First Abu Dhabi Bank · ADX:FAB

First Abu Dhabi Bank — National Bank of Abu Dhabi — Q2 2016 Earnings Presentation

53 slides from First Abu Dhabi Bank's earnings presentation, June 2016

  1. Slide 1: Investor Presentation

    Investor Presentation June 2016 1

  2. Slide 2: Disclaimer

    Disclaimer The information contained herein has been prepared by National Bank of Abu Dhabi P.J.S.C (“NBAD”). NBAD relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. This presentation has been prepared for information purposes onl

  3. Slide 3: Contents

    Contents  UAE, Abu Dhabi & Banking Sector  NBAD Overview  Strategy  Executive Summary – 2Q / 1H 2016  Financial Review – 2Q / 1H 2016  Appendix 33

  4. Slide 4: UAE Economic Overview

    UAE Economic Overview UAE Debt vs GDP1 Per cent (%) • The United Arab Emirates comprises seven Emirates with Abu Dhabi being the largest contributor to its GDP • Rating: Aa2*- by Moody’s (unsolicited) 26.2% 25.3% 26.0% • Nominal GDP for 2015 estimated at USD 339.1bn, making it the 22.5% 23.6% 23.1%

  5. Slide 5: Abu Dhabi – The Capital

    Abu Dhabi – The Capital Abu Dhabi Key Economic Indicators Credit Rating Aa2 (Moody’s) / AA (S&P) / AA (Fitch) Abu Dhabi’s rating is supported by several factors (i) the prodigious strength of the government's balance sheet with little direct or explicitly guaranteed Size Abu Dhabi accounts for 87% o

  6. Slide 6: The UAE Banking Sector

    The UAE Banking Sector UAE Banking System Key Indicators1 USD Bn Total Assets Deposits Loans & Advances • As at 31 Dec 2015 there were a total of 49 banks (23 locally incorporated banks and 26 foreign banks)1 • 8 Islamic banks 674 • Strong capitalisation driven by cautious lending and healthy 628 57

  7. Slide 7: Contents

    Contents  UAE, Abu Dhabi & Banking Sector  NBAD Overview  Strategy  Executive Summary – 2Q / 1H 2016  Financial Review – 2Q / 1H 2016  Appendix 77

  8. Slide 8: NBAD at a Glance (1/2)

    NBAD at a Glance (1/2)  Banker to the Abu Dhabi Government  70% owned by the Government of Abu Dhabi through ADIC (Abu Dhabi Investment Council) Strongest ratings of any bank in the Middle East & Emerging Markets at Aa3/AA-/AA-  - ‘Safest Bank in the Middle East & Emerging Markets’*  Largest ban

  9. Slide 9: NBAD at a Glance (2/2)

    NBAD at a Glance (2/2) Overview  Incorporated in 1968 to serve as Banker to the Emirate of Abu Ras al-Khaimah Dhabi Umm al-Quwain  Owned 70%1 by Government of Abu Dhabi, via the Abu Dhabi Ajman Fujairah Investment Council (ADIC) Sharjah  Listed on Abu Dhabi Securities Exchange (ADX) Dubai Credit

  10. Slide 10: A Strong Track Record of Financial Performance

    A Strong Track Record of Financial Performance Assets Non Performing Loans & Provisions Revenues & Cost-to-income ratio (AED bn) (AED bn) 113% 407 3.40% 38.7% 376 3.16% 3.07% 2.94% 2.76% 33.1% 34.5% 35.5% 325 30.5% 32.5% 301 2.30% 108% 256 105% 211 105% 9.4 10.4 10.6 99% 7.9 8.7 7.2 95% 2010 2011 20

  11. Slide 11: Contents

    Contents  UAE, Abu Dhabi & Banking Sector  NBAD Overview  Strategy  Executive Summary – 2Q / 1H 2016  Financial Review – 2Q / 1H 2016  Appendix 1111

  12. Slide 12: Our mission to be core to our chosen customers

    Our mission to be core to our chosen customers To be recognised as the Vision World’s Best Arab Bank Mission Be core to our chosen customers, helping them grow by providing exceptional products and services across our West-East Corridor and provide an environment to attract and develop exceptional a

