First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Q3 2022 Earnings Presentation
31 slides from First Abu Dhabi Bank's earnings presentation, Oct 26, 2022
Slide 1: Q3/9M'22 Earnings Presentation
Q3/9M’22 EARNINGS PRESENTATION 26 October 2022
Slide 2: Disclaimer
Disclaimer • Comparative figures have been reclassified where appropriate to conform to the presentation and accounting policies adopted in the consolidated financial statements • FAB’s Group consolidated financials include the financial performance of Bank Audi Egypt post legal day 1 on 28th April
Slide 3: Financial Review
Q3/9M’22 Financial Review James Burdett Group Chief Financial Officer Q3/9M’22 Earnings Presentation
Slide 4: Record nine month profit growth driven by strong underlying business momentum
Record nine month profit growth driven by strong underlying business momentum and strategic progress ▪ We delivered record revenue and net profit, demonstrating excellent strategic progress and the benefits of our diversified and client-centric business model Net profit 10.9 ▲ 19% AED Bn YoY (9M’21:
Slide 5: On track with FY'22 financial guidance; ahead on loan growth
On track with FY’22 financial guidance; ahead on loan growth FY’22 financial guidance 9M’22 actual Loan growth Mid to high single-digit +14% Ytd Cost of Risk <80bps 52bps Provision coverage > 90% 103% CET1 > 13.5% 13.1% (pre-dividend) Q3/9M’22 Earnings Presentation 5
Slide 6: 9M'22 net profit helped by revenue growth in rising rate environment
9M’22 net profit helped by revenue growth in rising rate environment, and lower provision charges amid economic rebound 9M’22 Summary P&L Net profit bridge (AED Mn) in AED Mn 9M’22 YoY%* +19% YoY -10% YoY on an underlying basis Net-Interest Income 10,177 18 Non-Interest Income 4,751 (35) U
Slide 7: Q3'22 underlying NPAT supported by rising interest rates and strong FX & investment income
Q3’22 underlying NPAT supported by rising interest rates and strong FX & investment income, partially offset by lower fees and higher impairments Q3’22 Summary P&L Net profit bridge (AED Mn) in AED Mn Q3’22 QoQ% YoY%* +1% QoQ +12% QoQ on an underlying basis Net-Interest Income 3,653 +8 +16 Non-Inter
Slide 8: Underlying revenue performance reflects strong levels of business activity
Underlying revenue performance reflects strong levels of business activity, interest rate tailwinds Operating income bridge (AED Mn) Net interest income bridge (AED Mn) Non-interest income bridge (AED Mn) +10% QoQ QoQ ↑8% QoQ ↑16% 3,390 +210 +20 +149 3,653 +240 +46 +9 +73 1,841 +96 +29 +222 5,494 (3
Slide 9: Balance sheet growth sustained through lending momentum and deposit inflows
Balance sheet growth sustained through lending momentum and sizeable deposit inflows; foundation remains robust across all key metrics Quarterly trend Asset Mix - Dec’21 +15%Ytd Asset Mix - Sep’22 in AED Bn Sep’22 QoQ% YoY% Ytd% (last 5 quarters) AED 1,001Bn (∆ in AED Bn) AED 1,146Bn 984 1,001 1,0
Slide 10: Double-digit NII growth reflects interest rate tailwinds, strong volumes and BAE inclusion
Double-digit NII growth reflects interest rate tailwinds, strong volumes and BAE inclusion Net interest income (AED Mn) • NII +18% in 9M’22; further benefits expected from higher Performing loan yields (%) rates (P&L impact from a +/-25bps parallel movement in Quarterly YTD QoQ ↑8% , YoY ↑16% Y
Slide 11: Underlying strength in fee-based business helps offset lower investment gains
