First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — H1 2020 Earnings Presentation
28 slides from First Abu Dhabi Bank's earnings presentation, Jul 28, 2020
Slide 1: Q2/H1'20 Earnings Presentation
Q2/H1’20 Earnings Presentation 28 July 2020
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. The information contained herein has been prepared by First Abu Dhabi Bank P.J.S.C (“FAB”). The information contained in th
Slide 3: Q2/H1'20 performance key highlights
Q2/H1’20 performance key highlights We delivered a resilient performance in the second quarter and first half of 2020 despite significant headwinds, including rate cuts and COVID-19-led economic slowdown We conservatively managed our balance sheet, and supported our customers through difficult times
Slide 4: A resilient performance despite significant headwinds
A resilient performance despite significant headwinds Q2’20 NPAT sequentially flat, operating profit up 11% Net profit bridge (AED Mn) Q2 performance was impacted by the economic slowdown induced by +116 (322) COVID-19, and a historically low +229 interest rate environment 2,408 (19) 2,411 Operating
Slide 5: A challenging environment
A challenging environment The shape and timing of economic recovery remain uncertain Markets remain volatile and credit demand is subdued, despite recent improvements in key indicators Brent (USD/bbl) UAE PMI Eibor 3M Deposits (MoM) 80 58 3% Libor 3M Credit, net (MoM) 70 3% 54 60 2% 50 50.4 2% 42 50
Slide 6: We responded to customer needs with agility
We responded to customer needs with agility Leveraging our digital capabilities and innovative solutions Increased demand and usage of digital channels Cash Transactions ATM Transactions Digital Logins Digital Transactions 108 100 99 124 123 100 120 119 118 117 88 75 112 113 107 72 69 103 63 100 1
Slide 7: Balance sheet conservatively managed
Balance sheet conservatively managed Liquidity prudently deployed QoQ change (AED Bn) QoQ% Ytd% Jun’20 change change Liquidity position significantly improved, Cash & balances leveraging our flight-to-safety status… +23 199 +13% +17% with CB's • Customer deposits ↑ AED 22Bn qoq (+4%), including CASA
Slide 8: Strong capital position
Strong capital position CET1 improved to 13.6%, from 12.2% in Q1’20 CET11 ratio progression QoQ • CET1 improved 141bps sequentially to 13.6%, on Partial reversal the back of capital generation, partial reversal of AFS DPS: 74 fils of AFS reserves losses reflecting the tightening of credit spreads in
Slide 9: Conservative asset mix
Conservative asset mix A highly liquid balance sheet; only 44% of total assets are loans and advances Total Assets - Jun’20 AED 866Bn High quality loan portfolio underpinned • 31% exposure to Government & GREs Cash & CB by our privileged position as the banker to 1 the Abu Dhabi government • ~7% of
Slide 10: Resilient asset quality
Resilient asset quality Cost of Risk up sequentially, reflecting cautious provisioning Impairment charges, net (AED Mn) & CoR1 (%) Q2 movements in Impairment charges & NPLs by segment Net impairment charges CoR (L&A) (bps) Impairment charges +246 +77 by segment 108 87 (AED Mn) 1,060 738 70 49 50 48
Slide 11: NII and margin trends
NII and margin trends Significant headwinds from rate cuts Net interest income (AED Mn) QoQ↑7%, YoY↓1% YoY↓1% Quarterly YTD QoQ ↔ 6,415 6,323 YoY ↓31bps Net interest margin (%) 3,301 3,329 3,263 3,031 3,061 2.21 2.19 2.11 2.25 2.17 1.89 1.90 1.90 QoQ↓43bps Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 H1'19 H1'20 Y
Slide 12: Non-interest income
Non-interest income Adversely impacted by business slowdown and market headwinds Non-interest income (AED Mn) Key highlights Net F&C income Net FX & Investment inc Other income H1’20 non-interest income down 17% yoy on the back of: QoQ↑2%, YoY↓17% YoY↓17% • Fees and commissions 6% lower yoy, impacte
Slide 13: Strong cost discipline
Strong cost discipline Opex down 9% qoq with Cost/Income ratio improving to 25.5% in Q2’20 Opex drivers QoQ (AED Mn) • Operating expenses well under control, down • xxx 9% sequentially in the second quarter, 1,353 +27 reflecting cost reduction initiatives amidst (85) continued strategic and digital
Slide 14: H2'20 outlook and FY'20 financial guidance
H2’20 outlook and FY’20 financial guidance We remain cautious in the context of a challenging and uncertain economic environment H2’20 Outlook FY20 financial guidance Healthy government and GRE pipeline to support lending activity in the Mid/high single digit Loan growth second half ex. large one-of
