FGB reports net profit of AED 2.87 Billion in the first half of 2015, up by 7%

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1 Press Release FGB reports net profit of AED 2.87 Billion in the first half of 2015, up by 7% FGB achieved a H Group Net Profit of AED 2.87 Billion, up 7% from H Second quarter net profit up by 8% to AED 1.45 Billion. Profitability remained robust with a Return on Average Equity at 17.1% and a Return on Average Assets at 2.7% Revenues at AED 4.63 Billion are up by 2% compared to last year, with non-interest revenues contributing 31% to total operating income Balance sheet indicators: Total Assets at AED Billion, Loans and Advances at AED Billion and Customer Deposits at AED Billion Liquidity position remains comfortable and within UAE Central Bank thresholds Key Ratios: Net Interest Margin at 3.4%, Cost to Income Ratio at 24.1%, NPL ratio at 2.6% and provision coverage at 116.6% Financial strength maintained with Basel II Tier 1 capital ratio of 17.5% and Total Capital Adequacy Ratio of 18.7% NET PROFIT TREND % Year-on-Year Net Profit Growth AED 0.63 Earnings Per share H1'14 H1'15 (In AED Bn) Abu Dhabi, July 26, 2015: FGB, one of the leading banks in the UAE, continued to deliver a higher financial performance in the first half of 2015, achieving a Group Net Profit of AED 2.87 Billion. This is AED 189 Million higher than the first half of 2014, reflecting a 7% increase year-on-year. In the second quarter of the year, net profits amounted to AED 1.45 Billion, up 8% from the second quarter of For the first half of 2015, Earnings Per Share increased to AED 0.63, against AED 0.58 the same period last year. 1/8

2 Abdulhamid Saeed, FGB Managing Director and Board Member, commented: In the second quarter of 2015, FGB continued to deliver a solid underlying financial performance despite rising headwinds caused by more challenging operating conditions. Our half year performance reflects the strength and quality of our franchise as we remain firmly focused on executing our strategy and on delivering long-term sustainable value to our shareholders. André Sayegh, CEO of FGB, added: FGB s results in the first half of 2015 demonstrate that the Bank s long term business model is built to deliver consistent growth in financial performance in spite of a challenging operating landscape. Our increased profitability during the period was driven by a healthy commercial momentum and a relentless focus on diversifying our sources of revenue by deepening and widening our product and services offering. We are also continuing to leverage on our strong balance sheet and diligent approach to risk by recording industry-leading credit quality metrics with a low NPL ratio of 2.6% and comfortable provision coverage of 116.6%, encompassing a robust general provision cushion. In recognition of how FGB consistently delivers best-in-class services to its customers, we scooped a number of prestigious industry awards during the period including Islamic Bank of the Year Shariah Compliant Window from The Banker for our Siraj brand, as well as Best Bank in the UAE and Best Bank in the Middle East at the 2015 Banker Middle East Industry Awards. We are very proud of these achievements which are a strong testament to our leadership in the market and we will continue to push the boundaries to ensure that our customers remain at the center of everything we do, by creating value to our various stakeholders. 2/8

3 Q2/H Summary Financials Incom e Statem ent (AED M n) H1'15 H1'14 YoY Q2'15 Q1'15 QoQ Q2'14 YoY Net Interest and Islam ic Financing Incom e 3,196 3,247-2% 1,609 1,587 1% 1,647-2% Other Operating Incom e 1,437 1,292 11% % % Operating Incom e 4,634 4,539 2% 2,312 2,322 0% 2,288 1% G&A expenses (1,117) (1,007) 11% (593) (524) 13% (532) 11% Provisions/ Im pairm ents (630) (828) -24% (258) (372) -31% (392) -34% Taxes (10) (11) -9% (4) (5) -20% (7) -43% M inority Interest (8) (12) -33% (5) (2) 150% (7) -29% Net Incom e 2,869 2,680 7% 1,452 1,417 2% 1,350 8% Earnings Per Share (AED) % % % Balance Sheet (AED Bn) Jun'15 Jun'14 YoY M ar'15 QoQ Net Loans & Advances % % Custom er Deposits % % TotalAssets % % Shareholders Equity % % Key Ratios (% ) Jun'15 Jun'14 YoY (bps) Net Interest M argin (29) Cost-to-Incom e Non-Perform ing Loan (NPL) (40) Provision Coverage Loan-to-Deposit ,290 Return on Average Equity (10) Return on Average Assets CapitalAdequacy (20) Note: Rounding differences may appear in the above table 3/8

