Commercial Bank Of Dubai(psc) · DFM:CBD
Commercial Bank Of Dubai(psc) — Commercial Bank of Dubai — H1 2024 Earnings Presentation
32 slides from Commercial Bank Of Dubai(psc)'s earnings presentation, Jul 24, 2024
Slide 1: Investor Presentation for the 6 months ended 30th June 2024
2024 Investor Presentation for the 6 months ended 30th June 2024 Dr Bernd van Linder Chief Executive Officer Mr Darren Clarke 24 July 2024 Chief Financial Officer
Slide 2: Executive Summary: Financial Highlights H1 24
Executive Summary Financial Highlights H1 24 ▪ Excellent net profit result with above system loan growth Net Profit AED 1,595m 30.2% from H1 23 ▪ Robust return on equity generating before tax internal capital for growth Operating AED 2,066m ▪ Strong balance sheet with all liquidity, 9.8% from H1
Slide 3: Earnings Snapshot
Earnings Snapshot – Excellent net profit result with strong growth in loans and improved Cost of Risk offsetting lower NIM and higher expenses AED m Change Change (%) H1 24 H1 24 - H1 23 H1 24 - H1 23 Net profit before tax 1,595.1 369.6 30.2% Net profit after tax 1,452.4 227.0 18.5% Return on equity
Slide 4: Financial Performance Snapshot – H1 24
Financial Performance Snapshot – H1 24 AED b Shareholder Strong Robust Solid Operating Value Creation Balance Sheet Core Ratios Performance Revenues Assets CET1 Ratio Operating Profit +10.1% +9.5% +29bps +9.8% 2.5 2.7 129.0 141.3 12.1% 12.4% 12.5% 12.8% 2.1 114.3 116.2 1.9 1.6 1.7 1.2 1.3 H1 21 H1 2
Slide 5: Progress against Strategic Execution H1 24
Progress against Strategic Execution H1 24 Achieve Become Customer Default Financial Results Employer of Choice Focus Digital Recruiting, Deepening customer Interest rate tailwinds % of wholesale developing and relationships 99% supported by growth transactions initiated retaining UAE through servic
Slide 6: Financial Guidance 2024 estimate
Financial Guidance 2024 estimate – Underlying business activity and momentum supports forward-looking sustainable net profit growth Looking Ahead 2024e Financial Guidance • Loan growth well above system Loan growth high single digit growth • Improved asset quality with lower Non-Performing Cost of R
Slide 7: Net Profit Bridge on Prior Year
Excellent net profit outcome with higher NFI and lower Net Profit Bridge on Prior Year – Cost of Risk, more than offsetting higher cost of funds, higher expenses and the introduction of corporate tax AED m NII higher by 138m on NFI favourable by Other Impairment Net Credit Staff expenses Other Opera
Slide 8: Core Performance Trends
Strong loan growth supported by high interest rates and lower Core Performance Trends – CoR negating flat CASA and higher expenses AED m Net profit before tax Revenue NFI NII Net profit after tax is 1,452m 4,938 2,650 +25% +35% 1,368 +10% 3,812 (28%) +30% 2,710 1,825 3,183 1,136 2,461 1,595 (30%) 80
Slide 9: Strategic Financial KPIs
Strategic Financial KPI’s – Strong loan growth, lower cost of risk, offsetting weaker Net Interest Margins and higher expenses Return on Equity (ROE) before tax Cost to Income Ratio ROE after tax is 21.63% -4% 27.18% 26.14% 24.87% 23.75% +22% 23.75% 21.23% -5% 15.99% +12% 13.22% 2021 2022 2023 H1 24
Slide 10: Profitability and Returns
Profitability and Returns – Excellent returns were supported by improved Cost of Risk despite lower margins and increased expenses AED m Expenses Revenue and Expense JAWS Revenue Expenses +19% 1,228 2,710 +11% 4,938 997 3,812 865 644 580 3,183 +5% +6% +5% 0% 1,228 644 865 997 2021 2022 2023 H1 23 H1
Slide 11: Net Interest Margin
