Bank as one of the most sought-after employers in the Kingdom is anchored to the Bank’s benchmarked compensation practice. Al Rajhi remained committed to attract, retain, develop, motivate and equitably compensate employees of the highest calibre during the reporting period, recognizing and rewarding employees in recognition for their relative contribution in effectively achieving the Bank’s strategic goals, while building a sustainable succession pipeline.

The Al Rajhi Bank’s Graduate Training Program (GDP) remained one of the Kingdom’s highly sought-after on-the-job training programmes for fresh graduates. GDP introduced a female only program during the reporting period to underscore the Bank’s commitment to provide equal opportunities, and also introduced programs to cover multiple focus areas; namely IT and business.

In 2023, Al Rajhi Bank continued to provide employees with a compensation package that consists of base salary, allowances and variable pay (incentives/bonuses) that are highly competitive with those provided by comparable organisations for similar levels of duties and responsibilities. The employee’s compensation package is built towards rewarding performance with emphasis on the “At Risk” component to align and encourage behaviours that support the Bank’s values and risk management framework, adherence to the internal control framework and compliance to regulatory requirements.

Risk factors are an integral part of the balanced scorecard for senior managers’ performance management. Risk-measure thresholds have been defined with required triggers for variable and long-term bonuses qualifying assessments. To ensure long- term and other risk factors are fully considered, the proportion of the variable bonus that is deferred increases with levels of seniority.

The Board of Directors has ultimate responsibility for promoting effective governance and sound remuneration practices. Compensations and remunerations due to Board members and
non-Board members are calculated on an annual basis, based on the recommendation of the Nominations and Remunerations Committee and approval of the Board of Directors. Please refer to page 196 for more detailed information on the Bank’s Remuneration Policy.

Corporate behaviour

Business ethics

The commitment to the highest standards of ethical, moral and statutory conduct and corporate behaviour at Al Rajhi Bank cascades from the Board of Directors and Senior Management down the organisational hierarchy to the employees across all strata of the organisation. The Bank is built on honesty, integrity and transparency, and promotes a corporate culture that adheres to these core values.

Compliance is instilled into Al Rajhi Bank’s everyday business practices, and is viewed as an integral part of its operations and banking activities. It is the responsibility of all employees to observe high ethical, moral and statutory standards nurtured by the Bank, which continues to strengthen its relationship with its customers and, consequently, its reputation.

Various regulatory requirements were integrated across the Bank to further enhance corporate behaviours, and continuously improve its governance process with the objective of combating misconduct across the Bank and its customer base.

During the reporting period, the Bank identified a number of risks that might hinder the achievement of its objectives and analysed these risks in order to understand how they can be managed.

Al Rajhi Bank continued to analyse the potential scenarios for fraud, misconduct, bribery, corruption and money laundering during the year in review, while assessing potential risks that may arise in the achievement of related objectives. This helped identify and create internal controls that have contributed towards mitigating risks that may bring about such cases of misconduct.

The Bank’s farsighted investments in the latest in technology enhanced its financial crime prevention, detection and response capabilities. Advanced strategies including financial crime detection strategies were executed during the year, revealing trends and patterns that the data of the Bank and its customers should follow. Artificial Intelligence (AI) and data mining methods were also utilised during 2023 to generate new data from existing databases, to predict customer behaviour as well as the future performance of the Bank’s different functions. Variations from expected outcomes will be directly identified and mapped on to the actions that employees and other parties have taken.

Following the major revamp of the Anti-fraud Function during the previous financial year, the Bank developed and adopted a best-in-class Anti-Fraud Function to global benchmarks, minimising incidents of fraud whilst minimally impacting the customer experience. Prevention and detection capabilities continued to be enhanced by utilising enriched data, leveraging Cognitive Analytics, AI and Machine Learning. Predictive analytics were applied to behaviours in a bid to understand anticipated future behaviour; which will enable the timely highlighting of any irregularities.

The Bank is committed to verifying, on an ongoing basis, the identity of its customers and ensuring that information and documentation is up-to-date, complete and accurate in order to mitigate financial crime risks. The monitoring of customer profiles is conducted through periodic reviews, event driven reviews, ongoing screening and transaction monitoring. Customer transactions continued to be monitored through a transaction monitoring system, with in-built rules or scenarios that trigger alerts that are reviewed by the Anti-money Laundering and Counter-terrorism Financing (AML-CTF) Department staff. This function reduces the risk of money laundering and terrorism financing and the risk to the Bank’s reputation, while also avoiding regulatory sanctions.

The reporting period also saw the Compliance Group implementing the SAS transaction monitoring system – a modern, flexible and automated AML Monitoring System compatible with Al Rajhi Bank’s core banking system.

Al Rajhi Bank, at its core, remains ESG compliant in its overarching strategy of becoming the “Bank of the Future”, supporting the diversification of the Saudi economy, and navigating the Kingdom towards Vision 2030 as a reliable, stable and sustainable financial institution, which conducts itself at the highest levels of corporate governance.