First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Investor Presentation (June 2018)
45 slides from First Abu Dhabi Bank's investor presentation, June 2018
Slide 1: Investor Presentation June 2018
INVESTOR PRESENTATION June 2018
Slide 2: Disclaimer
Disclaimer Please note that FAB pro forma consolidated financials at 31 March 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 presentati
Slide 3: Introducing FAB: This is our story
Introducing FAB The merger of two successful banks has created a new entity with the financial strength, expanded expertise and global network to drive growth in the UAE’s economy and the Middle East, while also opening up international growth opportunities to become the financial powerhouse of the
Slide 4: FAB at a glance
FAB at a glance 19 89 584 Countries presence Branches/ Cash offices ATMs/CDMs Overview (ex UAE) in UAE Middle East & • FAB is the result of the historic merger between two Africa (MEA) iconic Abu Dhabi based franchises (FGB and NBAD) UAE Lebanon • Largest UAE bank and 2nd largest in MENA by total Ba
Slide 5: FAB Share Profile
FAB Share Profile Overview Strong shareholding structure3 • Listed on Abu Dhabi Securities Exchange (ADX) Mubadala 4 ADIC 4 3.7% • Symbol: FAB 33.5% • Number of shares issued: 10,898 million1 • Market cap2: AED 128 Bn (USD 34.7 Bn) • Foreign Ownership Limit: 25% Foreign (ex-GCC) 9.6% Other UAE compa
Slide 6: Leading UAE and regional bank
Leading UAE and regional bank FY’17 Banking sector assets1 National 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) 733 3.0 182 27.8 34.7 Aa3 / AA- / AA- UAE 615 2.6 118 17.1 34.6 A1 / BBB+ / A- KSA 375 3.6 221
Slide 7: 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 H.E. Nasser H.E. Khaldoon H.E. Mohammed H.E. Mohamed H.E. Jassim H.E. Khalifa H.E. Sheikh H.E. Sheikh Ahmed Khalifa Al Thani Al- Saif Al Suwai
Slide 8: Strategy built on core strengths
Strategy built on core strengths Our vision 8
Slide 9: 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 10: 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) 677.8 345.2 338.2 393.9 395.8 404.0 660.4 644.1 669.0 321.3 328.3 330.5 377.3 378.9 624.6 Mar'17 Jun'17 Sep'17 Dec'17 Mar'
Slide 11: Key financials at a glance: Ratios
Key financials at a glance Ratios - Based on Pro forma Financial Information COST TO INCOME RATIO-YTD (%) NIM – YTD (%) NPL RATIO1 (%) PROVISION COVERAGE1 (%) (EX-INTEGRATION COSTS) 2.45 2.47 2.50 2.48 2.49 3.2 3.0 3.1 3.1 27.2 27.5 27.6 27.7 25.8 2.6 122 120 127 112 109 Q1'17 H1'17 9M'17 FY'17 Q1'1
Slide 12: Integration progress has exceeded expectations
Integration progress has exceeded 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 by the end of 2018 (adequate planning, resourcing and tight risk H
Slide 13: Integration progress: merger benefits since 2016
Integration progress has exceeded 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 4,08
Slide 14: Integration progress: synergy financials
Integration progress has exceeded expectations Synergy financials1 Run-rate cost synergy target increased In AED • Synergies significantly ahead of target in 2017 2017 2018 2019 2020 Initial phasing 25% 65% 85% 100% • IT system integration by the end of 2018 to Revised phasing 33% 55% 85% 100% unloc
Slide 15: 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 16: UAE Economic Overview
UAE Economic Overview 2nd largest economy in GCC USD 412 Bn 2018f Nominal GDP3 UAE 6th largest oil reserves ~95 Bn boe1 0.5% 2.0% +5.6% On path to strong recovery 2017e 2018f Increase in 2018 Real GDP Growth3 Federal Budget4 UAE federation established in 1971 Comprising 7 Emirates Diversified and
Slide 17: Other Macro Indicators
Other Macro Indicators 2018f Debt/GDP1 (%) UAE PMI in Expansionary Territory2 60.0 94.9 55.1 55.4 55.0 46.8 26.7 19.0 20.0 50.0 UAE Saudi Kuwait Oman Qatar Bahrain Arabia 45.0 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 AED 176 Bn Net Deposit Surplus as of Mar’183 Libor-Eibor spread AED Bn 200
Slide 18: 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 world2 (2016) ABU DHABI Highest ratings in MENA Aa2 / AA / AA Moody’s / S&P / Fitch 87% of UAE land area1 Ke
Slide 19: Sound and highly capitalised banking sector