Net Interest Margin – Higher NII benefitting from loan growth and high market interest rates notwithstanding flat CASA, increased funding costs and decreasing credit spreads Interest Income and Expense Net Interest Margin Interest Income Interest Expense AED m NIM YTD NIM QTD 916 959 947 885 880 3.2
Slide 12: Asset Quality and Impairments
Asset Quality and Impairments – Improved asset quality with a sharply lower non-performing loan ratio, lower Cost of Risk and a healthy coverage ratio AED m Cost of Risk Credit Impairment Charges Cost of Risk and Recoveries Credit Impairment Coverage Recoveries Coverage inc collateral stage 3 1.17%
Slide 13: Balance Sheet and Capital Strength
Balance Sheet and Capital Strength – Capital ratios remain well above regulatory requirements Capital Adequacy Ratio (CAR) Common Cost Equity Tier 1 (CET1) of Risk CAR Regulatory limit (Minimum) CET1 Regulatory limit (Minimum) 0% 2% 15.82% 16.04% 15.95% 16.05% 12.40% 12.54% 12.83% 12.13% 13.00% 13.0
Slide 14: Funding and Liquidity
Funding and Liquidity – Diversified deposit base with increased Term Deposit funding AED b Customer Deposits Other Funding Sources Time CASA Acceptances and Others Notes and Medium Term Borrowing Equity Due to Banks < 1year Green Bond +6% 99.8 Due to Banks > 1year AT1 Capital 88.3 82.7 81.1 +10% 40.
Slide 15: Balance Sheet Analysis
Balance Sheet Analysis – Backing customer ambitions across all market sectors of the UAE economy AED b Assets Mix Assets and Loans Net Loans and Advances Total Assets 3.0% 6.3% 14.5% +7% 10.0% 2.8% Cash and balances with CB Due from banks AED 141.3 billion Net loans and advances 141.3 129.0 Total As
Slide 16: Diversified business mix
Diversified business mix – Improving returns through ongoing economic cycles Revenue Revenue Asset Funding Diversification Segmentation Diversification Diversification 24% 28% 34% 21% H1 24 H1 24 H1 24 H1 24 70% 30% 32% 13% 37% Revenue Revenue Assets Funding 6% 40% 3% 18% 6% 27% 11% 70% 30% 54% 46%
Slide 17: Divisional Contributions
Divisional Contributions – Good performance across all business lines AED m Divisional operating profit movement Divisional revenue movement +10% +10% 139.6 2,066.2 201.7 52.8 78.8 2,709.9 1,881.7 71.4 99.9 -79.3 2,461.5 -132.0 H1 23 Instit Corp Personal Other H1 24 H1 23 Instit Corp Personal Other
Slide 18: Innovating in Digital – CBD Digital App and CBD Investr
Investing in award winning and industry recognized digital customer Innovating in Digital – experience CBD Digital App and Features CBD Investr • App rated 4.8 on App store and • Instant Account opening • Best Innovation in Investment 4.6 on Google Play • Tailored Offerings - Credit Cards Banking an
Slide 19: Innovating in Digital – CBD iBusiness
Investing in award winning and industry recognized digital customer Innovating in Digital – experience CBD iBusiness App and Features CBD iBusiness Best Mobile Banking Service Transaction Approvals – Unique QR CBD’s Next Generation online Implementation – MEA code feature banking with biometric logi
Slide 20: ESG Framework – Five key pillars
ESG Framework – Five key pillars of the ESG framework Environment People Financial Inclusion Governance Community We hold ourselves We promote We are default We protect our We are a local to account while Emiratization digital, all- stakeholders by bank, backing supporting our and a healthy, inclusi
Slide 21: Our commitment – Further progress across all 5 pillars
Our commitment – Further progress across all 5 pillars of our ESG Framework during Q2 2024 Environment People Financial Inclusion Governance Community Awarded the best Recognised with 3 Honored with 3 Conducted climate Sponsored Dubai green bond by a Nafis Awards for technology risk training for Fin
