First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — National Bank of Abu Dhabi — Q3 2013 Earnings Presentation
56 slides from First Abu Dhabi Bank's earnings presentation, Oct 30, 2013
Slide 1: Performance Review 3Q / 9M 2013
Performance Review 3Q / 9M 2013 1
Slide 2: Introduction / Strategic Review
Introduction / Strategic Review 3Q / 9M 2013 Alex Thursby, Group Chief Executive Officer 2
Slide 3: Continued strength in 3Q 2013 results
Continued strength in 3Q 2013 results Net earnings of AED 1.035bn for 3Q 2013, down 8% y-o-y as growth in fee and net interest income was offset by higher expenses and lower investment and other income Strong underlying year-over-year top line results as net fee and commission grew 18.5% to AED
Slide 4: Q3 2013 – Awards & Accomplishments
Q3 2013 – Awards & Accomplishments Sheikh Khalifa Excellence Award (SKEA) – Diamond Category Upgraded by S&P to AA-/A-1+ from A+/A-1 Ranked in World‟s 50 Safest Banks for 5th consecutive year (Global Finance) “The Strongest Bank Balance Sheet in the UAE for 2013” – Asian Banker Magazine “Bes
Slide 5: What we want to change – our mission
What we want to change – our mission to be core to our chosen customers Our strategy to deliver this will be built around 3 geographical pillars and will be achieved primarily through organic growth 2 Wholesale Network 3 New Franchise Markets Markets 1 Home Market Deepen our Wholesale network across
Slide 6: Trade and FDI flow across the West-East corridor
Trade and FDI flow across the West-East corridor 1.1 Intra Middle East 2.1 Asia and Africa 3.1 Intra Asia CAGR CAGR CAGR Trade flows 2011 2020 11-20 2011 2020 11-20 2011 2020 11-20 Trade 112 270 10% Trade 334 888 11% Trade 3302 6607 8% FDI flow 17 38 9% FDI flow 35 69 8% FDI flow 213 614 12% 1.2 Mid
Slide 7: 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 Institutions biggest volume segment in flow products Controls 70% of
Slide 8: 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
Slide 9: 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) Aviation, rail and transport (Abu Dhabi) Ind
Slide 10: Wholesale Banking Addressable Market - $140 Billion
Wholesale Banking Addressable Market - $140 Billion Wholesale1 banking revenue pools 2012, $ BN Exclude revenue pools in EU, N&S. 1000 America, which are 900 outside the WEC 800 Add back trade SME/Mid-cap (<$1 700 finance, FX flows BN turnover) and cross-border 600 634 excluded as focus is lending i
Slide 11: Strategic Update – Progress Report
Strategic Update – Progress Report Strategic 5-year Strategy developed and approved by Board Streamlined the Group to 3 Core Businesses (Introduced new reporting structure): • Global Wholesale • Global Wealth • Gulf Retail & Commercial New revenue campaigns across the business / excellent pipe
Slide 12: Results Discussion
Results Discussion Michael A. Miller, Head of Investor Relations 12
Slide 13: 3Q/9M 2013 – Income statement highlights
3Q/9M 2013 – Income statement highlights OPERATING INCOME / REVENUES OPERATING EXPENSES AED Mn AED Mn +11% +12% -2% 7,067 +10% 6,350 2,323 2,078 2,250 2,363 2,194 728 795 801 3Q'12 2Q'13 3Q'13 9M'12 9M'13 3Q'12 2Q'13 3Q'13 9M'12 9M'13 Up 11% in 9M‟13, driven by higher NII and non-interest Increased
Slide 14: 3Q/9M 2013 – Balance sheet highlights
3Q/9M 2013 – Balance sheet highlights ASSETS EQUITY* AED Mn +3.4% AED Mn +5.6% 322 327 345 31.1 31.2 32.2 33.3 305 301 29.7 Sep'12 Dec'12 Mar'13 Jun'13 Sep'13 Sep'12 Dec'12 Mar'13 Jun'13 Sep'13 Up 5.6% sequentially as loans and deposits both grew Up 3.4% sequentially, due mostly to growth in profits
Slide 15: Revenues by Segment
Revenues by Segment AED mn REVENUES 6,350 Up 11% 7,067 Contribution HO, 801 HO, 762 11% HO, 581 GW, 320 GW, 516 Islamic, 218 7% GW, 249 Islamic, 195 DBD, 1,564 R&C, DBD, 1,445 31% 2,197 IBD, 1,178 IBD, 1,002 GFM, 770 GFM, 884 GWB, 51% 3,593 GB, 2,108 GB, 2,102 9M'12 9M'13 (Old) 9M'13 (New) Note: In
Slide 16: Operating Profits by Segment
Operating Profits by Segment AED mn OPERATING PROFITS 4,272 Up 11% 4,744 2% HO, 110 HO, 75 GW, 161 GW, 355 7% GW, 101 Islamic, 142 Islamic, 122 DBD, 869 R&C, 25% DBD, 806 1,203 IBD, 806 IBD, 684 GFM, 669 GFM, 763 GWB, 66% 3,111 GB, 1,926 GB, 1,893 HO, (36) 9M'12 9M'13 (Old) 9M'13 (New) Note: In the
