Investor Presentation JUNE 2014

Transcription

1 Investor Presentation JUNE 2014

2 Contents I. UNB Introduction 1 II. UAE Banking Industry 3 III. UNB Business Overview 5 IV. UNB Strategy 10 V. Risk Management 11 VI. Financial Highlights and Performance 13 VII. Awards and Certifications 20

3 I. UNB Introduction

4 UNB Key Highlights Majority ownership (50%) and strong support from the Government of Abu Dhabi Stable and conservative management Demonstrated consistent performance of a time tested strategy, even in a challenging environment Reaffirmed strong ratings with stable outlook Diversified loan book and adequate provisioning High capitalization Strong CAR and Tier I ratio of 18.9% and 17.8% respectively Strong fundamentals, consistent strategy and management track record supporting sustainable growth 1

5 Overview of UNB Overview Established in 1982 and headquartered in Abu Dhabi Joint Abu Dhabi and Dubai Government ownership Listed on the Abu Dhabi Securities Exchange (ADX) Provides a full array of wholesale and retail banking services through a network of 68 branches in UAE 6 th largest local commercial bank in the UAE in terms of loans and advances International footprint in China,Egypt, Kuwait and Qatar Over 2,400 employees as at 30 June 2014 Market capitalization of AED 16.9 Billion (USD 4.6 Billion) as at 30 June 2014 Strong Ratings Constantly Maintained (1) Ownership Structure Group Operating Structure (1) Reaffirmed throughout the financial markets turmoil A1 99.0% 80.0% 94.9% A Rep office in China Branch in Qatar Financial Center Branch in Kuwait Note: (1) ADIC: Abu Dhabi Investment Council. ICD: Investment Corporation of Dubai. 2

6 II. UAE Banking Industry

7 UAE Banking Sector Snapshot Market Structure Loans and Deposits Growth AED billion 1,018 1, ,050 Loans: +4% Deposits: +7% CAGR 1,168 1,099 1,071 1,070 1,179 1,279 1,200 1,332 Largest Bank (19.9% of Total Loans) Q Nine Following Banks (Additional 60.4% of Total Loans) Loans & Advances Deposits Market Developments As at 31 Mar 2014 Remaining 41 Banks: 19.7% of Total Loans Regulated by Central Bank of UAE 51 Banks (930 branches) 23 National Banks with 843 Branches 28 Licensed Foreign Banks with 87 Branches Improving financial position Loans / Deposits ratio strengthened from 103.5% in 2009 to 90.0% as at 31 March 2014 Moody s banking sectors outlook for UAE is stable Source: UAE Central Bank as at 31 March

8 UNB Positioning within its main UAE peer group Asset Quality Non Performing Loans / Gross Loans As at 30 June 2014 As at 30 June 2014 Operating Efficiency Cost / Income ratio 13.5% 3.3% 3.0% 3.4% 3.9% 5.3% 9.8% 22.2% 28.8% 30.3% 31.8% 31.9% 32.7% 37.2% NBAD FGB ADCB UNB MB CBD ENBD FGB UNB ENBD CBD ADCB NBAD MB As at 30 June 2014 Liquidity Loan / Deposit Ratio As at 30 June 2014 Profitability 76.5% 79.1% 92.6% 93.2% 95.6% 96.9% 112.8% 15.2% 16.0% 16.1% 16.6% 16.8% 17.2% 18.7% 2.3% 1.7% 2.5% 1.4% 2.6% 2.7% 2.0% NBAD MB UNB FGB ENBD CBD ADCB UNB NBAD MB ENBD CBD FGB ADCB ROAE ROAA Source: Financial Statements as at 30 June

