Slide 1: Emirates NBD Investor Presentation
Emirates NBD Investor Presentation March 2012 1
Slide 2: Important Information
Important Information Disclaimer The material in this presentation is general background information about Emirates NBD's activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to
Slide 3: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 3
Slide 4: UAE Economic Update
UAE Economic Update Highlights Real GDP Growth Forecasts Estimated GDP growth to slow to 2.5% in 2012 from an expected 4.6% in 2008 2009 2010 2011F 2012F 2013F 2011 due to boost from higher oil production in 2011 (up 8.8% y/y) which is UAE 3.3% (1.6%) 1.4% 4.6% 2.5% 3.8% unlikely to be repeated in
Slide 5: UAE Economic Update (cont'd)
UAE Economic Update (cont’d) Highlights Trends in CDS spreads during 2011 Currently liquidity conditions show improvement; at year-end though 600 170 reported decline in bank deposits and lower holdings of certificates of deposit by 550 commercial banks 150 500 Factors contributing to outflow in
Slide 6: Dubai Economic Update
Dubai Economic Update Highlights Dubai: GDP growth set to decelerate 2011 GDP growth for Dubai is estimated at 3.5% vs. 2.8% in 2010 4 3.5 Lowered GDP growth forecast for Dubai in 2012 to 2.5% in the context of 3.3 global developments 3 2.8 2.5 UAE is a global and regional trade hub, and non-o
Slide 7: Dubai Economic Update (cont'd)
Dubai Economic Update (cont’d) Highlights Dubai’s Strategic Location Dubai is the 3rd largest centre for re-exports in the world which itself represents almost 50% of GDP Dubai is a strategically located international trading hub with some of the world’s best air and sea ports serving over 205 d
Slide 8: UAE Banking Market Update
UAE Banking Market Update Highlights UAE Banking Sector Growth (AED billion) UAE Banking sector is the largest by assets in the GCC; sector is 2,000 45% dominated by 23 local banks which account for more than 75% of banking 1,800 40% assets; 28 foreign banks account for the remainder 1,600 35% YoY
Slide 9: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 9
Slide 10: Summary
Summary One of the largest financial institutions (by asset size) in the GCC Flagship bank for Dubai Government 56% owned by Dubai Government Consistently profitable; despite significant headwinds during the last two years Fully fledged, diversified financial services offering Ever increasing presen
Slide 11: Emirates NBD at a Glance
Emirates NBD at a Glance Largest Bank in UAE Largest Branch Network* in the UAE No.1 Market share in UAE (at 31 Dec 2011): Dubai 112 Ras al-Khaimah (4) – Assets c.16%; Loans c.19% Abu Dhabi 27 Sharjah 15 Umm al-Quwain (2) – Deposits c.18% Fujairah (3) Other Emirates 12 Ajman (3) Retail market sh
Slide 12: Emirates NBD is the Largest Bank in the UAE and one of the largest in the GCC by Assets
Emirates NBD is the Largest Bank in the UAE and one of the largest in the GCC by Assets as at 31 Dec 2011 UAE Ranking by Assets (AED billion) UAE Ranking by Equity (AED billion) UAE Ranking by Profits (AED million) (1) Emirates NBD 284.6 Emirates NBD 29.1 NBAD 3,708 NBAD 255.7 FGB 26.8 FGB 3,707 ADC
Slide 13: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 13
Slide 14: Profit and Balance Sheet Growth in Recent Years
Profit and Balance Sheet Growth in Recent Years Revenues and Costs (AED billion) Net Profits (AED billion) and Return on Equity (%) Revenue Costs Net Profits ROE (%) +16% 10.8 +14% -4% 9.7 9.9 3.6 3.5 3.7 3.7 21.0% 21.8% 20.2% 3.4 3.3 8.4 3.1 3.0 7.1 2.7 2.5 16.3% 2.3 4.7 1.8 10.2% 10.3% 2006 2007 2
Slide 15: Financial Highlights