Slide 17: Key Ratios
Key Ratios Ratio 9M 2012 9M 2013 Diluted Earnings Per Share (EPS in AED) (restated for 2012) 0.69 0.79 Return on Equity (regulatory capital) 15.3% 15.1% (annualised; including Govt of Abu Dhabi Tier-I capital notes) Net Interest Margin (NIM) Efficiency (Based on average total assets and annualised N
Slide 18: Summary of Expectations – FY2013
Summary of Expectations – FY2013 Top line revenue growth 7% - 8% Expense growth 10% - 11% Balance sheet growth driven by lending growth 10% - 15% and deposit growth of 12% - 16% Provisioning expected to reduce gradually as we reach peak delinquency levels; NPLs to peak below 3.75% of perform
Slide 19: 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 : http://www.nbad.com investorrelations@nbad.com Michael Miller Head – Investor Relations Abhishek Kumat Investor Relations Khuloud Al Mehairbi
Slide 20: Appendix
Appendix 20
Slide 21: What we want to change – vision, mission, values
What we want to change – 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
Slide 22: West-East corridor high growth and megacities
West-East corridor is witnessing high growth & will have a higher concentration of megacities over the next 10-20 yrs Moscow London Beijing Seoul Paris Xi‟an Tokyo New York Istanbul Chongqing Osaka-kobe Lahore Tianjin Los Angeles Tehran Chengdu Shanghai Cairo Karachi Delhi Wukan Hangzhou Mexico city
Slide 23: Operating Income & Expenses
Operating Income & Expenses Interest vs Non-Interest Income (AED mn) Composition of Non-Interest Income (AED mn) Non-Interest Income Net Interest & Islamic Financing Income AED 555mn (Q3’13) Net fee and 2,510 commission 2,250 2,318 2,363 income 81% 2,194 31% 33% 39% 29% 25% Net foreign exchange gain
Slide 24: Net profits
Net profits Net profits (AED mn) CAGR 2009-2012: 13% +14% -8% -15% 4,332 3,683 3,708 3,656 3,020 3,212 1,125 1,120 1,409 1,212 1,035 2009 2010 2011 2012 9M 2012 9M 2013 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 • 3rd quarter profits down on sequential as well year-on-year basis primarily due to lower investment
Slide 25: Assets & liquidity
Assets & liquidity Net Interest Margin* (%) Composition of Assets – AED 345bn NIM% (Qtr) NIM% (Ytd) Fixed assets Cash & & Other balances assets with central 2.19% 4% banks 2.16% 15% Due from 2.05% banks & 2.16% 1.97% 2.00% Loans Reverse 2.06% 2.06% 53% repos 15% 1.97% 1.95% Investments 3Q'12 4Q'12 1
Slide 26: Loans and advances
Loans and advances Loans (gross) by customer type Loans (gross) by industry +10.9% Trading Transport Services Banks, 15% Banks & FI 3% 4% 12% 12% Mfg Individuals, 17% 16% 15% 4% Others (incl Corp/Pvt, Loans to 35% 34% Agriculture) Individuals 0.1% for Business Public Sector Real Estate 25% 24% 36% 7
Slide 27: Provisions & NPLs
Provisions & NPLs Provisions* & NPLs (AED mn) Key points • Strong asset quality – one of the lowest NPL ratios amongst Total Provisions Collective Provisions NPLs major UAE banks 6,121 6,264 • NPL ratio of 3.32% at end-9M’13 (3.4% at end-FY’12); NPLs 5,781 5,961 5,578 increased by AED 143mn in 3Q’13
Slide 28: Provisions & NPLs (cont'd)
Provisions & NPLs (…cont‟d) Impairment charges & Addition to NPLs (AED mn) Impairment charges (AED mn) Total Impairment charges, net* 9M 2013 9M 2012 Collective prov charges Charge for the period: Addition to NPLs Specific provisions 1,025 1,266 367 365 Collective provisions 343 130 322 301 299 1,36
Slide 29: Investments
Investments Investments – AED 45.7bn Investments by issuer Banks & FI's - Govt Related Sovereign HFT - Debt Entities Guaranteed 4% Sovereign 22% 3% AFS - Debt 30% Banks & FI's - 86% HFT - Equity & Funds Covered 2% Banks & FI's Bonds 29% 12% Supranational Held to 1% Maturity AFS - Equity Corporate/ (
Slide 30: Funding profile
Funding profile Liabilities - AED 312bn Term notes maturity profile (AED 17.8bn – 9M‟13) 4,591 Term (AED mn) borrowings 3,428 3,318 6% 3,158 Subdebt Customer 0.5% deposits 1,896 Other 74% liabilities 7% 1,120 Due to 89 - 152 banks & Repos 13% 2013 2014 2015 2016 2017 2018 2019 2020 >2020 • Liabiliti
Slide 31: Customer deposits
