GRI 2-9

GRI 2-15

GRI 3-3

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 a group of executive management committees of the first and second levels. This governance structure relies on a set of key pillars that ensure clarity and sound governance. These pillars are the Bank’s values, design of the organisational structure, policies and procedures, the delegation of authority matrix, and effective communication between various internal and external stakeholders.

Policies related to the Corporate Governance Manual

The Bank applies the Principles of Governance for Banks Operating in Saudi Arabia issued by the Saudi Central Bank as well as the Corporate Governance Regulations issued by the Capital Market Authority. The Bank has developed its Corporate Manual and the charters governing the Board Committees and management committees. These documents are subject to periodic review by the Board and its committees.

The Bank adopts a comprehensive set of policies and procedures that strengthen the Bank’s governance framework in line with the Board of Directors approved Delegation of Authorities (DOA) matrix to adequately reflect internal practices. At the forefront of these policies is the Related Party Transactions and Conflict of Interest Policy to better achieve transparency and integrity, while remaining compliant with the regulatory requirements under the Companies Law, the CMA Governance Regulations, and the principles and guidelines issued by SAMA.

The Bank also relies on written disclosure policies and regulations that enable shareholders and stakeholders to have access to all material information and developments without discrimination and in a timely manner. This includes information required to be disclosed according to the instructions of Saudi Central Bank and under the regulations of Capital Market Authority (CMA).

The Bank pays adequate attention to the training and qualification of members of the Board of Directors and the executive management. The Bank has prepared an introductory guide to assist the new Board members and provide them with necessary information on the Bank’s strategy, financial and operational aspects, and their obligations and duties.

The Bank also applies procedures for settling customers and shareholders complaints. These procedures are monitored by Saudi Central Bank and Capital Market Authority. The Bank has also implemented a social responsibility policy aiming at enhancing the Bank’s social role.

CMA Corporate Governance Regulations

The Bank has given due cognisance to the Corporate Governance Regulations currently in effect, as issued by the Capital Market Authority in the Kingdom of Saudi Arabia. The following is a report on the Bank’s corporate governance practices and the extent of its compliance with Capital Market Authority’s regulations.

Implemented and not implemented provisions of the Corporate Governance Regulations and reasons for non-implementation

The Bank applies all the provisions of the Corporate Governance Regulations issued by the Capital Market Authority on 13 February 2017 and amended on 22 August 2022, except for the following articles:

Board Structure

The Bank is managed by a Board of Directors consisting of eleven members, elected by the ordinary general assembly every three years. Members whose term has expired may be re-elected each time according to the Bank’s regulations.

Names of the companies inside and outside the Kingdom in which a Board Member is a manager or a member of their current or previous Board

Member name	Names of companies where the Board Member is a member of the current Boards or one of their directors	Inside/ outside the Kingdom	Legal entity	Names of companies where the Board Member is a member of the previous Boards or one of their directors	Inside/ outside the Kingdom	Legal entity
Abdullah bin Sulaiman Al Rajhi	Al Rajhi Company for Cooperative Insurance (Al Rajhi Takaful) Al Rajhi Capital Al Rajhi Holding Group Farabi Petrochemicals Company Indoor and Outdoor Floor Fabrics Solutions Holding Company Al Ajial Holding Company Erth Al-Awtan Real Estate Development Company Nagiz Investment Holding Company Mirath Holding Company	Inside the Kingdom	Listed joint-stock company Closed joint-stock company Closed joint-stock company Closed joint-stock company Closed joint-stock company Closed joint-stock company Limited liability company Limited liability company Limited liability company	Al Rajhi Bank (CEO) Saudi Carpet Supplies Manufacturing Company Jubail Saudi Company for Flooring Fabric Solutions Green Vision for Artificial Grass Company Al Farabi Investment Company Farabi Yanbu Petrochemicals Company Farabi Transformation Industries Company	Inside the Kingdom	Listed joint-stock company Limited liability company Limited liability company Limited liability company Limited liability company Limited liability company Limited liability company
Ibrahim Bin Mohammed Al Rumaih	The Saudi Arabian Investment Company	Inside the Kingdom	Unlisted company	The Saudi Arabian Investment Company (CEO) National Commercial Bank ACWA Power	Inside the Kingdom	Unlisted company Listed joint-stock company Unlisted company
Abdulaziz bin Khalid Al Ghufaily	Al Rajhi Capital The National Petrochemical Industrial Company (NATPET)	Inside the Kingdom	Unlisted company Unlisted company	Industrialisation & Energy Services Company Riyadh Hotels and Entertainment Company Saudi Industries Development Company Tabuk Agriculture Development Company National Medical Care Company Herfy Food Company Panda Retail Company Savola Group Savola Foods Company	Inside the Kingdom	Unlisted company Unlisted company Unlisted company Listed joint-stock company Listed joint-stock company Unlisted company Unlisted company Listed joint-stock company Unlisted company
Badr bin Mohammed Al Rajhi	Mohammed Abdulaziz Al-Rajhi and Sons Investment Company Al-Rajhi Steel Industries Company Berain Company The Saudi Company for Tourism Development Al-Jazira Home Appliances Company Al Motahedhoun Al Uzamaa Company Al Bader Zaher Investment	Inside the Kingdom	Closed joint-stock company Closed joint-stock company Closed joint-stock company Closed joint-stock company Closed joint-stock company Closed joint-stock company Limited liability company	Falcon Plastic Products Company	Inside the Kingdom	Closed joint-stock company
Khalid bin Abdulrahman Al Gwaiz	Riyadh Cables Group Company Emcor Facilities Management Co Unique Solutions for Chemical Industries (USIC) Bawan Company Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO)	Inside the Kingdom	Listed joint-stock company Limited liability company Limited liability company Listed joint-stock company Listed joint-stock company	ACWA Holding Group Astra Industrial Group Samba Financial Group Arab National Bank Swicorp Company Synergy Management Consulting Co. Bin Ladin International Holding Group (Executive Director) The National Medical Products Co. Ro’yat Watan Investment Company Roaa Development Holding Company	Inside the Kingdom	Unlisted company Listed joint-stock company Listed joint-stock company Listed joint-stock company Unlisted company Limited liability company Unlisted company Limited liability company Limited liability company Limited liability company
Alaa bin Shakib Al Jabri	Medical and Pharmaceutical Services Company	Inside the Kingdom	Limited liability company	Saudi British Bank Gulf International Bank Construction Products Holding Company Rolaco Group	Inside the Kingdom Inside and outside the Kingdom Inside the Kingdom Inside the Kingdom	Listed joint-stock company Unlisted company Unlisted company Unlisted company
Ibrahim bin Fahad Al Ghofaily	Jiwar Real Estate Management, Marketing and Development Company	Inside the Kingdom	Unlisted company	Al Inma Bank Al Rajhi Bank	Inside the Kingdom	Listed joint-stock company Listed joint-stock company
Hamza bin Othman Khoshaim	Hassana Investment Company	Inside the Kingdom	Unlisted company	Dallah Healthcare Holding Company	Inside the Kingdom	Listed joint-stock company
Raeed bin Abdullah Al-Tamimi	National Gas and Industrialization Company	Inside the Kingdom	Listed joint-stock company	Cooperative Insurance Company National Medical Care Company Waseel Electronic Information Transfering Co Cooperative Real Estate Investment Company Najm Company for Insurance Services Saudi Arabia Public Transport Company	Inside the Kingdom	Listed joint-stock company Listed joint-stock company Unlisted company Unlisted company Unlisted company Listed joint-stock company
Abdulatif bin Ali Al Seif	Arabian Cement Company Wisayah Global Investment Company Nahdi Medical Company STC Solutions Sabeen Investment The Saudi Agricultural and Livestock Investment Company (SALIC)	Inside the Kingdom	Listed joint-stock company Limited liability company Closed joint-stock company Listed joint-stock company Closed joint-stock company Closed joint-stock company	HSBC Saudi Arabia Shared Vision Company Ltd Pioneer Investments Company Abdullah Al Othaim Investment Co. Riva Investment Company National Petrochemical Company (PETROCHEM)	Inside the Kingdom	Unlisted company Limited liability company Unlisted company Closed joint-stock company Limited liability company Listed joint-stock company
Waleed bin Abdullah Al Mogbel	Al Rajhi Company for Cooperative Insurance (Al Rajhi Takaful) Emkan Finance Company International Digital Solutions Company (NeoLeap) Human Resources Management & Development Company (Tanfeeth) Ejada Systems Company Ltd.	Inside the Kingdom	Listed joint-stock company Closed joint-stock company Closed joint-stock company Limited liability company Limited liability company