4 Q2/H Income Statement Highlights Improving operating performance despite margin pressure Group revenues increased by 2% Year-on-Year to AED 4,634 Million in the first half of 2015, driven by healthy loan growth and a relentless focus on maximising synergies across businesses. Revenues in the second quarter of the year stood at AED 2,312 Million, up 1% from last year and flat compared to Q Half Year Net Interest Margin showed a decline of 29 basis points from the previous year to 3.4%, primarily due to lower asset yields on the corporate book, offsetting the improvement in funding costs over the period. As a result, Net Interest and Islamic financing income decreased by 2% from last year to AED 3,196 Million. On the non-interest revenue side, core fee income continued to show a positive trend overall, strengthening by 9% YoY to AED 978 Million. Contribution from FX & Derivative Income remained solid, recording a 105% jump year-on-year to AED 177 Million. Reflecting the ongoing success of the Group s revenue diversification strategy, contribution of non-interest revenues to total operating income grew to 31% in H1 2015, compared with 28% in H H REVENUE BREAKDOWN BY BUSINESS SEGMENT Subsidiaries & Other 8% T&GM 14% Real Estate 4% WBG 36% CBG 38% In terms of business contributions to total Group revenue, the Consumer Banking Group provided 38%, followed by the Wholesale & International Banking Group with 36% and the Treasury & Global Markets Group at 14%. Subsidiaries and associates including Dubai First and Aseel Islamic Finance generated 8% of FGB s total revenues, while real estate activities contributed 4%. The Group s international operations provided 5% of half year revenues. G&A expenses increased by 11% from last year to AED 1,117 Million. This increase was directly linked to the growth of the business, including investments in systems and technology designed to drive future operational efficiencies. Reflecting a slower revenue growth, half year cost-to-income ratio landed at 24.1% against 22.2% last year, while remaining at industryleading levels. Balance Sheet Liquidity A strong balance sheet despite tightening liquidity Lending activity remained strong during the period with loans and advances expanding by 16% from last year and by 4% from Q to AED Billion as of June-end This healthy momentum stemmed from FGB s wholesale and consumer businesses, as well as the Bank s subsidiaries. During the period, customer deposits recorded a slower 2% year-on-year increase to AED Billion. As a result of a faster growing loan book, loan-to-deposit ratio tightened to 106.1% as of June-end 2015, up from 93.2% last year. Nevertheless, 4/8

5 the Group s liquidity position remains highly comfortable in light of the regulatory Advances to Stable Deposits Ratio of 87.5%, which is below the UAE Central Bank 100% ceiling. Moreover, at the end of May, the UAE Central Bank released a liquidity circular introducing a pathway for UAE banks to migrate to a Basel III Liquidity Coverage Ratio (LCR) regulatory environment. FGB has been internally monitoring LCR over the last 30 months and as of June-end 2015, the Bank is comfortably above the Basel III glide path of 60% for the current year. LIQUIDITY RATIOS (%) L/D ratio Regulatory Advances-to- Deposits Ratio Jun'14 Sep'14 Dec'14 Mar'15 Jun'15 On the wholesale funding side, FGB accessed the Swiss market through a CHF 200 Million 7-year fixed rate transaction during the second quarter. This transaction was the longest ever Swiss issuance from a Middle Eastern issuer and the largest ever 7- year transaction from an Emerging Markets issuer. In line with its funding diversification strategy, FGB also established a Euro Commercial Paper (ECP) programme in June. The programme is designed to facilitate access to investors outside of the region including Asset Managers, Money Market Funds, Corporate and Bank Treasuries and Central Banks. Having raised USD 1.12 Billion since the beginning of the year, FGB was named Most Impressive Middle East Borrower at the 2015 Global Capital Bond Market Awards. Capitalization and Earnings Per Share (EPS) EPS increases by 9% As of June-end 2015, Total Shareholders Equity increased by 6% to AED 33.0 Billion, driven by higher retained earnings. With Risk Weighed assets growing by 7% from last year, the Capital Adequacy Ratio remained robust at 18.7% while Tier 1 capital stood at a healthy 17.5%. Earnings per share for the six month period ended June 2015 amounted to AED 0.63, up 9% from AED 0.58 the same period last year. Asset Quality Credit trends remain favorable Similarly to previous quarters, FGB recorded healthy asset quality metrics as of June-end The NPL ratio stood at 2.6%, while provision coverage remained highly comfortable at 116.6%. Loan impairment charges for the period amounted to AED 5/8

6 617 Million, a 26% decrease compared to last year thanks to favourable trends witnessed across Wholesale and Consumer portfolios. General Provisions as of June-end 2015 remained in excess of the regulatory threshold of 1.5% of total Credit Risk Weighted Assets. NPL RATIO AND PROVISION COVERAGE (%) NPL ratio Provision Coverage Jun'14 Sep'14 Dec'14 Mar'15 Jun'15 In light of the recent developments in the UAE retail banking industry, FGB welcomes and fully supports market-wide utilisation of the Al Etihad Credit Bureau. From the beginning of the second quarter of the year, the Bank started selective implementation for its Card and Personal Loan mass market customers. The initial outcomes confirm earlier assumptions on specific segments debt burden and past repayment behaviour. As FGB has always relied on thorough customer analysis and verification, no significant business impact has been observed at this stage. Sayegh concluded: FGB s earnings momentum in the first half of 2015 is putting us on the right track to achieving another record year. Although we are acutely aware of the headwinds caused by global market turmoil, we remain highly confident about the Bank s consistent ability to turn challenges into opportunities, which lies at the core of FGB s business model. We will continue to work relentlessly towards fulfilling our aspiration to be the First Choice for our customers, both domestically and abroad. FGB s fundamental strategy is designed to support this prime objective while continuing to drive the consistent profitable growth of our franchise. -Ends- Awards The Banker 2015 Islamic Bank of the Year Awards - Shariah-Compliant Window 2015 Trade Finance Awards for Excellence: Best Islamic Trade Finance Bank EMEA 6/8

7 Asian Banker 2015 Middle East and Africa Country Awards: Best Wealth Management in the Middle East Award and Best Mortgage and Home Loan Product in the Middle East Award 2015 Banker Middle East UAE Product Awards: Best Call Centre, Best Credit Card, Best Personal Loan, Best Wealth Management Service/Proposition, Best Offshore Wealth Proposition, Best Deposit Account Product and Best Bancassurance Product 2015 Banker Middle East Industry Awards: Best Bank in the UAE and Best Bank in the Middle East 2015 Global Capital Bond Market Awards: Most Impressive Middle East Borrower Award 2015 Smart Card and Payments Middle East Awards: Best Commercial Card Across Middle East 2015 MENA IR Insurance Awards: Most Innovative Service Provider. Interactive Media Awards: Best in Class for FGB s My FGB Card website; Outstanding Achievement for the FGB Wealth website UAE Excellence Awards: Golden Award for Chartered Institute of Purchasing & Supply: Best Procurement Start-up Function in the Middle East 7/8

8 About FGB As a major leading Bank in the UAE, FGB had Shareholder Equity of AED 33.0 Billion as of June 30 th, 2015 making it one of the largest equity based Banks in the UAE. Established in 1979 and headquartered in Abu Dhabi, UAE, the Bank offers a full range of financial services to business and consumer sectors throughout an extensive network of branches across the UAE. Internationally, FGB has branches in Singapore and Qatar, representative offices in India, Hong Kong, Seoul and London and a subsidiary in Libya. FGB is recognised as a world-class organisation committed to maximising value for shareholders, customers and employees as it focuses on delivering banking products and services that meet client needs and support the UAE s dynamic economy. In line with its commitment to excellence the Bank continues to invest significantly in people and technology to provide superior service standards. For more information Visit FGB s corporate website: Download FGB s Investor Relations app: Follow FGB on social media: Contacts For analyst and investor enquiries Sofia El Boury Head of Investor Relations ir@fgb.ae For media inquiries: Ghaleb Zeidan Jennifer Cain GZeidan@webershandwick.com JCain@webershandwick.com Hiba Haddad hhaddad@webershandwick.com 8/8

FIRST GULF BANK Q3/9M 13 EARNINGS PRESENTATION

FIRST GULF BANK Q3/9M 13 EARNINGS PRESENTATION DISCLAIMER This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as advice