Slide 15: Wrapping up
Wrapping up We delivered a resilient performance despite unprecedented economic events and market conditions Our foundation is robust, enabling us to continue to support our core clients as we expect a pickup in demand in the second half Our competitive strengths, in addition to the various relief m
Slide 16: Appendix
vail pubsicLiy FAB First Abu Dhabi Bank Grow Stronger Appendix
Slide 17: Asset & loan mix
Asset & loan mix Asset mix Gross loans by counterparty (AED Bn) Jun’20 10% 421.7 AED 866.0Bn Cash & CB Balances 400.6 Banks 8% 23% Dec’19 16% DFB and Reverse 6% 5% Personal/ Retail 21% AED 822.0Bn 16% Repos 17% 18% Loans and Advances Corporate/ Private 5% 43% 46% 7% Investments Public Sector 18% 22%
Slide 18: Strong liquidity position
Strong liquidity position Customer deposits (AED Bn) QoQ↑4%, YoY↑12%, Ytd ↔ 519.2 497.1 518.7 • FAB continued to attract liquidity from its global client 462.2 476.8 franchise, owing to its safe haven status and flight-to- safety in periods of market turmoil Notice, Time & 345.2 322.5 • Customer dep
Slide 19: NPLs and Loans /ECL by stage
NPLs and Loans /ECL by stage NPLs1 by segment (AED Bn) NPLs1 by sector (%) PB CIB (incl Subsidiaries) Real Estate & 5.7% 5.8% 5.8% Construction, 39% 5.0% 4.9% NPL ratio 2.2% 2.2% 2.7% 3.1% 3.3% Manufacturing, 9% 13.9 15.6 AED 15.6Bn 12.0 13.5 Energy, 2% 11.6 Jun’20 34% 36% Others, 2% Trading, 11% 48
Slide 20: Supporting our clients through payment deferrals
Supporting our clients through payment deferrals From April 1st 2020, relief measures The Group has undertaken a comprehensive portfolio review in line with the UAE CB were extended to our retail, SME and guidance corporate customers in the form of • Preemptive action taken to identify clients benef
Slide 21: Investments breakdown
Investments breakdown Investments by type Investments by ratings FVTPL - Debt 10% FVTPL - Equity & BBB Funds A 31% 11% 1% Amortised Cost BB & below AED 140.4Bn (Debt Inv) 83% 10% AED 140.4Bn Jun’20 1% of portfolio is Jun’20 FVOCI - Debt 87% FVOCI - Equity investment grade Unrated - Debt 0.4% 5% Equi
Slide 22: Customer deposits
Customer deposits Customer deposits (AED Bn) Customer deposits by account type (AED Bn) Notice and time deposits Current Accounts 2 Total Customer Deposits CASA Saving Accounts Certificates of deposits 518.7 Margin Accounts 519.2 497.1 462.2 476.8 519.2 518.7 1% 1% 6% 6% 2% 2% 32% 36% 59% 55% 37% 37
Slide 23: Liability mix and funding profile
Liability mix and funding profile Liability Mix Medium-term wholesale funding (AED Bn) Term MTNs Customer Borrowings Medium Term Notes 50.1 Sukuks Deposits & Sub Debt 67% Subordinated debt 0.4 8% Others Sukuks 9.3 AED 768.0Bn 8% Jun’20 22.7 Due to 4.9 2.5 1.9 Banks & Subordinated debt 0.4 1.0 8.2 5.
Slide 24: Segmental performance (by business)
Segmental performance (by business) Corporate & Investment Banking (CIB)1 of Group 61% Revenue In AED Mn H1’20 YoY % • CIB delivered a resilient performance in the first half of 2020 despite unprecedented Revenues 5,741 (3) market conditions resulting from the COVID-19 pandemic. Revenue was down 3%
Slide 25: Segmental performance (by geography)
Segmental performance (by geography) UAE of Group 85% In AED Mn H1’20 YoY % Revenue Revenues 7,932 (9) • Revenues were significantly impacted due to rate cuts coupled with a 21% decline in non-interest income on lower FX & investment income Operating expenses (2,015) (7) • Revenues declined 9% yoy,
Slide 26: Q2/H1'20 Financial Highlights
Q2/H1’20 Financial Highlights P&L summary In AED Mn Q2’20 Q1’20 QoQ% Q2’19 YoY% H1’20 H1’19 YoY% Revenue 4,795 4,566 +5 5,153 (7) 9,361 10,095 (7) Operating expenses (1,237) (1,353) (9) (1,365) (9) (2,589) (2,679) (3) Impairment charges (1,060) (738) +44 (467) +127 (1,799) (874) +106 Net profit (aft
Slide 27: FAB is taking decisive actions in response to COVID-19
FAB is taking decisive actions in response to COVID-19 We activated a robust Business Continuity Plan, enabling We took care of our employees, to safeguard their the bank’s functions to operate with speed and efficiency health and safety while limiting exposure • Flexible working policies being impl
Slide 28: 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 to access latest corporate updates Scan to download