Composition of the Board and classification of its members, as: executive members, non-executive members, or independent members

Member name	Membership classification (executive/non-executive/independent)
Abdullah bin Sulaiman Al Rajhi	Non-executive
Ibrahim bin Mohammed Al Rumaih	Independent
Abdulaziz bin Khalid Al Ghufaily	Non-executive
Badr bin Mohammed Al Rajhi	Non-executive
Khalid bin Abdulrahman Al Gwaiz	Non-executive
Alaa bin Shakib Al Jabri	Independent
Ibrahim bin Fahad Al Ghofaily	Independent
Hamza bin Othman Khoshaim	Non-executive
Raeed bin Abdullah Al-Tamimi	Independent
Abdulatif bin Ali Al Seif	Non-executive
Waleed bin Abdullah Al Mogbel	Executive

Committees of the Board of Directors

The functions and responsibilities of the Committees are identified based on internal bylaws and regulatory requirements. The membership term is set at three years, ending with the expiration of the term of the Board. The Board of Directors has the power to appoint, reappoint, or terminate the membership of any member of the Committees. The Committees submit their recommendations and minutes of their meetings to the Board of Directors.

The following is a brief description of the Bank’s Committees and their work.

A

- Executive Committee:

The main purpose of the Executive Committee (ExCom) is to assume responsibility for the business operations of Al-Rajhi Bank and to make quick decisions regarding urgent issues and matters related to the Bank’s business. The Executive Committee is responsible for reviewing, following up, and approving the basic financial, non-financial, commercial, investment, and operational decisions related to the Bank within the limits of the powers determined by the Bank’s Board of Directors.

The Committee held six meetings during the year 2022 as follows:

		Member name
Meeting No.	Date	Abdullah bin Sulaiman Al Rajhi	Ibrahim bin Mohammed Al Rumaih	Abdulaziz bin Khalid Al Ghufaily	Hamza bin Othman Khoshaim	Abdulatif bin Ali Al Seif
		Chairman	Member	Member	Member	Member
1.	17 February 2022
2.	24 February 2022
3.	29 June 2022
4.	15 September 2022
5.	27 October 2022
6.	8 December 2022

B

- Nominations and Compensations Committee

GRI 2-10

The main purpose of the Nominations and Compensations Committee is to submit recommendations on the nomination of Board Members, committee members, senior executives, and candidates for positions, subject to non-objection of the Saudi Central Bank, to the Board of Directors. The Committee prepares a description of the capabilities and qualifications required for Board of Director’s membership, evaluates the effectiveness and efficiency of the Board and senior management performance, and ensures that the Bank remains compliant with the internal incentive policies, the rules of incentive practices issued by the Saudi Central Bank, and the principles and criteria for compensation, in a manner that best achieves the interests of depositors, shareholders and the Bank’s strategic objectives. The Committee held four meetings during the year 2022 as follows:

		Member Name
Meeting No.	Date	Ibrahim Bin Mohammed Al Rumaih	Khalid bin Abdulrahman Al Gwaiz	Raeed bin Abdullah Al-Tamimi	Abdulaziz bin Khalid Al Ghufaily
		Chairman	Member	Member	Member
1.	13 January 2022
2.	2 June 2022
3.	27 October 2022
4.	1 December 2022

C

- Governance Committee:

The main purpose of the Governance Committee is to support and maintain the highest standards in corporate governance, on behalf of the Board of Directors, by ensuring that sound governance practices are followed in all activities carried out by the Bank through conducting an annual review of the general governance framework and related mechanisms. In addition, the Committee monitors cases of conflict of interest, ensures the continuous updating of the register of Related Parties, reviews requests for exemption from the governance requirements applicable at the Bank, and coordinates with the Bank’s subsidiaries to support good and consistent corporate governance standards for all activities of the Al Rajhi Bank Group. The Committee also focuses on increasing awareness of the importance of governance and its activities within the Bank among all employees, shareholders, and external stakeholders, and conducts an annual evaluation of the performance of the Board of Directors, members of the Board, all Board Committees and Management Committees. It is also responsible for reviewing and updating the policies related to the Board of Directors and its members, the Bank’s governance, and the conflict of interests, in addition to following up on the implementation of the Governance Manual, its annexes, and the Bank’s delegation of authority matrix. The Committee held four meetings during the year 2022 as follows:

