First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Q4 2017 Earnings Presentation
32 slides from First Abu Dhabi Bank's earnings presentation, Jan 29, 2018
Slide 1: Q4/FY'17 Earnings Presentation
Q4/FY’17 EARNINGS PRESENTATION January 29th, 2018
Slide 2: Disclaimer
Disclaimer Please note that FAB pro forma consolidated financials at 31 December 2017 serve as the main basis of reference for our Management Discussion & Analysis Report (MDA) and Investor Relations presentation. Comparative figures have been reclassified where appropriate to conform to the present
Slide 3: Q4/FY'17 Key Performance Highlights
Q4/FY’17 Key Performance Highlights • Resilient performance in transitional year • Reported Net Profit at AED 10.9Bn, down 4% yoy; EPS at AED 0.96 • Adjusted Group Net Profit at AED 11.5Bn, broadly in line with 2016 • Delivering top returns for our shareholders in year 1 • Proposing cash dividends o
Slide 4: Resilient performance in transitional year
Resilient performance in transitional year Financial Highlights FY’17 vs. FY’16 In AED Mn FY’17 FY’16 YoY % • Revenue 4% lower due to softer market conditions and portfolio optimisation Revenues 19,533 20,302 -4 Operating expenses (5,875) (5,922) -1 • BAU1 Operating costs down 8% when excluding one-
Slide 5: Resilient performance: met or exceeded most financial guidance
Resilient performance in transitional year We have met or exceeded most elements of financial guidance FY’17 GUIDANCE FY’17 ACTUAL Strong business momentum in second LOAN GROWTH Low single digit negative -1% half, offset by asset optimisation and PPA adjustments Revenues impacted by margin CORE REVE
Slide 6: Delivering top returns for our shareholders in year 1
Delivering top returns for our shareholders in year 1 • Board recommends cash dividends of AED 7.6Bn, highest combined dividend amount distributed by FGB and NBAD • Proposed DPS of AED 0.70 is 11% higher than 2016 pro forma (AED 0.63) 7.6 In AED Bn 6.8 6.8 5.8 NBAD NBAD 2.3 2.3 4.7 NBAD 1.9 3.9 NBAD
Slide 7: Integration exceeds expectations
Integration exceeds expectations All planned milestones successfully delivered in 2017 2017 2018 Q1 2019 Finalisation of organisational structure and operating model o IT system integration on track; to be completed around the end of 2018 (adequate planning, resourcing and tight risk Harmonisati
Slide 8: Integration exceeds expectations: merger benefits evident since 2016
Integration exceeds expectations Merger benefits evident since 2016 G&A expenses BAU1 In AED Mn 30.2% 29.3% 27.9% 28.6% 28.3% CI ratio1 27.0% 6,030 -5% 5,745 5,552 -8% 5,225 5,274 Cost reduction = AED 756Mn FGB 1,947 FGB 4,448 FGB 1,848 FGB 1,856 1,766 FGB 1,446 FAB NBAD NBAD NBAD 4,083 NBAD NBAD 3,
Slide 9: Integration exceeds expectations: synergy financials
Integration exceeds expectations Synergy financials Increasing run-rate cost synergy target In AED • Synergies significantly ahead of target in 2017 2017 2018 2019 2020 Initial phasing 25% 65% 85% 100% • IT system integration around end of 2018 to Revised phasing 33% 55% 85% 100% unlock substantial
Slide 10: PPA accounting
PPA accounting Substantially complete as of 31 Dec 2017 • As per IFRS 3 and Business Combination guidelines, the Bank is required to complete a “Purchase Price Allocation” exercise in order Concept to determine the goodwill arising from the merger Post-PPA Accounting treatment of PPA • All acquired
Slide 11: Robust capital position
