INVESTOR PRESENTATION August 2017

Transcription

1 INVESTOR PRESENTATION August 2017

2 DISCLAIMER Please note that FAB pro forma consolidated financials as at 30 June 2017 serve as the main basis of reference for our Investor Relations presentation. FAB s reviewed consolidated interim financial statements as at 30 June 2017 are prepared on the basis that FGB/NBAD merger was declared effective on 1 st April 2017 with FGB being the accounting acquirer as per IFRS 3. Therefore, these financials reflect consolidation of NBAD since 1 st April 2017 only, while prior period comparative financial information relates to FGB. For further information, please refer to the Business Combination note of the reviewed consolidated interim financial statements. The information contained herein has been prepared by First Abu Dhabi Bank P.J.S.C ( FAB ). FAB relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. This presentation has been prepared for information purposes only and is not and does not form part of any offer for sale or solicitation of any offer to subscribe for or purchase or sell any securities nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. Some of the information in this presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of FAB. These forward-looking statements include all matters that are not historical facts. The inclusion of such forward-looking information shall not be regarded as a representation by FAB or any other person that the objectives or plans of FAB will be achieved. FAB undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. Note: Rounding differences may appear throughout the presentation 2

3 CONTENTS 01 Introducing FAB 02 Integration update 03 Operating Environment 04 Q2/H1 17 Financial Review Based on Pro forma financial information as of 30 June Appendix 3

4 FAB - Largest bank in the UAE Result of the historic merger between two iconic Abu Dhabi-based franchises Largest bank in the UAE and 2 nd largest in MENA by total assets and market capitalisation Strong governance framework led by prominent Board and experienced Senior Leadership team Strong shareholding with 37% Government ownership through ADIC and Mubadala Strongest combined credit ratings of any bank in MENA at Aa3/AA-/ AA- Superior asset quality and cost efficiency and strong internal capital generation capacity Embarking on a robust and ambitious month integration journey with a number of key milestones already achieved so far Set to realize substantial synergy potential through cost synergies and funding cost synergies estimated at AED 1 Bn and AED 400 Mn respectively by

5 Merger timeline and key milestones May 1 st Launch of new brand identity 3 rd July FGB-NBAD merger announcement 2 nd April Legal merger completion First day of trading of new shares Q3 16 Q4 16 Q1 17 Q2 17 Appointment of Senior Leadership team Appointment of CIO and external consultants Integration Steering Committee (ISC) and Integration Management Office (IMO) established 7 th Dec Merger approved by shareholders at General Assembly Meetings 11 th Dec Filing of special resolution and start of credit objection period 24 th April Name change from National Bank of Abu Dhabi to First Abu Dhabi Bank (FAB) approved by shareholders at General Assembly Meeting 5

6 FAB at a glance Overview 1 19 Countries presence (ex UAE) 120 Branches in UAE 643 ATMs/CDMs FAB is the result of the historic merger of two iconic Abu Dhabi based franchises (FGB and NBAD) Largest UAE bank and 2 nd largest in MENA by total assets (AED 625 Bn) and market capitalization (AED 114 Bn) Offers extensive range of products and services via market-leading Corporate and Investment Banking (CIB) and Personal Banking (PB) franchises Domestic network: 120 branches and 643 ATMs/CDMs across all 7 emirates Global presence: 19 countries (excluding UAE) AMERICA United States of America Brazil EUROPE United Kingdom France Switzerland AFRICA Libya Egypt Sudan MIDDLE EAST UAE Bahrain Oman Qatar ASIA India Malaysia Singapore China/ Hong Kong South Korea Kuwait Jordan Lebanon Credit ratings Affirmation of NBAD s credit ratings by Moody s, S&P, and Fitch post merger completion on 3 rd April 2017 is a powerful testament to the strong rationale for the merger as it enhances the combined bank s business position and credit profile FAB has the strongest combined credit ratings of any bank in MENA at Aa3/AA-/ AA- Fitch Moody s S&P RAM (Malaysia) R&I Japan LT AA- Aa3 AA- AAA A+ ST F1+ P-1 A-1+ P1 A+ Outlook Stable Stable Stable Stable Stable 1 - All figures as on 30 June