  13. Slide 13: Geographical Pillars of our Strategy

    4 Geographical Pillars of our Strategy Vision: To be recognised as the World’s Best Arab Bank to be achieved around four pillars… 3 New Franchise 2 Markets Wholesale / Wealth 1 Network Markets Build 5 international bank Home Market Deepen our network franchises in the largest and fastest growing acr

  14. Slide 14: Banking the West-East corridor

    Banking the West-East corridor Moscow London Paris Beijing Seoul Xi’an Tokyo New York Istanbul Chongqing Osaka-kobe Lahore Tianjin Los Angeles Tehran Chengdu Shanghai Cairo Karachi Delhi Wukan Hangzhou Mexico city Ahmedabad Dhaka Guangzhou Kolkata Mumbai Shenzhen/Hong Kong Lagos Hyderabad Manila Bog

  15. Slide 15: Key industry sectors aligned to our network markets strategy

    Key industry sectors aligned to our network markets strategy Key sectors Why is it an opportunity? Illustrations  Significant and fastest growing segment globally Financial  40% contributor to the global Wholesale bank and the biggest Institutions volume segment in flow products  Controls 70% of

  16. Slide 16: Originate to distribute model

    We will increasingly utilise an ‘originate to distribute’ model Originate from Customers Distribute to Customers Government of Abu Dhabi Financial institutions Financial institutions Hedge funds On and off balance Energy and resources sheet Pension funds and Insurance  Primary distribution Aviation

  17. Slide 17: Wholesale banking model aligning to West-East corridor

    Wholesale banking model aligning to West-East corridor Customer geographies Banking hubs1 Centers of excellence Operating centers Key industry sectors The Gulf/Middle East Abu Dhabi  Financial institutions (Singapore)  Energy and resources (Abu Dhabi) Indian sub-continent Mumbai  Aviation, rail a

  18. Slide 18: Contents

    Contents  UAE, Abu Dhabi & Banking Sector  NBAD Overview  Strategy  Executive Summary – 2Q / 1H 2016  Financial Review – 2Q / 1H 2016  Appendix 1818

  19. Slide 19: Transformational Strategy is Working

    Transformational Strategy is Working Executive Summary Strong Core growth driven by strategic businesses • Underlying revenues up 7% YoY • Double-digit growth in Retail lending maintained Diversification of revenues continues in 2Q’16 • Non-interest income ratio in Global Wholesale at 40% in 2Q’16 (

  20. Slide 20: Strong underlying quarterly revenue growth continues

    Strong underlying quarterly revenue growth continues Gap between reported & core is reducing AED Mn Quarterly Revenue trend 2,757 2,684 2,718 2,759 CAGR 2,655 2,580 2,570 2,597 2,557 Reported +4% 2,509 2,730 2,650 Core +8% 2,544 2,522 2,556 2,434 2,478 2,387 2,399 2,278 Reported Core Quarterly Opera

  21. Slide 21: Evolving revenue mix underpins progress of transformation

    Evolving revenue mix underpins successful progress of transformation and strategy Revenue Mix (%) Wealth Other Investment gains & 7% 12% interest 20% 19% 8% Private Banking & 10% Wealth Products 11% 8% 10% 8% 22% Pillar-2 Non-lending 6% 6% 11% (Mkt sales, DCM & Advisory) 13% 11% 7% Trade & Cash 9% W

  22. Slide 22: Global Retail & Commercial: Increasing market share

    Global Retail & Commercial Increasing market share … Outperforming peers … Growth in numbers … Double-digit GRC 15% Retail Customer 29% Growth + 96,100 revenue growth CAGR since 2014 (2013-1H’16) Online Banking 1.7x Double-digit retail lending growth 17% CAGR since 2014 # Transactions + 340,000 (201

  23. Slide 23: Global Wholesale: Transforming to Originate to Distribute model

    Global Wholesale Transforming from a lending-led to Originate to Distribute model Strong revenue growth across strategic flow businesses … DO&D’s GCC League Table Rankings CAGR since 2014 Loans #6 → #1 2013 1H’16 Debt Origination & Distribution 71% Bonds & Sukuk #6 → #1 Global Transaction Banking 13