Underlying strength in fee-based business helps partially offset lower investment gains due to exceptional trading gains in 2021 Non-interest income • Fees and commissions 9M’22 9M’21 YoY% Q3’22 Q2’22 QoQ% Q3’21 YoY% (In AED Mn) 9M’22: Broadly flat YoY, yet up +11% YoY when Non-interest income 4,751
Slide 12: Opex trend reflects strategic and digital investments, and BAE inclusion
Opex trend reflects ongoing strategic and digital investments, and impact of BAE inclusion Opex drivers YoY (AED Mn) Operating expenses trend (AED Mn) and C/I ratio (%) C/I ratio (ex-integration)2 +6% YoY 24.2 25.4 33.2 31.2 28.7 30.9 26.7 +344 QoQ ↑1%, YoY ↑1% YoY ↑8% +14 +176 +38 4,705 Ex-BAE:
Slide 13: Healthy asset quality with NPL ratio improving to 3.4%
Healthy asset quality metrics with NPL ratio improving to 3.4% on subdued gross NPL formation and write-offs; 9M’22 CoR at 52bps, well within guidance Impairment charges, net (AED Mn) & CoR1 (%) NPLs2 and ECLs3 (%) Net impairment charges CoR (L&A) (bps) Provision Coverage (%) NPL Ratio (%) NPLs (AED
Slide 14: Strong capital position despite balance sheet growth and market headwinds
Strong capital position despite balance sheet growth and market headwinds, largely offset by profit accretion and ongoing risk optimisation CET11 ratio progression 9M’22 RoRWA (%ytd) and RWAs (AED Bn) 3.6 2.8 2.3 2.3 2.5 B/S growth offset by ongoing risk Negative MTM on AFS 13.3% optimisation invest
Slide 15: FY22e loan growth revised further upwards
FY22e loan growth revised further upwards to reflect 9M’22 outperformance 2022e 9M’22 actual current guidance revised guidance Loan growth +14% Ytd High-single digit Low teens Cost of Risk 52bps < 80bps ↔ (CoR) Provision coverage ratio 103% > 90% ↔ CET1 13.1% >13.5% ↔ (pre-dividend) Q3/9M’22 Earning
Slide 16: Wrap-up
Wrap-up ▪ We delivered record revenue and net profit, demonstrated excellent progress in our strategy to drive growth across our franchise, while underlining the resilience of regional economies against an increasingly challenging global backdrop ▪ We are maintaining a robust foundation through stro
Slide 17: Appendix
Appendix Q3/9M’22 Earnings Presentation 17
Slide 18: Loan growth led by top tier clients in Other FI's, govt and services sector
Loan growth led by top tier clients in Other FI’s, govt and services sector A well diversified, high-quality loan book Gross loans trend Gross loans by counterparty Ytd movement in gross loans by counterparty AED Bn QoQ ↑1%, YoY ↑15%, Ytd ↑13% 484.5 Trade-related 0 428.8 484.5 484.5 452.7 477
Slide 19: NPLs and Loans/ECL by stage
NPLs and Loans/ECL by stage NPLs1 by segment NPLs1 by sector (%) (AED Bn) Corporate (IB + CCB) Retail (CB + PB) 5.2% Real Estate & Construction, 5.0% 4.7% 4.8% 4.8% 43% NPL ratio 3.5% 3.7% 3.5% 3.2% 3.1% 17.0 17.0 Manufacturing, 4% 16.4 16.8 16.3 AED 16.3Bn Energy, 1% 28% 28% 28% Sep’22 31% 28% Trad
Slide 20: High-quality investment book
High-quality investment book Investments by type Investments by ratings Sep’22 Dec’21 Sep’22 Sep’22 Dec’21 AED 197.6Bn AAA 22% 16% Sep’22 16% 19% AED 197.6Bn FVTPL - Debt AA 27% 27% Dec’21 FVTPL - Equity & Funds 2% 5% AED 191.0Bn A 23% 24% Amortised Cost (Debt Inv) 2% 2% BBB 7% 8% Dec’21 • 71
Slide 21: Strong growth in deposits on healthy inflows
Strong growth in deposits on healthy inflows Sequential decline in CASA on account of some migration toward time deposits Customer deposits trend Ytd movement in deposits by counterparty AED Bn QoQ ↑15%%, YoY ↑23%%, Ytd ↑21%% +90 1 +84 Total Customer Deposits CASA (23) (0) (20) 745.8 745.8 61
