Banks. Emirates NBD PJSC. United Arab Emirates. Full Rating Report. Key Rating Drivers. Rating Sensitivities. Ratings

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1 United Arab Emirates Full Rating Report Ratings Foreign Currency Long-Term IDR A+ Short-Term IDR F1 Viability Rating bb+ Support Rating 1 Support Rating Floor A+ Sovereign Risk (Abu Dhabi) Long-Term Foreign-Currency IDR Long-Term Local-Currency IDR Outlooks Long-Term Foreign-Currency IDR Sovereign Long-Term Foreign-Currency IDR Sovereign Long-Term Local-Currency IDR Financial Data 31 Dec 17 AA AA Stable Stable Stable 31 Dec 16 Total assets (USDm) 128, ,988.8 Total assets (AEDm) 470, ,004.0 Total equity (AEDm) 49, ,383.8 Operating profit 8, ,387.5 (AEDm) Published net income 8, ,239.2 (AEDm) Comprehensive 8, ,978.0 income (AEDm) Operating ROAA (%) Operating ROAE (%) Fitch Core Capital ratio (%) Tier 1 capital ratio (%) Total capital ratio (%) Related Research GCC Banks: 2017 Compendium (November 2017) UAE Banks Results Dashboard (July 2017) Fitch 2018 Outlook: Gulf Cooperation Council Banks (November 2017) Abu Dhabi (December 2017) Analysts Anton Lopatin anton.lopatin@fitchratings.com Nicolas Charreyron nicolas.charreyron@fitchratings.com Key Rating Drivers Support Drives Ratings: s (ENBD) Issuer Default Ratings (IDRs) are driven by an extremely high probability of support from the UAE authorities if needed. This reflects a long history of support in the UAE as well as ENBD s domestic systemically important bank (D-SIB) status in the UAE and its flagship status in Dubai. Asset Quality Constrains VR: ENBD s Viability Rating (VR) is constrained by its high but improving impaired loans, moderate share of restructured loans and high loan concentration. The VR also reflects the bank s leading UAE franchise, improved profitability, strong customer deposit base and healthy capital ratios. Well-Reserved Impaired Loans: The impaired loans (including interest in suspense) ratio was unchanged at 8.2% at end Impaired loans were 94% covered by reserves. Restructured loans and loans more than 90 days past due but not impaired (PDNI) represented low single digits of gross loans. The total problem loans coverage ratio was weaker, but Fitch Ratings still views this as reasonable. High Dubai Exposure: ENBD has substantial exposure to the Dubai government and related entities. The Dubai sovereign exposure represented 42% of gross loans at end-2017, equal to 3.2x Fitch Core Capital (FCC). Loans to the real-estate sector made up a further 18% of gross loans (1.4x FCC), while lending to investment companies represented 0.6x FCC. Comfortable Capital Cushions: The FCC ratio was 16.3% at end The Tier 1 and total capital ratios were higher at 19.5% and 21.9%, respectively, due to hybrid capital notes not included in FCC. ENBD is considered to be a D-SIB by the UAE Central Bank (CBUAE) and therefore has an additional D-SIB charge on minimum regulatory requirements (10.5% Tier 1 ratio; 12.5% total capital ratio). Fitch views the cushions on the bank s minimum requirements as robust despite the zero risk-weight applied on its Dubai government loans. Solid Retail Funding Franchise: ENBD is mainly funded by customer deposits, which represented 81% of total funding at end The bank has a strong retail deposit franchise in the UAE; its deposit base is therefore more diversified than peers. The 20 largest deposits accounted for 19% of total customer deposits. ENBD s liquidity is adequate, with liquid assets accounting for 24% of total assets and covering deposits by a reasonable 34%. Good Profitability: ROAE was higher than peers at 18.2% in 2017 (2016: 17.5%), up from 9.9% in 2013 due to reduced loan impairment charges (LICs) as ENBD did not generate new large impaired loans, while legacy loans are well covered. The net interest margin (NIM) fell by about 35bp in 2016 as a result of tighter liquidity in the UAE, and increased deposit competition and consequently cost of funding. The NIM was stable in Rating Sensitivities Creditworthiness of UAE: The bank s IDRs are sensitive to any changes in Fitch s view on the UAE s ability and propensity to support the banking system or the bank. Asset Quality and Concentrations: An upgrade of the VR would be possible if the bank materially reduced the remaining impaired and restructured loans, and reduced its high concentration. Significant deterioration in asset quality or capital ratios could lead to a downgrade of the VR. 20

