First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — H1 2021 Earnings Presentation
60 slides from First Abu Dhabi Bank's earnings presentation, August 2021
Slide 1: Investor Presentation August 2021
INVESTOR PRESENTATION August 2021
Slide 2: FAB in brief
Jol nibgid iy ‘ 1 Fst abu Dab ark FAB in brief
Slide 3: UAE's leading bank and one of the world's largest and safest
We are the UAE’s leading bank, and one of the world’s largest and safest financial institutions Strongest Combined Market Heavyweight Credit Rating in MENA Largest UAE Bank 944 257 Among top 50 largest banks 182 50 2nd Largest in the MENA AED Bn USD Bn Total Assets in the world Largest UAE constitue
Slide 4: Recognised as one of the safest and strongest banks globally
Recognised as one of the safest and strongest banks globally 1 2 Safest banks’ rankings by Global Finance Top 1000 banks’ rankings by The Banker #1 in UAE & Middle East #1 #3 in UAE in Middle East by Tier 1 capital strength by Tier 1 capital strength #4 in Emerging Markets #94 #107 Worldwide Worldwi
Slide 5: FAB is amongst the most profitable AA- rated banks globally
FAB is amongst the most profitable AA- rated banks globally Western banks GCC banks APAC banks 25% Return on Tangible Equity (%) 20% Al Rajhi RBC**** TDBank**** SNB HDFC Bank* QNB Morgan Stanley Macquarie* 15% CBA** JP Morgan Scotia**** BMO**** ICICI* UBS ICBC Agri Bank China GS Bank of China 10% DB
Slide 6: Strategic international network facilitating liquidity, trade and investment flows
Our strategic international network facilitates inward/outward liquidity, trade and investment flows Europe, Americas, Middle East & Africa (EAMEA) Asia Pacific (APAC) Global Presence Across France UAE Libya China/Hong Kong UK India 5 Switzerland Bahrain Egypt Oman Saudi Arabia Indonesia Continents
Slide 7: A market heavyweight
A market heavyweight Overview1 Heavyweight constituent across multiple indices • Listed on Abu Dhabi Securities Exchange (ADX) Key Highlight1 Weight% • Symbol: FAB, ISIN: AEN000101016 • Market capitalisation: AED 182Bn (USD 50Bn) Largest constituent on the Abu Dhabi Stock Exchange 38.02% (Amongst th
Slide 8: Decisive actions in response to COVID-19
We took decisive actions in response to COVID-19 Prioritising the welfare of our employees, customers and the community at large Customer and Community Business Continuity Employees As the leading UAE bank, it is our duty to We continued to operate with a robust We took care of our employees, to saf
Slide 9: Economic and banking sector review
Economic and banking sector review 9
Slide 10: UAE economy rebounding from Covid-led disruption in 2020
UAE economy rebounding from Covid-led disruption in 2020 Driven by higher oil prices, rising consumer confidence and world leading COVID19 vaccination programme UAE real GDP to expand after contracting in 20201 Oil prices recovering from 2020 slump2 UAE PMI at 2-year high3 Oil Production (Mn bl/day)
Slide 11: A world-leading COVID vaccination program
A world-leading COVID vaccination program Supporting business activity’s return to normalcy Daily Covid-19 cases2 As of Aug 30 2021 • ~75% of the UAE population fully inoculated; with 83% of the Sep: Dubai & Sharjah Dec: Start of Feb: New Apr: Daily cases 4,500 Apr-5: Dubai May-12: Jun-2: Abu Jul-7:
Slide 12: Real estate market sees signs of revival
Real estate market sees signs of revival Abu Dhabi witnesses its highest residential property sales price increase yoy in over 6 years • Real estate sale prices in Abu Dhabi continued their • Property market expected to benefit from a pick-up • Project deliveries for H2’21, in both Abu Dhabi and upw
Slide 13: Sound and highly capitalised banking sector