Financial Highlights 2011 2011 Financial Results Highlights Key Performance Indicators Net profit of AED 2.5 billion, +6% vs. 2010 Income Statement Change 2011 2010 Net interest income grew 7% y-o-y to AED 7.3 billion due to net interest AED million % margin improvement to 2.68% in 2011 from 2.5
Slide 16: Net Interest Income
Net Interest Income Highlights Net Interest Margin Trends (%) 2011 NIM of 2.68% increased by 16 bps from 2.52% in 2010 due to: – Slightly higher loan spreads due to declining average Eibor rates during YTD NIM 2011 3.01% – Positive impact in 2011 of downward re-pricing on deposits during H1 2011 2
Slide 17: Non Interest Income
Non Interest Income Highlights Composition of Non Interest Income (AED million) 2011 Non interest income decreased by 9% from 2010 due to AED million 2011 2010 Change (%) – AED 250 million loss on investment properties in 2011 vs. AED 195 million loss in 2010 Core gross fee income 2,563 2,365 +8%
Slide 18: Operating Costs and Efficiency
Operating Costs and Efficiency Highlights Cost to Income Ratio Trends Costs increased by 15% to AED 3.5 billion in 2010 resulting from: – Investment in future growth across advertising and marketing costs, and Cost to income ratio (YTD) expansion of retail distribution and sales force 38.5% – Addi
Slide 19: Credit Quality
Credit Quality Key Messages Impaired Loans & Coverage Ratios (%) • 2011 impairment charge of AED 5 billion driven by: 101% 102% 102% 99% 101% 99% – Specific provisions of 94% 94% 90% – AED 2.3 billion for Corporate (of which AED 950 million 90% 83% made in relation to the AED 4.8 billion exposure to
Slide 20: Credit Quality
Credit Quality Group Loan Portfolio by Type – FY 2011 Loan Portfolio by Type – FY 2011 100% = AED 216.8b 100% = AED 216.8b Manuf. Retail Contracting Others 3% Transport & 3% 10% 4% comms Sovereign 2% 27% Trade 4% Personal - Corporate Sovereign 5% 28% Services 8% Real estate Islamic 15% Personal - Co
Slide 21: Credit Quality
Credit Quality Retail and Corporate Loans & Receivables Corporate & Sovereign Lending Portfolio By Sector(1) Corporate Credit Quality Real Estate & Contracting 100% = AED 167.5 b • Impaired loan ratio 13.8% at Q4 2011 vs. 12.0% at Q3 2011 • Exposures to Real Estate and Contracting Sector are AED 25.
Slide 22: Capital Adequacy
Capital Adequacy Highlights Capital Ratios - Basel II (AED billion) CAR declined 0.7% to 20.5% in 2011 from 19.8% in 2010 and T1 declined 19.8% 20.5% 0.4% to 13.0% in 2011 from 12.6% in 2010 18.7% The impact of consolidation of Dubai Bank’s good book RWA’s was -98bps for 11.9% 12.6% 13.0% 10.5%
Slide 23: Funding and Liquidity
Funding and Liquidity Highlights Headline Loan to Deposit Ratio (%) Headline LTD ratio of 105% at Q4 2011 vs. 98% at Q4 2010 due to balance sheet optimisation initiatives and increased deposit competition in the sector 129% The LTD ratio is expected to be managed to the target range of c.95%- 12
Slide 24: Loan and Deposit Trends
Loan and Deposit Trends Highlights Trend in Gross Loans by Type (AED billion) Signs of pickup in new underwriting in 2011: +6% – Gross loans increased 6% y-o-y 221 212 216 – Organic growth in gross loans of 1.5% y-o-y (excl. 205 8 162 173 Dubai Bank Impact) – 25% increase in irrevocable loan commi
Slide 25: Associates and Joint Ventures
Associates and Joint Ventures Composition of Balances Highlights Composition of Associates & Joint Ventures (AED million) Significant de-risking of investment in Union Properties (UP) since 2009: Income Statement Change 2011 2010 - UP investment reduced by AED 0.5 billion in 2009, AED 1.0 billion
Slide 26: Network International
Network International Strategic Partnership with Abraaj Capital Transaction Summary & Strategic Rational Financial Impact on Emirates NBD On 22 December 2010, Network International (NI) entered into a strategic In 2010, the assets and liabilities were disclosed as assets held for sale partnershi