Slide 22: Awards and Achievements
Awards and Achievements “In the Top 10 UAE Banks” “Best Use Case of AI Solutions ” – Forbes 30 Most Valuable Banks in – Middle East Banking AI & Analytics Summit 2024 Middle East 2024 “Customer & Partner Authentication Award” “Best Financial Green Bond in EMEA” – KuppingerCole European Identity – Th
Slide 23: Concluding remarks
Concluding remarks Excellent net profit result Strong loan growth increasing market share and improved asset quality Targeted investment in end-to-end digital solutions Delivering high shareholder returns with momentum to continue throughout 2024 and beyond CBD is well positioned to successfully exe
Slide 24: Board of Directors and Executive Committee
Board of Directors and Executive Committee Board of Directors Executive Committee H.E. Ahmad Abdulkarim Julfar Dr. Bernd van Linder Chairman Chief Executive Officer H.E. Ahmad Abdulla Binbyat Mr. Buti Saeed Al Ghandi Mr. Darren Clarke Mr. Fahad Al Muhairi Deputy Chairman Director Chief Financial Off
Slide 25: Global Economic Update
Global Economic Update – Cooling inflation and lower forecast central bank interest rates US Dollar Index Central Bank Overnight Rates 120.0 SOFR (USD) SONIA (GBP) STR (EURO) 6.00 115.0 5.3 5.00 5.2 110.0 4.00 105.0 3.7 105.9 3.00 100.0 2.00 95.0 1.00 90.0 0.00 85.0 -1.00 Jan-20 Jul-20 Jan-20 Jul-20
Slide 26: UAE Economic Update – Public sector strategic intent and investment
UAE Economic Update – Public sector strategic intent, investment and broad based business Performance, and population growth driving economic activity and confidence UAE GDP and Inflation Growth Purchasing Managers Index Inflation GDP UAE KSA 7.85% 55.0 54.6 4.83% 3.10% 3.80% 3.40% 3.52% 2.40% 3.10%
Slide 27: UAE Economic Update – Sound fiscal measures
UAE Economic Update – Sound fiscal measures boosting economic growth UAE Stock Market Indices UAE Fiscal Position DFM ADX Surplus / (Deficit) (AEDb) As % of GDP 11,500 250 10.40% 10% 10,500 9,061.7 6.90% 200 193.7 5.20% 9,500 4.70% 5% 8,500 150 1.90% 127.7 7,500 100.8 95.0 0% 100 0.59% -1.68% 0.33%
Slide 28: Dubai Economic Update – Business confidence
Dubai Economic Update – Business confidence and broad-based economic growth expected to continue through 2024 and beyond Business Confidence Index SME Index Trend China Dubai USA UK India Germany 180 Dubai’s BCI ranks highest at 131.5 180 170 170 160 160 150 150 140 140 130 130 131.5 120 120 122.8 1
Slide 29: Dubai Economic Update – Strong economic activity
Dubai Economic Update – Strong economic activity and business confidence Dubai GDP growth Dubai hospitality Apr-23 Apr-24 AED 7.60% +18.7% 6.20% 891 +13.1% 3.60% 2.70% 2.80% 805 1.90% 2.20% 751 712 +30.1% 93 71 -3.50% 2016 2017 2018 2019 2020 2021 2022 2023 Occupancy % Average daily rate Revenue per
Slide 30: UAE Banking Sector
UAE Banking Sector – Key part of the UAE economy, supporting business ambition Key industry indicators Average Loan Yield & Cost of Deposits vs 3M EIBOR AEDb 2021 2022 2023 Apr-24 YTD 3M EIBOR Yield on Loans Cost of Deposits Total assets 3,322 3,669 4,075 4,297 5.4% 6.80% 6.80% 6.00% Customer depo
Slide 31: UAE Banking Industry – Market Interest Rates
UAE Banking Industry – Market Interest Rates have peaked with continued growth expected in outlying years System-wide Gross loans and deposits Credit Growth in the UAE Banking Sector Gross loans Deposits Domestic Credit Foreign Credit 31.18% AED Billion 2,718 2,522 2,222 1,997 1,992 2,063 1,870 1,88
Slide 32: Disclaimer
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