7 FAB Share Profile Overview Listed on Abu Dhabi Stock Exchange (ADX) Symbol: FAB Number of shares issued: 10,898 million 1 Market cap 2 : AED 114 Bn (USD 31.2 Bn) Foreign Ownership Limit: 25% Strong shareholding structure 3 ADIC 33.5% Foreign (ex-gcc) 9.3% GCC (ex-uae) 1.5% Mubadala 3.7% Other UAE 52.0% Index Weightings 4 Abu Dhabi Securities Market Index ADSMI 35.7% Bloomberg GCC 200 Index BGCC % Bloomberg EMEA Banks Index BEUBANK 0.90% 1 - Includes 43 Mn Treasury shares 2 - As on 30 June Ownership structure as of 30 June 2017, based on shares outstanding (net of treasury shares) 4 - As of 07 August

8 Leading UAE and regional bank Banking sector assets 1 (USD Bn) National champion 2 H1 17 Net Profit (USD Mn) Total Assets (USD Bn) Equity Market Cap 3 (USD Bn) (USD Bn) UAE 723 1,494 1,060 #2 170 # # # , KSA 358 1, Qatar Kuwait Bahrain Oman Company and Central Bank information as of latest reported for 30 June 2017, except for Banking Sector Assets for Qatar, Kuwait, Oman (31 May 2017) and Bahrain (31 Mar 2017) 2 - Defined as the largest bank in the country by total assets 3 - Based on 07 August

9 Prominent Board and robust governance H.H. Sheikh Tahnoon Bin Zayed Al Nahyan Chairman National Security Advisor Chairman of Royal Group Board of Directors Photo Photo Photo Photo Photo Photo Photo H.E. Khaldoon Khalifa Al Mubarak H.E. Mohammed Thani Al- Romaithi H.E. Mohamed Saif Al Suwaidi H.E. Jassim Mohammed Al Siddiqi H.E. Nasser Ahmed Alsowaidi H.E. Khalifa Sultan Al Suwaidi H.E. Sheikh Mohammed Bin Saif Bin Mohammed Al Nahyan H.E. Sheikh Ahmed Mohammed Sultan Al Dhaheri Board Member CEO and MD of Mubadala Investment Company Chairman of the Executive Affairs Authority of the Government of Abu Dhabi Board Member Chairman of the Federation of UAE Chambers of Commerce and Industry Board Member of Al Etihad Credit Bureau Board Member Director General of Abu Dhabi Fund for Development Board Member of DP world and Agthia Board Member CEO and MD of Abu Dhabi Financial Group (ADFG) Chairman of Shuaa and Eshraq Properties Vice Chairman of the Board Board Member of Mubadala Development Company and IPIC Ex-Chairman of Department of Economic Development Board Member Executive Director at the Abu Dhabi Investment Council (ADIC) Board Member of UNB, ADIC and Barakah One Board Member Chairman of Abu Dhabi National Insurance Company (ADNIC) Chairman of Risk Management Committee of ADNIC Board Member Chairman of Bin Suroor Engineering Vice Chairman of Abu Dhabi National Hotels Company Board Management Committee Remuneration & Nomination Committee 4 Board Committees Risk Committee Audit Committee 9

10 Strategy built on core strength OUR PURPOSE To drive individual and institutional prosperity by putting the customer first OUR COMMITMENT To become a financial services leader delivering top shareholder value DOMINANT PERSONAL BANK IN UAE Bank of choice across key segments in Abu Dhabi, and enhanced market share in Dubai & Northern Emirates Multichannel and smart distribution model leveraging on digital solutions Leader in everyday banking anchored in payment solutions & cards REGIONAL WEALTH ADVISOR OF CHOICE Access new high growth HNWI segments Use global network to expand product and service range Deepen existing relationships with increased cross-sell TRUSTED PARTNER TO CIB CUSTOMERS Leverage scale and cross-sell to deepen client relationships and increase share of wallet in UAE and abroad COMPLEMENTARY OFFERING THROUGH SUBSIDIARIES Preferred banking partner for government and GREs One-stop shop banking partner for large corporates and medium-sized businesses INTERNATIONAL BUSINESS BUILT AROUND UAE KNOWLEDGE AND RELATIONSHIPS Wholesale-driven international strategy Reference bank for UAE multinational businesses Selective international presence and sharper focus on high potential growth markets (APAC) 10