2 Macro Statistics Sovereign IDR AA/Stable (Abu Dhabi)/Outlook MPI a 1 BSI b bbb a Macro Prudential Indicator b Banking System Indicator Source: Fitch Macro (Abu Dhabi) Performance GDP (USDbn) GDP per capita (USD 000) Real GDP (% change) Current account balance (% GDP) Net external debt (% GDP) Sovereign net foreign assets (% of GDP) Government balance (% of GDP) Government debt (% of GDP) International reserves (USDbn) Source: Fitch Support IDRs Based on Sovereign Support Fitch believes the UAE authorities have a strong ability to support the banking system. Our view of support considers the sovereign s strong financial flexibility, sustained by its sovereign wealth funds, revenue from its hydrocarbon production, despite the lower oil prices, and the moderate size of the UAE banking sector in relation to the country s GDP. The increasingly diversified non-oil sectors also underpin the sovereign s ability to support the banks. Fitch s opinion of support is also based on the willingness of the authorities to support the banking sector. This has been demonstrated by the UAE authorities long history of supporting domestic banks, most recently in the crisis through system-wide liquidity facilities and Tier 2 capital from the federal government and the CBUAE, and injections of additional Tier 1 capital for some banks from their respective emirates. Fitch classifies ENBD as a D-SIB in the UAE. Its Support Rating Floor is one notch above the UAE D-SIB Support Rating Floor due to its flagship status in the UAE, especially in Dubai. This importance is derived from its size as the second-largest bank the UAE after First Abu Dhabi Bank by loans and advances and total assets. Operating Environment Economic Growth Forecast for 2018 Abu Dhabi real GDP shrank by about 1.4% in 2017 but Fitch expects it to return to improve in 2018 with growth of 1.8%, underpinned by non-oil GDP growth of 3.5% over the next two years. GDP growth continues to be supported by the government spending, albeit less than in the past due to the declining oil revenue. The UAE economy has been performing well in logistics, aviation, tourism, retail and services for the past three years. Dubai has benefitted from the regional turmoil and is regarded as a regional haven for investments, businesses or tourism. Good Abu Dhabi Resilience to Lower Oil Prices Abu Dhabi has a strong sovereign balance sheet, with high foreign assets and minimal external debt. By extension, this applies to the UAE. Abu Dhabi maintains sizeable buffers, which provide resilience to the lower oil prices, after they started falling in mid Fitch estimates fiscal break-even Brent crude oil price of USD60 a barrel, while the actual price was close to USD70/bbl at end-february Fitch expects fiscal deficits of 5% of GDP in 2018 and 3% of GDP in 2019, under our baseline assumption that Brent will average USD57.5/bbl in 2018 and USD57.5/bbl in 2019 and beyond combined with moderate growth in government spending. The UAE government began collecting excise tax in October 2017 and introduced 5% value added tax at the beginning of 2018 to boost non-oil income, although the full revenue benefits will take time to materialise. It is still not clear how the revenue from these taxes will be split between the emirate-level governments and federal government. Over the medium term, the government expects to close any remaining fiscal gap through additional oil production, new dividends from the state-owned enterprises (SOEs) and a reduction in government contributions to SOEs, foreign government or the federal government. Stable Banking Sector The UAE banking sector expanded by about 2% in 2017 after stronger growth of 6% in 2016, based on CBUAE data. We expect lending to accelerate moderately in 2018 and forecast midsingle-digit growth. Related Criteria Bank Rating Criteria (March 2018) We believe UAE banks asset-quality metrics are generally at their optimum range with a sector average FCC ratio of 15% at end Loan-loss reserve coverage has been increasing at all banks over the past three years and is now stable. Strong internal capital generation capacity 2

3 and solid liquidity buffers provide a sound cushion against asset-quality deterioration. Some banks have accessed the international debt capital markets, raising subordinated and hybrid Tier 1 capital as well as senior debt. We expect capital levels to be stable in 2018 due to modest loan growth. Funding and liquidity is strong across UAE banks. Deposits have been behaviourally stable, although contractually short-term. Liquidity pressures have improved, with Abu Dhabi sovereign issuance and subsequent capital injection into the Abu Dhabi banks, but slower deposit growth and higher, albeit improved, pricing is likely to remain. Dubai GREs Restructuring Completed, but Bullet Repayments Leave Uncertainty Debt restructuring of the troubled Dubai-based government-related entities (GREs) is largely complete, although many repayments are still bullet, with some