Sound and highly capitalised banking sector CBUAE TESS and stimulus measures have supported the financial system & economic recovery Liquidity remains ample while credit growth reflects subdued demand1 FAB has a dominant position in UAE 3 • UAE banking sector : 21 Local and 38 Foreign banks (Incl. 1
Slide 14: Strategic overview
doll abo Bo Fist Abu Dhabi Bank Strategic overview
Slide 15: Our digital transformation journey
Our digital transformation journey • Instant joining FAB through Mobile H1’21 Banking • Manage credit cards digitally INCREASED DIGITAL ADOPTION1 • Freeze or unfreeze credit cards instantly Bank transactions2 +31% yoy • Control supplementary cards instantly >87% performed digitally Digital transacti
Slide 16: ESG topics most material to FAB
ESG topics most material to FAB Identified through a materiality refresh, using GRI principles Strategic pillars Areas of focus1 What we achieved1 • Customer experience • 8% reduction in operating expenses on the back of our investments in digital infrastructure and enhancement of processes • Financ
Slide 17: Our commitment to sustainability
Our commitment to sustainability Integration of ESG into risk management framework is a key focus for 2021 Recent Highlights Our ESG Ratings AA MSCI ESG ‘Leader’ A- CDP Score (formerly the Carbon Disclosure Project) • MSCI ESG ratings recently upgraded from A to AA • FAB named Middle East’s Best Ban
Slide 18: Our payment subsidiary, Magnati, at a glance
Our payment subsidiary, Magnati, at a glance A story of market leadership, continued growth in scale and profitability Leadership Scale Performance Direct Acquiring Merchants Double digit CAGR of Top 2 Market Share >30,000 Served processed value Issuing Market Total Processed #1 Share ~US$18 Bn Valu
Slide 19: Firmly laying the foundations for long term success
Firmly laying the foundations for long term success Driving specialisation and competitive advantage to build a future- proof FAB around our customers’ evolving needs: • Business structure realigned to strengthen capabilities, and enhance future income generation; 4 distinct business lines including
Slide 20: H1'21 Strategic Update
Jol nibgid iy ‘ 1 Fst abu Dab ark H1’21 Strategic Update
Slide 21: Building momentum in strategic areas: solid growth in core businesses
Building momentum in strategic areas Solid growth in core Robust results in Corporate Sustained performance businesses and Investment Banking in Personal Banking Revenue Revenue ▲ ▲ QoQ 24% QoQ 4% • Balance sheet growth • Continued momentum in acquisition • Regional leadership and strong volumes in
Slide 22: Building momentum: strategic expansion in targeted markets
Building momentum in strategic areas Solid growth in core businesses Delivered strong growth in MENA, driven by Egypt and Saudi Arabia International Contribution to H1’21 Group Revenue Strategic expansion in Revenue targeted markets ▲ 21% QoQ International 46% 19% MENA MENA Revenue (incl GCC) (incl
Slide 23: Building momentum: digital transformation and sustainability agenda
Building momentum in strategic areas Enhanced digital servicing Continued innovation and Solid growth in core growth in payments capabilities… businesses • Improved mobile banking services • Optimized distribution channels • Continued digitisation journey in CIB Strategic expansion in • Users ▲104%
Slide 24: Q2/H1'21 Financial Performance
Q2/H1’21 Financial Performance 24
Slide 25: Strong set of results in Q2/H1'21
Strong set of results in Q2/H1’21 Strong financial results reflect the Net profit Revenue successful execution of our strategy in an H1’21 AED Bn 5.4 ▲ 11% YoY 9.6 ▲ 2% YoY improved backdrop Q2’21 AED Bn 2.9 ▲ 16% 19% QoQ YoY 5.2 ▲ 18% 8% YoY QoQ Our foundation remains robust across all key metr