Robust capital position Even after PPA / FY’17 proposed dividends CET11 ratio progression • CET1 comfortably in excess of minimum requirement of 9% for 2017 even after PPA impact and FY’17 proposed 2.27% 0.13% dividends 14.8% 0.99% 0.05% 1.42% 14.5% 1.57% 12.9% • Limited RWA impact: Credit RWA optim
Slide 12: Strong business momentum in Q4 drives revenues higher
Strong business momentum in Q4 drives revenues higher Key Highlights Operating Income (AED Mn) • Q4’17 revenues up 10% qoq led by higher fees & commissions FY'17 FY'16 YoY % Q4'17 Q3'17 QoQ % (F&C) on strong pipeline execution, and property gains • FY’17 revenues managed at AED 19.5Bn (-4% yoy) refl
Slide 13: NIM trend reflects margin compression and excess liquidity placement
NIM trend reflects margin compression and impact from placement of excess liquidity Key Highlights Net Interest Margin (%) • Group NIM: -13bps qoq and -6bps yoy reflecting margin compression and the dilutive impact of deployment of short-term Group NIM (Qtr) Group NIM (YTD) excess liquidity • Perfor
Slide 14: Strong synergy realisation drives better operating efficiency
Strong synergy realisation drives better operating efficiency Key Highlights Cost-Income Ratio (%) • Operating expenses BAU reduced 8% yoy, reflecting disciplined C/I ratio (ex-integration) cost management and realisation of substantial synergies at an increased pace C/I ratio (ex-integration and me
Slide 15: CoR continues to benefit from RWA optimisation
CoR continues to benefit from RWA optimisation Key Highlights Impairment Charges, net (AED Mn) & CoR • Impairment charges (net) down 10% yoy driven by lower Impairment Charges, net Cost of Risk(bps)* collective provision charges resulting from balance sheet optimisation and higher write backs 76 • N
Slide 16: Strong corporate loan origination in Q4; deposits higher on Govt inflows
Strong corporate loan origination in Q4; deposits higher on Govt inflows Key Highlights Loans and Advances* (AED Bn) Loans and advances* 345.2 • Loan book increased 1% qoq as strong loan origination in Q4’17 334.4 was partially offset by continued balance sheet optimisation and fair 328.3 330.5 321.
Slide 17: Business Performance
Business Performance Corporate & Investment Banking (CIB) 48% of Group Revenue 2016 2017 AED Bn +7% • Strong business momentum in Q4’17 led to 6% sequential growth in revenue, while FY’17 revenues were down 5% on subdued loan market -5% +0.3% and lower trade activity • Strong revenue growth was reco
Slide 18: Business Performance (continued)
Business Performance (continued…) Subsidiaries of Group 7% Revenue 2016 2017 AED Mn AED Bn • FAB enjoys a highly diversified business model supported by -21% -9% complementary offerings provided across real estate management, +25% Islamic banking, brokerage, and credit cards through its subsidiaries
Slide 19: Outlook
Outlook • Sustained global economic growth • 2-3 Fed rate hikes expected in 2018 • Expansionary budgets across the GCC supported by firming oil prices > USD 50/barrel Economy/ • UAE GDP growth to accelerate to 3.4% (vs. 1.3% in 2017) , led by Abu Dhabi recovery Banking Sector and pick up in governme
Slide 20: Financial guidance
Financial guidance 2018 FINANCIAL GUIDANCE 2020 AMBITIONS Loan Mid-single digit GROWTH Revenue Low single-digit C/I Ratio EFFICIENCY (ex-integration costs) ~26%-27% ~25% ASSET QUALITY Cost of Risk1 65-75bps Net profit growth Mid single-digit PROFITABILITY RoTE2 ~15% 16-17% >13.5% CAPITAL Basel III C
Slide 21: Appendix
APPENDIX {2tuer FAB( First Abu Dhabi Bank
