First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Debt Investor Presentation (February 2018)
50 slides from First Abu Dhabi Bank's debt investor presentation, February 2018
Slide 1: Debt Investor Presentation
DEBT INVESTOR PRESENTATION February 2018
Slide 2: Disclaimer
Disclaimer Please note that FAB pro forma consolidated financials at 31 December 2017 serve as the main basis of reference for our Management Discussion & Analysis Report (MDA) and Investor Relations presentation. Comparative figures have been reclassified where appropriate to conform to the present
Slide 3: Contents
Contents 01 Operating Environment 02 Introducing FAB 03 Integration Journey Q4/FY’17 Financial Review 04 Based on Pro forma financial information as of 31 December 2017 05 Appendix 3
Slide 4: UAE Economic Overview
UAE Economic Overview 2nd largest economy in GCC USD 379 Bn 2017f Nominal GDP3 UAE 6th largest oil reserves ~95 Bn boe1 1.3% 3.4% +5.6% On path to strong recovery 2017f 2018f Increase in 2018 Real GDP Growth3 Federal Budget4 UAE federation established in 1971 Comprising 7 Emirates Diversified and
Slide 5: Other Macro Indicators
Other Macro Indicators 2017f Debt/GDP1 (%) UAE PMI in Expansionary Territory2 60 90.6 56.8 54.4 55 44.5 20.7 27.1 17.0 50 Saudi UAE Kuwait Oman Qatar Bahrain Arabia 45 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 AED 155 Bn Net Deposit Surplus as of Dec’173 Libor-Eibor spread has tightened AED B
Slide 6: Abu Dhabi – The Capital
Abu Dhabi – The Capital Umm al Quwain Ras al Khaimah Major contributor to UAE GDP1 USD 198 Bn Ajman 2016 Nominal GDP Sharjah Dubai Ajman Fujairah 4th Highest GDP per capita USD 68,3371 in the world3 (2016) ABU DHABI Highest ratings in MENA Aa2 / AA / AA Moody’s / S&P / Fitch 87% of UAE land area1 Es
Slide 7: Sound and highly capitalised banking sector
Sound and highly capitalised banking sector Key Highlights UAE Banking Sector Key Indicators2 • UAE banking sector comprises 48 banks (22 local, 26 foreign); top 4 Figures in AED Bn Dec’17 Dec’16 YoY local banks hold around 62% of system loans and deposits Total Assets, net2 2,586 2,485 4.1% • UAE C
Slide 8: Contents
Contents 01 Operating Environment 02 Introducing FAB 03 Integration Journey Q4/FY’17 Financial Review 04 Based on Pro forma financial information as of 31 December 2017 05 Appendix 8
Slide 9: Introducing FAB
Introducing FAB Result of the historic merger between two iconic Abu Dhabi-based franchises Largest bank in UAE and 2nd largest in MENA by total assets and market capitalisation Highest rated bank in MENA with Aa3/AA-/AA-1 (stable outlook) Strong liquidity profile and robust capital ratios
Slide 10: FAB at a glance
FAB at a glance 19 103 603 Overview Countries presence Branches in UAE ATMs/CDMs (ex UAE) • FAB is the result of the historic merger between two iconic Abu Dhabi based franchises (FGB and NBAD) • Largest UAE bank and 2nd largest in MENA by total assets (AED 669 Bn) and market capitalisation EUROPE &
Slide 11: FAB Share Profile
FAB Share Profile Overview Strong shareholding structure3 Mubadala • Listed on Abu Dhabi Securities Exchange (ADX) ADIC 3.7% 33.5% • Symbol: FAB • Number of shares issued: 10,898 million1 • Market cap2: AED 112 Bn (USD 30.4 Bn) • Foreign Ownership Limit: 25% Foreign (ex-GCC) 9.3% Other UAE companies
Slide 12: Leading UAE and regional bank
Leading UAE and regional bank Banking sector assets1 National FY’17 Net Profit1 Total Assets1 Equity1 Market Cap3 Credit Ratings3 (USD Bn) champion2 (USD Bn) (USD Bn) (USD Bn) (USD Bn) (Moody’s/S&P/Fitch) 734 3.0 182 27.8 30.4 Aa3 / AA- / AA- UAE 615 2.6 118 17.1 29.3 A1 / BBB+ / A- KSA 375 3.6 221
Slide 13: Prominent Board and robust governance
Prominent Board and robust governance H.H. Sheikh Tahnoon Bin Zayed Al Nahyan – Chairman National Security Advisor Chairman of Royal Group Board of Directors Photo Photo Photo Photo Photo Photo Photo H.E. Nasser H.E. Khaldoon H.E. Mohammed H.E. Mohamed H.E. Jassim H.E. Khalifa H.E. Sheikh H.E. Sheik
Slide 14: Talented and Experienced Senior Leadership