maturing in the 2020s. This gives the GREs time to make asset sales but depends on recovering market prices. The health of the real-estate market, where there has been some price corrections, is another important consideration for the overall economic outlook, and worse-than-expected performance could lead to the re-emergence of asset-quality problems in the UAE. Some Dubai GREs are now performing well and have repaid portions of their restructured debts prior to maturity. Dubai World (DW) has completed its second restructuring. DW reached an agreement with a majority of its creditors on a second restructuring of its USD15 billion outstanding debt in early Under agreed conditions, DW repaid USD3 billion in 2015, while the remaining USD12 billion tranche is amortising and has final maturity in Dubai Holding (DH) completed its large debt restructuring in In contrast to DW, DH s debt was restructured in form of bullet repayments up to 2024, contingent upon successful asset disposals and the completion of projects, leaving significant uncertainty. Asset Composition End-2017 Islamic 12% Treasury 10% Retail 13% Source: Fitch Other 6% Corporate 59% Segment Performance (2017) Corporate Retail Treasury Other Islamic 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Source: Fitch Operating income Net profit Company Profile Flagship Bank of Dubai ENBD is the second-largest bank in the UAE with a market share of about 25% by total assets. It was formed in 2007 from the merger of Emirates Bank International and National Bank of Dubai. The merger completed in ENBD is listed on the Dubai Stock Exchange and its main shareholder is the Investment Corporation of Dubai (ICD; majority owned by the Dubai government). The shareholder structure is stable, with 56% being held by ICD, 5% by Capital Assets LLC, a local company, with other shareholders holding stakes below 5%. ENBD is Dubai s flagship bank and is highly exposed to the Dubai government and Dubai GREs, including large real-estate developers and investment companies, such as DW and DH. The bank is headquartered in Dubai, where it has a wide network of about 100 branches, with 161 branches in total in the UAE, which is the largest network among UAE banks. Universal Commercial Bank Model; High Sovereign Exposure ENBD is active in all banking segments retail, wholesale and Islamic. The latter is handled through Emirates Islamic (EI), which is 100% owned by ENBD and operates under its own brand and banking licence. The Islamic business segment performance improved in 2017 due to lower impairment charges as its asset quality stabilised in 2017 as a result of tighter underwriting and a book clean-up in late ENBD is highly exposed directly to the Dubai government (this made up 42% of gross loans at end-2017, or 3x FCC). 3

4 Management and Strategy Experienced Management Team ENBD s executives have substantial experience in banking, with staff from local, MENA and international banking groups. Shayne Nelson was appointed as ENBD s chief executive in 2013, having previously been chief executive of Standard Chartered Private Bank in Singapore. The management structure is well established and has clear lines of reporting. All divisions report to the chief executive apart from the Internal Audit department and general counsel, which both report directly to the board. Divisional heads have deep market knowledge and experience. Low Turnover in the Board of Directors, Independent Directors in the Minority ENBD s board of directors has nine members who meet monthly to review the overall strategy, corporate structure, dividend policy and group risk-management policies. The chairman of the board is Sheikh Ahmed Bin Saeed Al Maktoom, the uncle of the ruler of Dubai. He is also the chairman of DW. ENBD does not disclose how many directors are considered independent, but Fitch believes that only three members are independent. The other members are not considered by Fitch as independent because they hold positions in other GREs or because of family connections (although both are applicable to many local banks in the UAE). Strategy Focuses on Customer Experience and Efficiency ENBD s strategic objectives are clearly determined and documented, and execution is regularly monitored. ENBD views customer satisfaction as a big part of its strategy. To improve client experience, the bank plans further development of its digital channels, products and capabilities. The bank expects to drive asset growth through all business segments. ENBD also aims to increase its share of fee and commission in its operating income with a greater focus on treasury and online banking. In the wholesale segment, ENBD focuses on reducing singlename concentration (which is