  24. Slide 24: Building the 'spine' for a scalable & sustainable Bank

    Enablement Building the ‘spine’ for a scalable & sustainable Bank Nawat  Fast-paced transformation of  Trade Finance Operations on track; most Sustain (completed)  Personal loans targeted for completion by end-  Credit Card Issuance 2016 Implement Systems & IT infrastructure  Retail online bank

  25. Slide 25: Investing now to build a sustainable bank for years to come

    Investing now to build a sustainable bank for years to come… ‘Bad’ costs out, ‘Good’ costs in Quarterly expenses broadly flat across last 6 quarters; YoY JAWS turns positive Operating expenses (AEDm) 1,110 1,014 1,017 1,039 1,012 1,008 1,009 930 867 Continuing to invest, but funded through cost effi

  26. Slide 26: FGB-NBAD Merger Update

    FGB-NBAD Merger Update Progress since merger announcement Timeline • Zulfiqar Ali Sulaiman, currently COO of FGB, Q3 / Q4 2016 appointed as Chief Integration Officer • Distribution of the shareholder circular on the • Initial meetings between CEO designate, proposed merger Abdulhamid Saeed, and the

  27. Slide 27: Contents

    Contents  UAE, Abu Dhabi & Banking Sector  NBAD Overview  Strategy  Executive Summary – 2Q / 1H 2016  Financial Review – 2Q / 1H 2016  Appendix 2727

  28. Slide 28: Quality result from a transforming, growing business franchise

    Quality result from a transforming, growing business franchise  Good revenue growth in targeted areas  Efficiency gains keeping costs flat  Lower collective provisions from balance sheet optimisation o Offset by: • Headwind from lower AFS gains, which we are now nearly through • Provisions in Com

  29. Slide 29: Strategic investments driving continued growth

    Strategic investments driving continued growth In 2Q & 1H 2016, our core business continued to deliver Strong underlying growth Year-over-Year in 2Q & 1H’16 strong underlying revenue growth of 7%* YoY Revenue (AEDbn) YTD ↔ vs 2Q’15 +2% vs 1Q’16 +4% UAE Retail & Commercial revenues +21% YoY in 2Q, ou

  30. Slide 30: YoY JAWS turns positive; NPAT impacted by higher provisioning

    YoY JAWS turns positive; NPAT impacted by higher provisioning Continued disciplined expense management Sequential growth kept relatively flat for last 6 quarters • Flat past 6 quarters Expenses (AEDbn) YTD ↔ vs 2Q’15 ↔ vs 1Q’16 ↔ On track to deliver positive JAWS for FY16 1.01 1.01 1.02 1.04 1.01 1.

  31. Slide 31: Continuing to maintain strong liquidity & robust capital

    Continuing to maintain strong liquidity & robust capital Reported NPAT down 8% YTD, but up 8% QoQ Net profit • Impacted by AFS gains and 1-off items NPAT (AEDbn) YTD -8% vs 2Q’15 -5% vs 1Q’16 +8% • Underlying net profits up 6% YoY* in 2Q • RoE improved to 13.0% for 2Q’16 1.42 1.45 1.33 1.38 1.27 1.0

  32. Slide 32: Core income continues to grow

    Core income continues to grow Gap between reported & core has reduced AED Mn Quarterly trend 2,757 2,718 2,759 2,684 2,655 2,580 2,570 2,597 2,557 2,509 2,730 2,650 2,544 2,522 2,556 2,434 2,478 2,387 2,399 2,278 1,410 1,428 1,372 1,423 1,446 1,376 1,370 1,326 1,271 1,036 1,347 1,235 1,217 1,272 1,2

  33. Slide 33: Global Wholesale Banking

    Global Wholesale Banking Growth momentum across strategic flow businesses and lower provisions Continued growth across strategic businesses … Strategic businesses counter declining traditional revenues Global Transaction Debt Origination & Global Market Revenue (AEDbn) YTD +1% vs 2Q’15 +5% Banking D

