Commercial Bank Of Dubai(psc) · DFM:CBD
Commercial Bank Of Dubai(psc) — Commercial Bank of Dubai — FY2023 Earnings Presentation
33 slides from Commercial Bank Of Dubai(psc)'s earnings presentation, Jan 31, 2024
Slide 1: Investor Presentation for the 12 months ended 31 December 2023
2023 Investor Presentation for the 12 months ended 31st December 2023 Dr Bernd van Linder Chief Executive Officer Mr Darren Clarke 31 January 2024 Chief Financial Officer
Slide 2: Executive Summary: Financial Highlights FY 2023
Executive Summary Financial Highlights FY 2023 ▪ Record net profit result and record AED 2,650m proposed dividend p 45.2% from 2022 Net Profit ▪ Excellent return on equity generating internal capital for growth Operating AED 3,710m p 31.8% from 2022 ▪ Solid balance sheet with healthy Profit liquidit
Slide 3: CBD dividend history – Record net profit and cash dividend
CBD dividend history – Record net profit of AED 2,650m and record cash dividend of 44.38 fils per share, a 595m (81.5%) increase in cash dividend AED m Net Profit Cash Payout % Cash dividend Total Dividend % Bonus shares 2,650 +17.3% 1,825 50% 1,451 1,325 1,400 50% 1,325 40% 1,120 41% 50% 50% 913 18
Slide 4: Earnings Snapshot
Earnings Snapshot – Aincome record financial result on higher market interest rates, robust non-funded and loan growth, partially offset by higher expenses AED m Change Change (%) 2023 2023 - 2022 2023 - 2022 Net profit 2,650.1 825.0 45.2% Return on equity (RoE) 21.23% 524 bp 32.8% Return on assets
Slide 5: Financial Performance Snapshot – FY 2023
Financial Performance Snapshot – FY 2023 AED b Shareholder Solid Robust Solid Operating Value Creation Balance Sheet Core Ratios Performance Revenues Assets CET1 Ratio Operating Profit +29.5% +11.0% +14bps +31.8% 4.9 114.3 116.2 129.0 12.7% 12.1% 12.4% 12.5% 3.7 3.8 97.5 2.8 3.0 3.2 2.2 2.3 2020 202
Slide 6: Progress against Strategic Execution FY 2023
Progress against Strategic Execution FY 2023 Achieve Become Customer Default Financial Results Employer of Choice Focus Digital Interest rate tailwinds Recruiting, Deepening customer % of wholesale developing and relationships 99% supported by rise in transactions initiated CASA retaining UAE throug
Slide 7: Financial Guidance 2024 estimate
Financial Guidance 2024 estimate – Underlying business activity and momentum supports forward looking sustainable net profit growth Looking Ahead 2024e Financial Guidance • Above system loan growth Loan growth Mid single digit growth • Cost of Risk expected to decline with improved asset Cost of Ris
Slide 8: Net Profit Bridge on Prior Year
Net Profit Bridge on Prior Year – Record profit driven by higher NII and OOI partially offset by expenses and specific impairments AED m NII higher by 894m on Fees and Other Net Credit Other Impairment Other Operating Staff expenses increased market Income favourable by Impairment was charge on the
Slide 9: Core Performance Trends
Core Performance Trends – Excellent revenue performance supported by higher interest rates, non-funded income and solid loan growth AED m Net profit Revenue OOI NII 2,650 4,938 +18% +33% 1,368 +45% 3,812 +30% (28%) 1,825 3,183 1,136 2,978 1,451 (30%) 1,105 1,092 1,120 (35%) (37%) 3,570 2,676 (72%) 1
Slide 10: Strategic Financial KPIs
Strategic Financial KPI’s – Deepening customer relationships, increased interest income and non- funded income, uplifting return on equity and assets Return on Equity (ROE) Cost to Income Ratio -3% 27.11% 27.18% 21.23% 26.14% 24.87% +26% -5% 15.99% 13.22% +33% 10.69% 2020 2021 2022 2023 2020 2021 20
Slide 11: Profitability and Returns