Slide 22: Q4/FY'17 Summary Financials
Q4/FY’17 Summary Financials 22
Slide 23: Q4/FY'17 Summary Financials
Q4/FY’17 Summary Financials Balance Sheet - Summary (AED Bn) Note Dec'17 Dec'16 YoY % Sep'17 QoQ % Loans and advances e 330.5 334.4 -1 328.3 1 Customer deposits e 395.8 379.2 4 378.9 4 CASA (deposits) 116.0 108.5 7 112.4 3 Total Assets e 669.0 649.1 3 644.1 4 Equity (incl Tier-1 capital notes) 101.7
Slide 24: Asset & Loan Mix
Asset & Loan Mix Asset Mix Gross loans by counterparty (AED Bn) Others Cash & CB 9% Balances 347.7 345.1 21% Banking Sector Investments 16% 22.3 21.1 DFB and 77.5 71.2 Personal/Retail Sector Reverse AED 669.0 Bn Repos Corporate/Private Dec’17 5% Sector 184.5 193.2 Public Sector Loans and 58.8 54.6 G
Slide 25: Investment breakdown
Investment breakdown Investments by type Investments by ratings A HFT - Debt 28% 17% HFT - Equity & BBB Funds 12% 1% Held to Maturity (Debt) BB & below AED 107.8 Bn AED 107.8 Bn 7% 7% Dec’17 Dec’17 Unrated – Debt AFS - Debt AFS - Equity & 2% 73% Funds Equity & Funds 2% AA 3% 35% AAA 13% Investments
Slide 26: Customer deposits
Customer deposits Customer deposits (AED Bn) Customer deposits by account type (AED Bn) CASA (%) Total Customer Deposits Notice and time deposits Current Accounts Saving Accounts Certificates of deposits Margin Accounts 393.9 377.3 378.9 395.8 395.8 379.2 379.2 2.8 5.7 26.8 34.7 15.0 13.3 93.2 102.7
Slide 27: Liability mix and Wholesale Funding
Liability mix and Wholesale Funding Liabilities mix Wholesale Funding (AED Bn) Dec’17 Syndicated loan 7.3 Customer Term Deposits Borrowings & Medium Term Notes/Bonds 34.8 70% AED 566.7 Bn Sub Debt Dec’17 8% Others Subordinated debt 0.4 6% Total 42.6 Due to Banks Commercial & Repos Paper 12% 4% Whole
Slide 28: Robust capital position
Robust capital position 3 Key Highlights Strong capital ratios (Basel III) • Robust capital position with Basel III CET13 ratio at 14.5%, comfortably in excess of regulatory requirements CET1 CAR CAR • Tier 1 capital ratio at 16.7% and total CAR at 17.8% (vs 17.0% and 18.2% 17.8% 18.2% in Dec’16) 1.
Slide 29: Prestigious awards highlight FAB's strength and industry expertise
Prestigious awards highlight FAB’s strength and industry expertise in UAE and MENA • Best Investment Bank in the • Best FX provider in UAE • Best Overall Cash Management Bank in MENA United Arab Emirates • Best Bank for Liquidity Management in MENA • Best Bank for Financing in the • Safest Bank in t
Slide 30: Prestigious awards highlight FAB's strength and industry expertise
Prestigious awards highlight FAB’s strength and industry expertise in UAE and MENA - Best Trade & Supply Chain - Most Outstanding Islamic Finance Solution Banking Window - UAE Asset Manager of the - Best Seamless Government Year - Digital Leader Award - Experience Government - Best Trade Finance Ban
Slide 31: Executed Landmark Public Transactions in 2017
Executed Landmark Public Transactions in 2017 DCM LCM CA/ECM Abu Dhabi Crude Oil Government of Abu Dhabi APICORP Emaar Development Dubai Metro – Saudi Electricity ADNOC Pipeline USD 10.0 bn USD 1.5 billion Department of Finance USD 1.75 billion USD 6 billion USD 3.037 bn Senior Unsecured USD 500 mn
Slide 32: Thank You!
THANK YOU! For more information, please visit www.bankfortheuae.com or contact FAB Investor Relations team ir@bankfab.com You can also download FAB’s Investor Relations App to access latest corporate updates, FAB pro forma financial information and FGB/NBAD archives Join the movement GrowStronger.co