9 III. UNB Business Overview

10 Business Lines AED million, as at 30 June 2014, unless otherwise stated Corporate Banking Retail and SME Banking International & Investment Banking Islamic Banking Assets (AED billion) Share of total (%) % (1) % (1) % (1) 6.8 7% (1) Operating Income Share of total (%) 33% (1) 39% (1) 15% (1) 7% (1) Net Income Share of total (%) % (1) % (1) % (1) 88 9% (1) Key Highlights Cross sell towards extended array of products and services Source of large and stable deposits Long term relationships High potential for SME business Core source of inexpensive deposits Very profitable sector for growth 6 th largest local commercial bank in the UAE in terms of branch Network with 68 branches. (2) Widespread and well established financial institutions relationships Growing focus on advisory and structured finance Group treasury (foreign exchange, money markets) Growing product offering Responding to increasing demand for financing and savings products Source: Financial Statements as at 30 June Note: (1) As at 30 June 2014, % of total including UNB-Egypt and unallocated items. (2) UAE Central Bank as at 31 Mar

11 Business Lines Corporate Banking Comments Full suite of corporate banking products market specific teams providing industry and market expertise across UAE Strong access to Abu Dhabi Government and Government Related Entities ( GRE ) related business Over 2,500 customers as at 30 June 2014 Prudent growth in loan book and focus on cross sell to top tier local and regional clients Assets (AED Billion) CAGR:+1% H Operating Income (AED Million) CAGR:-1% CAGR:+11% Net Income (AED million) 898 1,145 1,129 1, % % H H Source: Financial Statements as at 31 December 2011, 2012 and 2013 and H and H H

12 Business Lines Retail Banking Comments Assets (AED Billion) Full range of retail banking products including multicurrency accounts, loans, credit cards and banc assurance products Limited exposure to real estate Modest mortgage portfolio, mostly to UAE nationals 68 branches and over 246 ATMs in UAE Over 240,000 customers as at 30 June 2014, predominantly UAE nationals 2013 Banker Middle East Best Premium Credit Card for its Platinum Credit Card and Best SME Card Award for the UNB Business Credit Card. CAGR:+7% H Operating Income (AED million) Net Income (AED million) CAGR: +2% 1,104 1,116 1, CAGR: -31% +11% % H H H H Source: Financial Statements as at 31 December 2011, 2012 and 2013 and H and H

13 Business Lines International and Investment Banking Comments Comprises of: Treasury - Money Market Operations, Foreign Exchange Investments - Investment portfolio of AED 11.0 billion as at 30 June 2014 mostly comprising of Investment grade liquid instruments - Limited propriety trading Financial institutions - Relationship with over 250 Financial Institutions Structured Finance - Syndication, Project Financing and Debt Advisory services Private Banking and Wealth Management Services Operating Income (AED million) Assets (AED Billion) CAGR: +23% H Net Income (AED million) CAGR: +41% CAGR: +61% % % H H Source: Financial Statements as at 31 December 2011, 2012 and 2013 and H and H H H

14 Business Lines Islamic Banking Comments Shari a compliant products and services Assets (AED Billion) CAGR:-26% Offering to retail and corporate clients lending and deposit taking solutions Broad range of products such as Wakala, Murabaha, Ijara and Istissna Services offered through UNB s Islamic Banking window (ISB) and Al Wifaq Finance Company Focus on widening product offering capabilities H Operating Income (AED million) Net Income (AED million) CAGR: +27% % CAGR: +21% % H H H H Source: Financial Statements as at 31 December 2011, 2012 and 2013 and H and H

15 IV. UNB Strategy

16 UNB Strategy Key Pillars Core Values Consistency Focus on core banking Activities supporting risk management for UNB and customer needs Sustainability 2001-Q net profit CAGR of 18.0% Management and employees stability Business Objectives Customer Partnership Products cross-sell Follow the customers Lead by Example Operational efficiency Business mix diversification Business Achievements Customer Loyalty Longstanding relationships with borrowers and depositors Industry Recognition Product and market segment awards ISO Certification Financial Outcome Diversification Asset Quality Adequate Provisioning Strong Financial Condition High capitalisation Active liquidity management Vision : To be the best in class for the banking industry in the UAE 10