		Member Name
Meeting No.	Date	Ibrahim Bin Mohammed Al Rumaih	Ibrahim Bin Fahad Al Ghofaily	Raeed bin Abdullah Al-Tamimi
		Chairman	Member	Member
1.	14 June 2022
2.	18 September 2022
3.	30 October 2022
4.	13 December 2022

D

- Audit and Compliance Committee:

The main purpose of the Audit and Compliance Committee is to supervise the financial reporting process, oversee the internal and external auditors, submit recommendations to the Board of Directors and shareholders to approve, appoint and determine the remunerations and dismissal of the external auditors. The Committee also reviews and approves the scope of the audit operations and their implementation, receives key audit reports, assesses and follows up the Bank’s policy in combating financial fraud, and reviews the objectives and observations of the Shariah audit. Moreover, the Committee ensures that the senior management takes all necessary corrective measures in a timely manner to address any weaknesses in controls or non-compliance with policies, laws, and regulations, or any other issues identified by the auditors. The Audit and Compliance Committee held nine meetings during the year 2022 as follows:

		Member name
Meeting No.	Date	Abdullatif bin Ali Al Seif	Raeed bin Abdullah Al-Tamimi	Abdullah bin Ali Al Muneef	Farraj bin Mansour Abuthnain	Walid bin Abdullah Tamairik
		Chairman	Member	Member	Member	Member
1.	2 January 2022
2.	30 January 2022
3.	16 February 2022
4.	6 March 2022
5.	21 April 2022
6.	28 July 2022
7.	26 September 2022
8.	20 Octomber 2022
9.	29 December 2022

Audit and Compliance Committee members (Non-Board members)

No.	Name	Committee memberships	Current positions	Previous positions	Qualifications	Experience
1	Abdullah bin Ali Al Muneef	Audit and Compliance Committee	Member of Audit and Compliance Committee – Al Rajhi Bank	Chief Executive Officer – Al Muneef Financial and Management Consultancy Office Advisor – National Guard Director General of Finance and Administration Affairs – National Guard Head of Accounting Department - King Saud University Associate Professor of Accounting Department - King Saud University Executive Director of Financial and Administrative Affairs – King Faisal Specialist Hospital Head of Accounting Association, King Saud University Assistant Professor of Accounting Department, King Saud University Lecturer at Accounting Department, King Saud University Member of Shura Council Member of the Arab Parliament	Bachelor of Accounting – King Saud University Master Degree in Accounting – University of Southern California, USA PhD in Accounting – University of South Carolina, USA	Held many academic, leading, and advisory positions in financial and management fields
2	Farraj bin Mansour Abuthnain	Audit and Compliance Committee	Member of Audit and Compliance Committee – Al Rajhi Bank Board Member – Astra Industrial Group Board Member – Al Moammar Information Systems Co. Board Member – Saudi Industrial Investment Group	Director of Loan Department – Industrial Development Fund Member of the Project Loan Committee – Industrial Development Fund Member of the Industrial Projects Performance Audit Committee – Industrial Development Fund Senior Vice President of Finance and Investment – National Industrialisation Company (Tasnee) Member of the Council of Riyadh Region Board Member of Petrochem Member of Audit Committee – Almarai Company Board Member – Aljazira Capital	Bachelor of Industrial Management – Milwaukee School of Engineering, USA	Held many leading positions in the Saudi Industrial Development Fund and the National Industrialization Company (Tasnee)
3	Walid bin Abdullah Tamairik	Audit and Compliance Committee	Member of Audit and Compliance Committee – Al Rajhi Bank Member of Audit Committee – Raysan Al Arabia Real Estate Developer TEMAIRIK CPA Chairman of Audit Committee – Taajeer Finance Company	Arthur Andersen & Co. Ernst & Young Member of Advisory Committee of College of Management and Economics – King Abdulaziz University	Bachelor of Accounting – King Abdulaziz University Fellowship of the Saudi Organization for Certified Public Accountants (SOCPA)	Has more than 25 years of experience in accounting, auditing, and economics

E

- Risk Management Committee

The primary purpose of the Risk Management Committee is to advise the Board of Directors regarding risk tolerance and risk strategy and to oversee the management’s implementation of this strategy. This includes the management of capital and liquidity strategies, credit and market risk management, operational risk, compliance risk, reputational risk, and any other potential risks that the Bank may face. The Committee held five meetings during the year 2022 as follows:

		Member name
Meeting No.	Date	Alaa bin Shakib Al Jabri	Khalid bin Abdulrahman Al Gwaiz	Hamza bin Othman Khoshaim
		Chairman	Member	Member
1.	17 February 2022
2.	28 June 2022
3.	24 August 2022
4.	3 November 2022
5.	13 December 2022

Procedures of the Board of Directors to inform its members of shareholders’ suggestions and comments on the Bank and its performance

The Bank documents shareholders’ suggestions provided through the General Assembly and notifies the Chairman of the Board of any other suggestions related to the Bank to be presented at the next Board meeting. There is also an e-mail address dedicated to the comments and suggestions of the shareholders, which is published on the official website of the Bank and on Tadawul website so that the Board can review the suggestions and comments of the shareholders.

Methods adopted by the Board of Directors in evaluating its performance and that of its committees and members

GRI 2-18

The Bank’s Governance Committee evaluates the performance of the Board, its committees, and members through specific surveys at three levels: Board evaluation based on the Board of Directors terms of reference specified in the Bank’s Governance Manual, evaluation of Board’s Committees and the Audit and Compliance Committee based on their approved work regulations, and the self-evaluation of the Board and Committees member. The Governance Committee then prepares the annual evaluation report and submits it to the Nominations and Remunerations Committee.