Customer deposits Deposits by customer type Deposits growth trend (AED bn) CAGR 2008-9M’13: 20% +20.6% Individual, 23% 20% Corp/Pvt, 25% 24% 229 Public Sector 190 19% 20% 152 53% 116 123 55% 98 36% Govt, 33% 2012 9M 2013 2008 2009 2010 2011 2012 9M'13 (AED 190.3bn) (AED 229.5bn) • Substantial fundin
Slide 32: Capital Resources (Basel-II)
Capital Resources (Basel-II) Regulatory Capital resources (AED bn) Capital adequacy (%) Tier-I Capital Resources Total CAR Tier I% 21.0% 20.1% 19.7% 37.2 37.3 18.5% 36.1 17.8% 34.7 35.0 32.7 17.2% 17.3% 16.8% 31.8 15.8% 16.1% 30.4 30.5 UAE CB CAR requirement 12% 29.3 Minimum Tier-I requirement 8% Se
Slide 33: Results at a Glance
Results at a Glance AED mn % % % 2Q'13 3Q'13 3Q'12 9M'13 growth growth growth Income statement (AED mn) Net Interest Income 1,672 1,640 -1.9% 1,553 5.6% 4,848 6.8% (incl income from Islamic financing) Other Income 691 555 -19.8% 697 -20.4% 2,219 22.5% Revenue 2,363 2,194 -7.1% 2,250 -2.5% 7,067 11.3
Slide 34: Balance sheet
Balance sheet AED bn Balance Sheet Jun'13 Sep'13 % growth Sep'12 % growth Dec'12 % growth Assets Cash & Balances with 54.4 51.9 -4.5% 41.1 26.3% 54.9 -5.6% Central Banks DFB & Reverse Repos 44.2 50.8 15.1% 53.9 -5.6% 33.1 53.5% Investments 39.7 45.7 15.1% 33.0 38.4% 35.6 28.5% Loans & Advances 173.5
Slide 35: 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
Slide 36: Thank you
SKEA Diamond Winner 2013 THANK YOU Winning this prestigious award would not have been possible without our customers, shareholders and every member of NBAD staff NBAD’s ongoing journey of excellence will continue 36
Slide 37: Transcription for National Bank of Abu Dhabi, October 30th 2013
Transcription for NATIONAL BANK of ABU DHABI October 30th 2013
Slide 38: Corporate and Conference Call Participants
Corporate Participants Michael Miller National Bank of Abu Dhabi – Head of Investor Relations Alex Thursby National Bank of Abu Dhabi – Group Chief Executive Officer Abhijit Choudhury National Bank of Abu Dhabi – Group Chief Risk Officer Jamil ElHalabi National Bank of Abu Dhabi – Group Chief Financ
Slide 39: Call opening remarks and highlights
will provide some highlights from the third quarter and then we will provide some more details on the strategic vision for the Bank, followed by a strategic update highlighting some of the progress we have made to date. After his remarks, I will provide an overview of the results for the third quart
Slide 40: CEO remarks on margins and liquidity
the first wave of re-pricing of the asset side of the book tends to hit the corporate side and that has done so with us. The second is that we are a custodian of liquidity and we have had a lot of liquidity over the last six months coming in from the Government, and that we have found it difficult t
Slide 41: CEO remarks on awards and West-East corridor
I think that’s enough really just to give you a high level of where I see the results, and if I can just quickly move through to slide four and emphasise or explain to you that we are clearly starting to move forward in some of the engagements with our clients, but clearly the outstanding two things
Slide 42: CEO remarks on distribution and cross-sell
bank, which is the financial institutions, as we distribute that paper into the market, and we have already commenced this in a meaningful. What both avenues mean, though, is that in the financial institutions space we can further cross-sell into our markets positioning, where I think we've done a g
Slide 43: CEO remarks on addressable wallet
excluded the SME middle-cap and we've also excluded our non-target segment. We believe the assessable wallet for the industries that we operate in is approximately $140 billion of wallet. What we’re also coming to the conclusion is that 53-58%, and sorry I cannot be more precise than that, is wallet
Slide 44: CEO remarks on building the spine
We are also starting to look, and I think this is important from your area, at building the spine and the strength of the Bank in terms of its MIS, in terms of the way that we look at product profitability, in terms of building out better capabilities in our systems etc, and I won't bore you through