Profitability and Returns – Revenue outperformance driving remarkable returns and positive jaws despite increase in expenses AED m Expenses Revenue and Expense JAWS Revenue Expenses 1,228 +15% 4,938 997 3,812 865 +23% 3,183 807 2,978 +6% +5% +7% 0% 1,228 865 997 807 2020 2021 2022 2023 2020 2021 202
Slide 12: Net Interest Margin – retention despite higher funding costs
Outstanding NII benefitting from higher benchmark interest rates and CASA Net Interest Margin – retention despite higher funding costs and pressure on customer margins Interest Income and Expense Net Interest Margin Interest Income Interest Expense AED m NIM YTD NIM QTD 885 916 880 889 823 3.39 3.27
Slide 13: Asset Quality and Impairments
Asset Quality and Impairments – Improved asset quality with a lower non-performing loan ratio and higher coverage AED m Cost of Risk Credit Impairment Charges Cost of Risk and Recoveries Credit Impairment Coverage Recoveries Coverage inc collateral stage 3 1.51% 119.53% 120.83% 120.96% 110.15% 1.17%
Slide 14: Balance Sheet and Capital Strength
Balance Sheet and Capital Strength – Capital ratios remain well above regulatory requirements Capital Adequacy Ratio (CAR) Common Cost Equity Tier 1 (CET1) of Risk CAR Regulatory limit (Minimum) CET1 Regulatory limit (Minimum) -1% 0% 16.65% 16.04% 12.71% 12.40% 12.54% 15.82% 15.95% 12.13% 13.00% 13.
Slide 15: Funding and Liquidity
Funding and Liquidity – Diversified deposit base with increased franchise CASA AED b Customer Deposits Other Funding Sources Time CASA Acceptances and Others Notes and Medium Term Borrowing Equity Due to Banks < 1year Green Bond +8% 88.3 Due to Banks > 1year AT1 Capital 82.7 81.1 +14% 40.7 69.8 44.5
Slide 16: Balance Sheet Analysis
Balance Sheet Analysis – Backing customer ambitions across all market sectors of the UAE economy AED b Assets Mix Assets and Loans Net Loans and Advances Total Assets 6.1% 3.0% 11.6% +10% 3.0% 11.7% Cash and balances with CB Due from banks AED 129.0 billion Net loans and advances 129.0 116.2 Total A
Slide 17: Diversified business mix
Diversified business mix – Improving returns through economic cycles Revenue Revenue Asset Funding Diversification Segmentation Diversification Diversification 19% 28% 34% 19% 2023 2023 2023 2023 72% 24% 36% 34% 34% Revenue Revenue Assets 13% Funding 6% 3% 20% 21% 25% 12% 72% 28% 43% 57% 62% 38% 68%
Slide 18: Divisional Contributions
Divisional Contributions – Strong Personal Banking performance on the back of higher market rates AED m Divisional operating profit movement Divisional revenue movement +32% +30% 711.9 3,710.1 594.6 4,937.9 592.0 412.6 3,812.2 48.4 2,815.6 -1.2 -109.3 -228.8 2022 Instit Corp Personal Other 2023 2022
Slide 19: Innovating in Digital
Investing in award winning and industry recognized digital customer Innovating in Digital – experience CBD Digital App CBD Investr iBusiness Mobile App • App rated 4.8 on App store and 4.7 • Best Innovation in Investment • Best Mobile Banking Service on Google Play Banking and Best Robo Advisory imp
Slide 20: Digital Initiatives
Digital Initiatives – Improving the digital banking experience for our customers Instant Account Tailored and easily accessible offerings including Credit Cards and Bills Payment at one touch Opening Quick Loans Page 19 of 32
Slide 21: ESG Framework – Five key pillars
ESG Framework – Five key pillars of the ESG framework Environment People Financial Inclusion Governance Community We hold ourselves We promote We are default We protect our We are a local to account while Emiratization digital, all- stakeholders by bank, backing supporting our and a healthy, inclusi
Slide 22: Our commitment – progress across all 5 ESG pillars