Remunerations of Board members, Board Committee members, and Executive Management

GRI 2-19

GRI 2-20

A

- Summary of the most important provisions of the remuneration policy for members of the Board, its Committees and the Executive Management:

1

- Board of Directors remunerations and compensations:

The members of the Bank’s Board of Directors receive a fixed annual remuneration amounting to (SAR 400,000) on an annual basis for their membership on the Bank’s Board of Directors and their participation in its works.

Each member of the Board of Directors receives an amount of (SAR 5,000) for attending each of the Board’s sessions, whether the attendance is physical or through any remote means of communication.

The Bank pays all actual expenses incurred by members of the Board for attending the Board meetings, including travel and accommodation expenses.

2

- Remunerations and compensations of Board members for their membership in Board sub-committees:

The Bank’s Board members do not receive additional remuneration for their participation in the Board sub-committees as the annual remuneration includes additional remunerations if the member participates in any Board sub-committees.

Each member of the Board of Director receives an amount of (SAR 5,000) for attending each Committee meeting, whether the attendance is physical or through any remote means of communication.

The Bank pays all actual expenses incurred by members of the Board for attending the Committee meetings, including travel and accommodation expenses.

3

- Remunerations and compensations for Audit and Compliance Committee members:

Each member of the Audit and Compliance Committee, whether from within or outside the Board, receives a fixed annual remuneration for his or her participation in the Committee’s work, estimated at (SAR 150,000) annually. Annual remunerations and compensations for non-Board Audit and Compliance Committee members are not calculated as part of the annual remunerations and compensations granted to the Board member.

Each member of the Audit and Compliance Committee receives an amount of (SAR 5,000) for attending each Committee meeting, whether the attendance is physical or through any remote means of communication.

The Bank pays all actual expenses incurred by members of the Committee for attending the Committee meetings, including travel and accommodation expenses.

4

- Granting shares:

The Bank does not grant shares as remuneration to any Board member, Board Committee member, or Audit and Compliance Committee member.

5

- Allocation and payment mechanisms for remunerations and compensations:

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. Amounts are then presented to the General Assembly for approval at its next meeting.

Remunerations can vary to reflect the member’s experience, competencies, tasks, independence, and the number of attended meetings among other considerations.

Attendance remunerations are paid annually to beneficiaries based on their attendance records for Board, sub-committees, and Audit and Compliance Committee meetings.

Payments are made through Bank transfers, cheques, or any other methods approved by the Bank, and members are informed of details through the relevant department at the Bank.

Remunerations and compensations paid to Board members may not exceed (SAR 500,000) annually. Any additional due amounts will not be disbursed, except for the members of the Audit and Compliance Committee from within the Board. Total amounts paid to Board members should not exceed 5% of total net profits.

6

- Remunerations and compensations of Senior Executives:

The role of the Board of Directors includes, but is not limited to the following:

• The Board of Directors is responsible for approving the overall structure of numerations and oversight of all aspects of the remuneration system and may not delegate this responsibility to the executive management.
• Although there is a Board Nomination and Remuneration Committee, the Board of Directors has ultimate responsibility for promoting effective governance and sound remuneration practices.
• The Board of Directors reviews and approves the Remuneration Policy and any of its subsequent updates, based on the recommendation of the Nomination and Compensation Committee, taking into account, inter-alia, the Rules on Compensation Practices approved in May 2010 and any future updates or revisions issued by the Saudi Central Bank.

The Board of Directors reviews and approves the recommendations of the Nomination and Compensation Committee regarding the remunerations of senior executives. For this purpose, senior executives include senior managers and all those executives whose appointments are subject to non-objection by the Saudi Central Bank or other regulators.

The Board of Directors ensures that the management has put in place detailed systems and procedures and an effective oversight mechanism to ensure compliance with the Saudi Central Bank Rules on Compensation Practices and the Financial Stability Board Principles and Standards.

7

- Structure of remunerations and compensations of Senior Executives:

Remunerations structures are designed for the various levels of employees in a manner that enhances the effectiveness of risk management and achieves remunerations and compensations objectives in accordance with the highest standards of remunerations practices.

Forms of remunerations vary according to the position and role of the employee and may include cash payments, shares, and other forms of rewards and compensations.

The proportion of fixed and variable remuneration components for different business sectors is determined based on the nature and level of the employee’s responsibilities, the field of business, and the general philosophy of the Remuneration Policy of the Bank. The Bank ensures that the total variable remuneration does not limit its ability to strengthen the capital base.

The remunerations structure for employees working in control functions such as Risk and Compliance, Internal Auditing, etc., is designed with the aim of ensuring the objectivity and independence of these functions. In this regard, performance management and the determination of remunerations and compensations for these employees are not assigned to any person who works or has any relationship with the business sector that these employees monitor or supervise.

When determining remuneration allocations, the overall performance of the Bank is taken into consideration, while their distribution to employees is based on the performance of the employees in addition to the performance of the business unit or department in which they operate. However, there is no guaranteed minimum remuneration or similar payment, other than an employee’s salary that is not based on performance.

As part of the Remuneration Policy, the Bank may postpone a reasonable percentage of the performance bonus for a period of no less than three (3) years. The deferred bonus percentage and the maturity period are determined based on the nature of the business, its risks, and the activities carried out by the employee.

Where the Remuneration Policy provides for the payment of part of the remuneration and compensation in the form of shares, criteria must be set to determine the value of the share allocation. Moreover, the allocation of shares should be subject to an appropriate policy of shares retention.

Joining bonuses are not permitted unless clearly aligned with long-term value creation and prudent risk-taking. Payments should be related to the performance achieved over time and designed in a way that does not reward failure. Joining bonuses should be at least linked to successful completion of the probation period and where possible, they should be deferred according to terms similar to the those of deferred bonuses in the employee’s previous employer.

The Bank should demand from its employees that they commit themselves not to use personal hedging strategies or remunerations and liability-related insurance to undermine the risk alignment effects embedded in their remuneration and compensation arrangements.

The Bank confirms that there are no major deviations between granted remunerations and applicable Remunerations Policy.

