First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Q2 2022 Earnings Presentation
31 slides from First Abu Dhabi Bank's earnings presentation, Jul 28, 2022
Slide 1: Q2/H1'22 Earnings Presentation
Q2/H1’22 EARNINGS PRESENTATION 28 July 2022
Slide 2: Disclaimer
Disclaimer • Comparative figures have been reclassified where appropriate to conform to the presentation and accounting policies adopted in the consolidated financial statements • FAB’s Group consolidated financials include the financial performance of Bank Audi Egypt post legal day 1 on 28th April
Slide 3: Financial Review
Q2/H1’22 Financial Review James Burdett Group Chief Financial Officer Q2/H1’22 Earnings Presentation
Slide 4: Record first half reflecting underlying business momentum and strategic progress
Record first half reflecting underlying business momentum and strategic progress ✓ Strong financial performance with 50% increase in H1’22 profit underpinned by a favourable regional backdrop Net profit 8.0 ▲ 50% AED Bn YoY (H1’21: AED 5.4Bn) ✓ Core businesses maintained solid growth momentum, refle
Slide 5: Delivering on our ESG ambitions
Delivering on our ESG ambitions H1’22 ESG Performance at a Glance TRANSITIONING CAPITALISING TRANSFORMING to a Low Carbon Future on our Social Responsibility our Governance Model GREEN FINANCE FINANCIAL INCLUSION GOVERNANCE STRUCTURE & RISK FRAMEWORK Facilitated Sustainable Projects >AED 10Bn Suppor
Slide 6: H1'22 underlying net profit helped by higher NII, moderate cost of risk
H1’22 underlying net profit helped by higher NII, moderate cost of risk, amid ongoing investments, and adverse global market conditions H1’22 Summary P&L Net profit bridge (AED Mn) in AED Mn H1’22 YoY%* +50% YoY -3% YoY on an underlying basis Net-Interest Income 6,525 +19 Non-Interest Income
Slide 7: Q2'22 underlying NPAT supported by rising interest rates and Global Markets
Q2’22 underlying NPAT supported by rising interest rates and a strong Global Markets performance, partially offset by higher costs and impairments Q2’22 Summary P&L Net profit bridge (AED Mn) in AED Mn Q2’22 QoQ% YoY%* -43% QoQ +13% QoQ on an underlying basis Net-Interest Income 3,390 +8 +21 Non-I
Slide 8: All core businesses showed sequential improvements in underlying operating income
All core businesses showed sequential improvements in underlying operating income led by IB and CCB, helped by rising rates, strong volumes and GM sales momentum Operating income bridge (AED Mn) Net interest income bridge (AED Mn) Non-interest income bridge (AED Mn) +12% QoQ QoQ ↑8% QoQ ↑20% +204 +5
Slide 9: Balance sheet deployed to support healthy lending pipeline; liquidity remains strong
Balance sheet deployed to support healthy lending pipeline; liquidity position remains strong Quarterly trend Asset Mix - Jun’22 in AED Bn Jun’22 QoQ% YoY% Ytd% Asset Mix - Dec’21 +4%Ytd (last 5 quarters) AED 1,001Bn (∆ in AED Bn) AED 1,042Bn 983 1,001 1,042 944 982 22% Assets 1,042 +6 +10 +4 Cas
Slide 10: NII growth reflects interest rate tailwinds and strong volumes
NII growth reflects interest rate tailwinds and strong volumes Net interest income (AED Mn) • Group NIM widened QoQ and YoY on the back of interest rate hikes, partially offset by the placement of QoQ ↑8%, YoY ↑21% YoY ↑19% excess liquidity into lower yielding assets and high- quality lending
Slide 11: Strength in fee-based business offsets lower investment gains
