49 slides from Emirates Nbd Bank (p.j.s.c)'s investor presentation, September 2012
Slide 1: Emirates NBD Investor Presentation
Emirates NBD Investor Presentation Aug/Sep 2012 1
Slide 2: Important Information
Important Information Disclaimer The material in this presentation is general background information about Emirates NBD's activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to
Slide 3: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 3
Slide 4: UAE Economic Update
UAE Economic Update Highlights Real GDP Growth Forecasts Estimated GDP growth of 2.5% in 2012 2008 2009 2010 2011F 2012F 2013F The UAE’s PMI has shown modest expansion in 2012, indicating that private UAE 3.3% (1.6%) 1.4% 4.6% 2.5% 3.4% sector activity is expanding modestly UK (1.1%) (4.9%) 1.4%
Slide 5: UAE Economic Update (cont'd)
UAE Economic Update (cont’d) Highlights Trends in CDS spreads There was a decline in bank deposits growth and bank lending remains 550 170 relatively low 500 CDS spreads for both Dubai and Abu Dhabi have tightened in H1 2012 150 450 EIBOR rates have declined since 2011 while LIBOR rates have r
Slide 6: Dubai Economic Update
Dubai Economic Update Highlights Dubai: GDP growth set to decelerate 2011 GDP growth for Dubai is estimated at 3.4% vs. 2.8% in 2010 Lowered GDP growth forecast for Dubai in 2012 to 2.5% in the context of 4.0% 3.2% 3.4% 2.8% global developments 3.0% 2.5% UAE is a global and regional trade hub,
Slide 7: Dubai Economic Update (cont'd)
Dubai Economic Update (cont’d) Highlights Dubai’s Strategic Location Dubai is the 3rd largest centre for re-exports in the world which itself represents almost 50% of GDP Dubai is a strategically located international trading hub with some of the world’s best air and sea ports serving over 205 d
Slide 8: UAE Banking Market Update
UAE Banking Market Update Highlights UAE Banking Sector Growth (AED billion) UAE Banking sector is the largest by assets in the GCC; sector is 2,000 45% dominated by 23 local banks which account for more than 75% of banking 1,800 40% assets; 28 foreign banks account for the remainder 1,600 35% YoY
Slide 9: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 9
Slide 10: Summary
Summary One of the largest financial institutions (by asset size) in the GCC Flagship bank for Dubai Government 56% owned by Dubai Government Consistently profitable; despite significant headwinds during the last three years Fully fledged, diversified financial services offering Ever increasing pres
Slide 11: Emirates NBD at a Glance
Emirates NBD at a Glance Largest Bank in UAE Largest Branch Network* in the UAE No.1 Market share in UAE (at 30 Jun 2012): Dubai 108 Ras al-Khaimah (4) – Assets c.17.4%; Loans c.19.3% Abu Dhabi 27 Sharjah 14 Umm al-Quwain (2) – Deposits c.18.5% Fujairah (3) Other Emirates 12 Ajman (3) Retail mar
Slide 12: Emirates NBD is the Largest Bank in the UAE and one of the largest in the GCC by Assets
Emirates NBD is the Largest Bank in the UAE and one of the largest in the GCC by Assets as at 30 June 2012 UAE Ranking by Assets (AED billion) UAE Ranking by Equity (AED billion) UAE Ranking by Profits (AED million) (1) Emirates NBD 298.4 Emirates NBD 29.4 NBAD 2,087 NBAD 270.0 NBAD 28.3 FGB 1,951 A