B

- Remunerations and compensations paid to Board members, Board Committees, and Audit & Compliance Committee in 2022:

No.	Name	Board of Directors meetings		Audit and Compliance Committee meetings		Executive Committee meetings			Nominations and Remunerations Committee meetings		Governance Committee meetings		Risk Committee meetings		Annual remuneration	Total	Total paid to member according to policy
		No.	SAR	No.	SAR	No.	SAR		No.	SAR	No.	SAR	No.	SAR	SAR	SAR	SAR
1.	Abdullah bin Sulaiman Al Rajhi	6	30,000	–	–	6	30,000		–	–	–	–	–	–	400,000	460,000	460,000
2.	Ibrahim Bin Mohammed Al Rumaih	6	30,000	–	–	6	30,000		4	20,000	4	20,000	–	–	400,000	500,000	500,000
3.	Abdulaziz bin Khalid Al Ghufaily	6	30,000	–	–	6	30,000		4	20,000	–	–	–	–	400,000	480,000	480,000
4.	Khalid bin Abdulrahman Al Gwaiz	6	30,000	–	–	–	–		4	20,000	–	–	5	25,000	400,000	475,000	475,000
5.	Badr bin Mohammed Al Rajhi	6	30,000	–	–	–	–		–	–	–	–	–	–	400,000	430,000	430,000
6.	Alaa bin Shakib Al Jabri	6	30,000	–	–	–	–		–	–	–	–	5	25,000	400,000	455,000	455,000
7.	Ibrahim bin Fahad Al Ghofaily	6	30,000	–	–	–	–		–	–	4	20,000	–	–	400,000	450,000	450,000
8.	Raeed bin Abdullah Al-Tamimi	6	30,000	9	45,000	–	–		4	20,000	4	20,000	–	–	550,000	665,000	665,000
9.	Hamza bin Othman Khoshaim	6	30,000	–	–	6	30,000		–	–	–	–	5	25,000	400,000	485,000	485,000
10.	Abdulatif bin Ali Al Seif	6	30,000	9	45,000	6	30,000		–	–	–	–	–	–	550,000	655,000	655,000
11.	Stefano Paolo Bertamini (membership expired)	2	10,000	–	–	–	–		–	–	–	–	–	–	198,356	208,356	208,356
12.	Waleed bin Abdullah Al Mogbel (New member)	3	15,000	–	–	–	–		–	–	–	–	–	–	58,082	73,082	73,082
13.	Abdullah bin Ali Al Muneef	–	–	9	45,000	–	–		–	–	–	–	–	–	150,000	195,000	195,000
14.	Walid bin Abdullah Tamairik	–	–	9	45,000	–	–		–	–	–	–	–	–	150,000	195,000	195,000
15.	Farraj bin Mansour Abuthnain	–	–	9	45,000	–	–		–	–	–	–	–	–	150,000	195,000	195,000
	Total	65	325,000	45	225,000	30	150,000		16	80,000	12	60,000	15	75,000	5,006,438	5,921,438	5,921,438

C

- Remunerations and compensations paid to five Senior Executives who received the highest remunerations from the Bank, including the CEO and CFO, in 2022.

Description	2022
Salaries and compensations	10,260,000
Allowances	5,209,738
Periodic and annual rewards	12,640,000
Incentive schemes	21,140,000
Any other in-kind compensations	916,403
Total	50,166,141

Employee benefits and plans

The Bank offers its employees a number of benefits and bonuses during or at the end of the service period, according to the Saudi Labor Law and the Bank’s policies. The provision for employees’ end-of-service benefits is calculated using the entitlement assessment form in accordance with the Saudi Labor Law and local regulatory requirements. The provision for the end-of-service benefits amounted to SAR 2,241 Mn.

The Bank also grants deferred shares to its senior employees and to valuable human assets that the Bank needs to retain. This ensures strengthening the Bank’s long-term relationship with those employees. Granting of shares is subject to the approval of the Board of Directors upon the recommendation of the Nominations and Remunerations Committee.

Any penalty, sanction, precautionary measure, or precautionary restriction imposed on the Bank by the CMA or any supervisory, regulatory, or judicial authority

There are no fines imposed by the Capital Market Authority.

Penalties imposed by Saudi Central Bank

Violation subject	Fiscal year 2022		Fiscal year 2021
	Number of penalty decisions	Total amount of fines in SAR	Number of penalty decisions	Total amount of fines in SAR
Violating the supervisory instructions of the Saudi Central Bank	49	38,459,200	27	15,903,000
Violating the instructions of Saudi Central Bank related to customer protection	4	1,062,400	7	4,436,800
Violating the instructions of Saudi Central Bank related to due diligence	–	–	1	2,165,000
Violating the instructions of Saudi Central Bank related to the level of performance of ATMs and POS machines	–	–	–	–
Violating the instructions of Saudi Central Bank related to due diligence in combating money laundering and terrorism financing	3	150,000	5	795,000

Fines imposed by the Ministry of Municipal and Rural Affairs:

		Total amount of fines in SAR
No.	Violation subject	Fiscal year 2022	Fiscal year 2021
1.	Increase of building area percentage for ATMs, lack of setbacks, visible advertising posters on branches facades and ATMs, and non-existence of licenses for some Bank’s locations.	306,000	924,300

Outcomes of the annual review of internal control procedures at the Bank, in addition to the Audit and Compliance Committee opinion on the adequacy of the Bank’s internal control system

The Bank’s executive management is responsible for designing and maintaining an appropriate internal control system with the Board of Directors’ direct supervision. The system has been designed to properly mitigate risks that could impair the realization of the Bank’s strategic and operational objectives. The Bank’s executive management has adopted a suitable integrated internal control system aligned with the regulatory requirements of the Saudi Central Bank. The following are some of the key components of the Bank’s internal control system:

The Bank has completed, approved, and continuously develops the overall governance framework through which appropriate control tools are prepared and updated at the Bank level and the roles and responsibilities of the Bank’s various levels are clarified, including the Board of Directors, the Board committees, and other administrative committees.

Monitoring the Bank’s activities in general and making important decisions through committees formed to ensure that the Bank’s activities are running properly in order to protect and ensure the quality of the Bank’s assets.

The Auditing Department monitors the adequacy of the Bank’s supervisory procedures and adheres to them, and prepares a presentation clarifying the focus and development aspects.

The Internal Control Committee (ICC) formed at the Bank continuously follows up on the observations and control operations in departments such as Internal Auditing, Risks and Compliance, Account Differences, and other departments, and reviews the level of progress in addressing those observations and developing solutions to any obstacles that the Bank’s departments may face in this regard.