Our commitment – In 2023 we progressed across all 5 pillars of our ESG Framework Environment People Financial Inclusion Governance Community Signed UAE Emiratisation – Over 180k bank Corporate 27% reduction in Climate- 37.1% of all accounts provided Governance customers Responsible employees UAENs t
Slide 23: Awards and Achievements
Awards and Achievements “Number One Bank in the UAE” “Best Digitization Initiatives” # 1 – Forbes World’s Best Banks 2022 Report – ME Banking AI Awards 2023 “Best Robo Advisory Provider” “Best Innovation in Investment Banking” for CBD Investr – MEA Finance Wealth & Investment Awards 2022 – MEA Finan
Slide 24: Concluding remarks
Concluding remarks Record net profit result and record proposed dividend Strong loan growth increasing market share Targeted investment in end-to-end digital solutions Delivering higher shareholder returns with momentum to continue in 2024 CBD is well positioned to successfully execute our ongoing s
Slide 25: Board of Directors and Executive Committee
Board of Directors and Executive Committee Board of Directors Executive Committee H.E. Humaid Mohammad Dr. Bernd van Linder Al Qutami Chief Executive Officer Chairman H.E. Sultan Saeed Mohamed Mr. Abdullah Salim Alturifi Mr. Darren Clarke Mr. Fahad Al Muhairi Nasser Al Mansoori Director Chief Financ
Slide 26: Global Economic Update
Global Economic Update – Sticky inflation and higher central bank interest rates US Dollar Index Central Bank Overnight Rates 120.0 SOFR (USD) SONIA (GBP) STR (EURO) 6.00 115.0 5.4 5.00 5.2 110.0 4.00 3.9 105.0 3.00 100.0 101.4 2.00 95.0 1.00 90.0 0.00 85.0 -1.00 Jan-19Jul-19Jul-19 Jan-19 Jan-20 Jan
Slide 27: UAE Economic Update – Real estate and tourism
UAE Economic Update – Solid real estate and tourism sector performance with population growth driving economic activity and confidence UAE GDP and Inflation Growth Purchasing Managers Index Inflation GDP UAE KSA 57.4 57.5 7.85% 5.10% 4.83% 4.07% 3.80% 3.38% 3.10% 2.40% 3.10% 2.50% 3.12% 1.61% 1.97%
Slide 28: UAE Economic Update – Sound fiscal measures
UAE Economic Update – Sound fiscal measures boosting economic growth UAE Stock Market Indices UAE Fiscal Position DFM ADX Surplus / (Deficit) (AEDb) As % of GDP 11,500 250 10.40% 10% 10,500 9,577.9 200 193.7 5.69% 4.97% 9,500 5% 8,500 150 1.90% 0% 7,500 100 0.59% 106.4 98.0 -1.68% 0.33% 6,500 -2.82%
Slide 29: Dubai Economic Update – Business confidence
Dubai Economic Update – Business confidence remains robust notwithstanding higher global market interest rates Business Confidence Index SME Index Trend China Dubai USA UK India Germany 180 Dubai’s BCI ranks highest at 135.7 180 170 170 160 160 150 150 136.6 140 135.7 140 130 130 120 120 110 110 100
Slide 30: Dubai Economic Update – Economic activity
Dubai Economic Update – Strong economic activity and business confidence Dubai GDP growth Dubai hospitality Dec-22 Dec-23 AED 7.60% +18.8% 6.20% 1,061 +22.8% 3.30% 2.70% 2.80% 893 1.90% 2.20% 840 684 +3.4% 77 79 -3.50% 2016 2017 2018 2019 2020 2021 2022 9M 2023 Occupancy % Average daily rate Revenue
Slide 31: UAE Banking Sector
UAE Banking Sector – Backbone of the UAE economy and supporting business ambition Key industry indicators Average Loan Yield & Cost of Deposits vs 3M EIBOR AEDb 2020 2021 2022 Nov-23 YTD 3M EIBOR Yield on Loans Cost of Deposits 6.70% Total assets 3,188 3,322 3,669 4,026 p 9.8% 6.00% 5.50% 5.29% Cust
Slide 32: UAE Banking Industry – Credit growth moderating
UAE Banking Industry – Credit growth moderating with high interest rates System-wide Gross loans and deposits Credit Growth in the UAE Banking Sector Gross loans Deposits Domestic Credit Foreign Credit 2,444 31.18% 2,222 AED Billion 1,997 1,995 1,870 1,885 1,881 1,756 1,759 1,779 1,794 1,656 1,580 1
Slide 33: Disclaimer
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