11 CONTENTS 01 Introducing FAB 02 Integration update 03 Operating Environment 04 Q2/H1 17 Financial Review Based on Pro forma financial information as of 30 June Appendix 11

12 Integration firmly on track Great progress and key milestones achieved to-date including completion of Group organisation structure and appointments, and launch of new brand identity Substantial cost synergies at c. AED 175 Mn in H1 17, represent ~18% of 2020 annual run-rate target : Realised cost synergies in H1 17 ~AED 175 Mn 2020 annual run-rate target ~AED 1 Bn One-off integration costs at ~AED 194 Mn, in line with guidance New brand identity to be rolled out across branches and customer touchpoints in H2 17 Continued progress towards IT system integration and network rationalisation 12

13 A robust month integration journey / 2019 Q3 Q4 Q1 Integration Execution Integration roadmap execution Synergies realization Mobilisation Integration Design & Planning Staff relocation IT & Operations integration Full organization structure & operating model Culture and change management Day 1 readiness Branding Day 1 13

14 Validated synergies significantly higher than preliminary assessment Cost synergies validated at ~AED 1Bn up from preliminary assessment of AED 500Mn % of smaller bank cost base 50% Benchmark 1 ~30% IT&Operations 15% Others 5% ~AED 1Bn UAE Retail 30% Cost synergies full annual run-rate of ~AED 1Bn, to be realised over 3 years, will be primarily driven by: Network and staff rationalisation Consolidation of common businesses/ enablement functions Systems integration Premises reduction Enablement functions 25% Wholesale & International (incl. subsidiaries) 25% Validated cost synergies represent 50% of smaller bank cost base (17% of combined cost base), well above bank mergers average Target Phasing 25% 65% 85% 100% Funding cost optimisation alone, represents revenue synergy opportunity estimated at ~AED 400Mn Cross-selling opportunities to deliver significant upside to support core underlying revenue growth from 2018 onwards 1 - Based on European banks mergers average 14

15 One-time integration costs revised higher, yet compare favorably with benchmark One-time integration costs revised to ~AED 1.1Bn vs. preliminary assessment of AED 600Mn % of validated cost synergies 110% Benchmark % Other 11% Staff severance 14% Branding, premises and relocation 19% ~AED 1.1Bn IT migration & write-offs 42% Professional fees & training 14% One-time integration costs will be fully absorbed by 2019, and include: IT migration and write-offs Brand identity roll-out Professional fees and training Premises and relocation expenses Staff severance One-time integration costs represent 110% of cost synergies, compares favorably with benchmark range of 120%-140% Target Phasing 35% 35% 30% Integration costs exclude strategic investments in key enablers, estimated at ~AED 350Mn over the next 3 years 1 - Based on European Banks average 15

16 Laying the right foundation for long term sustainable growth How we will measure our success by Growth-oriented culture Mid single-digit core revenue CAGR Increased market share and share of wallet 2 3 Successful execution of integration plan One Bank, One brand, One team Full realisation of run rate synergies Infrastructure integration People integration 4 5 Sustainable cost leadership Strong internal capital generation capacity ~25% Cost-to-Income ratio 16-17% RoTE % min. CET1 1 - RoTE: Attributable profit (to equity shareholders net of interest on Tier1 capital notes) on average shareholders tangible equity (excl minority interests, excl goodwill and amortisation charge on it thereof) 16

17 CONTENTS 01 Introducing FAB 02 Integration update 03 Operating Environment 04 Q2/H1 17 Financial Review Based on Pro forma financial information as of 30 June Appendix 17