Slide 13: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 13
Slide 14: Profit and Balance Sheet Growth in Recent Years
Profit and Balance Sheet Growth in Recent Years Revenues and Costs (AED billion) Profits (AED billion) Revenues Costs Net Profits Pre-Provision Operating Profit +1% +6% +4% -14% 3.6 3.5 3.9 7.2 3.4 6.7 10.8 6.4 9.9 3.1 3.3 9.7 8.7 1.3 5.4 1.6 1.8 1.9 3.5 5.3 1.2 2.3 2.5 -40% 3.4 3.2 4.9 5.1 1.5 +12%
Slide 15: Financial Highlights
Financial Highlights H1 2012 H1 2012 Financial Results Highlights Key Performance Indicators Net profit of AED 1289 million, -40% vs. H1 2011 Income Statement H1 12 H1 11 Change Q2 12 Q1 12 Change Net interest income up marginally by 1% y-o-y to AED 3416 million AED million % % although net inte
Slide 16: Net Interest Income
Net Interest Income Highlights Net Interest Margin Trends (%) NIM of 2.45% in H1 2012 declined by 40 bps from 2.85% in 2011 resulting in an 8% q-o-q drop in net interest income to AED 1,639 million Qtrly NIM 3.01% H1 2012 NIM reduction driven by: YTD NIM 2.81%2.79% 2.85% – lower loan spreads res
Slide 17: Non Interest Income
Non Interest Income Highlights Composition of Non Interest Income (AED million) H1 2012 Non interest income increased by 22% from H1 2011 due to higher H1 12 H1 11 Change Q2 12 Q1 12 Change AED million core fee income of 24% (%) (%) H1 2012 Core fee income improved by 24% from H1 2011 due to Cor
Slide 18: Operating Costs and Efficiency
Operating Costs and Efficiency Highlights Cost to Income Ratio Trends Costs increased by AED 203 million or +12% y-o-y to AED 1,836 million in H1 2012 resulting from: Cost to income ratio (YTD) – AED 156 million Dubai Bank costs 38.5% 37.6%37.4% – AED 87 million increase in other costs and depreci
Slide 19: Credit Quality
Credit Quality Highlights Management Targets for impaired loan coverage ratios: The impaired loans ratio deteriorated by 0.2% q-o-q to 14.3% in Q2 2012 Provision coverage of impaired loans improved by 1% q-o-q to 46% in Q2 2012 80%-85% on underlying 55%-60% on overall Q2 2012 impairment charge
Slide 20: Credit Quality
Credit Quality Group Loan Portfolio by Type (1) Loan Portfolio by Type (1) 100% = AED 223.8b 100% = AED 223.8b Retail Others Transport & Contracting 9% 3% comms 4% Trade Sovereign 2% Manuf. 4% 29% 3% Personal - Corporate Sovereign 5% 29% Services 9% Real Corporate Personal - estate Islamic 48% FI &
Slide 21: Credit Quality
Credit Quality Retail and Corporate Loans & Receivables Corporate & Sovereign Lending Portfolio By Sector(1) Corporate Credit Quality Real Estate & Contracting 100% = AED 173.72 b • Impaired loan ratio 13.5% at Q2 2012 vs. 14.1% at Q1 2012 • Exposures to Real Estate and Contracting Sector are AED 23
Slide 22: Capital Adequacy
Capital Adequacy Highlights Capital Ratios - Basel II (AED billion) Capital adequacy showed strengthening to CAR 19.5% and T1 12.8% 19.8% 20.5% 19.1% 19.5% resulting from an increase in Tier 1 capital by AED 0.1 billion in H1 2012 due 18.7% to net profit generation for the quarter. 12.6% 13.0% 12.