Slide 45: CFO remarks on balance sheet and segments
Now, turning to the balance sheet on page 14, assets increased to 345 billion, up 14.8% year-to-date and 5.6% sequentially, driven by growth and lending in deposits. Equity grew 3.4% sequentially to 33.3 billion in the September quarter due to growth in profits. Sequentially, customer loans were up
Slide 46: Guidance and Question and Answer Session
Now, to the final slide to go over guidance, I will turn it back over to Alex. Alex Thursby Thank you very much. Now, I just want to re-emphasise to you the critical thing around now that we have normalisation of our quarterly earnings, so we do expect top line revenue growth still to remain somewhe
Slide 47: Q&A: Nisreen Assi on lending growth
Nisreen Assi Good afternoon everyone, thank you so much for the conference call. Okay, so the lending growth expected for the full year is down to 15%, could you please explain what factors will be driving this growth and will you be targeting higher yielding sectors. For the fees and commission inc
Slide 48: Q&A: fee income and trade finance
withdraw from certain markets in our trade finance business, so you won’t start to really see growth in that area, in the fee income area to possibly to the third/second quarter of next year. As I said, our real – when you take all the one-offs, we were flat quarter-on- quarter and it is difficult t
Slide 49: Q&A: sustainable ROE
includes some one-offs. In your view, what would be a sustainable ROA or an ROE level for the bank, and what kind of time horizon are we looking at in order for you to achieve that and what would be the drivers of that improvement, if you see an improvement in this? Secondly, earlier on in the prese
Slide 50: Q&A: ROE target and fee income
as being a model for the future either. We want to oscillate on or around that 15% over time. What I would point out to you is that if you put a taxed effect upon all of our banks, there is room for improvement in ROE versus good international competitors. Shabbir Malik Good, thanks, and on the fee
Slide 51: Q&A: capital and dividend payout
Operator We have a question from Mr Vikram Viswanathan, HSBC. Sir, please go ahead. Vikram Viswanathan Good afternoon gentlemen, thank you very much for hosting this call. My question is on the capital side versus the current dividend pay-out ratio. You obviously are a very well capitalised bank at
Slide 52: Q&A: organic growth and acquisitions
think right now our planning ids based upon organic. We believe that can be very successful, particularly in the parts of the world that we want to play in. We have seen a lot of new players in Asia develop very good organic businesses and very quickly. ANZ, to say, just one that I am obviously quit
Slide 53: Q&A: cost of risk and recoveries
I think there were a number of questions there. I think just to rearticulate the question, first was the question regarding recoveries which we have had so far, the second was in terms of the cost of risk I believe. Hello, can you hear me? Aarthi Chandrasekaran Yes, you're right. Abhijit Choudhury I
Slide 54: Q&A: loan growth and margin
Bank has recently changed the guidelines on classification of commercial and non-commercial entities. All in all, the two or three questions you asked, we expect the trend to in turn continue. We have been very stringent in terms of our follow-up on our problem loans, as a result of which we have ha
Slide 55: Q&A: commercial and retail mortgages
longer. I don’t expect a second phase of it though, so it is just the finishing off of the current phase that I think will come through. I think the key is what will happen in the commercial segment, and that I can’t tell you at this moment and that is not a big business for us. You should probably
Slide 56: Closing remarks
am sure Dubai will have something to say about that. In saying that, it is a great week for the UAE as well as Abu Dhabi, and we’re very delighted to be a major sponsor of the event that is, I know, for a fact, is very well liked by the participants and highly regarded. It is quite unique in the sen
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