18 UAE Economic Overview Solid Fundamentals Second largest economy in the GCC (after Saudi Arabia) with Nominal GDP estimated at USD 381 Bn in th largest oil reserves in the world (97.8 Bn boe 1 ), 6% of proven global oil reserves; Total population estimated at 9.9 Million 4 UAE federation, established in 1971 and comprising 7 Emirates; Politically stable country and highly favorable and competitive business environment 2 UAE Credit Ratings: S&P AA (Stable), Moody s Aa2 (Stable), Fitch AA (Stable) As per latest IMF report, economic activity is expected to strengthen gradually in the coming years with firming oil prices and an easing pace of fiscal consolidation 707 Saudia Arabia 2017F Nominal GDP 4 (USD Bn) UAE Qatar Kuwait Oman Bahrain Diversified Economy 3 Economic Structure and Performance e 2017f 2018f 2019f Real Estate & Business Services 13% Transport 9% Finance 9% Government Services 6% Trade, Restaurant & Hotels 15% Other 3% Construction 10% Agriculture 1% Mining & Quarrying 22% Manufacturing 9% Electricity, Gas, Water 3% 1 - BP Statistical Review of World Energy (June 2017) 2 - UAE ranked 16/138 in WEF 2016/2017 Global Competitiveness Report and ranked 10/63 in IMD World Competitiveness Yearbook Federal Competitiveness and Statistics Authority, 2015 GDP 4 - IMF World Economic Outlook, April 2017, except for UAE (IMF Article IV meeting, July 2017) 5 - Source: UAE (IMF Article IV meeting, July 2017) Real GDP Growth (% change) Nominal GDP (USD Bn) Inflation (CPI, % change) General government revenue (% GDP) General government expenditure (% GDP) Fiscal balance (% GDP) (4.3) (3.2) (1.9) (1.0) Gross Debt (% GDP)

19 Dec'04 Dec'05 Dec'06 Dec'07 Dec'08 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 Dec'14 Dec'15 Dec'16 Jun'17 Other Macro Indicators 2017F Debt/GDP 1 (%) UAE PMI 2 in Expansionary Territory* Saudia Arabia UAE Kuwait Oman Qatar Bahrain 40 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 AED 109 Bn Net Deposit Surplus as of Jun 17 EIBOR Vs LIBOR (%) AED Bn 108% % 104% 98% 100% % 100% 96% 94% 94% 92% 94% 93% % (50) (100) 5 16 (17) 1 (71) (35) 18 (1) % 100% 90% 80% 70% 60% 50% Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Net Deposit Surplus/ Deficit AED Bn L/D ratio, net LIBOR 3M EIBOR 3M E-L Spread (RHS) 1 - Source: IMF World Economic Outlook - April 2017, except for UAE (IMF Article IV meeting, July 2017) 2 - Source: Markit Economics *UAE Purchasing Manager Index is a composite indicator designed to provide an overall view of activity in the UAE s non-oil private sector economy. The indicator is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers delivery and stocks of goods purchased 19

20 Abu Dhabi The Capital Abu Dhabi At A Glance Largest Emirate in the UAE accounting for more than 80% of the country s total land area; Population estimated at 2.8 Million 1 Abu Dhabi Nominal GDP estimated at USD 231 Bn in 2017f 1, that s 61% of UAE overall nominal GDP 49% of 2015² GDP is generated from the hydrocarbon sector; major non-oil GDP contributors include: construction, financial services, public administration and defense, and manufacturing Transition underway towards a more diversified economy with a particular focus on the infrastructure and services sectors inline with Abu Dhabi Plan 2030 According to S&P 1, general government fiscal balance will be slightly in surplus in 2017, thanks to the expected increase in oil prices and continued fiscal consolidation ABU DHABI Ras al Khaimah Umm al Quwain Ajman Sharjah Dubai Ajman Fujairah Abu Dhabi Key Statistics 1 Abu Dhabi 2015 GDP Breakdown by Sector 2 Economic Structure and Performance 2016e 2017f 2018f 2019f Nominal GDP (USD Bn) Real GDP growth (%) Construction 12% Financial and Insurance 8% Real estate 5% Public administration and defense 4% Inflation Rate (CPI, % change) Revenue/ GDP Expenditures/ GDP Balance/ GDP (3.6) Liquid Assets/ GDP (%) Mining and Quarrying 49% Others 9% Manufacturing Industries 6% Transport and Storage 3% Wholesale Retail Trade and Repairing Services 4% 1 - S&P, February 2017 Report 2 - Statistics Center Abu Dhabi (SCAD) 2015, preliminary estimates 20

