First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Debt Investor Presentation (September 2021)
55 slides from First Abu Dhabi Bank's debt investor presentation, September 2021
Slide 1: Debt Investor Presentation September 2021
DEBT INVESTOR PRESENTATION September 2021
Slide 2: FAB in brief
Jol nibgid iy ‘ 1 Fst abu Dab ark FAB in brief
Slide 3: FAB – UAE's leading bank, and one of the world's largest and safest financial institutions
FAB – UAE’s leading bank, and one of the world’s largest and safest financial institutions FAB is the result of the historic merger between two Europe, Americas, Middle East & Africa (EAMEA) Asia Pacific (APAC) iconic Abu Dhabi-based franchises (FGB and NBAD) in France UAE Libya China/Hong Kong 2017
Slide 4: 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 5: 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 6: H1'21 Strategic Update
doll abo Bo Fist Abu Dhabi Bank H1’21 Strategic Update
Slide 7: 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 8: Building momentum in strategic areas: 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 9: Building momentum in strategic areas: digital transformation and sustainability
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 10: 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 11: 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 12: 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 13: We took 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 14: 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 15: 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 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: 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 18: Q2/H1'21 Financial Performance
Q2/H1’21 Financial Performance 18
Slide 19: 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 USD Bn 1.5 ▲ 11% YoY 2.6 ▲ 2% YoY improved backdrop Q2’21 USD Bn 0.8 ▲ 16% 19% QoQ YoY 1.4 ▲ 18% 8% YoY QoQ ▪ Our foundation remains robust across all key metr
Slide 20: Strong set of results
Strong set of results Reflect positive momentum across core businesses, helped by contribution of Bank Audi Egypt Net profit bridge (USD Mn) H1’21 summary P&L* (USD Mn) +16% QoQ H1’21 YoY% +221 Revenue 2,607 +2 (BAE – 42Mn) +187 Non-interest (36) Costs (754) +7 (BAE – 16Mn) income (56) (70) 784 +34
Slide 21: Resilient asset quality and adequate provision levels
Resilient asset quality and adequate provision levels Lower impairment charges YoY reflect improved backdrop Impairment charges, net (USD 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 22: NPLs and Loans/ECL by stage
NPLs and Loans/ECL by stage NPLs1 by segment NPLs1 by sector (%) PB CIB (incl Subsidiaries) (USD 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% USD 4.4Bn 4.3 4.3 4.3 4.3 4.4 Energy, 1% Jun’21 30% 31% 29% Others, 2% Trading, 15% 36% 3
Slide 23: NII and margins reflect headwinds from rate cuts
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 (USD Mn) QoQ ↑5%, YoY ↓14% YoY ↓13% 883 • P&L impact from a +/-25bps 838 1,722 parallel movement in interest rates is 777 729 763 1,492 estimat
Slide 24: 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 USD Mn) +16% on strong pipeline execution and trade-related fees Non-interest income 651 464 +40 498 +
Slide 25: 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 (USD Mn) and C/I ratio (%) Opex drivers QoQ (USD Mn) C/I ratio (ex-integration) +17 395 25.5 28.0 25.7 29.6 27.3 27.3 28.3 +3 +16 359 QoQ↑10%, Y
Slide 26: 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 (USD Bn) Asset Mix - Mar’21 Asset Mix - Jun’21 USD 256Bn USD 257Bn Cash & CB Balances 27% (7) 24% Due from Banks & 7% 8% (3) Reverse Repos 67% rated A & ab
Slide 27: 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 USD Bn USD 256.9Bn 109.8 113.4 Banks Cash & CB Balances 42% 24% Dec’20 42% 2% 3% Personal/ Retail USD 250.2Bn 25% DFB and Reverse Repos 18% 18% Investments Corporate/
Slide 28: 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 <30% and higher oil price
Slide 29: Capital, Funding and Liquidity
Capital, Funding and Liquidity 29
Slide 30: 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:USD 0.2 U
Slide 31: Strong lending growth driven by FI trade, CIB's 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 (USD Bn) QoQ ↑5%, YoY ↑4%, Ytd ↑3% Q1'21 108 QoQ Loan growth driven by: Trade-related Govt +0.7 International loans (net) • Corporate
Slide 32: Customer deposits
Customer deposits Customer Deposits Customer deposits by account type Total Customer Deposits CASA 2 (USD Bn) (USD Bn) 147.3 156.6 1% 1% 163.8 147.3 154.7 156.6 9% 9% Margin Accounts 141.2 2% 2% Certificates of deposits 39% 41% Saving Accounts Current Accounts 49% 47% 38% 36% 41% 44% 44% Notice and
Slide 33: 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 USD 48.2Bn USD 48.2Bn 19% Jun’21 Amortised Cost (Debt Inv), 3% Jun’21 AA Unrated
Slide 34: 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 (USD Mn) 69% Sub Debt, 9% 5,815 Others, 6% USD USD 228.1Bn 4,870 Jun’21 4,398 Due to Bank
Slide 35: 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 Placement Formosa 6% 6% Formosa 12% 9% US$ Bullet CHF Conventional Bullet 17% Private 7% Pu
Slide 36: 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 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: Appendix 1: Additional Financial and Business Information
Appendix 1: Additional Financial and Business Information 38
Slide 39: A strong financial track record
A strong financial track record Balance Sheet & Income Statement TOTAL ASSETS (USD Bn) LOANS & ADVANCES (USD Bn) CUSTOMER DEPOSITS (USD Bn) CAGR 2017-H1’21: 10% CAGR 2017-H1’21: 6% CAGR 2017-H1’21: 11% Jun'21 256.9 Jun'21 108.5 Jun'21 156.6 Dec'20 250.2 Dec'20 105.3 Dec'20 147.3 Dec'19 223.8 Dec'19
Slide 40: 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 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: 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 (USD Mn) H1’21 summary P&L (USD Mn) +29% QoQ H1’21 YoY% +239 Revenue 1,842 +16 +23 +9 (80) (1) 846 Costs (339) +4 656 Operating 1
Slide 43: Personal Banking
Personal Banking Renewed consumer confidence, strong commercial momentum, and the positive impact of Bank Audi support healthy performance Operating profit bridge (USD Mn) H1’21 summary P&L (USD Mn) +3% QoQ H1’21 YoY% +14 Revenue 801 -4 (8) 221 227 Costs (353) +3 Operating 448 -8 Profit Impairment (
Slide 44: 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 45: Q2/H1'21 financial highlights – Group financials
Q2/H1’21 financial highlights – Group financials Income Statement - Summary (USD Mn) Q2’21 Q1’21 QoQ % Q2’20 YoY % H1’21 H1’20 YoY% Net interest Income 763 729 5 883 (14) 1,492 1,722 (13) Non- interest Income 651 464 40 422 54 1,114 827 35 Total Operating Income 1,414 1,193 18 1,306 8 2,607 2,549 2
Slide 46: Q2/H1'21 financial highlights – Segmental
Q2/H1’21 financial highlights – Segmental H1'21 USD Mn Q2'21 Q1’21 QoQ % Q2’20 YoY % H1’21 H1’20 YoY % Contr% Revenues 1,414 1,193 18 1,305 8 2,607 2,549 2 CIB 1,020 821 24 865 18 1,842 1,584 16 71% PB 408 393 4 383 7 801 831 (4) 31% HO & Subsidiaries (15) (21) (30) 58 na (36) 133 na -2% UAE 1,149 9
Slide 47: 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 48: Appendix 2: Economic and Banking Sector Review
Appendix 2: Economic and Banking Sector Review 48
Slide 49: 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 50: 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 51: 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 Apr-5: Dubai May-12: Sep: Dubai & Sharjah Dec: Start of Feb: New Apr: Daily cases 4,500 Jun-2: Abu Jul-7:
Slide 52: 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 53: 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 54: 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 55: 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
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