Sound and highly capitalised banking sector Key Highlights UAE Banking Sector Key Indicators2 UAE banking sector comprises 22 local and 27 foreign banks Figures in AED Bn Mar’18 YTD YoY Latest regulatory developments: Total Assets, net2 2,597 0.5% 3.5% • UAE CB introduced in May 2015 a glide path on
Slide 20: Q1’18 Key Performance Highlights
Q1’18 Key Performance Highlights • 2018 off to a solid start • Improved profitability and returns both sequentially and yoy • Healthy business momentum supports operating performance • Integration journey and key strategic initiatives firmly on track • Synergy momentum continues - IT integration to
Slide 21: 2018 off to a solid start
2018 off to a solid start … Financial highlights Q1’18 P&L summary In AED Mn Q1’18 Q4’17 QoQ % Q1’17 YoY % • Operating income down qoq and yoy primarily due to material extraordinary revenue items realised in prior Revenues 4,871 5,049 (4) 5,188 (6) periods (investment and property-related) which we
Slide 22: 2018 off to a solid start: adjusted net profit
2018 off to a solid start … In AED Mn Reported Group net profit 2,926 2,562 2,605 2,822 2,998 Less: Material extraordinary revenue items ~400 - - ~180 - Add: One-off integration costs 104 91 70 198 70 Add: Amortisation of merger-related - - - 138 44 intangibles Adjusted Group net profit 2,630 2,653
Slide 23: Integration & strategy updates
Integration & strategy updates Strategic review of international operations and execution well underway KSA: both CMA and SAMA licenses obtained UAE network rationalisation and rebranding activities continue: • Branch & cash offices network reduced from 103 as of Dec’17 to 89 as of Mar’18 • Re
Slide 24: Capital position remains robust
Capital position remains robust Even after PPA, FY’17 dividends, and IFRS9 1 CET1 ratio progression Minimum UAE CB Basel III requirement Management guidance 14.5% • Robust capital position with Basel III 1.57% 0.62% 0.03% 12.4% >13.0% >13.5% CET11 ratio at 12.4%, comfortably in excess of regulatory
Slide 25: NII outlook remains positive
NII outlook remains positive Key highlights • Group NIM: +4bps yoy and +7bps qoq, reflect margin expansion on Quarterly YTD the back of rate hikes Net interest margin (%) 2.55 • Net Interest Income (NII) marginally up yoy as positive impact of rate 2.49 2.48 2.49 hikes and volume growth, were partly
Slide 26: Non-interest income supported by strong growth in fees and commissions
Non-interest income supported by strong growth in fees and commissions Fees & commissions, net (AED Mn) +19% +0.1% QoQ % YoY % Loan-related 483 (5) 25 932 934 860 782 788 Trade-related 283 8 19 Others 168 4 7 • Fees and commissions (net) grew 19% yoy driven by higher syndication fees reflecting a st
Slide 27: Remarkable improvement in operating efficiency
Remarkable improvement in operating efficiency Key highlights Cost-income ratio (ex-integration) (%) • Operating expenses BAU reduced 14% yoy, reflecting continued discipline on cost management and realisation of substantial synergies Qtr (%) YTD (%) • Headline operating expenses were lower 13% yoy
Slide 28: CoR benefits from tighter risk appetite and IFRS9 implementation
CoR benefits from tighter risk appetite and IFRS9 implementation Key highlights1 Impairment charges, net (AED Mn) & CoR*1 • Impairment charges (net) down 31% yoy and 22% qoq mainly Net Impairment chrgs (L&A) Net impairment chrgs (Others) reflecting tighter risk appetite in PBG and IFRS9 implementati
Slide 29: Loan and deposit growth momentum continues
Loan and deposit growth momentum continues Key highlights Net loans and advances (AED Bn) Loans and advances 345.2 338.2 321.3 328.3 330.5 • Up 2% qoq driven by a healthy business momentum in CIB (led by UAE public sector and trade FI) • Down 2% yoy due to lower trade FI and higher provisions from P
Slide 30: On track to meet/exceed 2018 financial guidance
On track to meet/exceed 2018 financial guidance Q1’18 2018 GUIDANCE 2020 AMBITIONS Loan +2% ytd Mid-single digit GROWTH Revenue -6% yoy Low single-digit C/I Ratio EFFICIENCY (ex-integration costs) 25.8% ~26%-27% ~25% ASSET QUALITY Cost of Risk1 49bps 65-75bps Net profit growth +2% yoy Mid single-dig
Slide 31: Appendix
shore FAB( Appendix
Slide 32: Q1’18 Summary Financials: Income Statement