21 Abu Dhabi in the GCC context Long Term Ratings 1 (Moody s, S&P, Fitch) Oil Production 2 GDP Per Capita Current f Abu Dhabi Aa2, AA, AA Aa2, AA, AA 3.1mn bpd USD 75,300 Saudi Arabia Aa3, AA-, AA A1, A-, A+ 12.3mn bpd USD 21,848 Kuwait Aa2, AA, AA Aa2, AA, AA 3.2mn bpd USD 29,240 Qatar Aa2, AA, NR Aa3 (-), AA- (-), AA (-) 1.9mn bpd USD 64,447 Bahrain Baa2 (-), BBB, BBB B1(-), BB- (-), BB+ (-) 0.4mn bpd USD 25,495 Oman A1, A, NR Baa2 (-), BB+ (-), BBB (-) 1.0mn bpd USD 17, Bloomberg 2 - BP Statistical Review of World Energy (June 2017), except Abu Dhabi (OPEC Annual Statistical Bulletin 2017) forecasts - Source: IMF World Economic Outlook (April 2017), except Abu Dhabi (S&P, Feb 17 report) Note: Unless otherwise indicated, all outlooks are stable; (-) Negative outlook 21

22 Dec'15 Government Public Sector/GREs Private Sector NBFI Non-Residents Dec'16 Government Public Sector/GREs Private Sector NBFI Non-Residents Jun'17 Gross Credit Customer Deposits Sound and highly capitalised banking sector Key Highlights UAE Banking Sector Key Indicators 2 UAE banking sector comprises 48 banks (22 local, 26 foreign); top 4 local banks hold around 62% of system loans and deposits UAE CB introduced in May 2015 a glide path on Liquidity Coverage Ratio (LCR) in the context of gradual migration to Basel III regulatory framework. The minimum for the current year is 80% UAE CB Basel III capital guidelines effective from 1st Feb 2017 (with min. CET 1 set at 7.0%) Figures in AED Bn Jun 17 Dec 16 YTD Jun 16 YoY Total Assets, net 2,544 2, % 2, % Loans and Advances, net 1,481 1, % 1, % Customer Deposits 1,589 1, % 1, % LDR 93% 94% -100bps 97% -400bps Lending to Stable Resources Ratio* 85.4% 86.6% -120bps 87.7% -230bps CAR** 18.5% 19.0% -50bps 18.4% +10bps Tier 1 capital** 16.9% 17.3% -40bps 16.8% +10bps *Total advances (net lending + net financial guarantees & stand-by LC+ Interbank placements more than 3 months)/ sum of (net free capital funds + total other stable resources) **Basel 2 FAB has a Dominant Market Position 1 Movements in Customer Deposits and Gross Credit by Sector 2 (AED Bn) LOANS & ADVANCES (NET) CUSTOMER DEPOSITS Dec Dec Jun , % 1, % 1, % 28% 1, % 1, % 1, Based on Jun 17 Financials of 10 largest UAE listed banks by Total Assets (FAB/ENBD/ADCB/DIB/ADIB/UNB/Mashreq/CBD/Rakbank/NBF) 2 - Source: UAE Central Bank 22

23 CONTENTS 01 Introducing FAB 02 Integration update 03 Operating Environment 04 Q2/H1 17 Financial Review Based on Pro forma financial information as of 30 June Appendix 23

24 Q2/H1 17 Key Performance Highlights Resilient performance amidst softer operating conditions Integration progress on track leading to substantial cost synergy realisation Continued focus on balance sheet optimisation Comfortable liquidity position with LDR at 85% and LCR well above Basel III glide path Solid asset quality albeit retail-led NPL formation Strengthened capital position with June-end 17 CET1 at 14.4% 24

25 Q2/H1 17 Summary Financials Half Yearly Quarterly Income Statement - Summary (AED Mn) H1'17 H1'16 YoY % Q2'17 Q1'17 QoQ % Q2'16 YoY % Net interest Income 6,383 6, ,171 3, ,357-6 Fees & commissions, net 1,631 1, , FX and investment income, net 1, , Other non-interest income Total Operating Income 9,851 9, ,662 5, ,954-6 Operating expenses (ex-integration costs) (2,892) (2,892) 0 (1,384) (1,508) -8 (1,469) -6 Impairment charges, net (1,260) (1,367) -8 (611) (649) -6 (696) -12 Non Controlling Interests and Taxes (211) (185) 14 (105) (106) -1 (107) -2 Net Profit 5,488 5, ,562 2, ,682-4 Earning per Share 1 (AED) Balance Sheet 2 - Summary (AED Bn) Jun'17 Dec'16 Ytd % Mar'17 QoQ % Jun'16 YoY % Loans and advances Customer deposits CASA (deposits) Total Assets Equity (incl Tier-1 capital notes) Tangible Equity Key Ratios (%) H1'17 H1'16 YoY (bps) Net Interest Margin Cost-Income ratio (ex-integration costs) Cost of Risk (bps) Non-performing loans ratio Provision coverage Loans-to-deposits ratio Return on Tangible Equity 4 (RoTE) Return on Risk-w eighted Assets (RoRWA) CET1 ratio Capital Adequacy ratio Year-to-date annualised; 2 - Restated net of National Housing Program loans and deposits 3 - Tangible equity is shareholders' equity net of Tier-1 capital notes, goodwill & intangibles 4 - Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl Tier 1 notes coupon (AED 228 Mn H1 17) and amortisation of intangibles 25

26 H1 17 performance vs. FY 17 guidance FY 17 GUIDANCE H1 17 ACTUAL LOAN GROWTH Mid single-digit -4% Subdued demand Rundown of low-yielding trade loans Balance sheet optimisation CORE REVENUE* GROWTH Low single-digit Headline revenue broadly stable 25bps margin contraction Lower business volumes yoy C/I RATIO (EX-INTEGRATION COSTS) 28%-30% 27.4% Realisation of substantial synergies Disciplined cost management One-off integ. costs in line with guidance COST OF RISK bps 74bps Prudent risk management Solid coverage ROTE 2 ~ 14% 14.7% *Excluding property-related one-offs and AFS investment gains 1 - Year-to-date annualised 2 - Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl Tier 1 notes coupon (AED 228 Mn) and amortisation of intangibles 26

27 Revenue trend reflects softer operating conditions Key Highlights Group Revenue broadly stable yoy reflecting softer operating conditions marked by subdued demand and volatile markets H1 17 NII down 5% yoy due to 25bps margin contraction and lower loan balances led by deliberate rundown of FI trade book and corporate repayments Non-interest revenues up 16% yoy supported by higher FX and investment income including AFS investment gains in Q1 17 Although 16% lower yoy, fees and commissions grew 7% sequentially driven by strong momentum in Corporate Finance Healthy pipeline in H2 17 expected to drive non-interest income generation higher Operating Income (AED Mn) H1'17 H1'16 YoY % Q2'17 Q1'17 QoQ % Net interest Income 6,383 6, ,171 3,212-1 Fees & commissions, net 1,631 1, FX and investment income, net 1, , Other non-interest income Total Operating Income 9,851 9, ,662 5, Operating Income (AED Mn) Non-interest Income (AED Mn) Net interest income Non-interest income 4,954 5,466 5,097 5,189 4,662 32% 39% 34% 38% 32% 68% 61% 66% 62% 68% +1% 9,729 9,851 31% 35% 69% 65% 1,597 6% Other income Net FX & Investment income Net fees and commission income 2,116 26% 1,750 5% 29% 27% 40% 65% 47% 56% 1,976 2% 40% 58% 1,491 3% 40% 57% +16% 3,468 2,999 3% 6% 29% 50% 65% 47% Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 H1'16 H1'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 H1'16 H1'17 27