  34. Slide 34: Global Retail & Commercial

    Global Retail & Commercial UAE Retail outperforms, while Commercial continues to face challenges Strong revenue growth as investment in retail Customer centric approach drives revenue growth … transformation paying off Revenue (AEDbn) YTD +18% vs 2Q’15 +15% vs 1Q’16 +3% • Retail revenue growth +18%

  35. Slide 35: Global Wealth

    Global Wealth Underlying growth in Private Bank offset by market headwinds Underlying revenue growth in Global Private Banking Significantly impacted by market headwinds offset by market headwinds Revenue (AEDm) YTD -15% vs 2Q’15 -20% vs 1Q’16 +4% • Impacted by FX depreciation and lower interest in

  36. Slide 36: International business remains a key differentiator

    International business remains a key differentiator … … significant contributor towards liquidity + enhancing diversification Continues to be a competitive advantage International: key liquidity contributor • For client proposition – FX deals, DCM, Cash mgmt Deposits (AED bn) • Key source of liquidi

  37. Slide 37: Asset quality remains strong; impairment charges

    SME’s (program lending) portfolio drives increase in impairment charges Asset quality remains strong; cost of risk moderately higher in 2016 vs 2015 NPL coverage remains over 100%; target > 100% Impairment charges Impairment Charges, net… YTD +76% vs 2Q’15 +79% vs 1Q’16 +1% CoR% (gross loans net of

  38. Slide 38: Continued strong balance sheet

    Continued strong balance sheet Positive momentum in loans and deposits in 2Q’16 Lending picks up in 2Q’16 Strong credit ratings maintained Loans (AEDb) Growth YTD -1% / YoY -7% / vs 1Q +2% Loan growth +2% in 2Q’16 218 Growth in Retail lending continued; encouraging signs of 212 206 203 demand in Glo

  39. Slide 39: Maintaining robust capital position

    Maintaining robust capital position ... … while RoE picks up in 2Q’16 on growth in revenues Capital ratios remain strong Maintaining strong capital ratios • Balance sheet optimisation moderating RWA growth, Tier 1 CAR delivering capital benefits 16.6% 16.5% 16.7% 16.4% • Focused on internal capital

  40. Slide 40: Financial guidance remains unchanged for 2016

    Financial guidance remains unchanged for 2016  Low single-digit revenue and earnings growth; core growth stronger  Neutral to positive JAWS  Tier-I capital above 15%  Loans to Deposit ratio target below 95% CoR – gradually increase – around 55bps  NPL ratio around 3% levels Provision coverage –

  41. Slide 41: Contents

    Contents  UAE, Abu Dhabi & Banking Sector  NBAD Overview  Strategy  Executive Summary – 2Q / 1H 2016  Financial Review – 2Q / 1H 2016  Appendix 4141

  42. Slide 42: Operating Income

    Operating Income Operating Income / Revenues AED Mn Non-interest Income AED Mn Non-Interest Income vs 2Q’15 +2% Other income vs 2Q’15 +5% YTD ↔ YTD -2% Net Interest Income vs 1Q’16 +4% FX & Investment income vs 1Q’16 +13% 5,402 5,409 Fees & comissions 1,773 2,718 2,650 2,759 922 1,742 2,597 2,557 87

  43. Slide 43: Expenses & Operating Profits

    Expenses & Operating Profits Operating Expenses AED Mn Cost-Income ratio (YTD) Per cent (%) Staff costs Others vs 2Q’15 ↔ YTD ↔ vs 1Q’16 ↔ 38.7% 37.8% 37.5% 38.1% 38.0% 37.3% 1,012 1,017 1,039 1,008 1,009 2,026 2,017 32% 31% 31% 35% 31% 31% 31% 69% 68% 65% 69% 69% 69% 69% 2Q'15 3Q'15 4Q'15 1Q'16 2Q'

