The information contained in this document has been provided on the basis of current knowledge, assumptions and expectations. In the event that any

Transcription

1 Burgan Bank March 2010 The information contained in this document has been provided on the basis of current knowledge, assumptions and expectations. In the event that any information is incorrect or any party misrepresented, Burgan Bank and its consultants cannot be held responsible for this. Various factors could cause future results, performance or events to differ materially from those given in this document. No obligation is undertaken to update this document or the statements / information contained in it. The information contained in this document should by no means be interpreted as an invitation to making any investment decision based on the same. Our continuous advice is that every investor must rely on his/her own advisor and resources to ensure the correctness of the information presented to him/her and then makes his/her investment decision accordingly.

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3 Overview KIPCO group banks KIPCO (Kuwait Projects Company) Financial Services Companies Organization Activity Subsidiary / Associate of; % ownership Burgan Bank, Kuwait (BB) Commercial banking KIPCO 56.03% Gulf Bank Algeria, Algeria (AGB) Commercial banking BB TIB JKB 60% 30% 10% Bank of Baghdad, Iraq (BoB) Commercial banking BB 51.79% Jordan Kuwait Bank, Jordan (JKB) Commercial banking (extensive branch network) BB 51.10% Syria Gulf Bank, Damascus (SGB) Commercial Banking UGB KIPCO 27.5% 11% Tunis International Bank, Tunis (TIB) OFFSHORE BANKING; Trade and Corporate Finance, Portfolio Management and Treasury UGB BB 76.56% 10% United Gulf Bank, Bahrain (UGB) KIPCO Investment banking 89% Libya Lebanon Palestine Tunis International Bank Representative Office Bank of Baghdad Branch (2010) Jordan Kuwait Bank Branch 3

4 Overview - Kuwait State of Kuwait Profile Ruled by a hereditary monarchy of the Al Sabah family. Parliament was established in Women enfranchised since Growing role of National Assembly helps to create a responsive policy making process. 5th largest proven world oil reserves; recent major government gas finds. Business environment benefits from a banking sector that is sound, well regulated and supervised. Capitalization, asset quality, operating income and liquidity are strong. Crude oil prices have been much higher than the $35 assumed in the Government s draft budget released in January Kuwait remains an attractive entry point for international companies and businessmen with dealings in Iraq. 4

5 Overview - Kuwait State of Kuwait Profile Macro Economic Data Kuwait E F 1 Real GDP growth (% Change y o y) GDP per capita (US$) 34,938 32,900 44,300 33,000 Population (MN) Oil production (Mn b/d) Oil Price (US$/b ave) Oil export revenues (US$ bn) Source: 1 = IIF 5

6 About Burgan Bank Incorporated as a public Listed on the Kuwait Stock Privatized. Government of Restructured operations shareholding company. Exchange. Kuwait divested it s 61.0% which laid emphasis on best Named after first and stake; KIPCO acquired practice, organizational major stake. capabilities and increased largest oil field. profitability. Underwent major management reshuffle, focusing on its growth strategy Adopts a long-term strategic plan Bright Future to be implemented over 5 years ( ). Acknowledged as Best Local Private Bank in Kuwait in the Fourth Annual Euromoney Private Banking Survey Became a subsidiary of KIPCO. Announced its new identity. Launched expansion strategy Bright Destiny. Wins regional corporate governance award. Completed transfer of 43.86% stake in JKB from UGB, taking its total stake to 51.1%. Completed transfer of AGB (60% stake) and BoB (45.3% stake) from UGB (additional 5% acquired in 2010 to make it a subsidiary). 6

7 About Burgan Bank Overview (contd ) Our Mission i & Visioni Our Vision To be the best of class financial service provider in the MENA region through sustained execution of best practice, innovation and reliable stakeholder care. Our Mission Burgan Bank is your financial partner, forming a relationship with you based on integrity and trust, providing innovative banking services that understand and support your different needs at every stage of life. Our Goals To maximize value for all our stakeholders, clients, personnel and shareholders by building on Burgan Bank s three pillars of client delight and care, leveraging its operational and technological capabilities and nurturing our staff. Our stakeholder s value must be consistent, growth oriented and accomplished in the spirit of the corporate governance framework. 7 7

8 About Burgan Bank Regulated by the CBK and Listed on the Kuwait Stock Exchange Burgan Bank Majority shareholder KIPCO: 56.03% Other shareholders Wafra Int. Investment Company: 5.73% Others (less than 5%): 38.24% Corporate Governance One of the first banks in the region to initiate and to publish its policy leading to.. Transparency of operations and activities Network of management committees Code of conduct Risk monitoring & management and resulting in the raising of standards. Shareholder Equity at USD 1,135m, market capitalization USD 1,199m and total balance sheet size of USD14,275m (as on 31 Dec 2009). Basel II capital adequacy % (as on 31 Dec 2009) Market share of 10% for loans & 11% for deposits in Kuwait (September 2009). The Group has four business areas and is active in all market segments across 6 countries in the MENA region. Retail Banking (group wide): 300,000+ clients, over 110 branches, 300+ ATMs, phone & Internet banking. Rollout of additional branches & ATMs. 8

9 About Burgan Bank Overview Ratings (as of 31 st December 2009) Burgan Bank Ratings Country ratings S & P: ST : A-2 ST : A-1+ LT : BBB+ LT : AA- Moody s: ST : P-1 ST : P-1 LT : A2 (FSR: D+) LT : Aa2 C.I.: ST : A2 ST : A1+ LT : A- (FSR: BBB+) LT : AA- 9

10 About the region & Burgan Bank The Acquisition iti United Gulf Bank and Burgan Bank are subsidiaries of Kuwait Projects Company (Holding) or KIPCO. KIPCO is listed on the Kuwait Stock Exchange and is part of a large business house with varied interests across the MENA Region in a number of business sectors. The acquisition involved the transfer of the shareholdings from one subsidiary of KIPCO to another in a reorganization of the financial services business of KIPCO. Thus, the transaction led to the transfer of the controlling shares held by United Gulf Bank in AGB, BoB and JKB to Burgan Bank. The objective was to restructure KIPCO s banking portfolio and to give a clear mandate to Burgan to drive the commercial banking activities. Pre-Transaction Post-Transaction % % % % %* % % 60.00% * 51.79% 51.10% 86.56% Pen nding * BB s effective stake in AGB would be 91.8% 10

11 Overview Burgan Bank Excellence is one of our 4 key values and we continually strive to maintain the highest standards in the industry. Listed below are some of our recognitions and awards that we have received; a ) Banking Best Local Private Bank - Euromoney Region s Most Innovative Retail Bank - ME Banking Awards JKB - Bank of the Year 2007 Award Jordan (The Banker). b) Corporate Governance (2007/2008) Winner st regional Corporate Governance Award Recognized as one of the leading institutions in Corporate Governance in 2008 & 2009 by Hawkamah Institute. c) Corporate Social Responsibilities CSR Leader of the Year award category - MEBA 2008 event. d) Marketing Winner ME Business Achievement Awards for Marketing Strategy of the Year. Burgan Bank won the prestigious 2009 Banking Web Awards Prize in the Commercial and Corporate Category for Kuwait which was presented by the Pan Arab Web Awards Academy. The Awards were created with the objective of recognizing excellence and creativity in creating a Banking service online that would cater to the banking needs of all public and private sectors clients. e) Quality The only bank in the GCC with ISO 9001:2008 certification in all its banking business. Only bank in Kuwait to win the JP Morgan Chase Quality Recognition Award, 12th year in succession. For two consecutive years received the COMMERZBANK Recognition Award For two consecutive years, received the COMMERZBANK Recognition Award. Received the World Quality Commitment Gold Award from Business Initiation Directives in 2008 and the Platinum in Burgan Equity Fund secured the topmost ranking in the Kuwait Equity (Conventional) category of Zawya Funds Ranking. The Fund outperformed eleven of its peers on performance parameters such as returns, volatility, fees and compliance. 11

12 Overview Burgan Bank Board of Directors MR. TARIQ MOHAMMED ABDULSALAM MR. MAJED ESSA AL-AJEEL MR. MASAUD HAYAT MR. ABDUL SALAM MOHAMMED AL BAHAR H.E. ABDUL KARIM KABARITI MR. ANTONY STROVER CHAIRMAN OF THE BOARD VICE CHAIRMAN BOARD MEMBER BOARD MEMBER BOARD MEMBER BOARD MEMBER 12

13 Overview Burgan Bank Senior Management MR. MASAUD HAYAT MANAGING DIRECTOR (Board Member) MR. RAED AL-HAQHAQ ACTING CHIEF GENERAL MANAGER / CHIEF BANKING OFFICER MS. MAY AL MUDHAF CHIEF INVESTMENT BANKING & TREASURY OFFICER MR. SIMON CLEMENTS CHIEF RETAIL BANKING OFFICER MR. MADHUSUDAN RAO CHIEF RISK OFFICER MR. KHALID AL ZOUMAN CHIEF FINANCIAL OFFICER MR. IAN HARRIES CHIEF FINANCIAL INSTITUTIONS OFFICER 13

14 About the region & Burgan Bank Burgan Bank Group 14

15 MENA Overview Over the last decade or so, the MENA Region has developed itself to become today the key hub between the East and West. Within the Region, a number of countries have seen phenomenal growth as a result of higher oil prices and trade infrastructure. These countries also contributed to the overall growth of the Region in respect to an extended investment footprint. The key drivers of growth are quite diverse in this Region and include oil prices, capital surplus and inflow of capital from outside the territory as a result of investments being brought back to the Region. Going forward, the outlook is most definitely positive since oil prices will remain on the higher levels for the foreseeable future. Furthermore, there are numerous key projects which have already begun taking place and that will continue to build upon the infrastructure of the economies. Though most of these initiatives are from the government sector, the rapid increase in the private sector investment and growth is a clear indication of investors confidence within the Region, despite areas of political dispute. The banking sector in the MENA Region has an important growth potential, with a contribution of close to 2.5% of the total GDP. There is also a great need for cross border transactions as companies expand their network and businesses. Banks have begun realizing the importance of expanding their circle cle of clients beyond the local market, towards a regional and international level. 15

16 Algeria Overview Algeria has a population of 34.2 million and an area of 2,381,740 square kilometers. Algiers is the country s capital. The hydrocarbons sector is the backbone of the economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. Algeria has the eighth-largest reserves of natural gas in the world and is the fourth-largest gas exporter; it ranks 15th in oil reserves. Sustained high oil prices in recent years have helped improve Algeria s financial and macroeconomic indicators. Algeria is running substantial trade surpluses and building up record foreign exchange reserves. Algeria has decreased its external debt to less than 1% of GDP. Real GDP has risen due to higher oil output and increased government spending. The government s continued efforts to diversify the economy by attracting foreign and domestic investment outside the energy sector, however, has had moderate success in reducing high unemployment and improving living standards. Structural reform within the economy, such as development of the banking sector and the construction of infrastructure is moving ahead. GDP (Purchasing Power Parity) GDP (Official Exchange Rate) GDP - Real Growth Rate GDP - Per Capita (PPP) GDP - Composition by Sector Budget Public Debt Inflation Rate (Consumer Prices) Investment (Gross Fixed) USD billion (2009 est.) USD billion (2009 est.) 3.4% (2009 est.) USD 7,100 (2009 est.) Agriculture: 8.3% Industry: 62.5% Services: 29.4% (2009 est.) Revenues: USD billion Expenditures: USD billion (2009 est.) 10.7% of GDP (2009 est.) 4.1% (2009 est.) 26.8% of GDP (2009 est.) ook 2010 Source: Country Factbo 16

17 About Gulf Bank Algeria (AGB) Gulf Bank Algeria was licensed in September 2002 as a commercial banking entity in Algeria. AGB commenced its operations in March Algeria is an important oil and gas growth economy with strong and improving economic fundamentals. AGB geared up to play its role in contributing to the Algerian economy in the banking and financial sectors through the expansion of its branches network. Gulf Bank Algeria has a capital of 6.5 billion Algerian Dinars. Being a commercial lbank, AGB s objective is to offer customers quality banking and financial services on a local and international level. The Bank has invested in technology for activities and services to ensure real time operations such as SWIFT service, SMS banking, e-banking etc. The Bank is poised to develop tailored loans for its clientele, be it individual or corporate customers. It is also currently working on developing new services with Bankassurance to be closer to customers. Recent Developments The Bank has announced that it plans to open 15 more branches by SNAPSHOT 2009 Equity: USD 164.4M Assets: USD 622.4M Revenue: USD 61.0M Net profit: USD 20.8M ROE: 18.9% (after tax) Branches: 13 15,000+ retail clients Acquired: April 09 17

18 Iraq Overview Iraq has a population of 29 million and an area of 438,317 square kilometers. Baghdad is Iraq s capital. Iraq's economy is dominated by the oil sector, which provides over 90% of government revenue and foreign exchange earnings. Oil exports have rebounded to levels seen before Operation Iraqi Freedom and government revenues have benefited, despite oil prices declining significantly since their apex of more than $140 per barrel in July Iraq is making modest progress in building the institutions needed to implement economic policy. In March 2009 Iraq concluded a Stand-By Arrangement (SBA) with the IMF that details economic reforms. Completion of the SBA was a condition for Iraq to receive a full 80% reduction of its debt owed to Paris Club creditor nations. The International Compact with Iraq was established in May 2007 to integrate Iraq into the regional and global economy, and some reform-minded leaders within the Iraqi government are seeking to pass laws to strengthen the economy. The Central Bank has been successful in controlling inflation through appreciation of the dinar against the US dollar. However, Iraqi leaders remain hard pressed to translate macroeconomic gains into improved lives for ordinary Iraqis. Reducing corruption and implementing structural reforms, such as bank restructuring and developing the private sector, would be important steps in this direction. GDP (Purchasing Power Parity) GDP (Official Exchange Rate) GDP - Real Growth Rate GDP - Per Capita (PPP) GDP - Composition by Sector Budget Debt (External) Inflation Rate (Consumer Prices) USD 96.6 billion (2009 est.) USD 70.1 billion (2009 est.) 5.8% (2009 est.) USD 3,300 (2009 est.) Agriculture: 9.6% Industry: 62.8% Services: 27.6% (2009 est.) Revenues: USD 45.6 billion Expenditures: USD 58.6 billion (2009 est.) USD billion (31 December 2009 est.) 3.5% (2009 est.) ook 2010 Source: Country Factbo 18

19 About Bank of Baghdad (BOB) Bank of Baghdad was the first licensed bank in Iraq, established in 1992 with a vision to support the needs of the national economy. Until September 25, 1998, Bank of Baghdad only practiced commercial banking. The Bank diversified its portfolio of services to encompass a wider range of banking services after the Central Bank of Iraq allowed all private sector banks to practice all banking activities was a transitional year for Bank of Baghdad, when United Gulf Bank and Iraq Holding Company became significant shareholders with 49% of the Bank s capital. Today, Bank of Baghdad is one of the largest private commercial banks in Iraq. It provides customers both Small and Medium Enterprises (SMEs) and individual clients with a wide range of commercial and international services including, amongst many others, accounts, loans, commercial credit facilities, trade finance, Debit Cards, Credit Cards and Internet Banking services. Recent Developments Bank of Baghdad currently has 32 branches throughout Iraq, with more set to open. SNAPSHOT 2009 Equity: USD 97.2M Assets: USD 680.7M Revenue: USD28.8M8M Net profit: USD 16.1M ROE: 17.6% (after tax) Branches: 32 80,000+ retail clients Acquired: April 09 19

20 Jordan Overview The Hashemite Kingdom of Jordan has a population of 627million 6.27 and an area of 89,342 square kilometer. Jordan s capital is Amman. Jordan's economy is among the smallest in the Middle East, with insufficient supplies of water, oil, and other natural resources, underlying the government's heavy reliance on foreign assistance. Since assuming the throne in 1999, King Abdullah has implemented significant economic reforms, such as opening the trade regime, privatizing state-owned companies, and eliminating most fuel subsidies, which in the past few years have spurred economic growth by attracting foreign investment and creating some jobs. Export-oriented sectors such as manufacturing, mining, and the transport of re-exports have been hit the hardest. Amman is considering sweeping tax cuts to attract foreign investment and stimulate domestic growth, and the government has guaranteed bank deposits through Jordan's financial sector has been relatively isolated from the international financial crisis because of its limited exposure to overseas capital markets. Jordan is currently exploring nuclear power generation to forestall energy shortfalls. GDP (Purchasing Power Parity) GDP (Official Exchange Rate) GDP - Real Growth Rate GDP - Per Capita (PPP) GDP - Composition by Sector Budget Public Debt Inflation Rate (Consumer Prices) Investment (Gross Fixed) USD billion (2009 est.) USD billion (2009 est.) 3.1% (2009 est.) USD 5,300 (2009 est.) Agriculture: 3.7% Industry: 29.9% Services: 66.5% (2009 est.) Revenues: USD billion Expenditures: USD billion (2009 est.) 69.9% of GDP (2009 est.) 1.7% (2009 est.) 31.2% of GDP (2009 est.) ook 2010 Source: Country Factbo 20

21 About Jordan Kuwait Bank (JKB) Founded in 1976 jointly by Jordanians, Kuwaitis and other Arab investors, JKB is a publicly listed company with 51 branches including two in Palestine and an international banking unit (IBU) established in Cyprus. It is today the 3rd largest bank in Jordan. JKB is a pioneer in adapting and infusing technology in all areas of its activity and was the first bank in Jordan to offer internet banking services, Bancassurance and chip (smart) cards. Jordan Kuwait Bank presents to its customers and the public an exclusive package of insurance programs and products in collaboration with Arab Orient Insurance Co. These include individual banking, corporate banking, electronic banking, correspondent banks, margin dealing, treasury operations and custodial services. Recent Developments The Banker - Britain s leading banking and finance magazine declared Jordan Kuwait Bank as Bank of the Year 2007 for the second consecutive year. Jordan Kuwait Bank recently launched the Visa Infinite card, becoming the first Jordanian bank to issue this prestigious card to its customer base. SNAPSHOT 2009 Equity: USD 393.2M Assets: USD 3,011.1M Revenue: USD 168.4M Net profit : USD 67.5M ROE: 18.3% (after tax) Branches: ,000+ retail clients Acquired: July 08 21

22 About the region & Burgan Bank Entities snapshot 2009 Equity: USD 164.4M Equity: USD 97.2M Equity: USD 393.2M Equity: USD 82.0M Assets: USD 622.4M Assets: USD 680.7M Assets: USD 3,011.1M Assets: USD 491.0M Revenue: USD 61.0M Revenue: USD 28.8M Net profit: USD 20.8M Net profit: USD 16.1M Revenue: USD 168.4M Net profit : USD 67.5M Revenue: USD 30.9M Net Profit: USD 13.33M ROE: 18.9% (after tax) Branches: 13 ROE: 17.6% (after tax) Branches: 32 ROE: 18.3% (after tax) Branches: 51 ROE: 17.04% (after tax) Branches: 3 15,000+ retail clients 80, retail clients 100,000+ retail clients Off-shore Bank Acquired: April 09 Acquired: April 09 Acquired: July 08 Acquisition under consideration 22

23 About the region & Burgan Bank MENA region GDP growth 23

24 About the region & Burgan Bank Overview on country risk 24

25 Burgan Group - Financials & Challenges Ahead *USD 1 = KD

26 Financial Review and strengths Balance Sheet Loans & Advances Customer Deposits USD m 9,500 8,500 7,500 6,500 5,500 4,500 3,500 2,500 2,619 2,789 3,300 4,955 7,835 7, USD m ,455 8,424 5,748 4,068 4,316 3,

27 Financial Review and strengths Profit & Loss Operating Profit Net Profit USD m USD' m

28 Financial Review and strengths Financial Strength NPLs to Loans Provision Coverage 12% 10% 8% 6% 4% 2% 6.1% 4.1% 3.5% 1.7% 10.0% 1.4% 280% 240% 200% 160% 120% 80% 40% 78% 109% 130% 166% 245% 57% 0% %

29 Financial Review and strengths Financial Strength Capital Adequacy Ratio of 16.86%. Sound Liquidity with 10% of total assets in T Bills & Bonds. Investments account for only around 3% of total assets. Investment company exposure represents less than 4 % of total credit exposure. Periodic stress testing of loan portfolio undertaken since early Prudential aggressive provision coverage Total provision of USD m, out of which about half in general provisions (Statutory and voluntary) TtlA Total Assets (USD M) 6,063 6,589 7, , ,748 14,275 Return on Assets 1.6% 2.5% 2.84% 2.8% 1.2% 0.2% Return on Equity 13.8% 19.2% 24.1% 24.7% 11.5% 2.0% Capital Adequacy Ratio* 17.8% 18.4% 16.5% 16.5% 13.8% 16.9% (Minimum 12% required by Central Bank of Kuwait) *Full compliance with Basel II standardized approach since December IFRS. 29

30 Financial Review and strengths Financial Strength Total Income USD million USD m Operating Expense and Cost-to-income ratio % 7% % Operating Cost C:I Ratio 30% 28% 26% 24% 22% 20% 18% 16% Operating Profit before provisions Net Profit USD million US SD m USD m

31 Financial Review and strengths Share Price Performance January 2009 to December 2009 General Index : 3% up Banking Index : 3% up BB Share Price : 17% down* ,134 8,298 6,765 6,745 9,253 9,136 8,080 7,817 8,370 6,987 KD Fils Jan-09 Mar-09 Jun-09 Sep-09 Dec-09 Banking Index General Index Jan-09 Mar-09 Jun-09 Sep-09 Dec-09 BB *Sh Share price without ih adjustment for Bonus Issue 31

32 Meeting the Challenges Meeting Challenges: 2010 Government support to investment sector & fiscal actions will be key determinants of the dynamics of the banking sector in Kuwait. Local economic developments dependent on State Budget and spending, along with international economic developments. Kuwait announced a 5 year Infrastructure Spending Plan of over US$ 130 Bn. Investment portfolio constitutes around 4 % of total balance sheet size, given the minimal trading portfolio, BB is well insulated from further market volatility. Group core operating income expected to grow by around 7 %. Acquisitions are in fast growing economies, isolated from global economic trends and will strengthen the position of the bank. 32

33 Meeting the Challenges Integration of Subsidiaries after Acquisition Working closely with international & well known consultants. Integration to be in three waves Wave 1: Risk Mgmt., Accounts / MIS, Treasury, Internal Audit & Corp. Communications: Completed. Wave 2: IT, Human Resources & Operations : In progress Wave 3: Client Facing Business Lines Steering Committee represented by the head of each bank to oversee the process and take decisions. Discussion on the Group Concept and set up of a Group Management structure. Brain storming for a Group Vision and Strategy under progress. Group Vision and Strategy to guide the future business plans of all the entities. 33

34 Financial Review and strengths Financial Strength BB Group Profile as on 31 st December 09 Loans & Advances USD 7,835m Total Assets USD 14,275m Customer Deposits USD 8,455m Equity USD 1,135m Net Interest Income Operating Income Operating Profit Net Profit USD 355m USD 539m USD 388m USD 22m 34

35 Q&A Burgan Bank, P.O. Box 5389, Al Safat 12170, State of Kuwait Kuwait. Telephone: Fax