Slide 26: Strong set of results
Strong set of results Reflect positive momentum across core businesses, helped by contribution of Bank Audi Egypt Net profit bridge (AED Mn) H1’21 summary P&L* (AED Mn) +16% QoQ H1’21 YoY% +811 Revenue 9,575 +2 (BAE – 156Mn) +688 Non-interest (133) Costs (2,768) +7 (207) (BAE – 57Mn) income (69) 2,8
Slide 27: On track with our FY'21 financial guidance
On track with our FY’21 financial guidance FY’21 financial guidance H1’21 actual Loan growth Mid-single digit +3% Ytd C/I Ratio <30% 28.3% (ex-integration costs) Cost of Risk <100bps 56bps Provision coverage ~ 90% 97% CET1 > 13.5% 13.0% (pre-dividend) On-track Investor Presentation August 2021 27
Slide 28: Corporate and Investment Banking
Corporate and Investment Banking Robust set of results reflecting strong pipeline execution and strategic initiatives to enhance income generation Operating profit bridge (AED Mn) H1’21 summary P&L (AED Mn) +29% QoQ H1’21 YoY% +896 Revenue 6,764 +16 +86 +44 (294) (32) 3,109 Costs (1,247) +4 2,409 Op
Slide 29: Personal Banking
Personal Banking Renewed consumer confidence, strong commercial momentum, and the positive impact of Bank Audi support healthy performance Operating profit bridge (AED Mn) H1’21 summary P&L (AED Mn) +3% QoQ H1’21 YoY% +55 Revenue 2,943 -4 (30) 810 835 Costs (1,297) +3 Operating 1,645 -8 Profit Impai
Slide 30: Enhanced returns through effective balance sheet deployment
Enhanced returns through effective balance sheet deployment … … whilst maintaining high quality assets and robust liquidity QoQ change in assets (AED Bn) Asset Mix - Mar’21 Asset Mix - Jun’21 AED 941Bn AED 944Bn Cash & CB Balances 27% (25) 24% Due from Banks & 7% 8% (10) Reverse Repos 67% rated A &
Slide 31: Strong capital position comfortably above regulatory requirements
Strong capital position comfortably above regulatory requirements CET1 impacted by implementation of Basel 3 requirements CET11 ratio progression H1’21 • Capital ratios remain well above minimum regulatory requirements; Tier 1 and CAR ratios at 15.0% and 16.1%, respectively 14.9% 1.60% DPS: 74 fils
Slide 32: Resilient asset quality and adequate provision levels
Resilient asset quality and adequate provision levels Lower impairment charges YoY reflect improved backdrop Impairment charges, net (AED Mn) & CoR1 (%) NPLs3 and ECLs4 (%) CoR (L&A) (bps) CoR - gross (L&A) (bps)2 Provision Coverage (%) NPL Ratio (%) Net impairment charges Gross impairment charges 2
Slide 33: NII and margins reflect rate cut headwinds offset by volume growth
NII and margins reflect headwinds from rate cuts and higher IIS in H1’20, offset by volume growth and positive impact of Bank Audi Egypt Net interest income (AED Mn) QoQ ↑5%, YoY ↓14% YoY ↓13% 3,244 • P&L impact from a +/-25bps 3,079 6,323 parallel movement in interest rates is 2,854 2,679 2,802 5,4
Slide 34: Strong portfolio returns and rebound in fees boost non-interest income
Strong portfolio returns, and rebound in fees and commissions boost non-interest income Non-interest income • Fees and commissions (Q2’21 vs. Q1’21) Q2’21 Q1’21 QoQ% Q2’20 YoY% H1’21 H1’20 YoY% (In AED Mn) +16% on strong pipeline execution and trade-related fees Non-interest income 2,390 1,703 +40 1
Slide 35: Cost-income ratio remains within guidance
Cost-income ratio remains within guidance amidst continued investments in our digital capabilities and Bank Audi Egypt integration Operating expenses trend (AED Mn) and C/I ratio (%) Opex drivers QoQ (AED Mn) C/I ratio (ex-integration) +64 1,451 25.5 28.0 25.7 29.6 27.3 27.3 28.3 +12 +57 1,318 QoQ↑1
Slide 36: Reiterating FY'21 financial guidance