Strength in fee-based business helps partially offset lower investment gains due to adverse market conditions in H1’22 Non-interest income • Fees and commissions H1’22 H1’21 YoY% Q2’22 Q1’22 QoQ% Q2’21 YoY% (In AED Mn) H1’22: +3% YoY on double-digit growth in IB and Non-interest income 2,910 4,093 (
Slide 12: Opex trend reflects strategic and digital investments, and BAE inclusion
Opex trend reflects ongoing strategic and digital investments, and impact of BAE inclusion Opex drivers YoY (AED Mn) Operating expenses trend (AED Mn) and C/I ratio (%) C/I ratio (ex-integration)2 33.3 31.5 32.41 27.3 24.2 25.4 28.4 +8% YoY +251 QoQ ↑5%, YoY ↑10% YoY ↑13% +154 +31 Ex-BAE: YoY ↑
Slide 13: Healthy asset quality metrics with NPL ratio improving to 3.6%
Healthy asset quality metrics with NPL ratio improving to 3.6%; H1’22 CoR at 47bps, well within guidance Impairment charges, net (AED Mn) & CoR1 (%) NPLs2 and ECLs3 (%) Net impairment charges CoR (L&A) (bps) Provision Coverage (%) NPL Ratio (%) NPLs (AED Bn) Provisions (AED Bn) 81 101 101 101 102 10
Slide 14: Strong capital position
Strong capital position: profit accretion and risk optimisation offset by balance sheet growth, market and regulatory headwinds CET11 ratio progression H1’22 RoRWA (%ytd) and RWAs (AED Bn) 3.6 2.8 2.0 2.3 2.3 • New CVA risk • Negative MTM on AFS charge (28bps) investments (37bps) 13.3% • B/S growth
Slide 15: Positive tailwinds for the region despite uncertain global economic outlook
We continue to see positive tailwinds for the region despite a complex and uncertain global economic outlook UAE economy set to grow at one of the fastest pace in over a decade… … against a backdrop of high oil prices UAE vs Global Real GDP growth (%) Oil Production (Mn bl/day) (LHS) Brent Monthly A
Slide 16: FY22e loan growth revised upwards to reflect H1'22 outperformance
FY22e loan growth revised upwards to reflect H1’22 outperformance 2022e H1’22 • Underlying performance reflects sustained actual original revised business activity and pipeline execution in UAE guidance guidance and targeted markets Mid to high- High- Loan growth +12% Ytd single digit single digit •
Slide 17: Wrap-up: Strong set of results in H1'22
Wrap-up Strong set of results in H1’22 underpinned by a favourable regional backdrop despite heightened global market volatility All our core businesses delivered solid momentum, reflecting healthy pipeline execution across our diversified franchise, and early benefits from higher interest rates We
Slide 18: Appendix
Appendix Q2/H1’22 Earnings Presentation 18
Slide 19: Loan growth led by core clients in Other FI's, government and services sector
Loan growth led by core clients in Other FI’s, government and services sector A well diversified, high-quality loan book Gross loans trend Gross loans by counterparty Ytd movement in gross loans by counterparty AED Bn QoQ ↑6%, YoY ↑15%, Ytd ↑11% 477.9 +2 Trade-related 428.8 477.9 477.9 17% +4 +30 41
Slide 20: NPLs and Loans/ECL by stage
NPLs and Loans/ECL by stage NPLs1 by segment NPLs1 by sector (%) (AED Bn) Corporate (IB + CCB) Retail (CB + PB) 5.1% 5.2% 5.0% 4.8% Real Estate & Construction, 4.7% 45% NPL ratio 3.6% 3.5% 3.7% 3.5% 3.2% 16.4 17.0 17.0 16.8 Manufacturing, 4% 16.2 AED 16.8Bn Energy, 1% 28% 28% 28% Jun’22 30% 31% Othe
Slide 21: High-quality investment book
High-quality investment book Investments by type Investments by ratings BBB • 67% rated A and above FVTPL - Debt, 13% A 20% 8% • 75% investment grade and above FVOCI - Debt, 78% BB & below • 94% of BB & below are AED 185.6Bn 17% Sovereign & GREs FVTPL - Equity & Funds, 5% AED 185.6Bn Jun’22 AA Jun’2