The Bank has a set of policies and procedures that govern its various activities. The Bank also reviews these policies and procedures periodically to verify their adequacy, efficiency, and suitability for the Bank’s activities.

Most of the operations of the Bank are executed through automated systems, which helps in reducing manual errors and chances of fraud.

The Bank has specialized departments for evaluating and monitoring internal control systems, including Internal Auditing, Compliance, Fraud Control, and various risk departments.

There is an effective Audit and Compliance Committee supervising internal and external auditors’ activities in order to promote their independence. This Committee receives regular and periodic reports on outcomes of audits carried out on different departments and their activities.

The comments and reports of the Shariah Group are conveyed to the Audit Committee to enhance the independence of the Shariah Group.

Follow up on important transactions, fraud cases, legal cases, tax and Zakat cases, disclosures, and any matters requested by the Board of Directors from the Audit and Compliance Committee.

Regular reviews on the efficiency and adequacy of the internal control system are carried out by the Internal Auditing Group based on an annual plan approved by the Audit and Compliance Committee, in addition to regular reviews of some aspects of internal control by external auditors as well as the audit carried out by the Saudi Central Bank.

Annual review of internal control procedures

During 2022, Al Rajhi Bank made every effort to ensure the adequacy and effectiveness of the internal control system, in line with the requirements issued by the Saudi Central Bank. In addition, the activities implemented during the year 2022, which included a review of the efficiency of the internal control system through the works of Departments of Internal Audit and Risks and Compliance have contributed to providing reasonable assurances of the adequacy of the applied internal controls, in addition to confirming the existence of systems and procedures necessary to identify and evaluate the high risks that the Bank may face, the method of dealing with them, as well as the safety of their application. No fundamental weaknesses affecting the adequacy of the internal control system were detected. Accordingly, and based on the results of the internal control system evaluation, Al Rajhi Bank has an adequate internal control system that works appropriately and is monitored and strengthened on an ongoing basis, bearing in mind that any internal control system, regardless of the level of its design and effectiveness, cannot provide absolute assurances.

General Assembly

The Bank adheres to the regulatory requirements in all matters relating to Ordinary and Extraordinary General Assemblies. The Bank is also obliged to provide sufficient information to enable shareholders to make their decisions.

Historical information of General Assembly meetings during the fiscal year:

		Attendance record
No.	Name	Extraordinary General Assembly 14th Meeting
1.	Abdullah bin Sulaiman Al Rajhi
2.	Ibrahim bin Mohammed Al Rumaih
3.	Alaa bin Shakib Al Jabri
4.	Khalid bin Abdulrahman Al Gwaiz
5.	Stefano Paolo Bertamini
6.	Badr bin Mohammed Al Rajhi
7.	Abdulatif bin Ali Al Seif
8.	Hamza bin Othman Khoshaim
9.	Abdulaziz bin Khalid Al Ghufaily
10.	Raeed bin Abdullah Al-Tamimi
11.	Ibrahim bin Fahad Al Ghofaily

Bank’s significant plans, decisions, and future expectations

Al Rajhi Bank continues to lead in the retail banking market, and intends to enhance its leadership in this sector by increasing the financing portfolio in general and real estate financing in particular. The Bank also intends to strengthen its position in the SMEs sector, while continuing to invest in the latest technologies to ensure the provision of the best banking services and products to customers, in addition to expanding the customer base.

Description of the Bank’s dividend policy

• The net annual profits of the Bank, which are determined after deducting all overheads and other costs and creating the necessary reserves to face doubtful debts, investment losses, and emergency obligations that the Board of Directors deems necessary in accordance with the provisions of the Banking Control Law and the directives of the Saudi Central Bank, are distributed as follows:
  • The amounts required to pay the Zakat prescribed for the shareholders are calculated and the Bank pays these amounts to the competent authorities.
  • At least 25% of the remainder of the net profits after deducting Zakat is carried over to the statutory reserve until the aforementioned reserve becomes at least equal to the paid-up capital.
  • An amount not less than 5% of the paid-up capital, after deducting the statutory reserve and Zakat, is allocated from the remainder of the profits for distribution to the shareholders in accordance with the Board of Directors’ proposal and the General Assembly’s decision. If the remaining percentage of the profits owed to the shareholders is not sufficient to pay this percentage, then shareholders may not claim its payment in the following year or years, and the General Assembly may not decide to distribute a percentage of the profits exceeding what was proposed by the Board of Directors.
  • The remaining amount is used after allocating the amounts mentioned in Paragraphs (1), (2), and (3), as proposed by the Board of Directors and decided by the General Assembly.
• Subject to the provisions of Paragraph (A) and the relevant regulations and after obtaining no objection from the Saudi Central Bank, the Company may distribute interim dividends on a semi-annual or quarterly basis.

Description of any interest of the Bank’s board members, senior executives and their spouses and minor children in the Bank’s securities or any of its subsidiary companies.

A

- Major shareholders:

No.	Holder of interest, contractual papers, or subscription rights	Number of shares at the beginning of year 2022	Number of shares at the end of year 2022	Net change	Percentage of change	Percentage of ownership %
1.	General Organization for Social Insurance	240,454,785	Non-major shareholder since 13 January 2022

B

- Members of the Board of Directors:

No.	Holder of interest, contractual papers, or subscription rights	Number of shares at the beginning of year 2022	Number of shares at the end of year 2022	Net change	Percentage of change %
1.	Abdullah bin Sulaiman Al Rajhi	54,518,389	87,229,416	32,711,027	60.00
2.	Ibrahim bin Mohammed Al Rumaih	17,089	27,342	10,253	60.00
3.	Abdulaziz bin Khalid Al Ghufaily	32,307	51,691	19,384	60.00
4.	Badr bin Mohammed Al Rajhi	2,041,390	3,647,973	1,606,583	78.70
5.	Khalid bin Abdulrahman Al Gwaiz	–	–	–	0.00
6.	Alaa bin Shakib Al Jabri	–	–	–	0.00
7.	Ibrahim bin Fahad Al Ghofaily	742,742	1,188,387	445,645	60.00
8.	Raeed bin Abdullah Al–Tamimi	–	–	–	0.00
9.	Abdulatif bin Ali Al Seif	1,000	1,600	600	60.00
10.	Hamza bin Othman Khoshaim	–	–	–	0.00
11.	Stefano Paolo Bertamini	–	Board representation expired on 01 July 2022	–	0.00
12.	Waleed bin Abdullah Al Mogbel	Board representation started on 09 November 2022	–	–	0.00

3 shares were granted for every 5 owned shares to reflect the increase in the Bank’s capital based on the approval of the 14th Extraordinary General Assembly held on 08 May 2022.