Talented and Experienced Senior Leadership Andre Sayegh Deputy Group CEO & Group Head of Corporate & Investment Abdulhamid M. Saeed Banking Group CEO Zulfiqar Hana Al Karim James PK Shirish Arif Nurendra Fadhel Al Ali Sulaiman Rostamani Karoui Burdett Medappa Bhide Shaikh Perera Group Group Chief Gr
Slide 15: Strategy built on core strengths
Strategy built on core strengths Our Vision: Creating value for our customers, employees, shareholders and communities to grow stronger through differentiation, agility and innovation. DOMINANT PERSONAL BANK IN UAE • Bank of choice across key segments in Abu Dhabi, and enhanced market share in Dubai
Slide 16: Business Segments
Business Segments CORPORATE & Segment PERSONAL BANKING SUBSIDIARIES HEAD OFFICE INVESTMENT BANKING Covers corporate and Targets retail, affluent, private Complementary offerings Centralised enablement institutional clients through banking and SME customer provided across real estate and func
Slide 17: Key financials at a glance
Key financials at a glance Balance sheet & Income Statement - Based on Pro forma Financial Information TOTAL ASSETS (AED Bn) LOANS & ADVANCES (AED Bn) CUSTOMER DEPOSITS (AED Bn) 660.4 669.0 334.4 345.2 328.3 330.5 379.2 393.9 377.3 378.9 395.8 649.1 624.6 644.1 321.3 Dec'16 Mar'17 Jun'17 Sep'17 Dec'
Slide 18: Key financials at a glance
Key financials at a glance Ratios - Based on Pro forma Financial Information COST TO INCOME RATIO-YTD (%) NIM – YTD (%) NPL RATIO (%) PROVISION COVERAGE (%) (EX-INTEGRATION COSTS) 2.55 2.46 2.48 2.51 2.49 3.2 3.0 3.1 124.6 121.8 28.3 27.2 27.5 27.6 27.7 2.7 2.6 111.6 109.0 120.1 FY'16 Q1'17 H1'17 9M
Slide 19: Contents
Contents 01 Operating Environment 02 Introducing FAB 03 Integration Journey Q4/FY’17 Financial Review 04 Based on Pro forma financial information as of 31 December 2017 05 Appendix 19
Slide 20: Integration exceeds expectations
Integration exceeds expectations All planned milestones successfully delivered in 2017 2017 2018 Q1 2019 Finalisation of organisational structure and operating model o IT system integration on track; to be completed around the end of 2018 (adequate planning, resourcing and tight risk Harmonisati
Slide 21: Integration exceeds expectations
Integration exceeds expectations Merger benefits evident since 2016 G&A expenses BAU1 In AED Mn 30.2% 29.3% 27.9% 28.6% 28.3% CI ratio1 27.0% 6,030 -5% 5,745 5,552 -8% 5,225 5,274 Cost reduction = AED 756Mn FGB 1,947 FGB 4,448 FGB 1,848 FGB 1,856 1,766 FGB 1,446 FAB NBAD NBAD NBAD 4,083 NBAD NBAD 3,
Slide 22: Integration exceeds expectations
Integration exceeds expectations Synergy financials Increasing run-rate cost synergy target In AED • Synergies significantly ahead of target in 2017 2017 2018 2019 2020 Initial phasing 25% 65% 85% 100% • IT system integration around end of 2018 to Revised phasing 33% 55% 85% 100% unlock substantial
Slide 23: Laying the right foundation for long term sustainable growth
Laying the right foundation for long term sustainable growth How we will measure our success by 2020 1 Growth-oriented culture Increased market share and share of wallet Successful execution of 2 integration plan Full realisation of run rate synergies One Bank, One brand, Infrastructure integr
Slide 24: Contents
Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment Q4/FY’17 Financial Review 04 Based on Pro forma financial information as of 31 December 2017 05 Appendix 24
Slide 25: Q4/FY'17 Key Performance Highlights
Q4/FY’17 Key Performance Highlights • Resilient performance in transitional year • Reported Net Profit at AED 10.9Bn, down 4% yoy; EPS at AED 0.96 • Adjusted Group Net Profit at AED 11.5Bn, broadly in line with 2016 • Delivering top returns for our shareholders in year 1 • Proposing cash dividends o
Slide 26: Resilient performance in transitional year
Resilient performance in transitional year Financial Highlights FY’17 vs. FY’16 In AED Mn FY’17 FY’16 YoY % • Revenue 4% lower due to softer market conditions and portfolio optimisation Revenues 19,533 20,302 -4 Operating expenses (5,875) (5,922) -1 • BAU1 Operating costs down 8% when excluding one-