among the highest of UAE banks), maintain the growth in its financial institutions business and build up its international segment including through acquisitions. ENBD is continually developing in terms of digitalisation and systems to meet customer needs and retain its leading domestic retail franchise. ENBD s customer service (including internet and smartphone applications) is robust and viewed as one of the best among the UAE banks. Reasonable Execution; Tightening of Underwriting Standards Loan impairment charges increased in 2016 in the Islamic and consumer banking segments due to weaker market conditions and deterioration in the SME segment. However, performance in both segments recovered in 2017 thanks to tightening of underwriting standards. The corporate segment improved in 2017 driven by an improvement in margins and lending growth. Although ENBD aims to diversify its lending book, concentration is still substantial. The bank s single-name concentration is the highest among Fitch-rated UAE banks. Execution by Segments, Corporate Consumer Treasury Islamic Other Total (AEDm) Total operating income 4,979 4,298 6,833 6, ,377 2, ,471 15,455 14,748 Operating expenses ,908-1, ,012-1,093-1,388-1,287-4,844-4,888 Impairment charges , ,229-2,608 Other Segment profit for the period 3,765 3,532 4,326 3, , ,346 7,239 Source: ENBD 4

5 Loan Book Composition End-9M17 Other corporate loans 5% Trade 6% FIs 7% Services 3% Manufacturing 2% Government 42% Risk Appetite High Dubai Related-Party Lending The underwriting process in ENBD is similar to that established in other UAE banks. As the flagship bank of the Dubai government, ENBD finances many state projects and therefore has a higher-than-sector-average volume of related-party lending. At end-2017, ENBD reported AED143 billion of related-party loans (43% of total gross loans, 3.2x FCC). This almost entirely comprised AED140 billion in direct exposure to the Dubai government. Retail loans 17% Source: Fitch Real estate 18% Impaired loans (including interest in suspense) accounted for 8.2% at end-2017, which was unchanged from end In Fitch s view, total problem loans could be above 10%, including an additional 0.8% of loans more 90 days past due but accounted as not-impaired and lowsingle-digit loans being previously restructured. (This is Fitch s assessment, as the bank does not disclose the amount of restructured loans.) Mid-Single-Digit Growth Is Expected in the Medium Term Growth (%) Growth of total assets Growth of gross loans Source: ENBD, Fitch s estimations ENBD s consolidated lending book grew by AED15 billion (5%) in 2017 largely due to a AED9 billion increase in lending to Dubai government. The bank forecasts lending growth in the midsingle-digit range in line with nominal GDP growth. Limited Interest-Rate Risk Interest-rate risk in the banking book is limited, as most assets and liabilities (about 75%) are floating rate. ENBD mainly uses gap analysis, but also carries out simulations and stress-tests to assess the impact of a 2% shock to the yield curve, which would have meant a decrease/increase of 2%-4% of FCC at end Securities Held for Liquidity Management Purposes Investments in securities made up 5% of total assets at end-2017 (0.6x FCC) as the bank does not have large proprietary positions and mainly uses securities for liquidity management. Most securities are publically traded bonds (represented 92% of total securities book) and are accounted for as available for sale, so market revaluation is accounted for directly in equity. The bond book is well-diversified by issuer with the 20 largest investments making up 30% of the total portfolio and these are mainly sovereign bonds of Gulf Cooperation Council and European countries. Market risk-weighted assets (RWAs) account for below 3% of total RWAs, reflecting low market risk. 5

6 Financial Profile Asset Quality Stabilised Impaired Loans; Good Reserve Coverage Asset-Quality Metrics (%) End-2017 End-2016 End-2015 End-2014 End-2013 Growth of gross loans Impaired loans/gross loans Reserves for impaired loans/impaired loans Reserves for impaired loans/gross loans Loan impairment charges/average gross loans Source: ENBD ENBD s asset quality has improved significantly since The impaired loans ratio (including interest in suspense) was 8.2% at end-2017 (unchanged over the previous 12 months), compared with about 19% at end Restructured and more than 90 days PDNI loans make up another 5%-6% of gross loans, resulting in a total problem loans ratio of 13%-14% at end Impaired loans were 94% covered by reserves, while coverage of total problem loans was weaker at about 75%, but Fitch still views this as reasonable as most restructured loans are performing under their