  44. Slide 44: Impairment Charges & Asset Quality

    Impairment Charges & Asset Quality Impairment Charges, net AED Mn Cost of Risk (YTD) Per cent (%) Collective prov charges vs 2Q’15 +79% CoR(ytd) as % of Op Profits YTD +76% Specific prov charges & Others vs 1Q’16 +1% CoR (ytd) as % of gross loans 18.0% 17.5% 436 593 14.6% 295 298 10.2% 10.0% 10.2% 1

  45. Slide 45: Assets & Liquidity

    Assets & Liquidity Assets AED Bn Asset Mix Per cent (%) Growth YTD +3% / YoY +7% / vs 1Q +5% Investments DFB & 21% Reverse repos 7% Cash & 1H’16 balances with 400 405 407 400 419 Loans 393 AED 419bn CentralBanks 48% 17% Fixed & Other assets 1Q'15 1H'15 9M'15 FY'15 1Q'16 1H'16 7% Risk Weighted Assets

  46. Slide 46: Investments

    Investments Investments AED Bn Investments by Issuer AED Bn HFT - Debt Growth Corporate/ YTD +13% Banks AFS - Debt 16% Pvt Sector YoY +21% 24% 74% HFT - Equity QoQ +3% Covered 6% & Funds Bonds Supranatl 1H’16 2% 7% 1H’16 2% AED 86bn Held to AED 86bn Sovereign Maturity Guaranteed Sovereign AFS - Equi

  47. Slide 47: Loans and Advances

    Loans and Advances Loans & advances, net AED Bn Gross loans by customer type AED Bn Growth YTD -1% / YoY -7% / vs 1Q +2% 210 Govt 213 11% 8% Public Sector 17% 18% Corp/Pvt 218 42% 43% 200 212 206 200 203 Personal/ Retail 30% 31% Banks 1Q'15 1H'15 9M'15 FY'15 1Q'16 1H'16 2015 1H'16 Gross loans by ind

  48. Slide 48: Funding Profile

    Funding Profile Funding Mix AED Bn Term borrowings 7% Subdebt 0% Customer Other deposits 1H’16 liabilities 65% AED 376bn 10% Due to banks & Repos 18% MTNs / MTBs maturity profile AED Bn Subdebt maturity & Perpetuals AED Bn MTNs MTBs (revolving) Perpetuals include: • AED 4bn Govt of Abu Dhabi Tier-I

  49. Slide 49: Customer accounts & other deposits

    Customer accounts & other deposits Customer A/Cs & other deposits AED Bn Customer A/Cs & other deposits by sector AED Bn Growth YTD +4% / YoY +6% / vs 1Q +4% 243 Govt 234 10% 10% Public Sector 28% 24% Corp/Pvt 250 230 235 234 233 243 27% 29% Retail 21% 22% 18% CDs 11% 1Q'15 1H'15 9M'15 FY'15 1Q'16 1

  50. Slide 50: 2Q/1H'16 Financial Performance at a Glance

    2Q/1H’16 Financial Performance at a Glance Income Statement - Summary Quarterly Year-to-date (in AED million) 2Q 2016 1Q 2016 2Q 2015 QoQ % YoY % 1H 2016 1H 2015 YoY % Net interest income 1,837 1,831 1,840 0.3 -0.2 3,668 3,629 1.1 (incl net income from Islamic financing) Non-interest income 922 819

  51. Slide 51: 2Q/1H'16 Financial Performance at a Glance (cont'd)

    2Q/1H’16 Financial Performance at a Glance (cont’d…) Revenues by Business Quarterly Year-to-date (in AED million) 2Q 2016 1Q 2016 2Q 2015 QoQ % YoY % 1H 2016 1H 2015 YoY % Global Wholesale (GWB) # 1,342 1,315 1,272 2.0 5.5 2,656 2,643 0.5 Global Retail & Commercial (GRC) # 1,177 1,138 1,023 3.5 15.1

  52. Slide 52: Corporate Access Links

    Corporate Access Links Corporate Headquarters: One NBAD Tower, Sheikh Khalifa St PO Box 4, Abu Dhabi, UAE Tel : +971-2-6111111 Fax : +971-2-6273170 Website : www.nbad.com [email protected] For information and updates on NBAD-FGB Merger, please visit BankfortheUAE.com Michael Miller Head – I

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