Reiterating FY’21 financial guidance in an improving, yet uncertain environment FY’21 financial guidance Loan growth Mid-single digit • Economic activity to gather momentum in H2’21, on the back of fiscal and monetary stimulus, world-leading vaccination programme, C/I Ratio and higher oil prices (ex
Slide 37: Wrapping up
Wrapping up Strong set of results in Q2/H1’21 reflecting the successful execution of our strategy amidst an improved economic backdrop Our foundation is robust, through strong liquidity and funding ratios, a solid capital position and resilient asset quality We are confident in our capacity to
Slide 38: Supplementary financial slides
Supplementary financial slides 38
Slide 39: Asset & loan mix
Asset & loan mix Conservative asset mix with a well diversified, high-quality loan book Asset mix Gross loans by counterparty Jun’21 AED Bn AED 944.3Bn 403.3 416.5 Banks Cash & CB Balances 42% 24% Dec’20 42% 2% 3% Personal/ Retail AED 919.1Bn 25% DFB and Reverse Repos 18% 18% Investments Corporate/
Slide 40: Strong lending growth driven by FI trade, CIB international book and BAE
Strong lending growth driven by FI trade, CIB’s international book and BAE Liquidity ratios remain solid, well above regulatory requirements Loans and advances, gross (AED Bn) QoQ ↑5%, YoY ↑4%, Ytd ↑3% Q1'21 395 QoQ Loan growth driven by: Trade-related Govt +3 International loans (net) • Corporate c
Slide 41: Dominant franchise in UAE with strategic International presence
Dominant franchise in UAE with strategic International presence Breakdown by Business Breakdown by Geography Corporate & Investment Banking UAE International Personal Banking Group HO & Subsidiaries Revenue Profit after taxes Revenue Profit after taxes 81% 85% 88% 71% H1’21 H1’21 20% H1’21 H1’21 31%
Slide 42: Supporting our customers through payment deferrals
Supporting our customers through payment deferrals UAECB TESS facility further extended to end-June 2022 From April 1st 2020, relief measures were extended to The Group undertook a comprehensive portfolio review in Q2’20 in line with the UAE CB guidance our retail, SME and corporate customers in the
Slide 43: NPLs and Loans/ECL by stage
NPLs and Loans/ECL by stage NPLs1 by segment NPLs1 by sector (%) PB CIB (incl Subsidiaries) (AED Bn) 6.0% 5.6% Real Estate & Construction, 5.0% 5.0% 4.8% 41% NPL ratio 3.3% 3.4% 3.7% 3.7% 3.7% Manufacturing, 6% AED 16.2Bn 15.6 15.7 15.8 15.7 16.2 Energy, 1% Jun’21 30% 31% 29% Others, 2% Trading, 15%
Slide 44: High-quality investment book
High-quality investment book Investments by type Investment by ratings BBB • 67% rated A and above FVTPL - Debt, 14% A 9% • 93% of BB & below 25% Sovereign & GREs FVOCI - Debt, 80% FVTPL - Equity & Funds, 2% BB & below AED 177.1Bn AED 177.1Bn 19% Jun’21 Amortised Cost (Debt Inv), 3% Jun’21 AA Unrate
Slide 45: Customer deposits
Customer deposits Customer Deposits Customer deposits by account type Total Customer Deposits CASA 2 (AED Bn) (AED Bn) 540.9 575.2 1% 1% 601.8 540.9 568.3 575.2 9% 9% Margin Accounts 518.7 2% 2% Certificates of deposits 39% 41% Saving Accounts Current Accounts 49% 47% 38% 36% 41% 44% 44% Notice and
Slide 46: 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) 69% Sub Debt, 9% 21,358 Others, 6% USD AED 837.9Bn 17,887 Jun’21 16,154 Due to B
Slide 47: 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 Private Currency ex- EUR Other 6% 6% Placement Formosa 12% Formosa 9% Bullet US$ Bullet CHF Conventional 17% Private 7% Pu
Slide 48: Leader in MENA Green Bond Issuance
Leader in MENA Green Bond Issuance Highlights: FAB Green Bonds Outstanding • In 2020 FAB’s Green Bond framework was expanded to a Sustainable Finance USD Private Framework. 7% US$ Public • The framework was developed to align with market best practice requirements reflected in 56% the International