17 UNB Strategy Tested Over Time Mission: By identifying and satisfying the needs of all customers, staff and shareholders we aim to be regarded as one of the market leaders in the UAE banking industry as measured by growth in our return on equity Sheikh Khalifa Excellence Award (based on EFQM model) ROAE increased from 9.7% to 18.9% - one of the highest among peer group Mission: To be a top quality bank and the best service provider in the UAE banking industry First bank of its size in the Middle East to achieve full ISO certification across all branches and operations Dubai Quality Award (based on EFQM model) Sheikh Khalifa Excellence Award Gold Category (based on EFQM model) Mission: To be the best partner for the UAE banking customer and a key player in the region Acquisition of UNB Egypt (ACMB) Representative office in China Al Wifaq Islamic Finance Company Forbes recognition The Best Performing Bank in the UAE Mission: To deliver superior customer service, grow market share and shareholder value and establish UNB as the employer of choice in the UAE Opened a branch in the state of Kuwait. The first ever bank to receive Sheikh Khalifa Excellence Award Diamond Category Inaugural UNB Sustainability Report rated level A+ by Global Reporting Initiative. The first commercial bank in the world to be certified by M/s :Lloyd s Register Quality Assurance Ltd. to Integrated Management System (IMS) Mission: Through innovation, staff well-being and outstanding customer service, we will grow shareholder value and maintain our financial stability. Financial Solidity Shareholder Value Customer Service Best Employer Innovation Value Preservation and Enhancement for Customers, Employees and Shareholders 11

18 V. Risk Management

19 Robust Risk Management Framework Board Remedial Asset Committee Chairman & Board of Directors Chief Executive Officer Audit Committee Executive Committees Head Office Credit Committee (HOCC) High level decisions with regards to credit and lending activities, including sector focus / limits Asset Liability Committee (ALCO) Ensure UNB s liquidity, interest rate / foreign exchange and capitalization levels are adequate Risk Management Committee (RMC) Ensure appropriate and prudent policies procedures and practices are implemented and abided by Investment Committee (ICO) Develop UNB s trading and investment strategy Remedial Assets Committee (RAC) Monitor UNB s non performing loan portfolio and make decisions on impairment policies, legal actions Management Credit Management Develop lending policies and customer classification parameters Risk Management Division Enterprise risk management framework and continuous monitoring of the risk environment and integrated evaluation of risks and their interaction 12

20 VI. Financial Highlights and Performance

21 Financial Highlights Comments Stable funding base and consistent adequate liquidity Average total deposits/total assets at 73% over the past 5 years Healthy assets composition General provisions constitute 1.3% of the credit risk weighted assets NPLs reflect prevailing market conditions Consistent Growth (AED Billion) 71% 73% 73% 74% 73% Strong capitalisation providing room for further growth H Total Assets Total Deposits Total Deposits / Total Assets Impairment (AED Billion) Strong Capitalization % % 4.7% 4.3% % % 4.9% 21.9% 23.2% 5.3% 4.7% 19.9% 18.9% 1.2% 1.1% 1.6 (1) % 16.7% 18.5% 18.7% 17.8% H NPL Provisions NPL / Gross Loans H Tier 1 Tier 2 Total CAR Source: Financial Statements as at 31 December 2010, 2011, 2012, 2013 and H

22 Sustained Positive Performance Comments Operating Income (AED million) UNB s operating income has proven resilient amidst the financial and economic crisis Continuous growth in top line income 2,555 2,838 3,091 3,212 Although net interest income remains the driving force, other sources of income (including fees and commissions) constitute an integral part of the revenue mix 1,648 1,596 The bank continues to see relatively even contributions from its core businesses (retail and corporate) to the growth in its operating income H H Operating Income Breakdown (AED million) Operating Income Contribution As at 30 June , ,389 2,539 2, ,321 1,273 Retail Banking 27% Islamic Banking 9% Others 3% International & Investment Banking 20% H H Net Interest Income & Net Income from Islamic Financing Non Interest Income Corporate Banking 41% Source: Financial Statements as at 31 December 2010, 2011, and Q1 2013,