revised terms. Dubai Sovereign Dominates Loan Book; Real-Estate Risks Are High Loans to the Dubai sovereign made up 42% of total gross loans (or 3.2x FCC) at end This includes exposures to the Dubai government, municipalities, courts and government departments. This exposure grew by 7% in Fitch understands ENBD targets loan book diversification and expects single-borrower concentration to decrease, although exposure to Dubai is unlikely to fall below 30% of total loans in the medium term. Reported lending to the real-estate and construction sectors represented 18% of gross loans (1.4x FCC) at end However, Fitch understands that real-estate project finance could also be structured through lending to investment and other finance companies (about 7% of total loans 0.6x FCC) and that the total real-estate exposure may be higher. Dubai government-related exposures are unsecured and uncovered by reserves. Some realestate loans are also uncollateralised, while projects are long-term and the principle is nonamortising. Fitch understands that repayment of these loans is subject to refinancing or sale of assets after completion. Personal Loans Safety Margin (%) Interest yield 9.0 Cost of funds -1.4 Allocated operating expenses/personal loans a Annual losses -1.5 Safety margin 3.6 a Calculated based on cost-to-income ratio Source: ENBD, Fitch calculation Retail Lending Good LTVs in Secured, Good Margin in Unsecured Retail loans balance was AED61 billion at end-2017 (1.4x FCC). Secured loans (auto and mortgage) accounted for about 40% of total retail book and risks are well-managed due to reasonable downpayments. Loan-to-values are therefore usually below 70% during the life of the loan, which Fitch views as comfortable. The remaining 60% of retail loans are personal loans and credit cards. The majority of total unsecured loans are salary-assigned, which Fitch views as low risk. With an average effective interest yield of 9% and a low 1.4% cost of funding, ENBD has a reasonable NIM of 7.6% in unsecured retail lending. The Fitch-calculated safety margin (NIM net of operating expenses to average loans less annual impairment losses) was a comfortable 3.6%, meaning that the retail unsecured segment would be profitable for ENBD unless annual losses increased to 5.1% from 1.5%. 6

7 Earnings and Profitability Stabilised LICs; Pressured NIM Profitability Metrics (%) Interest income/average earning assets Interest expense/average interest-bearing liabilities Net interest income/average earning assets Non-interest expense/gross revenue Operating profit/average total assets Operating profit/average total equity Loans and securities impairment charges/ pre-impairment profit Net income/average equity Operating profit/risk-weighted assets Source: ENBD, Fitch calculations The bank s NIM decreased by 40bp in 2016 due to a similar increase in cost of funding. The latter reflects liquidity tightening in the UAE, higher deposit competition and a resulting increase in the cost of term deposits. ENBD still reports a solid interest expense-average interest bearing liabilities ratio and its net interest margin compares well with most UAE banks. Fitch believes ENBD s impaired and other problem loans are reasonably provisioned. There have been no new large problem exposures over the past few years and the bank has not needed to create large impairment reserves. As a result, the LICs-pre-impairment profit ratio decreased to 21% in 2017 from 53% in 2014, when there was a spike in provision charges as a result of asset-quality deterioration, mainly in the real-estate segment. ENBD demonstrated a good ROAE of 18% in 2017 because of the bank s healthy NIM, reasonable cost-income ratio (non-interest expense/gross revenue) of 31% and lower LICs. ROAE has been stable at 18%-19% over the past three years. Capitalisation and Leverage Sound Cushion Over Basel III Requirements; Dubai Zero Weighting Helps Capitalisation (%) End-2017 End-2016 End-2015 End-2014 Fitch Core Capital/weighted risk Tangible common equity/tangible assets Tier 1 regulatory capital ratio Total regulatory capital ratio Impaired loans less reserves for impaired loans/fitch Core Capital Source: ENBD, Fitch calculations Basel III Capital Requirements (Including Buffers) for D-SIBs a (%) End-2017 End-2019 CET Tier Total a Banks recognised as D-SIB by the CBUAE Source: ENBD The FCC ratio was an adequate 16.3% at end Tier 1 and total capital ratios were also sound at 19.5% and 21.9%. The Tier 1 ratio was lower than the FCC ratio as Fitch does not include hybrid capital (e.g. ENBD s perpetual securities) in FCC. The perpetual securities related to a AED4 billion capital injection from the government in 2009 and USD1.5 billion of perpetual hybrid Tier 1 notes issued in In 2017, the CBUAE announced the transition of capital regulation from Basel II to Basel III with full implementation by end UAE Basel III capital requirements are higher than many jurisdictions, but we believe this is reasonable due to the emerging nature of the market, which leads to potentially higher asset-quality volatility than in developed markets. At end-2017, ENBD was required to maintain its Tier 1 and total capital ratios above 10.5% and 12.5%, respectively. The bank s cushions were sound for both ratios. 7