Slide 49: Q2/H1'21 financial highlights – Group financials
Q2/H1’21 financial highlights – Group financials Income Statement - Summary (AED Mn) Q2’21 Q1’21 QoQ % Q2’20 YoY % H1’21 H1’20 YoY% Net interest Income 2,802 2,679 5 3,244 (14) 5,482 6,323 (13) Non- interest Income 2,390 1,703 40 1,551 54 4,093 3,038 35 Total Operating Income 5,193 4,382 18 4,795 8
Slide 50: Q2/H1'21 financial highlights – Segmental
Q2/H1’21 financial highlights – Segmental H1'21 AED Mn Q2'21 Q1’21 QoQ % Q2’20 YoY % H1’21 H1’20 YoY % Contr% Revenues 5,193 4,382 18 4,795 8 9,575 9,361 2 CIB 3,748 3,016 24 3,178 18 6,764 5,818 16 71% PB 1,499 1,444 4 1,406 7 2,943 3,054 (4) 31% HO & Subsidiaries (54) (78) (30) 211 na (132) 490 na
Slide 51: A strong financial track record
A strong financial track record Balance Sheet & Income Statement TOTAL ASSETS (AED Bn) LOANS & ADVANCES (AED Bn) CUSTOMER DEPOSITS (AED Bn) CAGR 2017-H1’21: 10% CAGR 2017-H1’21: 6% CAGR 2017-H1’21: 11% Jun'21 943.6 Jun'21 398.6 Jun'21 575.2 Dec'20 919.1 Dec'20 386.6 Dec'20 540.9 Dec'19 822.0 Dec'19
Slide 52: A strong financial track record (contd)
A strong financial track record (…contd) Key ratios COST-TO-INCOME RATIO - YTD (%) NIM - YTD (%) NPL RATIO1 (%) PROVISION COVERAGE1 (%) (EX-INTEGRATION COSTS) 109 110 27.7 26.7 27.0 28.3 2.5 4.0 3.9 95 97 25.8 2.4 93 2.1 3.2 3.2 1.8 3.0 1.5 FY'17 FY'18 FY'19 FY'20 H1'21 Dec'17 Dec'18 Dec'19 Dec'20 H
Slide 53: Appendix
doll abo Bo Fist Abu Dhabi Bank Appendix
Slide 54: UAE economic overview
UAE economic overview Diversified economy with a strong fiscal position ~11.1Mn people (2020e)1 • The UAE’s policy response to the COVID-19 pandemic was A cosmopolitan country Expatriates ~85% proactive and decisive in the form of fiscal and monetary stimulus packages, including an AED 256Bn (USD 69
Slide 55: Abu Dhabi - the capital
Abu Dhabi - the capital Highest rated ‘sovereign’ across MENA reflecting strong fiscal and external metrics Aa2 / AA / AA Highest sovereign rating in MENA Moody’s / S&P / Fitch “The ‘AA’ rating reflects Abu Dhabi's strong fiscal and external metrics and high GDP per capita… USD 249Bn 2019e Nominal G
Slide 56: Leading UAE and regional bank
Leading UAE and regional bank H1’21 Banking sector assets1 National Net Profit2 Total Assets2 Equity2 Market Cap4 Credit Ratings4 (USD Bn) champion2,3 (USD Bn) (USD Bn) (USD Bn) (USD Bn) (Moody’s/S&P/Fitch) 874 FAB 1.5 257 28.8 49.6 Aa3 / AA- / AA- UAE 827 SNB 1.5 238 42.6 68.8 A1 / A- / A- KSA 480
Slide 57: Accelerating our digital transformation
Accelerating our digital transformation To enhance efficiency and stakeholder value OUR DIGITAL AMBITIONS Establish World Class Technology Foundations • Migrate to Cloud and modernise on-premise infrastructure • Build fully automated & reusable templates that enable Group Tech to stand immutable com
Slide 58: Policy response to COVID-19 has been swift and effective
Policy response to COVID-19 has been swift and effective Monetary stimulus launched by the UAE Abu Dhabi’s stimulus measures to support economy through the Central Bank - AED 256Bn (USD 70Bn) COVID-19 pandemic • AED 50Bn (USD 13.6Bn) TESS1 facility to provide zero • AED 6bn (USD 1.6Bn) supply chain
Slide 59: Prestigious awards highlight FAB's strength and industry expertise
Prestigious awards highlight FAB’s strength and industry expertise • Best Bank in UAE • Best Equity Bank in the Middle East 2018-2021 • Best Neo Bank • MEA Finance Best Investment Bank in the UAE 2018-2021 • Best User Experience • Best Bank for Cash Management in the Middle East • Best Bank for Paym
Slide 60: Save the date / Thank you
SAVE THE DATE Analyst & Investor Day 2021 Tuesday 23rd November 2021 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 to access latest corporate update