First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — FY2018 Earnings Presentation
26 slides from First Abu Dhabi Bank's earnings presentation, Jan 31, 2019
Slide 1: Q4/FY'18 Earnings Presentation
Proud Partner Q4/FY’18 EARNINGS PRESENTATION 31 January, 2019
Slide 2: Disclaimer
Disclaimer Please note that FAB pro forma consolidated financials as at 31 December 2018 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 pres
Slide 3: Q4/FY'18 Key Performance Highlights
Q4/FY’18 Key Performance Highlights • Strong set of results in second year post-merger • FY’18 Net Profit up 10% yoy, meeting upper end of target range • Healthy underlying revenue growth, considering one-offs in 2017 • Continuing to maximise shareholder returns • Proposed DPS of 74 fils (vs. 70 fil
Slide 4: Strong set of results in second year post-merger
Strong set of results in second year post-merger FY’18 Financial Highlights P&L summary In AED Mn FY’18 FY’17 YoY % Revenues 19,446 19,533 (0) • Net profit up 10% yoy; EPS +10%, proposed DPS +6% Operating expenses (5,329) (5,875) (9) • Operating income broadly in line with 2017 revenue which BAU1 co
Slide 5: Net profit growth at upper end of target range
Strong set of results in second year post-merger Net profit growth at upper end of target range 2018 GUIDANCE 2018 ACTUAL Loan High single-digit +7% yoy GROWTH Broadly flat Revenue Low single-digit +3% yoy on underlying basis EFFICIENCY C/I Ratio ~25-26% 25.9% (ex-integration costs) ASSET QUALITY Co
Slide 6: Continuing to maximise shareholder returns
Continuing to maximise shareholder returns Proposed FY’18 cash dividends 6% higher yoy • Proposed dividend1 per share: 74 fils, +6% yoy • Dividend yield2: 5.2% • Record total cash dividends3: AED 8.0 Billion In AED Bn +6% 8.0 7.6 6.8 6.8 5.8 NBAD NBAD 4.7 NBAD 2.3 2.3 3.9 1.9 NBAD FAB NBAD 1.7 FAB 1
Slide 7: Reflecting on a successful journey
Reflecting on a successful journey 3rd Jul 2016 2nd Apr 2017 3rd Dec 2018 Merger Legal merger Unification of legacy systems announcement completion Final milestone of UAE integration journey Network and Ongoing Finalisation of Strategic Strong focus on organisation channels alignment of network opti
Slide 8: BAU costs at 6-year low
BAU costs at 6-year low Cost reduction since 2015 reflects substantial merger benefits G&A expenses BAU1 AED Mn 30.2% 29.3% 28.6% 28.3% 27.9% 27.0% Adjusted Cost-Income ratio1 6,030 25.0% 5,745 5,552 5,225 5,264 -8% AED 1.2Bn FGB 4,852 1,947 FGB 4,448 FGB 1,848 FGB 1,856 1,766 FGB 1,446 FAB FAB NBAD
Slide 9: On track to meet 2020 run-rate target; one-off integration cost guidance revised downward
On track to meet 2020 run-rate target; one-off integration cost guidance revised downward Cost synergies • ~AED 1.1Bn cost synergies achieved to-date, that is ~75% of 2020 run-rate target 2017 2018 2019 2020 Previous Phasing 33% 65% 85% 100% • On track to meet 2020 target; 19e phasing slightly revis
Slide 10: Strong lending momentum in 2018
Strong lending momentum in 2018 Key highlights Loans and advances (AED Bn) QoQ ↔, YoY↑7% • Loans and advances increased 7% yoy, primarily driven by healthy growth in CIB across Asia-Pacific, MENA and UAE, while 353.8 353.2 selective growth in Personal Banking was offset by risk 344.7 optimisation 33
Slide 11: NII/NIM trend
NII/NIM trend: volume growth and rate hikes offset by margin contraction, excess short-term liquidity placements Key highlights • Net Interest Income (NII) broadly flat yoy as strong business Quarterly YTD volumes and rate hike benefits were offset by competitive Net interest margin (%) pricing, ris
Slide 12: Strength in unfunded income, despite softer Q4
Strength in unfunded income, despite softer Q4 Fees & commissions, net (AED Mn) QoQ ↓1%, YoY↓15% Ytd↑1% • Fees and commissions (net) grew 1% yoy, on the back of 3,362 3,392 higher income from trade finance, LCM and DCM, partially 932 934 861 805 793 offsetting lower fees in Personal Banking due to r
Slide 13: Industry-leading cost efficiency