Slide 22: Liability mix and funding profile
Liability mix and funding profile Leading issuer in the MENA region – conventional, Sukuks and Green bonds Liability mix Medium-term wholesale funding Customer Term Borrowings & Issuances1 Maturities1 (AED Mn) Deposits, Sub Debt, 6% 72% 21,355 Others, 9% AED 18,631 USD 1,033.9Bn 17,274 16,152 Sep’22
Slide 23: Diversified Term Funding portfolio
Diversified Term Funding portfolio Frequent Issuer across multiple products, currencies and geographies Term Funding Portfolio by Type1 Term Funding Portfolio by Currency1 Asian Currency Other ex-Formosa 6% PP 11% 19% Formosa Bullet EUR 12% 10% Callable US$ Bullet CHF 36% Private USD US$ Public Plac
Slide 24: Leader in MENA Green Bond Issuance
Leader in MENA Green Bond Issuance Highlights: FAB Green Bonds Outstanding • In 2022, FAB’s Sustainable Finance Framework was updated to further align with market best practices and to expand the scope of financial products. EUR Public • The framework was developed to align with market best practice
Slide 25: Diversified franchise by business segment and geography
Diversified franchise by business segment and geography Breakdown by Business Breakdown by Geography Investment Banking Corporate & Commercial Banking Consumer Banking Global Private Banking UAE International Head Office 3 Operating Income Profit after taxes Operating Income Profit after taxes 9M’22
Slide 26: Business segments overview – IB & CCB
Business segments overview – IB & CCB Investment Banking (IB) Key highlights AED Mn 9M’22 YoY% • Operating income improved +9% QoQ driven Quarterly operating income trend (AED Bn) Loans & Deposits (AED Bn) Operating Income 6,346 (25) by robust Global Markets (GM) sales and Loans: QoQ ↓1%, Ytd ↑5% Qo
Slide 27: Business segments overview – CB & GPB
Business segments overview – CB & GPB Consumer Banking (CB) Key highlights AED Mn 9M’22 YoY% • Profitability improved 31% sequentially in Quarterly operating income trend (AED Bn) Loans & Deposits (AED Bn) Operating income 3,240 (11) Q3’22 and 9% year-on-year in 9M’22 driven by Loans: QoQ ↔, Ytd ↑5%
Slide 28: International – financial overview
International – financial overview International International 9M’22 YoY%* (AED Mn) Key highlights Quarterly operating income trend (AED Mn) Operating Income • 9M’22 operating income improved +18% YoY driven by (BAE: 733) 3,232 18 the inclusion of Bank Audi Egypt, and complemented by QoQ ↑4%, YoY ↑1
Slide 29: Q3/9M'22 financial highlights – Group financials
Q3/9M’22 financial highlights – Group financials Income Statement - Summary (AED Mn) Q3’22 Q2’22 QoQ % Q3’21 YoY % 9M’22 9M’21 YoY% Net interest Income 3,653 3,390 8 3,141 16 10,177 8,622 18 Non- interest Income 1,841 1,587 16 3,270 (44) 4,751 7,363 (35) Operating Income 5,494 4,977 10 6,411 (14) 14
Slide 30: Q3/9M'22 financial highlights – Segmental
Q3/9M’22 financial highlights – Segmental 9M'22 AED Mn Q3'22 Q2'22 QoQ % Q3'21 YoY % 9M'22 9M'21 YoY % Contr% Operating income 5,494 4,977 10 6,411 (14) 14,929 15,986 (7) 100% Investment banking (IB) 2,337 2,135 9 3,643 (36) 6,346 8,453 (25) 43% Corporate & Commercial banking (CCB) 1,300 1,204 8 933
Slide 31: Thank You!
THANK YOU! For more information, please visit www.bankfab.com or contact FAB Investor Relations team at ir@bankfab.com You can also download FAB’s Investor Relations App from App Store /Google Play Scan to download this presentation to access latest corporate updates Click on the images below to acc