23 Sustained Positive Performance (cont d) Comments Net Profit (AED million) Consistent profitability throughout the financial crisis Access to most sought after GRE projects yet dealt with on a commercial basis Robust efficiency 1,350 1,500 1,602 1, ,032 2 nd best efficiency ratio in UAE Low by international standards, despite continuous investment in systems, competencies and talent H H Cost to Income Ratio (%) RoAA / RoAE 28.0% 28.8% 14.9% 14.6% 14.0% 13.9% 15.2% 25.7% 25.5% 26.6% 24.9% 1.7% 1.8% 1.9% 2.0% 2.3% H H H Source: Financial Statements as at 31 December 2010, 2011, 2012, 2013 and H1 2013, * Annualized RoAE excluding Tier I Capital Notes RoAE RoAA 15

24 Cautious Lending Approach Highlights Measured Loan Growth (AED Billion) Sustainable loan growth CAGR:+3% Selective lending with focus on long-term relationships Selective real estate corporate financing H Impaired Assets and Provisioning (%) Diversified Loan Book 4.3% 3.7% 4.7% 4.3% 4.1% As at 30 June % 74.7% 78.6% 90.7% 90.4% H Impairement Provisions / Non Performing Loans (%) Non Performing Loans / Gross Loans (%) Source: Financial Statements as at 31 December 2010, 2011, 2012, 2013 and H

25 Funding Structure Comments 1 st access to the international bond markets in 2005 Accessed the Syndicated Loan Market in 2003 with a 3-year facility for USD 275 million and in Year facility for USD 1 billion Total outstanding amount under EMTN program of US$ 3 billion was US$ 0.8 billion as at 31 March In February 2009, the Bank issued Tier 1 capital notes to the Department of Finance, Government of Abu Dhabi, with a principal amount of AED 2 billion. Product-wise Deposit break-down (AED Billion) Funding Mix (AED Billion) % 6% 6% 2% 2% 15% 16% 16% 18% 17% 8% 5% 5% 6% 8% 71% 73% 73% 74% 73% H Deposits Borrowings Equity Others Total Funding Sector-wise Deposit Break-down (AED Billion) % 4% 3% 3% 3% 8% 5% 2% 1% 3% 11% 11% 12% 16% 16% 78% 80% 83% 79% 77% H Time Current Islamic Other Total Deposits % 14% 15% 14% 15% 12% 16% 14% 16% 20% 35% 30% 35% 34% 38% 38% 40% 36% 36% 27% H Corporate Sovereign Public Sector Retail Total Deposits Source: Financial Statements as at 31 December 2010, 2011, 2012, 2013 and H

26 Adequate Liquidity Position Comments Loans / Deposits (%) Net lender in the interbank market 98.2% 100.1% 94.1% 85.4% 93.9% Liquid investment portfolio c.70% representing investment grade assets 97.6% 95.5% 90.4% 92.3% 92.6% Prudent management avoiding expensive deposits growth while maintain more then adequate liquidity at all times given the current market conditions in the last 5 years Liquid Assets (AED Billion) H UNB Loans / Deposits Total Sector Source UAE Banking indicator as of May 2014 Investment Portfolio As at 30 June 2014 TOTAL : AED 11.0 Bn By Rating CCC+ and below 16% Unrated 14% AAA to AA- 15% Treasury Bills 12% By Security Type Equity 2% H Cash Due from Banks Total Assets Source: UNB prospectus. Financial Statements as at 31 December 2010, 2011,2012 and 2013 and H BB+ to BB- 3% BBB+ to BBB- 18% A+ to A- 34% Debt 85% 18

27 Awards and Accolades In the first half of the year, the Bank has been the privileged recipient of numerous awards and accolades. Some of the prominent awards / accolades won by the Bank include: 2013 United Europe Award by Socrates Committee, Europe Business Assembly at an award ceremony held in United Kingdom Prestigious 2014 Superbrand award for the 4th consecutive year An Award of appreciation for being a strategic partner of the "Zakat Fund" Abu Dhabi. Dubai Human Development Appreciation Award at the 20th Business Excellence Award Ceremony held in Dubai, UAE 2014 European Award for best practices, presented by the European Society for Quality Research at an award ceremony held in Brussels, Belgium. Two awards at the 2014 Banker Middle East Product Awards for Best Car Loan and Best Personal Loan UNB s Performance Has Been Recognized by the Community Having Accomplished Several Prestigious Awards and Certifications 19