Slide 22: Strong growth in deposits Ytd on healthy inflows from UAE based clients
Strong growth in deposits Ytd on healthy inflows from UAE based clients Sequential decline in CASA on account of some migration toward time deposits Customer deposits trend Ytd movement in deposits by counterparty AED Bn QoQ ↑8%, YoY ↑13%, Ytd ↑5% Total Customer Deposits CASA 1 648.1 +62 (6) (15) 60
Slide 23: Liability mix and funding profile
Liability mix and funding profile Leading issuer in the MENA region – conventional, Sukuks and Green bonds Liability mix Medium-term wholesale funding Customer Deposits, Term Borrowings & Issuances1 Maturities1 (AED Mn) 70% Sub Debt, 6% 21,355 Others, 8% AED 930.9Bn 18,631 USD 17,274 Jun’22 16,152 D
Slide 24: Diversified Term Funding portfolio
Diversified Term Funding portfolio Frequent Issuer across multiple products, currencies and geographies Term Funding Portfolio by Type1 Term Funding Portfolio by Currency1 Asian Currency Other PP ex-Formosa 6% 16% 11% Formosa Bullet EUR 13% US$ Bullet 10% Callable US$ Public Private CHF USD Formosa
Slide 25: Dominant franchise in UAE with strategic international presence
Dominant franchise in UAE with strategic international presence Breakdown by Business Breakdown by Geography Investment Banking Corporate & Commercial Banking Consumer Banking Global Private Banking UAE International Head Office 3 Operating Income Profit after taxes Operating Income Profit after tax
Slide 26: Business segments overview – IB & CCB
Business segments overview – IB & CCB Investment Banking (IB) Key highlights AED Mn H1’22 YoY% • Operating income grew +14% qoq from Quarterly operating income trend (AED Bn) Loans & Deposits (AED Bn) Operating Income 3,996 (17) higher non-interest income underpinned Loans: QoQ ↑2%, Ytd ↑7% by stron
Slide 27: Business segments overview – CB & GPB
Business segments overview – CB & GPB Consumer Banking (CB) Key highlights AED Mn H1’22 YoY% Quarterly operating income trend (AED Bn) Loans & Deposits (AED Bn) • Q2’22 operating income +5% qoq on the Operating income 2,166 (9) Loans: QoQ ↑1%, Ytd ↑4% back of higher fees and commissions on QoQ ↑5%,
Slide 28: International – financial overview
International – financial overview International International H1’22 YoY%* (AED Mn) Key highlights Quarterly operating income trend (AED Mn) Operating Income 2,124 18 • Operating income grew 18% yoy driven by the (BAE: 452) QoQ ↓1%, YoY ↑8 YoY ↑18% inclusion of Bank Audi Egypt, and represent 23% of
Slide 29: Q2/H1'22 financial highlights – Group financials
Q2/H1’22 financial highlights – Group financials Income Statement - Summary (AED Mn) Q2’22 Q1’22 QoQ % Q2’21 YoY % H1’22 H1’21 YoY% Net interest Income 3,390 3,135 8 2,802 21 6,525 5,482 19 Non- interest Income 1,587 1,323 20 2,390 (34) 2,910 4,093 (29) Operating Income 4,977 4,458 12 5,193 (4) 9,43
Slide 30: Q2/H1'22 financial highlights – Segmental
Q2/H1’22 financial highlights – Segmental H1'22 AED Mn Q2'22 Q1'22 QoQ % Q2'21 YoY % H1'22 H1'21 YoY % Contr% Operating income 4,977 4,458 12 5,193 (4) 9,435 9,575 (1) 100% Investment banking (IB) 2,126 1,870 14 2,858 (26) 3,996 4,809 (17) 42% Corporate & Commercial banking (CCB) 1,211 1,040 16 817
Slide 31: Thank You!
THANK YOU! For more information, please visit www.bankfab.com or contact FAB Investor Relations team at ir@bankfab.com You can also download FAB’s Investor Relations App from App Store /Google Play Scan to download this presentation to access latest corporate updates Click on the images below to acc