Slide 23: Funding and Liquidity
Funding and Liquidity Highlights Headline Loan to Deposit Ratio (%) Headline LTD ratio of 100% at Q2 2012 The LTD ratio is being managed to the target range of c.95%-100% 129% 126%127% Liquid assets (excl. Investments) of AED 48.8 billion as at 30 June 2012 122% (16% of total assets) 117%119%
Slide 24: Loan and Deposit Trends
Loan and Deposit Trends Highlights Trend in Gross Loans by Type (AED billion) Modest pickup in new underwriting in H1 2012 with 3% +3% growth in gross loans and an annualised organic growth 221 223 in gross loans of 5% from H1 2011 to H2 2012 (excl. 216 218 212 8 Dubai Bank Impact) 205 8 9 162 173
Slide 25: Associates and Joint Ventures
Associates and Joint Ventures Composition of Balances Highlights Composition of Associates & Joint Ventures (AED million) Significant de-risking of investment in Union Properties (UP) since 2009: Income Statement H1 12 H1 11 Change Q2 12 Q1 12 Change - UP investment reduced by AED 0.5 billion in 2
Slide 26: Network International
Network International Strategic Partnership with Abraaj Capital Transaction Summary & Strategic Rational Financial Impact on Emirates NBD On 22 December 2010, Network International (NI) entered into a strategic In 2010, the assets and liabilities were disclosed as assets held for sale partnershi
Slide 27: Acquisition of Dubai Bank
Acquisition of Dubai Bank Highlights Financial Impact Upon Acquisition (AED million) As per the decree issued by the Ruler of Dubai on 11 2,588 October 2011, Emirates NBD acquired a 100% stake in 158 Dubai Bank The consideration was AED 10 which equates to the fair 930 value of net assets acquir
Slide 28: Divisional Performance
Divisional Performance Balance Sheet Trends Revenue Trends AED billion AED million Key focus during H1 2012 was on strategy re-alignment to ensure enhanced future customer service quality and share of +3% +4% Wholesale Banking wallet, increased cross-sell of Treasury and Investment Banking income
Slide 29: Divisional Performance: Global Markets & Treasury, Emirates Islamic Bank
Divisional Performance Revenue Trends AED million Global Markets & Treasury -3% Revenue improved 35% y-o-y (from H1 2011 to H1 2012) to AED 443 million 701 678 Treasury sales recorded a good performance during H1 2012 590 as the low interest rate scenario encouraged some clients to lock 443 in r
Slide 30: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 30
Slide 31: Strategic Imperatives
Strategic Imperatives 2012 Objectives Evidence of Success in H1 2012 1 Maintain headline LTD ratio within 95% - Headline LTD ratio of 98% in Q1 2012 and 100% 100% target range in Q2 2012 from 105% in Q4 2011 Continue to focus on liabilities growth Strong CASA growth of 11% or AED 8.8 billion
Slide 32: Strategic Imperatives
Strategic Imperatives 2012 Objectives Evidence of Success in H1 2012 2 Revenue growth CWM fee income up 30% in H1 2012 vs. H1 2011 – Increase cross-sell and bolster fee based Developed a strategic plan and roadmap for the business within the Consumer Banking and wholesale bank to transform int
Slide 33: Strategic Imperatives
Strategic Imperatives 2012 Objectives Evidence of Success in H1 2012 3 Continue to upgrade and enhance IT Lean transformation in second wave with focus platforms – undertake implementation of the on IT portfolio rationalisation to focus on IT lean transformation initiative which was developments
Slide 34: Strategic Imperatives
Strategic Imperatives 2012 Objectives Evidence of Success in H1 2012 3 Exploit domestic opportunities Optimised distribution set-up – Continue to enhance domestic – Further optimised branch set-up (elimination of distribution network through selecting, and duplication) implementing the most opti
Slide 35: Outlook
Outlook During H1 2012 the UAE economy continued to display resiliency and modest growth with oil output rising 4.1% and modest private sector expansion Continued strength and growth witnessed in Dubai’s traditional trade, logistics, tourism and retail sales sectors and signs of green shoots in