8 However, ENBD s capital ratios are supported by zero risk-weighting on loans to the Dubai government, Fitch estimates that the FCC, Tier 1 and total ratios would be reduced to 11%, 13% and 14%, respectively, if 100% risk-weighting was assigned to Dubai government loans, which is still above the CBUAE requirements. Funding and Liquidity Solid Retail Deposit Franchise; Safe Liquidity Cushion Funding Ratios (%) End-2017 End-2016 End-2015 End-2014 Loans/customer deposits Interbank assets/interbank liabilities Customer deposits/total funding (excluding derivatives) Source: ENBD, Fitch calculations Deposits by Clients End-9M17 Corporate 36% Source: Fitch Sovereigns & public-sector entities 8% Retail 56% ENBD is primarily deposit funded although the bank also relies on wholesale funding and regularly taps the capital markets. ENBD s cost of funding increased by 30bp in 2016 as a result of tighter liquidity in the market but was stable in The bank has a strong retail deposit franchise, accounting for 42% of total banking system retail deposits. As a result of its higher share of retail deposits (56% at end-9m17), ENBD s customer deposit base is less concentrated than peers, with the 20 largest deposits accounting for 19% of total deposits. Fitch believes the wholesale funding maturity profile is comfortable at end-2017 with about AED6 billion of wholesale funding maturing in Most of this is its Euro medium-term note programme, which ENBD refinances annually. Liquid assets (including cash, liquid bonds and short-term placements with other banks) were AED111 billion at end-2017, or 24% of total assets, and covered deposits by a reasonable 34%. 8

9 Income Statement 31 Dec Dec Dec Dec 2014 Year End Year End As % of Year End As % of Year End As % of Year End As % of USDm AEDm Earning Assets AEDm Earning Assets AEDm Earning Assets AEDm Earning Assets Audited - Unqualified Audited - Unqualified Audited - Unqualified Audited - Unqualified Audited - Unqualified 1. Interest Income on Loans 4, , , , , Other Interest Income , , , , Dividend Income Gross Interest and Dividend Income 4, , , , , Interest Expense on Customer Deposits , , , , Other Interest Expense , , , Total Interest Expense 1, , , , , Net Interest Income 2, , , , , Net Gains (Losses) on Trading and Derivatives , , , , Net Gains (Losses) on Other Securities Net Gains (Losses) on Assets at FV through Income Statement (0.7) (0.00) (25.2) (0.01) Net Insurance Income n.a. n.a. - n.a. - n.a. - n.a Net Fees and Commissions , , , , Other Operating Income Total Non-Interest Operating Income 1, , , , , Personnel Expenses , , , , Other Operating Expenses , , , , Total Non-Interest Expenses 1, , , , , Equity-accounted Profit/ Loss - Operating Pre-Impairment Operating Profit 2, , , , , Loan Impairment Charge , , , , Securities and Other Credit Impairment Charges Operating Profit 2, , , , , Equity-accounted Profit/ Loss - Non-operating n.a. n.a. - n.a. - n.a. - n.a Non-recurring Income n.a. n.a. - n.a. - n.a Non-recurring Expense n.a. n.a. - n.a. - n.a. - n.a Change in Fair Value of Own Debt n.a. n.a. - n.a. - n.a. - n.a Other Non-operating Income and Expenses n.a. n.a. - n.a. - n.a Pre-tax Profit 2, , , , , Tax expense Profit/Loss from Discontinued Operations n.a. n.a. - n.a. - n.a. - n.a Net Income 2, , , , , Change in Value of AFS Investments (365.6) (0.09) (414.9) (0.12) Revaluation of Fixed Assets n.a. n.a. - n.a. - n.a. - n.a Currency Translation Differences (29.1) (106.9) (0.03) (895.6) (0.23) (135.7) (0.04) (77.1) (0.02) 36. Remaining OCI Gains/(losses) n.a. - n.a. - (59.5) (0.02) 37. Fitch Comprehensive Income 2, , , , , Memo: Profit Allocation to Non-controlling Interests Memo: Net Income after Allocation to Non-controlling Interests 2, , , , , Memo: Common Dividends Relating to the Period , , , , Memo: Preferred Dividends Related to the Period n.a. n.a. - n.a. - n.a. - n.a. - Exchange rate USD1 = AED USD1 = AED USD1 = AED USD1 = AED

10 Balance Sheet 31 Dec Dec Dec Dec 2014 Year End Year End As % of Year End As % of Year End As % of Year End As % of USDm AEDm Assets AEDm Assets AEDm Assets AEDm Assets Assets A. Loans 1. Residential Mortgage Loans n.a. n.a. - n.a. - n.a. - n.a Other Mortgage Loans n.a. n.a. - n.a. - n.a. - 36, Other Consumer/ Retail Loans 16, , , , , Corporate & Commercial Loans 21, , , , , Other Loans 51, , , , , Less: Reserves for Impaired Loans 6, , , , , Net Loans 82, , , , , Gross Loans 89, , , , , Memo: Impaired Loans included above 7, , , , , Memo: Loans at Fair Value included above n.a. n.a. - n.a. - n.a. - n.a. - B. Other Earning Assets 1. Loans and Advances to Banks 23, , , , , Reverse Repos and Cash Collateral n.a. n.a. - n.a. - n.a. - n.a Trading Securities and at FV through Income , , , , Derivatives , , , , Available for Sale Securities 3, , , , , Held to Maturity Securities , , Equity Investments in Associates , , , , Other Securities n.a. n.a. - n.a. - n.a. - n.a Total Securities 6, , , , , Memo: Government Securities included Above 3, , , , , Memo: Total Securities Pledged Investments in Property , Insurance Assets n.a. n.a. - n.a. - n.a. - n.a Other Earning Assets n.a. n.a. - n.a. - n.a. - n.a Total Earning Assets 112, , , , , C. Non-Earning Assets 1. Cash and Due From Banks 9, , , , , Memo: Mandatory Reserves included above 8, , , , , Foreclosed Real Estate n.a. n.a. - n.a. - n.a. - n.a Fixed Assets , , , , Goodwill 1, , , , , Other Intangibles Current Tax Assets n.a. n.a. - n.a. - n.a. - n.a Deferred Tax Assets n.a. n.a. - n.a. - n.a. - n.a Discontinued Operations n.a. n.a. - n.a. - n.a. - n.a Other Assets 3, , , , , Total Assets 128, , , , , Liabilities and Equity D. Interest-Bearing Liabilities 1. Customer Deposits - Current 40, , , , , Customer Deposits - Savings 10, , , , , Customer Deposits - Term 38, , , , , Total Customer Deposits 88, , , , , Deposits from Banks 5, , , , , Repos and Cash Collateral Commercial Paper and Short-term Borrowings 1, , , , , Total Money Market and Short-term Funding 96, , , , , Senior Unsecured Debt (original maturity > 1 year) 10, , , , , Subordinated Borrowing n.a. n.a. - n.a. - n.a. - n.a Covered Bonds n.a. n.a. - n.a. - n.a. - n.a Other Long-term Funding n.a. n.a. - n.a. - n.a. - n.a Total LT Funding (original maturity > 1 year) 10, , , , , Derivatives , , , , Trading Liabilities n.a. n.a. - n.a. - n.a. - n.a Total Funding 107, , , , , E. Non-Interest Bearing Liabilities 1. Fair Value Portion of Debt n.a. n.a. - n.a. - n.a. - n.a Credit impairment reserves n.a. n.a. - n.a. - n.a. - n.a Reserves for Pensions and Other n.a. n.a. - n.a. - n.a. - n.a Current Tax Liabilities Deferred Tax Liabilities n.a. n.a. - n.a. - n.a. - n.a Other Deferred Liabilities n.a. n.a. - n.a. - n.a. - n.a Discontinued Operations n.a. n.a. - n.a. - n.a. - n.a Insurance Liabilities n.a. n.a. - n.a. - n.a. - n.a Other Liabilities 4, , , , , Total Liabilities 111, , , , , F. Hybrid Capital 1. Pref. Shares and Hybrid Capital accounted for as Debt n.a. n.a. - n.a. - n.a. - n.a Pref. Shares and Hybrid Capital accounted for as Equity 2, , , , , G. Equity 1. Common Equity 13, , , , , Non-controlling Interest Securities Revaluation Reserves Foreign Exchange Revaluation Reserves (332.0) (1,219.1) (0.26) (1,103.0) (0.25) (207.4) (0.05) (71.7) (0.02) 5. Fixed Asset Revaluations and Other Accumulated OCI n.a. n.a. - n.a. - n.a. - n.a Total Equity 13, , , , , Total Liabilities and Equity 128, , , , , Memo: Fitch Core Capital 12, , , , , Exchange rate USD1 = AED USD1 = AED USD1 = AED USD1 = AED

11 Summary Analytics 31 Dec Dec Dec Dec 2014 Year End Year End Year End Year End A. Interest Ratios 1. Interest Income on Loans/ Average Gross Loans Interest Expense on Customer Deposits/ Average Customer Deposits Interest Income/ Average Earning Assets Interest Expense/ Average Interest-bearing Liabilities Net Interest Income/ Average Earning Assets Net Int. Inc Less Loan Impairment Charges/ Av. Earning Assets Net Interest Inc Less Preferred Stock Dividend/ Average Earning Assets B. Other Operating Profitability Ratios 1. Non-Interest Income/ Gross Revenues Non-Interest Expense/ Gross Revenues Non-Interest Expense/ Average Assets Pre-impairment Op. Profit/ Average Equity Pre-impairment Op. Profit/ Average Total Assets Loans and securities impairment charges/ Pre-impairment Op. Profit Operating Profit/ Average Equity Operating Profit/ Average Total Assets Operating Profit / Risk Weighted Assets C. Other Profitability Ratios 1. Net Income/ Average Total Equity Net Income/ Average Total Assets Fitch Comprehensive Income/ Average Total Equity Fitch Comprehensive Income/ Average Total Assets Taxes/ Pre-tax Profit Net Income/ Risk Weighted Assets D. Capitalization 1. FCC/FCC-Adjusted Risk Weighted Assets Tangible Common Equity/ Tangible Assets Tier 1 Regulatory Capital Ratio Total Regulatory Capital Ratio Common Equity Tier 1 Capital Ratio n.a. n.a. n.a. n.a. 6. Equity/ Total Assets Cash Dividends Paid & Declared/ Net Income