Slide 27: Resilient performance in transitional year
Resilient performance in transitional year We have met or exceeded most elements of financial guidance FY’17 GUIDANCE FY’17 ACTUAL Strong business momentum in second LOAN GROWTH Low single digit negative -1% half, offset by asset optimisation and PPA adjustments Revenues impacted by margin CORE REVE
Slide 28: PPA accounting
PPA accounting Substantially complete as of 31 Dec 2017 • As per IFRS 3 and Business Combination guidelines, the Bank is required to complete a “Purchase Price Allocation” exercise in order Concept to determine the goodwill arising from the merger Post-PPA Accounting treatment of PPA • All acquired
Slide 29: Robust capital position
Robust capital position Even after PPA / FY’17 proposed dividends CET11 ratio progression • CET1 comfortably in excess of minimum requirement of 9% for 2017 even after PPA impact and FY’17 proposed 2.27% 0.13% dividends 14.8% 0.99% 0.05% 1.42% 14.5% 1.57% 12.9% • Limited RWA impact: Credit RWA optim
Slide 30: Robust capital position
Robust capital position 3 Key Highlights Strong capital ratios (Basel III) • Robust capital position with Basel III CET13 ratio at 14.5%, comfortably in excess of regulatory requirements CET1 CAR CAR • Tier 1 capital ratio at 16.7% and total CAR at 17.8% (vs 17.0% and 18.2% 17.8% 18.2% in Dec’16) 1.
Slide 31: Strong corporate loan origination in Q4; deposits higher on Govt inflows
Strong corporate loan origination in Q4; deposits higher on Govt inflows Key Highlights Loans and Advances* (AED Bn) Loans and advances* 345.2 • Loan book increased 1% qoq as strong loan origination in Q4’17 334.4 was partially offset by continued balance sheet optimisation and fair 328.3 330.5 321.
Slide 32: Strong business momentum in Q4 drives revenues higher
Strong business momentum in Q4 drives revenues higher Key Highlights Operating Income (AED Mn) • Q4’17 revenues up 10% qoq led by higher fees & commissions FY'17 FY'16 YoY % Q4'17 Q3'17 QoQ % (F&C) on strong pipeline execution, and property gains • FY’17 revenues managed at AED 19.5Bn (-4% yoy) refl
Slide 33: NIM trend reflects margin compression
NIM trend reflects margin compression and impact from placement of excess liquidity Key Highlights Net Interest Margin (%) • Group NIM: -13bps qoq and -6bps yoy reflecting margin compression and the dilutive impact of deployment of short-term Group NIM (Qtr) Group NIM (YTD) excess liquidity • Perfor
Slide 34: Strong synergy realisation drives better operating efficiency
Strong synergy realisation drives better operating efficiency Key Highlights Cost-Income Ratio (%) • Operating expenses BAU reduced 8% yoy, reflecting disciplined C/I ratio (ex-integration) cost management and realisation of substantial synergies at an increased pace C/I ratio (ex-integration and me
Slide 35: Asset & Loan Mix
Asset & Loan Mix Asset Mix Gross loans by counterparty (AED Bn) Others Cash & CB 9% Balances 347.7 345.1 21% Banking Sector Investments 16% 7% 6% DFB and Personal/Retail Sector Reverse 22% 21% AED 669.0 Bn Repos Corporate/Private Dec’17 5% Sector 53% 56% Public Sector Loans and 17% 16% Government Se
Slide 36: CoR continues to benefit from RWA optimisation
CoR continues to benefit from RWA optimisation Key Highlights Impairment Charges, net (AED Mn) & CoR • Impairment charges (net) down 10% yoy driven by lower Impairment Charges, net Cost of Risk(bps)* collective provision charges resulting from balance sheet optimisation and higher write backs 76 • N
Slide 37: Liability mix and Wholesale Funding
Liability mix and Wholesale Funding Liabilities mix Wholesale Funding (AED Bn) Dec’17 Syndicated loan 7.3 Customer Term Deposits Borrowings & Medium Term Notes/Bonds 34.8 70% AED 566.7 Bn Sub Debt Dec’17 8% Others Subordinated debt 0.4 6% Total 42.6 Due to Banks Commercial & Repos Paper 12% 4% Whole
Slide 38: Customer deposits
Customer deposits Customer deposits (AED Bn) Customer deposits by account type (AED Bn) Notice and time deposits Current Accounts CASA (%) Total Customer Deposits Saving Accounts Certificates of deposits Margin Accounts 393.9 377.3 378.9 395.8 379.2 379.2 395.8 1% 1% 7% 9% 4% 3% 25% 26% 63% 61% 29%