Slide 27: Acquisition of Dubai Bank
Acquisition of Dubai Bank Highlights Financial Impact Upon Acquisition (AED million) As per the decree issued by the Ruler of Dubai on 11 2,588 October 2011, Emirates NBD acquired a 100% stake in 158 Dubai Bank The consideration was AED 10 which equates to the fair 930 value of net assets acquir
Slide 28: Divisional Performance: Wholesale Banking
Divisional Performance Balance Sheet Trends Revenue Trends AED billion AED million Key focus during the period was on balance sheet optimisation, continued proactive management of credit quality, building non- +2% Wholesale Banking +4% risk based and fee generating businesses and selective growth
Slide 29: Divisional Performance: Emirates Islamic Bank and Global Markets & Treasury
Divisional Performance Revenue Trends AED million Revenue declined 3% compared to 2010 despite a non- -3% Global Markets & Treasury recurring gain on a treasury position in 2011 701 678 Globally financial markets remained volatile, adversely impacting 590 the Treasury Trading business Persiste
Slide 30: Contents
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 30
Slide 31: Strategic Imperatives are Evolving
Strategic Imperatives are Evolving Gradual Shift in Focus from Strengthening the Bank to Growth Acceleration 2008 2009 2010 2011 2012 Crisis Growth Strengthening the Bank Management Acceleration 1. Optimise Balance Sheet 1. Optimise Balance Sheet and Capital • Capitalisation Allocation • Liquidity •
Slide 32: Strategic Imperatives
Strategic Imperatives 2011 Objectives Evidence of Success in 2011 2012 Objectives 1 Increase lending activities in Growth in gross loans of 6% in H2 Maintain headline LTD ratio within identified pockets of growth, 2011 95% - 100% target range e.g. SME lending, cards, … Successfully managed H
Slide 33: Strategic Imperatives (cont'd)
Strategic Imperatives (cont’d) 2011 Objectives Evidence of Success in 2011 2012 Objectives 2 Management focus on yield Revamped pricing and customer Revenue growth optimisation selection models in retail banking – Increase cross-sell and bolster fee Extending Key account resulting in improve
Slide 34: Strategic Imperatives (cont'd)
Strategic Imperatives (cont’d) 2011 Objectives Evidence of Success in 2011 2012 Objectives 3 Further enhance employee Talent philosophy and talent model Continue to upgrade and enhance proposition through approved and piloted with rollout IT platforms – undertake talent/leadership development
Slide 35: Strategic Imperatives (cont'd)
Strategic Imperatives (cont’d) 2011 Objectives Evidence of Success in 2011 2012 Objectives 4 Exploit domestic opportunities Exploit domestic opportunities Exploit domestic opportunities – Implementation of Private – Further increase of Private Banking – Continue to enhance domestic Banking gro
Slide 36: Tanfeeth Overview
Tanfeeth Overview Tanfeeth was established as the GCC's 1st shared services company to deliver most cost efficient operations at significantly improved service levels through application of lean manufacturing methodologies to run efficient operations Strategic objectives: Concept and o Enhance c
Slide 37: Tanfeeth Overview (Cont'd)
Tanfeeth Overview (Cont’d) Further improve efficiency and customer satisfaction for Emirates NBD Migrating and transforming the next phase of Emirates NBD processes : o Operations Processing Centre (OPC) o HR Services Focus for 2012 o Finance & Accounting services o Emirates Islamic Bank service
Slide 38: Outlook