C

- Senior executives:

No.	Holder of interest, contractual papers, or subscription rights	Number of shares at the beginning of 2022	Number of shares at the end of year 2022	Net change	Percentage of change %
1.	Saleh bin Abdullah Al Lheidan	44,991	94,432	49,441	109.89
2.	Abdulrahman bin Abdullah Al Fadda	49,691	79,505	29,814	60.00
3.	Abdulaziz bin Saad Al Rusais	500	–	(500)	–100.00
4.	Ahmed bin Saleh Al Sudais	3,000	32,000	29,000	966.67
5.	Meshaal bin Mustafa Al Fadl	–	11,180	11,180	100.00
6.	Majed bin Saleh Al Rajhi	88,864	145,019	56,155	63.19
7.	Hussam bin Issam Al Basrawi	–	13,543	13,543	100.00
8.	Abdullah bin Saleh Al–Omari	–	3,529	3,529	100.00
9.	Turki bin Mohammad Al–Dafyan	–	8,867	8,867	100.00
10.	Ibraheem bin Hamad Alzeer	2,332	8,755	6,423	275.43

3 shares were granted for every 5 owned shares to reflect the increase in the Bank’s capital based on the approval of the 14th Extraordinary General Assembly held on 08 May 2022.

Board of Directors meetingsr

		Number of meetings (6)
No.	Member name	First meeting 24 February 2022	Second meeting 29 June 2022	Third meeting 15 August 2022	Fourth meeting 13 December 2022	Fifth meeting 14 December 2022	Sixth meeting 15 December 2022
1.	Abdullah bin Sulaiman Al Rajhi
2.	Ibrahim bin Mohammed Al Rumaih
3.	Alaa bin Shakib Al Jabri
4.	Abdulaziz bin Khalid Al Ghufaily
5.	Badr bin Mohammed Al Rajhi
6.	Khalid bin Abdulrahman Al Gwaiz
7.	Ibrahim bin Fahad Al Ghofaily
8.	Hamza bin Othman Khoshaim
9.	Raeed bin Abdullah Al-Tamimi
10.	Abdulatif bin Ali Al Seif
11.	Stefano Paolo Bertamini			Membership expired on 01 July 2022
12.	Waleed bin Abdullah Al Mogbel	Membership started on 09 November 2022

Bank requests for shareholder register

No	Request date	Request reasons
1.	03 January 2022
2.	03 January 2022
3.	31 January 2022
4.	28 February 2022
5.	04 April 2022
6.	29 May 2022
7.	03 July 2022
8.	07 August 2022
9.	07 September 2022
10.	03 October 2022
11.	01 November 2022
12.	30 November 2022
13.	22 December 2022

Company actions

Related party transactions

During its normal business cycle, the Bank makes transactions with related parties which are subject to the controls stipulated by the Kingdom’s legislative entities. The Bank has disclosed related party transactions in Note 34 of its final Financial Statements for the year 2022. The following is a summary of the nature and balances of those transactions for the year ended on 31 December 2022 (all amounts are in thousands of Saudi riyals):

Type of transaction	Balances resulting from transactions
Loans and advance payments	14,491,266
Accrued Payable on Financing	479,252
Potential obligations	4,999,867
Current accounts	389,941
Contributions payable	121,709
Receivables against claims	275,418
Bank balances	168,727
Income from finance and other financial assets	293,015
Mudaraba Fees	130,028
Employees’ salaries and benefits (air tickets)	2,666
Rent and premises related expenses	2,313
Contribution – policies written	554,460
Claims incurred and notified during the year	373,090
Claims paid	349,542
Board members remunerations	5,921
Short-term benefits	130,284
Provision for employees’ end of service benefits	2,241

Following is information related to businesses and contracts in which the Bank was a party and in which there was an interest for a member of the Board of Directors, a senior executive, or any person related to their professions during the year 2022:

1

- Commercial contracts and service contracts (all figures are in Saudi Riyal)

No.	Related party	Party associated with related party	Position in ARB	Type of relation with related party	Relation type	Period	Conditions	Transactions amount for the year 2022
1.	Fursan Travel & Tourism Co.	Abdullah bin Sulaiman Al Rajhi	Board Member	Owned by Board member	Travel & tourism services contract	Pricing contract for a period of one year automatically renewed for a similar period	Standard conditions without preferences	2,859,267
2.	Berain Company	Badr bin Mohammed Al Rajhi	Board Member	Chairman of the Board	Mineral water ‏ supply services	Pricing contract for a period of one year automatically renewed for a similar period	Standard conditions without preferences	348,945
3.	Arabian Internet and Communications Services Company “STC Solutions”	Abdulatif bin Ali Al Seif	Board Member	Board member of the Company	Cisco Hardware Support and Maintenance, Licensing, and Infrastructure Transformation Solutions	One to three years	Standard conditions without preferences	1,373,111

2

- Lease contracts (All figures are in Saudi Riyal)

No.	Related party	Party associated with related party	Position in ARB	Type of relation with related party	Relation type	Period	Conditions	Transactions amount for the year 2022
1.	Mohammed Abdulaziz Al-Rajhi and Sons Investment Company	Badr bin Mohammed Al Rajhi	Board Member	Board Member in the Company	Lease contract for the Southern Regional Administration building	Seven years – automatically renewable for similar period	Lease contract	282,373
2.	Mohammed Abdulaziz Al-Rajhi and Sons Investment Company	Badr bin Mohammed Al Rajhi	Board Member	Board Member in the Company	Lease contract for a direct sales office in Abha	Seven years – automatically renewable for a similar period	Lease contract	46,000
3.	Mohammed Abdulaziz Al-Rajhi and Sons Investment Company	Badr bin Mohammed Al Rajhi	Board Member	Board Member in the Company	Lease contract for ATM location	Five years – automatically renewable for a similar period	Lease contract	40,250