Industry-leading cost efficiency Key highlights Movement in operating expenses (AED Mn) • Headline operating expenses reduced by 9% yoy (↓8% BAU), reflecting cost synergy momentum • BAU costs up 4% sequentially in Q4’18 as cost savings were offset by ( 255 ) ( 177 ) ( 114 ) new costs (incl. key hire
Slide 14: Healthy credit risk metrics
Healthy credit risk metrics Key highlights1 Impairment charges, net (AED Mn) & CoR1,4 • Impairment charges (net) for FY’18 down 28% yoy reflecting healthy Net impairment chrgs (L&A) Net impairment chrgs (Others) asset quality, adequate provisions post IFRS9 implementation and CoR (L&A) (bps) PPA, an
Slide 15: Robust capital position
Robust capital position CET11 ratio progression Minimum UAE CB Basel III requirement • CET11 (post IFRS9 impact) improved yoy 14.4% on the back of internal capital generation, 13.8% 14.0% 2.47% 12.4% RWA optimisation 0.63% 0.45% 1.57% >13% 1.64% • CET1 post proposed dividend is above 0.21% guidance
Slide 16: 2019 outlook and guidance
2019 outlook and guidance Economy to gather Our strategic priorities 2019 financial guidance momentum… • UAE real GDP growth to pick- Loan growth High single digit up to +3.2% (vs. 2.9% in 2018) Deliver disciplined and • Modestly higher oil output balanced growth Revenue and stabilized oil price Mid
Slide 17: Appendix
Jol paboty sronger FAB First Abu Dhabi Bank APPENDIX
Slide 18: Q4/FY'18 Summary Financials
Q4/FY’18 Summary Financials Income Statement - Summary (AED Mn) Note Q4'18 Q3'18 QoQ % Q4'17 YoY % FY'18 FY'17 YoY % Net interest Income 3,271 3,263 0 3,363 (3) 13,026 13,106 (1) Fees & commissions, net 793 805 (1) 932 (15) 3,392 3,362 1 FX and investment income, net 804 738 9 464 73 2,869 2,586 11
Slide 19: Q4/FY'18 Summary Financials
Q4/FY’18 Summary Financials Balance Sheet - Summary (AED Bn) Note Dec'18 Sep'18 QoQ % Dec'17 YoY % Loans and advances, net 353 354 (0) 330 7 Customer deposits 465 455 2 396 18 CASA (deposits) b 159 155 2 150 6 Total Assets 744 732 2 669 11 Equity (incl Tier 1 capital notes) 102 100 2 102 (0) Tangibl
Slide 20: Segmental Performance (by business)
Segmental Performance (by business) Corporate & Investment Banking (CIB) of Group 51% Revenue In AED Mn FY’18 YoY % • CIB Revenue up 10% against a strong comparative period in 2017, which included Revenues 9,909 10 opportunistic investment gains, with broad-based growth across key products: › Global
Slide 21: Segmental Performance (by geography)
Segmental Performance (by geography) UAE of Group 87% Revenue In AED Mn FY’18 YoY % Revenues 16,851 (1) • Solid UAE profitability yoy, on the back of strong business momentum, continued synergy realization and a significant reduction in net impairment charges Operating expenses (4,381) (13) • Operat
Slide 22: Asset & Loan Mix
Asset & Loan Mix Asset Mix Gross loans by counterparty (AED Bn) Others 9% 367.1 345.1 Banking Sector Investments Cash & CB 14% Balances 6% 8% Personal/Retail Sector 25% 21% 18% AED 744.1Bn Corporate/Private Dec’18 DFB and Sector Reverse 56% 55% Repos Public Sector 5% 16% 17% Government Sector Loans
Slide 23: Investments breakdown
Investments1 breakdown Investments by type Investments by ratings A HFT - Debt 31% BBB 11% 10% HFT - Equity & Funds 3% BB & below AED 105.1Bn Held to Maturity AED 105.1Bn 8% AFS - Debt Dec’18 (Debt) Dec’18 80% Unrated - Debt 5% 3% AFS - Equity & Funds Equity & Funds AA 1% 3% 32% AAA 13% Investments
Slide 24: Customer deposits
Customer deposits Customer deposits (AED Bn) Customer deposits by account type (AED Bn) Total Customer Deposits CASA Notice and time deposits Current Accounts 2 Saving Accounts Certificates of deposits Margin Accounts 465.5 404.0 431.3 455.3 465.5 395.8 395.8 1% 1% 9% 7% 3% 2% 35% 32% 38% 41% 34% 34
Slide 25: Liability mix and Wholesale Funding
Liability mix and Wholesale Funding Liabilities mix Wholesale funding (AED Bn) Dec’18 Customer Deposits 72% Syndicated loan 5.5 Term Borrowings & Sub Medium Term Notes/Bonds 34.4 AED 642.1Bn Debt Dec’18 7% Sukuk 2.4 Others 6% Subordinated debt 0.4 Due to Banks & Repos Commercial Paper 12% Total 42.7
Slide 26: Thank You!
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