Slide 39: Investment breakdown
Investment breakdown Investments by type Investments by ratings A HFT - Debt 28% 17% HFT - Equity & BBB Funds 12% 1% Held to Maturity (Debt) BB & below AED 107.8 Bn AED 107.8 Bn 7% 7% Dec’17 Dec’17 Unrated – Debt AFS - Debt AFS - Equity & 2% 73% Funds Equity & Funds 2% AA 3% 35% AAA 13% Investments
Slide 40: Outlook
Outlook • Sustained global economic growth • 2-3 Fed rate hikes expected in 2018 • Expansionary budgets across the GCC supported by firming oil prices > USD 50/barrel Economy/ • UAE GDP growth to accelerate to 3.4% (vs. 1.3% in 2017) , led by Abu Dhabi recovery Banking Sector and pick up in governme
Slide 41: Financial guidance
Financial guidance 2018 FINANCIAL GUIDANCE 2020 AMBITIONS Loan Mid-single digit GROWTH Revenue Low single-digit C/I Ratio EFFICIENCY (ex-integration costs) ~26%-27% ~25% ASSET QUALITY Cost of Risk1 65-75bps Net profit growth Mid single-digit PROFITABILITY RoTE2 ~15% 16-17% >13.5% CAPITAL Basel III C
Slide 42: Contents
Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment Q4/FY’17 Financial Review 04 Based on Pro forma financial information as of 31 December 2017 05 Appendix 42
Slide 43: Q4/FY'17 Summary Financials
Q4/FY’17 Summary Financials Full Year Quarterly Income Statement - Summary (AED Mn) Note FY'17 FY'16 YoY % Q4'17 Q3'17 QoQ % Q4'16 YoY % Net interest Income a 13,106 13,550 -3 3,363 3,244 4 3,392 -1 Fees & commissions, net 3,362 3,886 -13 932 788 18 968 -4 FX and investment income, net a 2,586 2,023
Slide 44: Q4/FY'17 Summary Financials
Q4/FY’17 Summary Financials Balance Sheet - Summary (AED Bn) Note Dec'17 Dec'16 YoY % Sep'17 QoQ % Loans and advances e 330.5 334.4 -1 328.3 1 Customer deposits e 395.8 379.2 4 378.9 4 CASA (deposits) 116.0 108.5 7 112.4 3 Total Assets e 669.0 649.1 3 644.1 4 Equity (incl Tier-1 capital notes) 101.7
Slide 45: Business Performance
Business Performance Corporate & Investment Banking (CIB) 48% of Group Revenue 2016 2017 AED Bn +7% • Strong business momentum in Q4’17 led to 6% sequential growth in revenue, while FY’17 revenues were down 5% on subdued loan market -5% +0.3% and lower trade activity • Strong revenue growth was reco
Slide 46: Business Performance (continued…)
Business Performance (continued…) Subsidiaries of Group 7% Revenue 2016 2017 AED Mn AED Bn • FAB enjoys a highly diversified business model supported by -21% -9% complementary offerings provided across real estate management, +25% Islamic banking, brokerage, and credit cards through its subsidiaries
Slide 47: Prestigious awards highlight FAB's strength and industry expertise
Prestigious awards highlight FAB’s strength and industry expertise in UAE and MENA • Best Investment Bank in the • Best FX provider in UAE • Best Overall Cash Management Bank in the Middle East United Arab Emirates • Best Bank for Liquidity Management in the Middle East • Best Bank for Financing in
Slide 48: Prestigious awards highlight FAB's strength and industry expertise
Prestigious awards highlight FAB’s strength and industry expertise in UAE and MENA - Best Trade & Supply Chain - Most Outstanding Islamic Finance Solution Banking Window - UAE Asset Manager of the - Best Seamless Government Year - Digital Leader Award - Experience Government - Best Trade Finance Ban
Slide 49: Executed Landmark Transactions in 2017
Executed Landmark Transactions in 2017 DCM LCM CA/ECM Abu Dhabi Crude Oil Government of Abu Dhabi APICORP Emaar Development Dubai Metro – Saudi Electricity ADNOC Pipeline USD 10.0 bn USD 1.5 billion Department of Finance USD 1.75 billion USD 6 billion USD 3.037 bn Senior Unsecured USD 500 mn Murabah
Slide 50: Thank You!
THANK YOU! For more information, please visit www.bankfortheuae.com or contact FAB Investor Relations team [email protected] You can also download FAB’s Investor Relations App to access latest corporate updates, FAB pro forma financial information and FGB/NBAD archives 2018 Extel Investor Relations Sur
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