3

- Insurance contracts

No.	Related Party	Party associated with related party	Position in ARB	Type of relation with related party	Relation type	Period	Conditions	Transactions amount for the year 2022
1.	Al Rajhi Company for Cooperative Insurance	Abdullah bin Sulaiman Al Rajhi	Board Member	Board Member in the Company	Micro and Small Business Motor Insurance	Annual contracts	No preferential conditions or benefits	27,662,596
		Waleed bin Abdullah Al Mogbel	Managing Director and CEO	Managing Director and CEO is a Board member
		Saleh bin Abdullah Al Lheidan	Senior executive	Senior executive is a member of Shariah Board
2.	Al Rajhi Company for Cooperative Insurance	Abdullah bin Sulaiman Al Rajhi	Board Member	Board Member in the Company	Banker’s Blanket Bond and Professional Indemnity Insurance	Annual contracts	No preferential conditions or benefits	12,056,443
		Waleed bin Abdullah Al Mogbel	Managing Director and CEO	Managing Director and CEO is a Board member
		Saleh bin Abdullah Al Lheidan	Senior executive	Senior executive is a member of Shariah Board
3.	Al Rajhi Company for Cooperative Insurance	Abdullah bin Sulaiman Al Rajhi	Board Member	Board Member in the Company	Directors and Officers Insurance	Annual contracts	No preferential conditions or benefits	4,010,160
		Waleed bin Abdullah Al Mogbel	Managing Director and CEO	Managing Director and CEO is a Board member
		Saleh bin Abdullah Al Lheidan	Senior executive	Senior executive is a member of Shariah Board
4.	Al Rajhi Company for Cooperative Insurance	Abdullah bin Sulaiman Al Rajhi	Board Member	Board Member in the Company	Properties All Risk Policy	Annual contracts	No preferential conditions or benefits	2,309,517
		Waleed bin Abdullah Al Mogbel	Managing Director and CEO	Managing Director and CEO is a Board member
		Saleh bin Abdullah Al Lheidan	Senior executive	Senior executive is a member of Shariah Board
5.	Al Rajhi Company for Cooperative Insurance	Abdullah bin Sulaiman Al Rajhi	Board Member	Board Member in the Company	Fire and Allied Perils Policy – Mortgage Insurance	Annual contracts	No preferential conditions or benefits	6,538,885
		Waleed bin Abdullah Al Mogbel	Managing Director and CEO	Managing Director and CEO is a Board member
		Saleh bin Abdullah Al Lheidan	Senior executive	Senior executive is a member of Shariah Board
6.	Al Rajhi Company for Cooperative Insurance	Abdullah bin Sulaiman Al Rajhi	Board Member	Board Member in the Company	Bancassurance Agreement	Annual contracts	No preferential conditions or benefits	80,504,252
		Waleed bin Abdullah Al Mogbel	Managing Director and CEO	Managing Director and CEO is a Board member
		Saleh bin Abdullah Al Lheidan	Senior executive	Senior executive is a member of Shariah Board
7.	Al Rajhi Company for Cooperative Insurance	Abdullah bin Sulaiman Al Rajhi	Board Member	Board Member in the Company	Motor Insurance Agreement	Annual contracts	No preferential conditions or benefits	421,377,668
		Waleed bin Abdullah Al Mogbel	Managing Director and CEO	Managing Director and CEO is a Board member
		Saleh bin Abdullah Al Lheidan	Senior executive	Senior executive is a member of Shariah Board

Legal payments

Legal payments due by the Bank during the year consist of Zakat owed by shareholders, taxes, amounts paid to the General Organization for Social Insurance, and costs of issuing visas, passports, etc.

The following table shows details of the legal payments made during the year:

	2022
Description	Paid	Due for payment by end of fiscal period (unpaid)	Brief description	Reasons
Zakat	2,560,421,877.37	–	Paid	–
Taxes	61,524,969.91	–	Paid	–
VAT	290,846,627.73	–	Paid	–
General Organization for Social Insurance	274,947,809	–	Paid	–
Visa and passport costs	587,150	–	Paid	–
Ministry of Labor fees	1,574,725	–	Paid	–

Basis for preparing the Bank’s consolidated financial statements

The Bank prepares its consolidated financial statements in accordance with international accounting standards for financial institutions approved in the Kingdom of Saudi Arabia as well as other standards and publications issued by Saudi Organization for Chartered and Professional Accountants and the requirements of the Banking Control Law, the Companies Law applicable in the Kingdom of Saudi Arabia, and the Bank’s Articles of Association.

Basel 3

The Bank publishes its quantitative and qualitative disclosure data on an annual basis. These disclosures are available on the Bank’s website (www.alrajhibank.com.sa).

Auditors

During the Ordinary General Assembly of the shareholders, Messrs. Ernst & Young and KPMG Al Fozan & Partners were appointed as auditors for the Bank’s accounts for the fiscal year 2022. The next General Assembly will appoint external auditors for the fiscal year 2023 based on the recommendation of the Audit and Compliance Committee in this regard.

The Board did not recommend replacing the external auditors before the end of the contract period.

Board of Directors’ Acknowledgments:

According to the available information, the auditor’s report, and current market data, the Board of Directors acknowledges the following:

• Accounting records have been prepared properly
• The internal control system has been prepared based on proper fundamentals and is executed effectively
• There is no doubt about the Bank’s ability to continue its business.

Conclusion

The Board of Directors expresses its pleasure and pride in the positive results achieved by the Bank during the year 2022. On this occasion, the Board would like to convey its appreciation to the Custodian of the Two Holy Mosques, HRH the Crown Prince, and our wise Government.

The Bank also extends its sincere thanks to the Ministry of Finance, the Ministry of Commerce, the Saudi Central Bank, and the Capital Market Authority for their consistent cooperation and continuous support in developing the financial sector, which had a great impact and role in supporting the growth of the national economy.

The Board also seizes this opportunity to express its thanks and appreciation to the shareholders, the Bank’s valued customers and its correspondents for their support, confidence and cooperation, which have had a positive impact on the Bank’s progress and prosperity. The Board also conveys its sincere thanks and appreciation to all employees of the Bank for their sincere efforts and dedication. In addition, the Bank extends its appreciation to Shariah Board members for their loyal efforts and effective contributions to the Bank’s business.