Slide 36: Summary
Summary Strong operating performance with 52% y-o-y growth in operating profit to AED 1.3 billion in H1 2012 Top-line trends for H1 2012 encouraging with 7% y-o-y growth in total income to AED 5.2 billion Operating expenses increased by 12% in H1 2012 vs H1 2011, but improved 5% q-o-q and will be ma
Slide 37: APPENDIX A: Awards
APPENDIX A Awards 37
Slide 38: 2012 Awards
2012 Awards Emirates NBD wins “Dubai Award for sustainable transport” fourth edition. Emirates NBD is Rated Amongst 50 top Regional Companies in the Hawkamah ESG Pan Arab Index. Emirates NBD wins “Best Trade Finance Bank” Award for 2012 from Global Finance. Emirates NBD wins “Best Foreign Exchange P
Slide 39: 2012 Awards
2012 Awards Emirates NBD Asset Management named 'Best Islamic Wealth Management Service Provider' at the 2012 Sukuk Summit - Islamic Finance Awards of Excellence Emirates NBD Asset Management named 'MENA Sukuk Manager' of the year at the 2012 Global Investor/ISF Investment Excellence Awards Emirates
Slide 40: 2012 Awards
2012 Awards Best Bank in UAE”, “Best Trade Finance Bank in UAE” and “Best Foreign Exchange Provider in the UAE” Emirates NBD wins “Best Bank Brand” and award for leading PR and marketing company Emirates NBD wins “Best Customer Attraction” and “Best Overall Customer Experience” Emirates NBD wins “Be
Slide 41: 2012 Awards
2012 Awards Emirates NBD wins Banker Middle East “Best SME insurance product” award. Emirates NBD Asset Management wins “Specialist Fund of the Year” at the 2012 MENA Fund Manager Performance Awards for its Emirates Global Sukuk Fund. Emirates NBD wins “Best Foreign Exchange Providers in the UAE” Aw
Slide 42: APPENDIX B: Key Deals
APPENDIX B Key Deals 42
Slide 43: Large Deals Concluded 2012
Large Deals Concluded 2012 January 2012 February 2012 January 2012 March 2012 March 2012 PALM DISTRICT IFA HOTELS AND EMIRATES ISLAMIC EMIRATES NBD BANK EMIRATES NBD BANK COOLING LLC RESORTS FZE BANK PJSC PJSC USD 500,000,000 RMB 750,000,000 USD 1,000,000,000 AED 1,140,000,000 5 YEAR SUKUK 3 YEAR SU
Slide 44: Large Deals Concluded 2012 (cont'd)
Large Deals Concluded 2012 (cont’d) May 2012 June 2012 MAF PROPERTIES HORIZON EMIRATES TERMINALS LLC USD 75,000,000 USD 290,000,000 & EUR 96,500,000 LOAN FACILITIES LOAN FACILITIES Mandated Lead Arranger & Bookrunner Mandated Lead Arranger 44
Slide 45: Large Deals Concluded 2011
Large Deals Concluded 2011 June 2011 June 2011 June 2011 July 2011 August 2011 EMIRATES AIRLINES NATIONAL BANK OF IS BANK EMIRATES AIRLINES FUJAIRAH DEPARTMENT OF FINANCE USD 645,000,000 USD 1,000,000,000 USD 500,000,000 MULTI TRANCHE USD 500,000,000 5.125% NOTES DUE TERM LOAN FACILITY AIRCRAFT FINA
Slide 46: APPENDIX C: Asset Quality Disclosures
APPENDIX C Asset Quality Disclosures 46
Slide 47: Additional Asset Quality Disclosures
Additional Asset Quality Disclosures Investment /CDS Income and Impairments AED million Q1 08 Q2 08 Q3 08 Q4 08 FY 08 Q1 09 Q2 09 Q3 09 Q4 09 FY 09 Q1 10 Q2 10 Q3 10 Q4 10 FY 10 Q1 11 Q2 11 Q3 11 Q4 11 FY 11 Q1 12 Q2 12 Income: Investment 103 (74) 148 (601) (690) 6 241 120 54 421 172 (7) 143 48 356
Slide 48: Additional Asset Quality Disclosures (cont'd)
Additional Asset Quality Disclosures (cont’d) Credit Metrics AED million Q1 08 Q2 08 Q3 08 Q4 08 FY 08 Q1 09 Q2 09 Q3 09 Q4 09 FY 09 Q1 10 Q2 10 Q3 10 Q4 10 FY 10 Q1 11 Q2 11 Q3 11 Q4 11 FY 11 Q1 12 Q2 12 P&L Impairment Allowances: Credit – Specific 32 99 58 242 431 94 584 473 533 1,684 442 481 1,20
Slide 49: Investor Relations
Investor Relations PO Box 777 Emirates NBD Head Office, 4th Floor Dubai, UAE Tel: +971 4 201 2606 Email: IR@emiratesnbd.com Ben Franz-Marwick Head, Investor Relations Tel: +971 4 201 2604 Email: bernhardf@emiratesnbd.com Shagorika Cairae Senior Analyst, Investor Relations Tel: +971 4 201 2620 Email: