Emirates NBD Announces First Half 2014 Results

Transcription

1 For immediate release Emirates NBD Announces First Half 2014 Results Net Profit up 30% to AED 2.35 billion Pre-impairment Operating Profit up 35% to AED 4.91 billion Dubai, 24 July 2014 Financial Highlights Emirates NBD (DFM: EmiratesNBD) the largest bank in UAE by Total Income and branch network, delivered an impressive set of financial results with net profit up 30% year on year to AED 2,350 million. The strong operating performance for the first half of 2014 was helped by solid revenue growth in both Retail Banking & Wealth Management and our Islamic Banking subsidiary, Emirates Islamic, which has successfully transformed itself to be one of the fastest growing segments within the Group. Net profit for the half year ended 30 June 2014 amounted to AED 2.35 billion, up 30% from H1-13. Total Income for H1-14 grew by 27% to AED 7.04 billion whilst Pre-Impairment Operating Profit for H1-14 improved by 35% to AED 4.91 billion. Total assets grew by 2% to AED billion in the first half of Customer loans increased by 1% during the first half of 2014 to AED billion. Customer deposits also increased by 6% to AED billion over the same period. The Bank s Advances to Deposits ratio improved to 95.6% from 99.5% at the end of The Bank s NPL ratio improved further to 13.5% whilst the Tier 1 ratio strengthened to 15.6%. Backed by this stronger liquidity and capital profile, on 20 th July 2014, Emirates NBD were able to repay the remaining AED 4.8 billion Ministry of Finance Deposits received in Group Chief Executive Officer, Emirates NBD, Shayne Nelson, said: During the first half of 2014, we have delivered another healthy set of results, with net profit up by 30% to AED 2.35 billion. This is driven by strong growth in both net interest income and non-interest income coupled with a firm control on expenses. I have focused management efforts on balance sheet optimization, diversification of income, addressing the legacy NPL position, improved capital efficiency and stronger liquidity. As a result the bank is in a healthier position than at the beginning of 2014 in each of these areas. I am confident that the Bank will continue to deliver excellent service to our customers and superior value to our shareholders. Group Chief Financial Officer, Emirates NBD, Surya Subramanian, said: The Bank has continued to deliver strong levels of operating profitability which is evident from the growth in both total income and preprovision operating profit. Despite a competitive environment we have been able to maintain margins helped by growth in higher margin Retail and Islamic products, a more efficient funding base and a contribution from our Egyptian business. Costs remain firmly under control with a cost-to-income ratio of 30.3% for the first 6 months on 2014, 4.2% lower than the comparable period in Page 1 of 7

2 Financial Review AED million Half year ended 30 Jun 2014 Half year ended 30 Jun 2013 Better / (Worse) (%) Half year ended 31 Dec 2013 Better / (Worse) (%) Net interest income 4,559 3,661 25% 4,478 2% Non-interest income 2,483 1,889 31% 1,829 36% Total income 7,042 5,550 27% 6,307 12% General & administrative expenses (2,137) (1,914) (12%) (2,281) 6% Operating profit before impairment charges 4,905 3,636 35% 4,026 22% Impairment allowances (2,613) (1,884) (39%) (2,829) 8% Operating profit 2,292 1,752 31% 1,197 91% Share of profits of associates % 80 51% Gain on disposal of stake in associates / subsidiaries 0 0 n/a 202 (100%) Taxation charge (63) (10) (537%) (31) (104%) Net profit 2,350 1,808 30% 1,448 62% Cost to income ratio (%) 30.3% 34.5% 4.2% 36.2% 5.9% Net interest margin (%) 2.77% 2.44% 0.33% 2.80% (0.03%) EPS (AED) % % Return on average shareholders equity (%) 16.6% 13.7% 2.9% 10.2% 6.4% AED billion as at 30 Jun 2014 as at 31 Dec 2013 Better / (Worse) (%) as at 31 Mar 2014 Better / (Worse) (%) Total Assets % % Loans % % Deposits % % Impaired Loan Ratio (%) 13.5% 13.9% 0.4% 13.8% 0.3% Impaired Loan Coverage Ratio (%) 64.7% 57.5% 7.2% 60.7% 4.0% Capital Adequacy Ratio (%) 19.6% 19.6% 0.0% 19.2% 0.4% Tier 1 Ratio (%) 15.6% 15.3% 0.3% 15.0% 0.6% Total income for the first half ended 30 June 2014 amounted to AED 7,042 million; an increase of 27% compared with AED 5,550 million in H1-13 and an increase of 12% compared with AED 6,307 million in H2-13. Net interest income for H1-14 improved by 25% to AED 4,559 million from AED 3,661 million in H1-13. The improvement in net interest income is attributable to an improved asset mix due to Retail and Islamic growth, an improved funding mix as we continue to experience CASA growth and a contribution from our Egyptian business. Non-interest income for the first half improved by 31% to AED 2,483 million from the previous year, driven primarily by an increase in core banking fee income, particularly related to the growth in credit card business and trade finance volumes as well gains on the sale of a legacy property and other investments. Costs for the first half ended 30 June 2014 amounted to AED 2,137 million, an increase of 12% over H1-13 and a decline of 6% compared to H2-13. Excluding Egypt, costs were up 4% y-o-y. This 4% increase is due to investment in customer service, IT and communication related costs in line with higher business volumes. Page 2 of 7

3 The cost to income ratio improved by 4.2% in H1-14 to 30.3%, compared to H1-13, as improving top line momentum more than offset the increase in costs base. Excluding one-offs, the cost to income ratio would have been 31.4%. The NPL ratio improved to 13.5% at the end of H1-14. The impairment charge for first half of 2014 increased to AED 2,613 million, compared with AED 1,884 million in the previous year. This was primarily driven by continued conservative provisioning on the Corporate and Islamic financing portfolios, which helped boost the coverage ratio to 64.7% from 52.7% in H1-13, an increase of 12%. The positive contribution of the Bank s investments in associates and joint ventures amounted to AED 121 million in H1-14 compared with AED 67 million in H1-13 and AED 80 million in H2-13. Net profit for the Group was AED 2,350 million for the half year ended 30 June 2014, 30% above the profit posted in H1-13 of AED 1,808 million. The increase in net profits was driven by net interest income and noninterest income both outpacing the expense growth. Customer Loans as at 30 June 2014 (including Islamic financing) amounted to AED billion, an increase of 1% from the end of Customer Deposits as at 30 June 2014 were AED billion, an increase of 6% from 31 December The Advances to Deposits Ratio improved in the first half of 2014 to 95.6% from 99.5% at the end of 2013, due to continued strong growth in current and savings account balances. As at 30 June 2014, the Bank s total capital adequacy ratio and Tier 1 capital ratio were 19.6% and 15.6% respectively, compared with 19.6% and 15.3% as at 31 December The improvement in the Tier 1 ratio is due to retained profit in the first half of the year more than offsetting the annual dividend payment. The Capital Adequacy ratio remained stable as the amortization of Ministry of Finance Tier 2 sub-debt offset the net increase in Tier 1 capital. In July 2014, we repaid AED 4.8 billion of Ministry of Finance Deposits received in With this, the entire crisis era support has been repaid. Business Performance Retail Banking & Wealth Management (RBWM) The bank s Retail Banking and Wealth Management division recorded a robust performance during the first half, with income growth of 15% for the half year ended 30 June 2014 reaching AED 2,793 million compared to AED 2,502 million in H1-13. Net interest income increased by 12% while fee income grew by a strong 22%. RBWM s sustained focus on liabilities growth and, in particular, current and savings accounts resulted in faster than market growth of 7.3% in customer deposits to reach AED billion. Page 3 of 7

4 Our strategic focus on deepening existing customer relationships as well as acquisition of new high value customers has been instrumental to the growth, achieving increased cross-sell and higher revenues per customer in The bank s partnerships with Skywards and Manchester United is driving strong growth for the credit cards business as well as enabling new product introductions like Manchester United accounts, debit cards and pre-paid cards. The retail wealth business continues to experience strong growth especially from our affluent segment, supported by certified frontline staff equipped with tablet based state-of-the-art financial planning tools. Our DirectRemit service launched earlier this year that offers instant remittances to India, our largest remittance market, has seen high uptake, with the launch of additional corridors planned for the second half of the year. The bank has been optimizing its branch footprint to serve customers more effectively by relocating branches to emerging areas in the UAE. Our efforts to develop and differentiate our digital channels have seen a greater number of customers utilise these lower cost channels. Currently 28% of our customers are active users of online and mobile banking. The bank continues to lead innovation on the UAE mobile banking space with the launch of mepay, a pioneering instant money transfer facility, and Shake n Save, which enables customers to save money instantly by shaking their mobile device. The Private Banking business delivered strong growth rates from its UAE platform across core market segments. Further, its international locations in the Kingdom of Saudi Arabia, Singapore and the United Kingdom have shown impressive performance compared to last year. Both Emirates NBD Securities, the brokerage arm, as well as Emirates NBD Asset Management continue to deliver exceptional growth driven by strong market performance and new product launches. Wholesale Banking (WB) Wholesale Banking s operating income showed steady growth to AED 2,243 million in H1-14, compared to AED 2,164 million reported in H1-13, in a competitive market where credit growth was challenging and asset margins remained under pressure. H1-14 Net interest income of AED 1,558 million was 3% lower compared with H1-13. However this was offset by a 6% rise in fee income to AED 685 million in H1-14, reflecting a continued focus on improving capital efficiency through growth in non-funded income especially from foreign exchange and debt capital markets activity. In terms of balance sheet, due to low levels of new deal flows, H1-14 Assets were maintained at Dec 2013 levels whereas deposits grew by 3.2% in line with the increasing liquidity levels in the market. Emirates NBD Capital, our Investment Bank, continued its strong performance in H1-14. This performance was crowned when Emirates NBD Capital was ranked as the as the leading arranger of US dollar sukuk globally, by number of issues, in the first half of It also acted as the book-runner for the US$ 201 million Emirates REIT IPO; the first Sharia a-compliant REIT- based in the DIFC, successfully listed on NASDAQ Dubai. Page 4 of 7

5 Global Markets & Treasury (GMT) GMT reported total income of AED 464 million for the first half of 2014 compared with AED 216 million for the comparable period in The strong first half performance is primarily due to an increase in Net Interest Income due to effective balance sheet positioning & hedging. The numbers also reflect a strong performance in the Investment Portfolio. Revenues from both Foreign exchange and Fixed Income sales were also higher in the first half of 2014 compared with the H1-13. In spite of market volatility caused by geopolitical challenges, the Credit Trading desk delivered a strong performance. Group Funding raised 400 million Australian dollars in May, which is the cheapest 5-year funding that the bank has raised in the last 6 years. Emirates Islamic Emirates Islamic s (EI) performance continued to show steady performance with total income increasing by 28% to AED 918 million from AED 717 million for H1-13. Net financing and investing receivables grew by 4% to AED 23.8 billion from the end of As at 30 June 2014, the branch and ATM/SDM network of EI totaled 53 and 176 respectively. EI growth continued with a net profit of AED 226 million compared to AED 112 million in H1-13, leveraging its expanded platform to serve better its Retail, SME and Corporate customers. EI also contributed to an increase in fee income due to higher customer account volumes. EI recently introduced a trading platform for murabaha in partnership with NASDAQ Dubai. This new initiative is starting to generate fee income. The Bank s success continued to be recognized across the industry, with EI winning Best Premium Islamic Card and Best Self Employed Finance at the CPI Financial in early Information Technology and Operations Emirates NBD Group is ready with the first phase of Foreign Account Tax Compliance Act (FATCA) for existing and new customers. Group IT facilitated helped upgrade Treasury Front Office systems which should lead to increased trade volumes and income. Group IT also supported Emirates Islamic in launching Digital Account Opening where customers can initiate paperless online account opening via the website. Mobile Banking Application was successfully launched in the Kingdom of Saudi Arabia. This application allows users to perform payments, transfers and other functionality. Page 5 of 7

6 Tanfeeth Tanfeeth continued delivering on all Service Level Agreements across revenue, operating margins, operating risk and service quality. Significant focus was placed on driving seamless customer service and operational improvements across Emirates NBD s entire front, middle and back office. A comprehensive help desk system was rolled out to centralized enquiries and promotes swift responses and complaint resolution. Emirates NBD will open a 100-seat, all-emirati call centre in Ras Al Khaimah. The initiative is driven by Emirates NBD's commitment to providing additional employment opportunities for UAE Nationals. The call centre will be operated by Tanfeeth, and is expected to be fully-operational by December During H1, Tanfeeth received several industry awards. These include Outstanding Straight Through Processing Awards from Barclays Bank, Deutsche Bank and Standard Chartered Bank. Two accolades were also received for best-practice learning and development initiatives. Emirates NBD S.A.E. Egypt Despite a challenging political and economic backdrop, the Emirates NBD S.A.E. Egypt operation has continued to perform well since its consolidation with the Group on 9 June In H1-14, it contributed AED 326 million revenue and AED 103 million net profit to the Group s results. At present, cultural, system and policy integration are ongoing and proceeding as expected, in accordance with the Group s integration plans. Outlook The UAE remains well-positioned to enjoy solid growth in 2014 driven primarily by an expansion in non-oil sectors, particularly tourism, retail and manufacturing. We believe the construction sector will contribute more significantly to GDP growth this year as the recovery in real estate prices encourages new development. Following a boost to oil production in excess of 4% in 2013, we expect growth in the hydrocarbon sector to slow this year. Against an improving global economic backdrop, the Bank forecasts 2014 GDP growth of 5.0% in the UAE and Dubai. The Bank will continue to implement its successful strategy and take advantage of the positive growth opportunity in Dubai and the region. This strategy is built around five core building blocks which include delivering excellent customer experience, building a high performance organisation, driving core businesses, running an efficient organisation and diversifying sources of income. END Page 6 of 7

7 Notes to editors: Awards Best Bank and Best Regional Bank Awards Emirates NBD Best Local Bank United Arab Emirates at the 2014 annual Euromoney Private Banking and Wealth Management Survey 'Best Consumer Credit Product award' and 'Best Risk Management award for its Personal Loan business at the 2014 Asian Banker s International Excellence in Retail Financial Services Awards Middle East Regional Bank of the Year at the International Financing Review (IFR) Middle East Awards 2013 Asset management and Consumer Finance Awards Emirates NBD Asset Management UAE Asset Manager of the Year for second consecutive year, at the 5th annual MENA Fund Manager Performance Awards 2014 MENA Equity Fund of the Year for the Emirates MENA Top Companies Fund, at the 5th annual MENA Fund Manager Performance Awards 2014 Balanced Fund of the Year for the Emirates MENA Opportunities Fund, at the 5th annual MENA Fund Manager Performance Awards 2014 Treasury, Emerging and Capital Markets Awards Emirates NBD UAE s Best Foreign Exchange Provider 2014 by Global Finance Best Treasury Management Project award in the Middle East at the Asian Banker Middle East Banking Products and Projects 2014 Awards Most impressive emerging market financial institution borrower by Global Capital (formerly Euroweek) at the Global Capital Bond Awards 2014 Best debt house at EMEA Finance s Middle East Banking Awards 2013 Marketing, Social Media and Customer Engagement Awards Emirates NBD ranked 25 on the Power 100 Social Media Rankings compiled by The Financial Brand wins a Silver and Bronze award in the Social Media category, at the 2014 Dubai Lynx Awards Social Brand of the Year at MENA Digital Awards Best Social Media Engagement award at the Asian Banker Middle East Banking Products and Projects 2014 Awards Banking & Finance Customer Care Excellence Award at the 8th annual Middle East Government and Business Customer Care Excellence Awards 2014 Best New Card and Best Customer Engagement Program at the Smart Cards Middle East 2014 Best Sports Marketing Campaign at Sports Industry Awards Card Awards Emirates NBD Man United Card Awarded Best International Sports Affinity Co-brand Card in the UAE for 2013 by MasterCard Other Awards Emirates Money named the Best Non-Bank Consumer Finance Business at the Asian Banker Middle East Banking Products and Projects 2014 Awards About Emirates NBD Emirates NBD (DFM: Emirates NBD) is a leading bank in the region. Emirates NBD has a leading retail banking franchise, with 224 branches and over 885 ATMs and CDMs in the UAE and overseas. It is a major player in the UAE corporate and retail banking arena, and has strong Islamic banking, investment banking, private banking, asset management, global markets & treasury and brokerage operations. The bank has operations in the UAE, Egypt, Qatar, the Kingdom of Saudi Arabia, Singapore, the United Kingdom and representative offices in China, India and Indonesia. For more information, please visit: For more information: Ibrahim Sowaidan Head - Group Corporate Affairs Emirates NBD Telephone: / ibrahims@emiratesnbd.com Patrick Clerkin Head - Investor Relations Emirates NBD Telephone: / IR@EmiratesNBD.com / PatrickE@EmiratesNBD.com Page 7 of 7

8 H1-14 Results Presentation July 24,

9 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 investors or potential investors and does not take in to account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. The information contained here in has been prepared by Emirates NBD. Some of the information relied on by Emirates NBD is obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. Forward Looking Statements It is possible that this presentation could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. Emirates NBD undertakes no obligation to revise or update any forward looking statement contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. 2

10 H1-14 Financial Results Highlights Highlights Net profit of AED 2,350 Mn for H1 improved 30% y-o-y. Net interest income rose 25% y-o-y helped by an improved asset mix due to retail and Islamic growth, CASA growth leading to lower cost of funds and a contribution of 6% from Egypt Non-interest income improved 31% y-o-y boosted by increases in trade finance income, brokerage & asset management fees, gains from legacy property sales and a contribution of 4% from Egypt Cost to income ratio improved 4.2% y-o-y. Excluding one-offs, cost to income ratio would have been 31.4%. Costs increased 12% y-o-y due to staff and occupancy costs linked with rising business volumes and partially offset by a control of other costs. Egypt contributed 8% of the increase Provisions of AED 2,613 Mn boosted the coverage ratio by 7.2% in H1 to 64.7% AD ratio of 95.6% within % management range NIMs improved 33bp y-o-y to 2.77% due to improving asset and deposit mix and contribution from Egypt Key Performance Indicators AED Mn H1-14 H1-13 Better / (Worse) H2-13 Better / (Worse) Net interest income 4,559 3,661 25% 4,478 2% Non-interest income 2,483 1,889 31% 1,829 36% Total income 7,042 5,550 27% 6,307 12% Operating expenses (2,137) (1,914) (12%) (2,281) 6% Pre-impairment operating profit 4,905 3,636 35% 4,026 22% Impairment allowances (2,613) (1,884) (39%) (2,829) 8% Operating profit 2,292 1,752 31% 1,197 91% Share of profits from associates % 80 51% Gain on disposal of stake in associates/subsidiaries - - n/a 202 (100%) Taxation charge (63) (10) (537%) (31) (104%) Net profit 2,350 1,808 30% 1,448 62% Cost: income ratio (%) 30.3% 34.5% 4.2% 36.2% 5.9% Net interest margin (%) 2.77% 2.44% 0.33% 2.80% (0.03%) AED Bn 30-Jun Jun-13 % 31-Dec-13 % Total assets % % Loans % % Deposits % % 3

11 Q2-14 Financial Results Highlights Highlights Net profit of AED 1,308 Mn for Q2 improved 35% y-o-y and 25% q-o-q Net interest income rose 22% y-o-y helped by an improved asset mix due to retail and Islamic growth, CASA growth leading to lower cost of funds and a 5% contribution from Egypt Non-interest income improved 37% y-o-y boosted by increases in trade finance income, asset management fees, gains from legacy property sales and a contribution of 3% from Egypt Cost to income ratio improved 4.6% y-o-y. Excluding one-offs, cost to income ratio would have been 31.1%. Costs increased 10% y-o-y due to staff and occupancy costs linked with rising business volumes and partially offset by a control of other costs. Egypt contributed 6% of the increase Provisions of AED 1,345 Mn boosted the coverage ratio by 4% in Q2 to 64.7% AD ratio of 95.6% within % management range Q2-14 NIMs improved to 2.78% due to improving asset and deposit mix Key Performance Indicators AED Mn Q2-14 Q2-13 Better / (Worse) Q1-14 Better / (Worse) Net interest income 2,327 1,913 22% 2,232 4% Non-interest income 1,382 1,007 37% 1,101 26% Total income 3,709 2,920 27% 3,333 11% Operating expenses (1,087) (989) (10%) (1,050) (4%) Pre-impairment operating profit 2,622 1,931 36% 2,283 15% Impairment allowances (1,345) (997) (35%) (1,267) (6%) Operating profit 1, % 1,016 26% Share of profits from associates % 61 (2%) Gain on disposal of stake in associates/subsidiaries - - n/a - n/a Taxation charge (29) (3) (741%) (35) 17% Net profit 1, % 1,042 25% Cost: income ratio (%) 29.3% 33.9% 4.6% 31.5% 2.2% Net interest margin (%) 2.78% 2.48% 0.30% 2.75% 0.03% AED Bn 30-Jun Dec-13 % 31-Mar-14 % Total assets % % Loans % % Deposits % % 4

12 Net Interest Income Highlights Net Interest Margin (%) NIMs improved 3 bps in Q2-14 and improved 33 bps from 2.44% in H1-13 to 2.77% in H1-14 Loan spreads improved in Q2 and year-on-year due to growth in balances of higher yielding retail and Islamic assets Treasury spreads improved y-o-y due to strong investment performance coupled with cheaper cost of wholesale funding The benefit from growth in CASA has been offset by a drop in interest rates 2014 NIM guidance revised upwards from % to % due to successful balance sheet optimisation Q Q Q Q1 13 Q2 13 Qtrly NIM Q3 13 Q4 13 YTD NIM 2.75 Q Q2 14 Net Interest Margin Drivers (%) Q2-14 vs. Q1-14 H1-14 vs. H (0.01) (0.01) 0.17 (0.07) 2.77 Q1 14 Loan Spreads Deposit Spreads Treasury Spreads Other Q1 14 Q4 13 Loan Spreads Deposit Spreads Treasury Spreads Other Q2 14 5

13 Funding and Liquidity Highlights Advances to Deposit (AD) Ratio (%) Headline AD ratio of 95.6% comfortably within the % management target range Liquid assets* of AED 46.9 Bn as at Q2-14 (15.4% of total liabilities) Debt maturity profile comfortably within funding capabilities Issued A$ 400 million of 5-year senior debt. Cheapest 5-year funding that the bank has raised in the last 6 years Modest maturity profile affords Emirates NBD ability to consider public and private debt issues opportunistically 99.9 Q Q3 12 Q4 12 Q1 13 Q2 13 Target range % Q Q4 13 Q1 14 AD Ratio (%) 95.6 Q2 14 Composition of Liabilities/Debt Issued (%) Maturity Profile of Debt Issued (AED Bn) Liabilities (AED Bn) Debt/Sukuk (AED 24.1 Bn) Customer deposits 83% Banks 5% Others 4% Debt/Sukuk 8% Syn bank borrow. 1% Loan secur. 1% Maturity Profile of Debt/Sukuk Issued 100% = AED 24.1 Bn EMTNs 5% Sukuk 1% *including cash and deposits with Central Banks but excluding interbank balances and liquid investment securities 6

14 Loan and Deposit Trends Highlights Gross loans increased by 1% q-o-q and by 2% from end 2013 Consumer lending grew 1% q-o-q and by 5% from end 2013 Islamic financing grew 4% q-o-q and by 6% from end 2013 Deposits increased 1% q-o-q and by 6% from end 2013 CASA grew 2% q-o-q and by 14% from end 2013 More costly time deposits declined by 2% q-o-q and by 5% from end 2013 CASA deposits as a percentage of total deposits have increased to 57% in Q2-14 from 43% at the end of 2012 Trend in Gross Loans by Type (AED Bn) % % Q2 13 Q3 13 Corporate Q4 13 Consumer Q1 14 Q2 14 Islamic* Treasury/Other Trend in Deposits by Type (AED Bn) +6% % Q2 13 Q3 13 Other Q4 13 Time Q1 14 CASA Q2 14 Gross Islamic Financing Net of Deferred Income 7

15 Non-Interest Income Highlights Non-interest income improved 31% y-o-y and 36% from the previous half year due to a rise in fee income, brokerage income, and income from legacy property sales and investment securities Positive trend in core gross fee income due to a rise in credit card business and trade finance volumes as well as a doubling in brokerage and asset management fees Property income improved significantly due to increased profit from sale of inventory and disposal of a legacy site Investment securities income up 41% due to strong investment portfolio performance Composition of Non Interest Income (AED Mn) AED Mn H1-14 H1-13 Trend in Core Gross Fee Income (AED Mn) +31% 1, % 1, Better / (Worse) 180 H Better / (Worse) Core gross fee income 2,177 1,668 31% 1,725 26% Fees & commission expense (361) (185) (95%) (273) (32%) Core fee income 1,816 1,483 22% 1,451 25% Property income / (loss) % % Investment securities % % Total Non Interest Income 2,483 1,889 31% 1,829 36% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Forex, Rates & Other Brokerage & AM fees Fee Income Trade finance 8

16 Operating Costs and Efficiency Highlights Cost to Income Ratio (%) Costs increased 10% y-o-y in Q2 due to staff and occupancy costs on the back of higher business volumes and the inclusion of the Egyptian business Excluding Egypt, costs only increased by 4% y-o-y. Cost to Income Ratio improved by 2.2% q-o-q to 29.3%. Adjusted for one-offs Cost to Income Ratio would be 31.4% for H1-14 and 31.1% for Q2-14 The longer term management target for cost to income ratio is 33%. We will invest more in the future, within this parameter, on systems and people to help support business growth and this process has already been set in motion in Q Q2 13 Cost Composition (AED Mn) , Q3 13 CI Ratio (YTD) CI Ratio Q % 1, Q1 14 1,050 1, Q % 81 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Egypt Staff Cost Occupancy cost Depr & Amort Other Cost 9

17 Credit Quality Highlights Impaired loans ratio improved by 0.3% q-o-q to 13.5% Net impaired loans decreased by AED 0.2 Bn helped by repayments and recoveries H1-14 net impairment charge of AED 2.6 Bn driven principally by additional net specific Corporate and Islamic loan provisions Coverage ratio increased by 4% in Q2 to 64.7% Total portfolio impairment allowances amount to AED 4.09 Bn or 2.7% of unclassified credit RWAs Medium term management targets for Impaired Loan Ratio is 12% and Coverage Ratio is 80% Impaired Loan & Coverage Ratios (%) Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Impact of DW* % Coverage ratio, excl. DW* % NPL ratio, excl. DW* Coverage ratio, incl. DW* % Impaired Loans and Impairment Allowances (AED Bn) Impaired Loans Impairment Allowances Q Q3 13 Q4 13 Q1 14 Q2 14 DW* Core Corporate -1% Retail Q2 13 Islamic Q3 13 Q4 13 Other Debt Securities Q Q % *DW = exposure AED 9.14 Bn; provision AED 409 Mn 10

18 Capital Adequacy Highlights CAR and T1 improved by 0.4% and 0.6% respectively in Q2-14 to 19.6% and 15.6% respectively resulting from: increase in Tier 1 capital due to retained earnings modest decrease in risk weighted assets Tier 1 Capital Ratio has improved by 1.1% y-o-y from 14.5% to 15.6% In July 2014, we repaid the remaining AED 4.8 Bn of MOF Tier 2 Deposits. With this, the entire crisis era support has been repaid. Capitalisation Q Q Q Q Q2 14 T2 T1 T1 % CAR % Capital Movements (AED Bn) FY-13 to H1-14 (AED Bn) Tier 1 Tier 2 Total Capital as at 31-Dec Net profits generated FY 2013 dividend paid (1.4) - (1.4) Tier 1 Issuance Repayment of Tier Amortisation of MOF T2 / sub debt - (1.0) (1.0) Interest on T1 securities (0.2) - (0.2) Tier 2 Issuance Repayment of subordinated debt Goodwill (-) - (-) Other - (0.1) (0.1) Capital as at 30-Jun Risk Weighted Assets Basel II (AED Bn) Q Q3 13-2% Q Q Q2 14 Operational Risk Market Risk Credit Risk 2.7 0% 11

19 Egyptian Business Overview Highlights Financials Full service commercial banking platform: Corporate Banking: focused on large corporate and MNCs; serves c.4,000 clients Retail Banking: High growth segment; serves c.246,000 clients Wide presence in Egypt through 72 branches and 185 ATMs Financially sound with robust profitability and a healthy balance sheet Improving Cost to Income Ratio AED Mn Year 2013 (from 9-June-13) H1-14 Net interest income Non-interest income Total income Operating expenses (193) (158) Pre-impairment operating profit Impairment allowances (22) (14) Net Loans 100% = AED 3.7 Bn Deposits 100% = AED 9.1 Bn Operating profit Taxation charge (30) (51) Other Net profit Corporate 55% 45% Retail Time 32% 1% 67% CASA AED Bn 31-Dec Jun-2014 Net Loans Deposits Impaired Loan Ratio (%) 0.2% 0.5% Cost to Income Ratio (%) 53.8% 48.0% 12

20 Divisional Performance Retail Banking & Wealth Management RBWM continued to improve its position during the quarter Revenue improved 1% q-o-q and 10% y-o-y Deposits grew 7% from end 2013, driven mainly by CASA growth Loans grew 5% from end 2013 driven by growth in personal loans, credit cards and auto loans The bank has improved its distribution as part of its channel optimization strategy and had 524 ATMs and 99 branches as at Q2 Balance Sheet Trends AED Bn % % Q4 13 Q2 14 Loans Deposits Revenue Trends AED Mn 1, % 1,388 1, Q2 13 Q1 14 Q2 14 NFI NII +1% Islamic Banking Islamic Banking revenue improved 18% q-o-q and 31% y-o-y to AED 496 Mn in Q2 Financing receivables grew 8% in H1-14 Customer accounts declined by 2% in H1-14 due to a decrease in expensive wakala deposits At Q2-14, EI had 53 branches and ATM & CDM network of 176 Islamic Banking business continues to develop through a strengthened core franchise coupled with an expansion of retail, SME, and corporate offerings Balance Sheet Trends AED Bn +8% % Q4 13 Q2 14 Financing receivables Customer accounts Revenue Trends AED Mn Q2 13 NFI +31% Q1 14 NII 496 Q % 13

21 Divisional Performance (cont d) Wholesale Banking The decrease y-o-y and q-o-q is due to internal management adjustments for term funding and does not affect total Bank income Loans were broadly stable from end 2013 as new underwriting offset normal loan repayments Deposits grew by 8% from end 2013 Main focus during Q2-14 was on continued strategy evolution by building center of excellence around key sectors and geographic locations to enhance customer service quality and share of wallet, increased cross-sell of Treasury and Investment Banking products and larger Cash Management and Trade Finance penetration Balance Sheet Trends AED Bn % 82.6 Q Q % Revenue Trends AED Mn 1,136-3% Q2 13 1, Q1 14 1, Q2 14-4% Loans Deposits NFI NII Global Markets & Treasury Revenue at AED 220 Mn in Q2-14 declined by 10% q-o-q but improved 111% y-o-y Net interest income improved on the back of balance sheet positioning and hedging Improved gains from investments in Q2-14 Revenue Trends AED Mn Q % NFI Q1 14 NII % Q

22 Outlook Economic Outlook 2014 GDP growth expectations for the UAE have been revised upwards to 5% due to a strong expansion in the non-oil private sector GDP growth expectations also revised upwards to 5% for Dubai as manufacturing, hospitality, transport and logistics expanded robustly. Also buoyant real estate and construction sectors will boost growth In 2014 Dubai residential property price growth slowed significantly for villas and apartments Inflation expected to rise to 3% in 2014 from 1.1% in 2013 on the back of higher housing costs and higher input prices Emirates NBD has improved its capital and funding profile allowing it to take advantage of the expected future growth in Dubai and the region As Dubai continues to grow we expect a further positive trend in impaired loans leading to a stronger balance sheet 15

23 Summary Profitability Pre-impairment operating profit of AED 4,905 Mn in H1-14, up 35% y-o-y Net profit of AED 2,350 Mn improved 30% y-o-y Income Total income improved 27% y-o-y to AED 7,042 Mn in H1-14 helped by an improving asset mix, efficient funding base and strong fee income Net Interest Margin CI Ratio Provisions Credit Quality Capital and Liquidity Outlook NIMs stable at 2.77% in H1-14. Guidance revised upwards to % Cost to Income ratio improved by 4.2% y-o-y to 30.3% in H1-14 H2-14 spend is expected to grow as we invest in systems and people to support future business growth Conservative provisioning with net impairment allowances of AED 2,613 Mn in H1-14 boosting the coverage ratio to 64.7%, up 12% from a year ago NPL ratio improved by 0.3% to 13.5% in Q2-14 due to further recoveries Coverage ratio improved by 4.0% to 64.7% in Q2-14 Capital and liquidity position extremely strong offering resilience for the future Tier 1 ratio improved by 1.1% y-o-y to 15.6% in Q2-14 The Bank will continue to implement its successful strategy and consolidate our position as a dominant player in the UAE and the region 16

24 GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS PERIOD ENDED 30 JUNE 2014

25 GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Contents Page Independent auditor s report on review of the Group condensed consolidated interim financial statements 1 Group condensed consolidated interim statement of financial position 2 Group condensed consolidated interim income statement 3 Group condensed consolidated interim statement of comprehensive income 4 Group condensed consolidated interim statement of cash flows 5-6 Group condensed consolidated interim statement of changes in equity 7 Notes to the Group condensed consolidated interim financial statements 8-34

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27

28 3 GROUP CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT Unaudited Unaudited Unaudited Unaudited three months period ended three months period ended six months period ended six months period ended 30 June June June June 2013 Notes AED 000 AED 000 AED 000 AED 000 Interest and similar income 2,593,235 2,270,215 5,146,190 4,493,021 Interest and similar expense (591,420) (637,766) (1,191,189) (1,356,932) Net interest income 2,001,815 1,632,449 3,955,001 3,136,089 Income from Islamic financing and investment products Distribution on Islamic deposits and profit paid to Sukuk holders Net income from Islamic financing and investment products Net interest income and income from Islamic financing and investment products net of distribution to depositors 451, , , ,386 (126,607) (135,585) (262,946) (287,620) 325, , , ,766 2,327,044 1,912,632 4,558,591 3,660,855 Fee and commission income 836, ,297 1,614,884 1,173,451 Fee and commission expense (204,130) (114,528) (360,638) (184,589) Net fee and commission income 632, ,769 1,254, ,862 Net gain (loss) on trading securities 46,188 (6,174) 78,470 (13,160) Other operating income , ,382 1,150, ,363 Total operating income 3,708,843 2,919,609 7,042,075 5,549,920 General and administrative expenses 17 (1,087,238) (988,847) (2,137,182) (1,913,604) Operating profit before impairment 2,621,605 1,930,762 4,904,893 3,636,316 Net impairment loss on financial assets 18 (1,345,330) (996,483) (2,612,646) (1,884,484) Operating profit after impairment 1,276, ,279 2,292,247 1,751,832 Share of profit of associates and joint ventures Group profit for the period before taxation 60,113 40, ,000 66,554 1,336, ,064 2,413,247 1,818,386 Taxation charge (28,737) (3,418) (63,452) (9,959) Group profit for the period after taxation Attributable to: 1,307, ,646 2,349,795 1,808,427 Equity holders of the Group 1,307, ,796 2,349,546 1,807,568 Non-controlling interest Group profit for the period 1,307, ,646 2,349,795 1,808,427 Earnings per share The attached notes 1 to 28 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors report on review of the Group condensed consolidated interim financial statements is set out on page 1.

29 4 GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Unaudited Unaudited three months three months six months six months period ended period ended period ended period ended 30 June June June June 2013 AED 000 AED 000 AED 000 AED 000 Group profit for the period 1,307, ,646 2,349,795 1,808,427 Items that may be reclassified subsequently to Income statement: Other comprehensive income Cash flow hedges: - Effective portion of changes in fair value 8,404 (21,533) (20,519) (30,287) Fair value reserve (available-for-sale financial assets): - Net change in fair value (110,249) (175,590) 659,087 (117,067) - Net amount transferred to income statement (136,797) (90,783) (167,149) (201,182) Currency translation reserve (50,468) (6,412) (67,547) (5,180) Other comprehensive income for the period (289,110) (294,318) 403,872 (353,716) Total comprehensive income for the period 1,018, ,328 2,753,667 1,454,711 Attributable to: Equity holders of the Bank 1,018, ,478 2,753,418 1,453,852 Non-controlling interest Total comprehensive income for the period 1,018, ,328 2,753,667 1,454,711 The attached notes 1 to 28 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors report on review of the Group condensed consolidated interim financial statements is set out on page 1.

30 5 GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS OPERATING ACTIVITIES Unaudited six months period ended Unaudited six months period ended 30 June June 2013 AED 000 AED 000 Group profit for the period 2,349,795 1,808,427 Adjustment for non cash items Impairment loss on loans and receivables 1,709,856 1,257,761 Impairment loss on Islamic financing receivables 749, ,628 Impairment loss on investment securities 108,470 91,386 Interest unwind on impaired loans (49,070) (45,660) Amortisation of fair value (net) 23,018 23,239 Premium discount on Investment securities 20,679 18,857 Unrealised foreign exchange gain (64,282) (87,654) Amortisation of intangibles 46,500 31,500 Depreciation of property and equipment 155, ,538 Share of profit of associates and joint ventures (121,000) (66,554) Unrealized (gain)/loss on investments (127,043) 73,012 Gain on sale of properties (267,324) - Operating profit before changes in operating assets and liabilities 4,535,306 3,741,480 (Increase)/decrease in interest free statutory deposits (2,822,523) (2,897,838) (Increase)/decrease in certificate of deposits with Central Bank maturing after three months (Increase)/decrease in amounts due from banks maturing after three months (4,098,007) (2,000,000) 51,222 1,381,643 Increase/(decrease) in amounts due to banks maturing after three months 541, ,341 Net change in other liabilities/other assets 599,415 (2,023,418) Net change in fair value of derivatives 122,396 79,986 Increase/(decrease) in customer deposits (including islamic deposits) 13,268,818 8,680,389 (Increase)/decrease in loans and receivables (3,744,028) (10,191,528) (Increase)/decrease in Islamic financing receivables (2,108,325) (1,547,630) Net cash flows from/(used in) operating activities 6,345,976 (4,564,575)

31 6 GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS INVESTING ACTIVITIES Unaudited six months period ended Unaudited six months period ended 30 June June 2013 AED 000 AED 000 (Increase)/decrease in trading securities (net of fair value movements) 352, ,008 (Increase)/decrease in investment securities (net of fair value movements) 1,219,180 (2,112,048) (Increase)/decrease in investments in associates and joint ventures 56, ,302 Sale of investment in subsidiary - 5,204 Acquisition/disposal of Investment Properties 175,414 (7,775) Acquisition of subsidiary - (661,218) Additions to property and equipment (net) (84,062) (39,838) Advance for Acquisition of NCI in Subsidiary - (88,324) Net cash flows from/(used in) investing activities 1,720,321 (2,422,689) FINANCING ACTIVITIES Increase/(decrease) in deposits under repurchase agreements 33,156 (543,715) Increase/(decrease) in debt issued and other borrowed funds 358, ,614 Increase/(decrease) in Sukuk borrowing 5,640 (1,023) Interest on Tier I capital notes (235,301) (147,901) Issuance of Tier I capital notes - 3,648,497 Dividends paid (1,387,968) (1,387,968) Net cash flows from/(used in) financing activities (1,226,089) 2,093,504 Increase/(decrease) in cash and cash equivalents (refer Note 25) 6,840,208 (4,893,760) The attached notes 1 to 28 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors report on review of the Group condensed consolidated interim financial statements is set out on page 1.

32 7 GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY Issued Capital Treasury shares Tier I Capital Notes Share premium reserve ATTRIBUTABLE TO EQUITY HOLDERS OF THE GROUP Legal and Statutory reserve Other reserves Fair value reserve Currency Translation Reserve Retained earnings Total Noncontrolling interest AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 AED 000 Balance as at 1 January ,557,775 (46,175) 7,648,497 12,270,124 2,778,888 2,869, ,159 5,343 9,825,643 41,710,787 4,525 41,715,312 Total comprehensive income for the period Tier I capital notes issued during the period (note 15) ,419 (67,547) 2,349,546 2,753, ,753, Interest on Tier 1 capital notes (235,301) (235,301) - (235,301) Increase in non-controlling interest Dividends paid (1,387,968) (1,387,968) - (1,387,968) Balance as at 30 June ,557,775 (46,175) 7,648,497 12,270,124 2,778,888 2,869,533 1,272,578 (62,204) 10,551,920 42,840,936 4,774 42,845,710 Group Total Balance as at 1 January ,557,775 (46,175) 4,000,000 12,270,124 2,706,815 2,869, ,823 (4,793) 8,505,205 36,452,307 46,269 36,498,576 Total comprehensive income for the period Tier I capital notes issued during the period (348,536) (5,180) 1,807,568 1,453, ,454, ,648, ,648,497-3,648,497 Interest on Tier 1 capital notes (147,901) (147,901) - (147,901) Increase in non-controlling interest* ,705 89,705 Dividends paid (1,387,968) (1,387,968) - (1,387,968) Balance as at 30 June ,557,775 (46,175) 7,648,497 12,270,124 2,706,815 2,869, ,287 (9,973) 8,776,904 40,018, ,833 40,155,620 *Increase in non-controlling interest is due to acquisition of BNP Paribas Egypt, a subsidiary of the Group. Note: No allocation to legal and statutory and other reserves has been made for the six months period ended 30 June 2014 as this will be effected at the year end. The attached notes 1 to 28 form an integral part of these Group condensed consolidated interim financial statements. The independent auditors report on review of the Group condensed consolidated interim financial statements is set out on page 1.

33 8 NOTES TO THE GROUP CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 CORPORATE INFORMATION Emirates NBD PJSC (the Bank ) was incorporated in the United Arab Emirates on 16 July 2007, under the Commercial Companies Law (Federal Law Number 8 of 1984 as amended) as a Public Joint Stock Company. The Bank was incorporated principally to give effect to the merger between Emirates Bank International PJSC ( EBI ) and National Bank of Dubai PJSC ( NBD ). The merger became effective from 16 October 2007, while the legal merger was completed on 4 February Post this date, EBI and NBD ceased to exist. The condensed consolidated interim financial statements for the period ended 30 June 2014 comprises the Bank and its subsidiaries (together referred to as the Group ) and the Group s interest in associates and joint ventures. The Bank is listed on the Dubai Financial Market (TICKER: EMIRATESNBD ). The Group s principal business activities are corporate banking, consumer banking, treasury and Islamic banking. The Bank s website is The registered address of the Bank is Post Box 777, Dubai, United Arab Emirates ( UAE ). The parent company of the Group is Investment Corporation of Dubai, a company in which the Government of Dubai is the majority shareholder. 2 BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ( IAS ) 34 Interim Financial Reporting. The accounting policies applied by the Group in the preparation of the condensed consolidated interim financial statements are consistent with those applied by the Group in the annual consolidated financial statements for the year ended 31 December The adoption of the new and amended IFRS and IFRIC interpretations with effect from 1 January 2014 has had no effect on the condensed consolidated interim financial statements of the Group. These condensed consolidated interim financial statements do not include all the information and disclosures required for full annual consolidated financial statements prepared in accordance with International Financial Reporting Standards and should be read in conjunction with the Group s financial statements as at and for the year ended 31 December In addition, results for the six months period ended 30 June 2014 are not necessarily indicative of the results that may be expected for the full financial year ending 31 December In preparing these condensed consolidated interim financial statements, significant judgments made by the management in applying the Group s accounting policies and the key sources of estimation were the same as those that were applied to the consolidated financial statements as at and for the year ended 31 December (a) Estimates The preparation of condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. (b) Financial Risk Management The Group s financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2013.