Q1’18 Summary Financials Income Statement - Summary (AED Mn) Note Q1'18 Q4'17 QoQ % Q1'17 YoY % Net interest Income 3,268 3,363 (3) 3,256 0 Fees & commissions, net 934 932 0 782 19 FX and investment income, net 656 464 41 1,097 (40) Other non-interest income 13 289 (95) 53 (76) Total Operating Incom
Slide 33: Q1’18 Summary Financials: Balance Sheet
Q1’18 Summary Financials Balance Sheet - Summary (AED Bn) Note Mar'18 Dec'17 QoQ % Mar'17 YoY % Loans and advances 338 330 2 345 (2) Customer deposits 404 396 2 394 3 CASA (deposits) b 166 150 11 150 11 Total Assets 678 669 1 660 3 Equity (incl Tier-1 capital notes) 94 102 (8) 94 (0) Tangible Equity
Slide 34: Asset & Loan Mix
Asset & Loan Mix Asset Mix Gross loans by counterparty (AED Bn) Others Cash & CB 9% Balances 353.5 20% 345.1 Banking Sector Investments 16% 6% 7% DFB and Personal/Retail Sector Reverse 21% 20% AED 677.8Bn Repos Corporate/Private Mar’18 5% Sector 56% 55% Public Sector Loans and 16% 17% Government Sec
Slide 35: Investments breakdown
Investments1 breakdown Investments by type Investments by ratings A HFT - Debt 29% 16% BBB HFT - Equity & Funds 10% 3% Held to Maturity BB & below AED 106.4 Bn (Debt) AED 106.4 Bn 8% Mar’18 6% Mar’18 Unrated – Debt AFS - Debt AFS - Equity & 2% 75% Funds Equity & Funds 0% AA 3% 34% AAA 14% Investment
Slide 36: Liability mix and Wholesale Funding
Liability mix and Wholesale Funding Liabilities mix Wholesale Funding (AED Bn) Mar’18 Customer Deposits 69% Syndicated loan 7.3 Term Borrowings & Medium Term Notes/Bonds 34.3 AED 583.6 Bn Sub Debt Mar’18 8% Sukuk 2.4 Others 8% Subordinated debt 0.4 Due to Banks & Repos 11% Commercial Paper 4% Total
Slide 37: Customer deposits
Customer deposits Customer deposits (AED Bn) Customer deposits by account type (AED Bn) CASA (%) 2 Total Customer Deposits Notice and time deposits Current Accounts 2 Saving Accounts Certificates of deposits Margin Accounts 393.9 377.3 378.9 395.8 404.0 395.8 404.0 1% 1% 9% 8% 3% 3% 35% 38% 52% 50%
Slide 38: PPA completed as of 31 March 2018
PPA completed as of 31 March 2018 • 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 assets and assumed lia
Slide 39: Business Performance: Corporate & Investment Banking
Business Performance Corporate & Investment Banking (CIB) of Group 51% Revenue In AED Mn Q1’18 QoQ % YoY % • FAB’s market-leading CIB franchise is a major contributor to Group Revenues 2,471 5 (1) revenue with a share of 51% • Revenues in Q1’18 grew 5% sequentially driven by strong performances Oper
Slide 40: Business Performance (continued): Subsidiaries
Business Performance (continued…) Subsidiaries of Group Revenue In AED Mn Q1’18 QoQ % YoY % 3% Revenues 131 (63) (3) • Subsidiaries generated a net profit of AED 82 Million in the first quarter of 2018 (vs. net loss of AED 11 Million in Q1’17), driven by lower operating expenses and provision write-
Slide 41: Our commitment to sustainability
Our commitment to sustainability Signatory to the Equator Principles • The global best practice in environmental and social risk management for major capital projects First UAE bank signatory to United Nations Global Compact (UNGC) principles • since Dec 2017 Top ranking in the S&P/Hawkamah ESG Pan
Slide 42: Executed Landmark Transactions in Q1 2018
Executed Landmark Transactions in Q1 2018 DCM LCM KCA Deutag Emirates Airlines Majid Al Futtaim VakifBank Huawei Technologies Burgan Bank Ping An Leasing Saudi Electricity USD 400 million USD 600 million USD 400 million USD 650 million USD 1.2 billion USD 350 million USD 300 million USD 2.6 billion
Slide 43: Prestigious awards highlight FAB’s strength and industry expertise
Prestigious awards highlight FAB’s strength and industry expertise in UAE and MENA • Best Equity Bank in the Middle East • Best Investment Bank in the UAE • Best Investment Bank in the • Best FX provider in UAE United Arab Emirates • Best Overall Cash Management Bank in the Middle East • Best Bank f
Slide 44: 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 45: Thank You!
THANK YOU! For more information, please visit www.bankfab.com or contact FAB Investor Relations team ir@bankfab.com You can also download FAB’s Investor Relations App from App Store / Google Play to access latest corporate updates, FAB pro forma financial information and FGB/NBAD archives Scan to do
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