First Abu Dhabi Bank · ADX:FAB
First Abu Dhabi Bank — Q4 2021 Earnings Presentation
37 slides from First Abu Dhabi Bank's earnings presentation, Jan 27, 2022
Slide 1: Q4/FY'21 Earnings Presentation
Q4/FY’21 EARNINGS PRESENTATION 27 JANUARY 2022
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 Hana Al Rostamani Group Chief Executive Officer Q4/FY'21 Earnings Presentation
Slide 4: Executive Summary: Key Financial Highlights FY'21
Executive Summary Key Financial Highlights FY’21 Net profit 12.5 ▲19% AED Bn YoY • Record net profit and revenue in a year of strong economic rebound. • Core businesses showed solid momentum led by our Investment Earnings 1.12▲ 20% YoY Banking business. Per Share AED • Total assets in excess of AED
Slide 5: Delivering superior shareholder returns while enabling future growth
Delivering superior shareholder returns while enabling future growth FY’21 dividend proposal of 70 fils equivalent per share 12,011 12,520 12,531 10,915 10,555 Net Profit (AED Million) 7,628 8,064 8,081 8,081 7,644 70 74 74 74 70 Cash 49 fils Dividends fils/share fils/share fils/share fils/share fil
Slide 6: Building on our foundations to drive future growth
Building on our foundations to drive future growth Regional Leadership Disciplined Growth Delivering Transformation • Top ranked regional bank across all MENA Investment Banking league tables • Total assets exceeding AED 1 Trillion >50% c.60 NPS New-to-bank • Outperformed industry loan and deposit g
Slide 7: As the UAE's largest bank, we are committed to championing ESG
As the UAE’s largest bank, we are committed to championing ESG • Sustainable Finance: Finance and/or facilitate >USD 75Bn of sustainable or social projects by 2030 Environment • Carbon emissions: committed to become a Net zero bank by 2050 We have defined a clear set of targets to drive positive cha
Slide 8: Financial Review
FY’21 Financial Review James Burdett Group Chief Financial Officer Q4/FY'21 Earnings Presentation
Slide 9: FY'21 Key Performance Highlights
FY’21 Key Performance Highlights Record net profit (AED Mn) ▪ A record performance in 2021 with Group net profit Net Profit +19% yoy to AED 12.5Bn, driven by positive momentum RoTE % across core businesses, and double-digit growth in revenue led 16.1 15.1 16.2 by our Investment Banking business 14.6
Slide 10: We have met / exceeded FY'21 financial guidance metrics
We have met / exceeded FY’21 financial guidance metrics FY’21 actual FY’21 financial guidance Loan growth +6% Mid-single digit C/I Ratio 26.4% <30% (ex-integration costs) Cost of Risk 65bps <100bps Provision coverage 98% ~ 90% CET1 13.4% > 13.5% (pre-dividend) Q4/FY'21 Earnings Presentation 10
Slide 11: Enhanced revenue generation, positive Jaws and risk discipline drive record 2021 net profit
Enhanced revenue generation, positive Jaws and risk discipline drive record 2021 net profit in AED Mn FY’21* YoY% Q4’21 QoQ% YoY% Net profit bridge (AED Mn) Operating +19% YoY Income 21,681 +17 5,695 (11) +16 Net interest 11,658 (5) 3,036 (3) (1) income Operating Income +3,107Mn Non-interest 1
Slide 12: Balance sheet effectively deployed; total assets exceed AED 1 Trillion
Balance sheet effectively deployed to generate higher returns; total assets exceed AED 1 Trillion mark Quarterly trend Asset Mix - Dec’21 in AED Bn Dec’21 QoQ% YoY% Asset Mix - Dec’20 +9%Ytd (last 5 quarters) AED 919Bn (∆ in AED Bn) AED 1,000Bn 983 1,000 919 941 944 Cash & CB Balances 25% 26% As
Slide 13: Revenue growth primarily driven by Investment Banking
Revenue growth primarily driven by Investment Banking, with all businesses showing positive momentum Revenue bridge (AED Mn) Revenue trends and segment contribution (AED Bn) +17% YoY QoQ ↓11%, YoY ↑16% YoY ↑17% 16% 22% (488) (265) 21.7 +5051 (28) 6.4 5.7 18.6 Lower Lower fees from (1,163)
Slide 14: NII trend reflects lower interest rates, partially offset by volume growth
NII trend reflects lower interest rates and lower IIS reversals, partially offset by volume growth and positive impact of BAE acquisition Net interest income (AED Mn) QoQ ↓3% , YoY ↓1% YoY ↓5% • P&L impact from a +/-25bps parallel 3,079 3,141 3,036 12,256 11,658 2,802 movement in interest r
Slide 15: Strong trading performance and fee generation drive non-interest income growth
Strong trading performance and robust fee-generation drive 59% yoy growth in non-interest income Non-interest income • Fees and commissions FY’21 FY’20 YoY% Q4’21 Q3’21 QoQ% Q4’20 YoY% (In AED Mn) +4% YoY reflecting growth in fee-generating business and strong momentum across loan, debt Non-interest
Slide 16: Opex +9% yoy excluding BAE; Cost-to-Income ratio improves
Opex +9% yoy excluding BAE impact amidst ongoing investment; Cost-to-Income ratio improves YoY on positive Jaws Operating expenses trend (AED Mn) and C/I ratio (%) Opex drivers YoY (AED Mn) C/I ratio (ex-integration) 8 months of BAE costs & 29.6 27.0 related integration costs 25.7 27.3 26.4 24.2 25.
Slide 17: Stable NPL ratio, and adequate provisioning; CoR within guidance
Stable NPL ratio, and adequate provisioning; CoR within guidance Impairment charges, net (AED 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 NPLs (AED Bn) Provisions (AED Bn) 90 67 81
Slide 18: Strong capital generation, partially offset by regulatory changes
Strong capital generation, partially offset by regulatory changes CET11 ratio progression Q4/FY’21 • Capital ratios remain well above minimum regulatory requirements; Tier 1 and CAR ratios at 15.2% and 16.3%, respectively 14.9% DPS: 74 fils 1.60% AED 8.08Bn 13.4% Cash DPS3: 49 fils -49bps 0.9
Slide 19: GDP growth expected to accelerate in 22e
GDP growth expected to accelerate in 22e UAE Real GDP1 2022F: 4.8% Brent Oil Price (USD / bbl)2 2022F: Avg USD 75 / bbl Interest rate forecast (%)3 2022F: 2-3 rate hikes FAB in-house forecast FAB in-house forecast Federal Funds Target Rate FAB in-house forecast 8% 4.8% 100 3 3.4% 3.2% 4% 75 80 2 0%
Slide 20: Looking ahead: 2022e guidance
Looking ahead: 2022e guidance • Underlying performance to reflect sustained 2022e financial guidance business activity and pipeline execution in UAE and targeted markets Loan growth Mid to high-single digit • NII to benefit from higher volumes and rising interest rates Cost of Risk • Growth in fee-g
Slide 21: Wrap-up
Wrap-up ▪ We’ve achieved record revenue and net profits in 2021, reflecting positive momentum across our core businesses in an improved backdrop, and successful strategy execution in Investment Banking ▪ We are entering 2022 with a robust foundation across all key metrics, and a strong capital posit
Slide 22: Appendix
Appendix Q4/FY'21 Earnings Presentation 22
Slide 23: Asset & loan mix
Asset & loan mix Conservative asset mix with a well diversified, high-quality loan book Asset mix Gross loans by counterparty AED Bn AED Bn 428.8 403.3 1,000.3 919.1 Cash & CB Balances 18% Personal/ Retail 26% 18% 25% 7% DFB and Reverse Repos Corporate/ Private 8% 17% 19% 47% 47% Investments Banks 4
Slide 24: Loan growth led by corporates; strong deposit inflows
Loan growth led by corporates, trade finance, mortgages & BAE inclusion; Strong deposit inflows led by CASA Loans and advances, gross (AED Bn) YoY Loan growth driven by: QoQ ↑2%, YoY ↑6% FY'20 403 Trade-related Govt +2 International loans (net) • Corporate clients in UAE and MENA GREs +3 • Trade-fin
Slide 25: Supporting our customers through payment deferrals
Supporting our customers through payment deferrals UAE CB TESS deferral facility expired Dec-end 2021; TESS recovery extended to June-end 2022 TESS Programme Overview Deferrals, exposure and impairment allowances (AED Mn) From April 1st 2020, relief measures were extended to our retail, SME As of 31
Slide 26: 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) 5.2% 5.3% 5.1% 5.2% 5.0% Real Estate & Construction, 44% NPL ratio 3.6% 3.6% 3.6% 3.5% 3.7% Manufacturing, 4% 15.8 15.7 16.2 16.4 17.0 AED 17.0Bn Energy, 1% Dec’21 31% 32% 30% 30% 27% Othe
Slide 27: High-quality investment book
High-quality investment book Investments by type Investments by ratings BBB • 67% rated A and above A 8% FVTPL - Debt, 19% • 75% investment grade FVOCI - Debt, 73% 24% and above BB & below • 92% of BB & below are AED 191.0Bn 18% Sovereign & GREs Dec’21 FVTPL - Equity & Funds, 5% AED 191.0Bn Dec’21 A
Slide 28: Customer deposits
Customer deposits Customer Deposits Customer deposits by account type Total Customer Deposits CASA 2 (AED Bn) (AED Bn) 540.9 614.5 606.0 614.5 568.3 575.2 0.5% 0.5% Margin Accounts 540.9 9% 8% 2% 2% Certificates of deposits 39% 45% Saving Accounts Current Accounts 49% 45% 41% 44% 44% 45% 47% Notice
Slide 29: 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, Issuances1 Maturities1 (AED Mn) 69% Term Borrowings & Sub Debt, 8% 21,355 Others, 6% 18,086 USD AED 887.5Bn 17,274 Dec’21 16,152 D
Slide 30: 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 Private EUR Placement ex-Formosa 6% 10% 6% 11% Formosa CHF Conventional US$ Bullet 8% Public Bullet Private
Slide 31: Dominant franchise in UAE with strategic international presence
Dominant franchise in UAE with strategic international presence Breakdown by Business Breakdown by Geography Investment Banking Corporate & Commercial Banking Consumer Banking Global Private Banking UAE International Head Office 3 Revenue Profit after taxes Revenue Profit after taxes 16% 22% 8% 89%
Slide 32: International – financial overview
International – financial overview International International FY’21* YoY% (AED Mn) Key highlights Quarterly Revenue trend (AED Bn) Revenue (BAE – 597) 3,797 26 • Revenue from international operations grew 26% YoY ↑26% QoQ ↑11%, YoY ↑27% YoY, contributing 18% to Group revenue, with higher con
Slide 33: Business segments overview – IB & CCB
Business segments overview – IB & CCB Investment banking (IB) Key highlights AED Mn FY’21 YoY% • Record revenue performance Quarterly Revenue trend (AED Bn) Loans & Deposits (AED Bn) Loans: QoQ ↑1%, YoY ↑3% Revenue 12,391 69 reflecting improving market sentiment QoQ ↑8%, YoY ↑110% YoY ↑69%
Slide 34: Business segments overview – CB & GPB
Business segments overview – CB & GPB Consumer banking (CB) Key highlights AED Mn FY’21 YoY% • CB registered strong sales momentum Quarterly Revenue trend (AED Bn) Loans & Deposits (AED Bn) Loans: QoQ ↓1%, YoY ↑5% Revenue 4,875 (5) during 2021 capitalising on improving QoQ ↓1%, YoY ↓2% YoY ↓
Slide 35: Q4/FY'21 financial highlights – Group financials
Q4/FY’21 financial highlights – Group financials Income Statement - Summary (AED Mn) Q4’21 Q3’21 QoQ % Q4’20 YoY % FY’21 FY’20 YoY% Net interest Income 3,036 3,141 (3) 3,079 (1) 11,658 12,256 (5) Non- interest Income 2,660 3,270 (19) 1,829 45 10,023 6,317 59 Total Operating Income 5,695 6,411 (11) 4
Slide 36: Q4/FY'21 financial highlights – Segmental
Q4/FY’21 financial highlights – Segmental FY'21 AED Mn Q4'21 Q3'21 QoQ % Q4'20 YoY % FY'21 FY'20 YoY % Contr% Revenues 5,696 6,411 (11) 4,908 16 21,681 18,574 17 100% Investment banking (IB) 3,945 3,641 8 1,879 110 12,391 7,341 69 57% Corporate & Commercial banking (CCB) 921 934 (1) 1,215 (24) 3,480
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 to access latest corporate updates Scan to download