Internal Capital Generation E. Loan Quality 1. Growth of Total Assets Growth of Gross Loans Impaired Loans/ Gross Loans Reserves for Impaired Loans/ Gross Loans Reserves for Impaired Loans/ Impaired Loans Impaired loans less Reserves for Impaired Loans/ Fitch Core Capital Impaired Loans less Reserves for Impaired Loans/ Equity Loan Impairment Charges/ Average Gross Loans Net Charge-offs/ Average Gross Loans (0.14) (0.55) (0.75) Impaired Loans + Foreclosed Assets/ Gross Loans + Foreclosed Assets F. Funding and Liquidity 1. Loans/ Customer Deposits Interbank Assets/ Interbank Liabilities Customer Deposits/ Total Funding (excluding derivatives) Liquidity Coverage Ratio n.a. n.a. n.a. n.a. 5. Net Stable Funding Ratio n.a. n.a. n.a. n.a. 11

12 Reference Data 31 Dec Dec Dec Dec 2014 Year End Year End As % of Year End As % of Year End As % of Year End As % of USDm AEDm Assets AEDm Assets AEDm Assets AEDm Assets A. Off-Balance Sheet Items 1. Managed Securitized Assets Reported Off-Balance Sheet n.a. n.a. - n.a. - n.a. - n.a Other off-balance sheet exposure to securitizations n.a. n.a. - n.a. - n.a. - n.a Guarantees 13, , , , , Acceptances and documentary credits reported off-balance sheet 3, , , , , Committed Credit Lines 6, , , , , Other Off-Balance Sheet items , , Total Assets under Management n.a. n.a. - n.a. - n.a. - n.a. - B. Average Balance Sheet Average Loans 88, , , , , Average Earning Assets 109, , , , , Average Assets 124, , , , , Average Managed Securitized Assets (OBS) n.a. n.a. - n.a. - n.a. - n.a. - Average Interest-Bearing Liabilities 104, , , , , Average Common equity 12, , , , , Average Equity 12, , , , , Average Customer Deposits 87, , , , , C. Maturities Asset Maturities: Loans & Advances < 3 months 42, , , , , Loans & Advances 3-12 Months 7, , , , , Loans and Advances 1-5 Years 16, , , , , Loans & Advances > 5 years 15, , , , , Debt Securities < 3 Months n.a. n.a. - n.a. - n.a. - n.a. - Debt Securities 3-12 Months n.a. n.a. - n.a. - n.a. - n.a. - Debt Securities 1-5 Years n.a. n.a. - n.a. - n.a. - n.a. - Debt Securities > 5 Years n.a. n.a. - n.a. - n.a. - n.a. - Loans & Advances to Banks < 3 Months n.a. n.a. - n.a. - n.a. - n.a. - Loans & Advances to Banks 3-12 Months n.a. n.a. - n.a. - n.a. - n.a. - Loans & Advances to Banks 1-5 Years n.a. n.a. - n.a. - n.a. - n.a. - Loans & Advances to Banks > 5 Years n.a. n.a. - n.a. - n.a. - n.a. - Liability Maturities: Retail Deposits < 3 months 69, , , , , Retail Deposits 3-12 Months 17, , , , , Retail Deposits 1-5 Years 2, , , , , Retail Deposits > 5 Years Other Deposits < 3 Months n.a. n.a. - n.a. - n.a. - n.a. - Other Deposits 3-12 Months n.a. n.a. - n.a. - n.a. - n.a. - Other Deposits 1-5 Years n.a. n.a. - n.a. - n.a. - n.a. - Other Deposits > 5 Years n.a. n.a. - n.a. - n.a. - n.a. - Deposits from Banks < 3 Months 4, , , , , Deposits from Banks 3-12 Months 1, , , , , Deposits from Banks 1-5 Years , , Deposits from Banks > 5 Years Senior Debt Maturing < 3 months 1, , , , , Senior Debt Maturing 3-12 Months , , , , Senior Debt Maturing 1-5 Years 9, , , , , Senior Debt Maturing > 5 Years 1, , , , , Total Senior Debt on Balance Sheet 12, , , , , Fair Value Portion of Senior Debt n.a. n.a. - n.a. - n.a. - n.a. - Subordinated Debt Maturing < 3 months n.a. n.a. - n.a. - n.a. - n.a. - Subordinated Debt Maturing 3-12 Months n.a. n.a. - n.a. - n.a. - n.a. - Subordinated Debt Maturing 1-5 Year n.a. n.a. - n.a. - n.a. - n.a. - Subordinated Debt Maturing > 5 Years n.a. n.a. - n.a. - n.a. - n.a. - Total Subordinated Debt on Balance Sheet n.a. n.a. - n.a. - n.a. - n.a. - Fair Value Portion of Subordinated Debt n.a. n.a. - n.a. - n.a. - n.a. - D. Risk Weighted Assets 1. Risk Weighted Assets 74, , , , , Fitch Core Capital Adjustments for Insurance and Securitisation Risk Weighted Asse n.a. n.a. - n.a. - n.a. - n.a Fitch Core Capital Adjusted Risk Weighted Assets 74, , , , , Other Fitch Adjustments to Risk Weighted Assets n.a. n.a. - n.a. - n.a. - n.a Fitch Adjusted Risk Weighted Assets 74, , , , , E. Equity Reconciliation 1. Equity 13, , , , , Add: Pref. Shares and Hybrid Capital accounted for as Equity 2, , , , , Add: Other Adjustments n.a. n.a. - n.a. - n.a. - n.a Published Equity 16, , , , , F. Fitch Core Capital Reconciliation 1. Total Equity as reported (including non-controlling interests) 13, , , , , Fair value effect incl in own debt/borrowings at fv on the B/S- CC only Non-loss-absorbing non-controlling interests Goodwill 1, , , , , Other intangibles Deferred tax assets deduction Net asset value of insurance subsidiaries First loss tranches of off-balance sheet securitizations Fitch Core Capital 12, , , , , Exchange Rate USD1 = AED USD1 = AED USD1 = AED USD1 = AED

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