Outlook The UAE economy has proved relatively resilient to global and regional developments in 2011, with estimated GDP growth of 4.6% for the year on the back of higher oil production and improving trends in non-oil trade and tourism For 2012 the external environment remains challenging in the
Slide 39: Summary
Summary Robust operating performance with pre-impairment operating profit of AED 6.4 billion Top-line trends for 2011 encouraging with 7% y-o-y growth in net interest income and growth in core fee income of 8%. Continuation of balance sheet de-risking and conservatism on provisioning resulted in imp
Slide 40: Appendix A: Awards
APPENDIX A Awards 40
Slide 41: 2011 Awards
2011 Awards Emirates NBD Capital named “Best investment bank in the UAE” by Global Finance “Human Resources Development in Banking and Financial sector” Award for 2010 at the Sharjah Career Fair 2011 “Best Private Banking Services Overall in UAE” Award in 2011 by Euromoney “Best bank in the UAE” for
Slide 42: 2011 Awards
2011 Awards “E-Banking Excellence” Award for 2011 the Middle East Excellence Awards Institute 2011 “The Leading PR/Marketing Company” by Arab Achievement Award 2011 “Best Fund Management Company” at Arab Achievement Awards 2011 “Marketing Department of the Year” at 2011 International Business Awards
Slide 43: 2011 Awards
2011 Awards “Asia’s Best Brand at 2011” CMO Asia Awards for Excellence in Branding and Marketing “Best Corporate Account” and “Best Business Banking Promotion” at Banker Middle East Product Awards 2011 “The largest financial services contributor to foreign direct investment (FDI) in Saudi Arabia in
Slide 44: 2011 Awards
2011 Awards Emirates NBD wins “Best Foreign Exchange Provider in the UAE” by Global Finance. Emirates NBD Asset Management awarded “Equity Manager of the Year” by Global Investor. Emirates NBD wins Stevies Distinguished Honoree for its international brand building strategy with “Truth and Reality” C
Slide 45: 2011 Awards
2011 Awards Emirates NBD wins Global Award for Brand Leadership in Banking and Financial Services. Emirates NBD “Best Private Sector Customer Service Initiative” 2011 Customer Service Week STAR Awards. Emirates NBD wins “Best Large Bank: Service Quality” 2011 Bank Benchmarking Index. 45
Slide 46: Appendix B: Key Deals
APPENDIX B Key Deals 46
Slide 47: Large Deals Concluded 2011
Large Deals Concluded 2011 June 2011 June 2011 June 2011 July 2011 August 2011 EMIRATES AIRLINES NATIONAL BANK OF IS BANK EMIRATES AIRLINES FUJAIRAH DEPARTMENT OF FINANCE USD 645,000,000 USD 1,000,000,000 USD 500,000,000 MULTI TRANCHE USD 500,000,000 5.125% NOTES DUE TERM LOAN FACILITY AIRCRAFT FINA
Slide 48: Appendix C: Asset Quality Disclosures
APPENDIX C Asset Quality Disclosures 48
Slide 49: Additional Asset Quality Disclosures
Additional Asset Quality Disclosures Investment /CDS Income and Impairments AED million Q1 08 Q2 08 Q3 08 Q4 08 2008 Q1 09 Q2 09 Q3 09 Q4 09 2009 Q1 10 Q2 10 Q3 10 Q4 10 2010 Q1 11 Q2 11 Q3 11 Q4 11 2011 Income: Investment Securities 31 49 (265) (504) (689) 6 241 120 54 421 172 (7) 143 48 356 (12) 7
Slide 50: Additional Asset Quality Disclosures (cont'd)
Additional Asset Quality Disclosures (cont’d) Credit Metrics AED million Q1 08 Q2 08 Q3 08 Q4 08 2008 Q1 09 Q2 09 Q3 09 Q4 09 2009 Q1 10 Q2 10 Q3 10 Q4 10 2010 Q1 11 Q2 11 Q3 11 Q4 11 2011 P&L Impairment Allowances: Credit – Specific 32 99 58 242 431 94 584 473 533 1,684 442 481 1,203 469 2,595 706
Slide 51: Investor Relations
Investor Relations PO Box 777 Emirates NBD Head Office, 4th Floor Dubai, UAE Tel: +971 4 201 2606 Email: IR@emiratesnbd.com Ben Franz-Marwick Head, Investor Relations Tel: +971 4 201 2604 Email: bernhardf@emiratesnbd.com Shagorika Cairae Senior Analyst, Investor Relations Tel: +971 4 201 2620 Email: