First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Q4 2022 Earnings Presentation
37 slides from First Abu Dhabi Bank's earnings presentation, Jan 26, 2023
Slide 1: Q4/FY'22 Earnings Presentation
Q4/FY’22 EARNINGS PRESENTATION 26 JANUARY 2023
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: Introductory Remarks
Introductory Remarks Q4/FY’22 Earnings Presentation
Slide 4: A standout performance in 2022
A standout performance in 2022 Record net profit (AED Bn) Net Profit RoTE % • The Group achieved record revenue and net profit in 2022, demonstrating excellent progress against our strategic priorities. 14.6 16.2 16.1 13.0 15.2 15.7 • All our core businesses sustained a positive momentum, 12.5 12.5
Slide 5: Our aspirations
Our long-term strategic aspirations reflect our deep roots and commitments Our aspirations Banking powerhouse driving regional economic growth and diversification Sustain our track The most trusted partner for our record of superior clients wherever we operate and sustainable shareholder returns MEN
Slide 6: Our strategic plan is designed to create long term value for all stakeholders
Our strategic plan is designed to create long term value for all stakeholders 1 2 3 STIMULATE CATALYSE ENHANCE GROWTH CHANGE CONNECTIVITY Be the regional leader in chosen Deliver exceptional customer experience segments and markets Be GCC+E’s preferred financial gateway by enhancing digital capabili
Slide 7: Delivering against our sustainability agenda
Delivering against our sustainability agenda FY’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 >AED 33Bn Established a Board Risk &
Slide 8: Financial Review
Financial Review Q4/FY’22 Earnings Presentation
Slide 9: FY'22 Key Performance Highlights
FY’22 Key Performance Highlights Key Financial Highlights FY’22 • Net profit 13.4 ▲ 7% AED Bn YoY Group Net Profit +7% yoy to AED 13.4 Billion, a historical high, translating to 15.7% RoTE • Group Revenue +10% yoy driven by strong business volumes, solid underlying performance across core businesses
Slide 10: Met or exceeded FY'22 financial guidance metrics
Met or exceeded FY’22 financial guidance metrics FY’22 financial guidance FY’22 actual Loan growth Low teens +12% YoY Cost of Risk <80bps 62bps Provision coverage > 90% 98% CET1 > 13.5% 13.6% (pre-dividend) Q4/FY’22 Earnings Presentation 10
Slide 11: Record FY'22 net profit driven by core business momentum and Magnati stake sale
Record FY’22 net profit driven by core business momentum and Magnati stake sale; prudent risk management and cost discipline maintained amid ongoing investments FY’22 Summary P&L Net profit bridge (AED Mn) in AED Mn FY’22 YoY%* +7% YoY Net-Interest Income 14,386 +23 Underlying Operating Income
Slide 12: Q4'22 underlying NPAT supported by higher NII and investment income
Q4’22 underlying NPAT supported by higher NII and investment income, offset by negative MTM on properties, prudent provisioning and legacy system write-offs Q4’22 Summary P&L Net profit bridge (AED Mn) -16% QoQ in AED Mn Q4’22 QoQ% YoY%* -5% QoQ on an underlying basis Net-Interest Income 4,209 +15
Slide 13: Underlying operating performance reflects strong business activity and interest rate tailwinds
Underlying operating performance reflects strong levels of business activity and interest rate tailwinds offset by exceptional trading gains in 2021 Operating income bridge (AED Mn) Net interest income bridge (AED Mn) Non-interest income bridge (AED Mn) -4% YoY YoY ↑23% YoY ↓36% 14,386 21,681 +1333
Slide 14: Double-digit balance sheet growth reflects business momentum and strong liquidity profile
Double-digit balance sheet growth reflects business momentum and strong liquidity profile Quarterly trend Asset Mix - Dec’21 +11%Ytd Asset Mix - Dec’22 in AED Bn Dec’22 QoQ% YoY% (last 5 quarters) AED 1,001Bn (∆ in AED Bn) AED 1,110Bn 1,146 1,110 1,001 982 1,042 Assets 1,110 (3) +11 Cash & CB Ba
Slide 15: Double-digit NII growth reflects higher interest rates and strong volumes
Double-digit NII growth reflects benefits from higher interest rates, strong business volumes and the positive impact of BAE inclusion Net interest income (AED Mn) • NII +23% in FY’22; reflecting the impact of strong business Performing loan yields (%) volumes, higher interest rates and positive imp
Slide 16: Non-II performance impacted by Magnati deconsolidation and 2021 trading gains
Non-II performance impacted by Magnati deconsolidation & exceptional trading gains in 2021, partially offset by continued strength in fee-based businesses and client flow Non-interest income • Fees and commissions FY’22 FY’21 YoY% Q4’22 Q3’22 QoQ% Q4’21 YoY% (In AED Mn) FY’22: -8% YoY, yet up 2% whe
Slide 17: Opex trend reflects FABMisr integration and legacy systems write-off
Opex trend reflects FABMisr integration, legacy systems write-off in Q4’22 as part of our ongoing technology transformation strategy, and continued investments into the business Opex drivers YoY (AED Mn) Operating expenses trend (AED Mn) and C/I ratio (%) C/I ratio (ex-integration)2 +13% YoY 33.2 31
Slide 18: Healthy asset quality metrics with NPL ratio at 3.9% and coverage at 98%
Healthy asset quality metrics with NPL ratio at 3.9% and coverage at 98%; FY’22 CoR at 62bps, reflects prudent provisioning 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) 86
Slide 19: Strong organic capital generation; CET1 above regulatory requirements
Strong organic capital generation despite market and regulatory headwinds; year-end CET1 comfortably above regulatory requirements and well within guidance CET11 ratio progression FY’22 RoRWA (%ytd) and RWAs (AED Bn) +27bps 2.3 3.6 2.8 2.5 2.3 13.3% -129bps 13.6% 579 583 595 584 572 +17bps +232bps 5
Slide 20: Structural market shifts and client needs shaping our strategic focus
Structural market shifts, more sophisticated client needs are constantly shaping our strategic focus More sophisticated client needs with increased capital markets activity GCC set to continue to outperform global growth in MENA and global markets volatility + Backdrop of higher energy/oil prices +
Slide 21: Looking ahead: 2023e financial guidance
Looking ahead: 2023e financial guidance • Underlying operating performance to benefit from 2023e financial guidance healthy pipeline execution in UAE and targeted markets, and higher interest rates Loan growth Mid single-digit • Deepening of client relationships and broadening of product capabilitie
Slide 22: Wrap-up
Wrap-up ▪ We’ve achieved record revenue and net profits in 2022, reflecting positive momentum across our core businesses in a favorable regional backdrop, and successful strategy execution ▪ We will continue to invest in the franchise to expand our product offering, strengthen digital capabilities a
Slide 23: Appendix
Appendix Q4/FY’22 Earnings Presentation 23
Slide 24: Loan growth led by top tier clients in Other FI's and government sector
Loan growth led by top tier clients in Other FI’s and government sector A well diversified, high-quality loan book Gross loans trend Gross loans by counterparty YoY movement in gross loans by counterparty AED Bn QoQ ↓1%, YoY ↑12%, 479.7 +47 Trade-related 428.8 (1) 479.7 477.9 484.5 479.7 16% 428.8 4
Slide 25: 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% 4.8% 4.9% 4.9% 4.8% Real Estate & Construction, NPL 46% ratio 3.7% 3.5% 3.2% 3.1% 3.7% Manufacturing, 3% 17.0 17.0 16.8 18.5 Energy, 5% AED 18.5Bn 16.3 24% Dec’22 28% 28% 28% 28% Othe
Slide 26: High-quality investment book
High-quality investment book Investments by type Investments by ratings Dec’22 Dec’21 Dec’22 Dec’22 Dec’21 AED 205.7Bn AAA 24% 16% Dec’22 14% 19% AED 205.7Bn FVTPL - Debt AA 23% 27% Dec’21 FVTPL - Equity & Funds 2% 5% AED 191.0Bn A 26% 24% Amortised Cost (Debt Inv) 2% 2% BBB 7% 8% Dec’21 • 72% rated
Slide 27: Strong YoY growth in deposits on healthy inflows
Strong YoY growth in deposits on healthy inflows Sequential decline in CASA on account of some migration toward time deposits Customer deposits trend YoY movement in deposits by counterparty AED Bn QoQ ↓6%, YoY ↑14% +55 Total Customer Deposits CASA 1 +53 (0) (3) (11) 700.6 745.8 700.6 614.7 614.7 64
Slide 28: 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 Term Borrowings & Issuances1 Maturities1 (AED Mn) Deposits, Sub Debt, 6% 71% 21,355 Others, 10% AED 995.0Bn 18,631 USD 17,274 Dec’22 Due to
Slide 29: 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% 9% Formosa EUR Callable Bullet US$ Bullet CHF 9% 32% 11% Private Conventional Public 8
Slide 30: Leader in MENA Green Bond Issuance
Leader in MENA Green Bond Issuance Highlights: FAB Green Bonds Outstanding (as of 31 Dec’22) • In 2022, FAB’s Sustainable Finance Framework was updated to further align with market best practices and to expand the scope of financial products. CHF Public HKD PP 32% 4% • The framework was developed to
Slide 31: Diversified franchise by business segment and geography
Diversified franchise by business segment and geography 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 taxes FY’22
Slide 32: Business segments overview – IB & CCB
Business segments overview – IB & CCB Investment Banking (IB) Key highlights AED Mn FY’22 YoY% • IB delivered another quarter of revenue growth, up Quarterly operating income trend (AED Bn) Loans & Deposits (AED Bn) Operating Income 8,848 (26) 26% qoq; FY’22 revenue lower by 26% yoy as Loans: QoQ ↓3
Slide 33: Business segments overview – CB & GPB
Business segments overview – CB & GPB Consumer Banking (CB) Key highlights AED Mn FY’22 YoY% • Ex-Magnati deconsolidation, CB profitability was Quarterly operating income trend (AED Bn) Loans & Deposits (AED Bn) stable yoy on the back of strong cost discipline, Operating income 4,128 (14) Loans: QoQ
Slide 34: International – financial overview
International – financial overview International International FY’22 YoY%* (AED Mn) Key highlights Quarterly operating income trend (AED Bn) Operating Income • Operating income +32% yoy in FY’22 to cross AED 5Bn for the first 5,022 32 (FABMisr: 2,247) time, driven by the inclusion of Bank Audi Egypt
Slide 35: Q4/FY'22 financial highlights – Group financials
Q4/FY’22 financial highlights – Group financials Income Statement - Summary (AED Mn) Q4’22 Q3’22 QoQ % Q4’21 YoY % FY’22 FY’21 YoY% Net interest Income 4,209 3,653 15 3,036 39 14,386 11,658 23 Non- interest Income 1,703 1,841 (8) 2,660 (36) 6,454 10,023 (36) Operating Income 5,911 5,494 8 5,695 4 20
Slide 36: Q4/FY'22 financial highlights – Segmental
Q4/FY’22 financial highlights – Segmental FY'22 AED Mn Q4'22 Q3'22 QoQ % Q4'21 YoY % FY'22 FY'21 YoY % Contr% Operating income 5,911 5,494 8 5,696 4 20,840 21,681 (4) 100% Investment banking (IB) 2,818 2,239 26 3,860 (27) 8,848 12,036 (26) 42% Corporate & Commercial banking (CCB) 1,518 1,273 19 897
Slide 37: 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 to access latest corporate updates our presentations