28 Cost control and synergy realisation drive Opex reduction Key Highlights Cost to Income Ratio (ex-integration costs) Operating expenses (ex-integration costs) reduced 7% yoy and 8% qoq, reflecting disciplined cost management and realisation of substantial synergies at onset of integration journey (c. AED 175 Mn) Cost synergies during the period were primarily driven by headcount rationalisation and vendor savings Integration costs stood at AED 194 Mn (including AED 91 Mn in Q2 17) and mainly relate to professional fees and severances Qtr (%) YTD (%) C/I ratio (ex-integration costs) stands at industry-leading level of 27.4%, improving from 29.7% in H1 16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Operating Expenses (ex-integration costs) (AED Mn) Operating expenses (ex-integration) One off Integration costs -8% 2,892 1,469 1,472 1,548 1,405 1,294-7% 2, Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 H1'16 H1'17 28

29 Asset quality metrics remain solid Key Highlights Impairment Charges, net (AED Mn) & CoR Impairment charges (net) down 8% yoy and 6% qoq led by higher write-backs/recoveries NPLs up 13% ytd primarily due to retail-led NPL formation NPL ratio at 3.2% is 53bps higher qoq due to combined effect of higher NPLs and lower loan balances Impairment Charges, net Cost of Risk - YTD Portfolio is adequately provisioned with coverage strengthening to 112% from 110% as of Jun 16 Annualised cost of risk at 74bps improved 5bps from previous year and stands within management range for FY 17 At AED 7.1 Bn, general provisions represent 1.7% of CRWA vs. 1.5% min. regulatory requirement ,364 1,259 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 H1'16 H1'17 NPLs and Provisions (AED Mn) Provision Coverage & NPL ratio Jun'17 Dec'16 YTD% Jun'16 YoY% Provision Coverage (%) NPL Ratio (%) NPLs 10,497 9,280 13% 10,600-1% Provisions 11,713 11,565 1% 11,672 0% Specific 4,629 4,325 7% 4,549 2% General 7,084 7,240-2% 7,124-1% Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 29

30 Continued focus on balance sheet optimisation Loans and advances* Key Highlights Loan book down 4% ytd (AED -13 Bn) and 7% qoq (AED -24 Bn) on the back of deliberate rundown of trade FI loans (AED -8 Bn), corporate repayments, and continued balance sheet de-risking Slowdown in loan origination during second quarter primarily attributed to softer demand Customer Deposits and other accounts* Customer deposits broadly stable ytd and down 4% qoq driven by realisation of funding cost synergies Liquidity position remains highly comfortable with loan-to-deposit ratio of 85% June-end 17 LCR at 116% stands above Basel III glide path Medium-term borrowings USD 1.3 Billion legacy FGB syndicated and bilateral loans were repaid during the second quarter Loans and Advances* (AED Bn) Total Loans Trade Loans Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Customer Deposits* (AED Bn) Jun'16 Sep'16 Dec'16 Mar'17 Jun' Loan-to-deposit ratio* (%) *Restated net of National Housing Program loans and deposits Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 30

31 NIMs continue to be impacted by excess liquidity Net Interest Margin (%) Key Highlights Group NIM (Qtr) Group NIM (YTD) NIMs reduced 25bps yoy and 6bps qoq mainly on the back of short term placement of excess liquidity with Central Banks, as well as competitive pressures Performing loan yields improved 3bps yoy and 6bps qoq reflecting asset repricing following benchmark rate hike Cost of customer deposits was stable qoq at 74bps, and only 4bps higher yoy, indicating realisation of funding cost synergies Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Performing Loan Yields (%) Performing Loans Yield (Qtr) Performing Loans Yield (YTD) Cost of Customer Deposits (%) Cost of Customer Deposits (Qtr) Cost of Customer Deposits (YTD) Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 31

32 Strengthened capital position on RWA optimisation Key Highlights Strong capital ratios Group capital position strengthened with CET1 ratio and total CAR at 14.4% and 17.8% respectively (vs. 13.2% and 16.3% in Jun 16) Improvement in capital ratios primarily driven by RWA optimisation FAB officially designated as Domestic Systemically Important Bank (D-SIB); required to hold additional capital buffer of 1.5% by 2019 Solid returns with Annualised RoTE at 14.7% CET1 13.2% 13.8% 14.4% 13.8% 13.3% Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 CAR 16.3% 1.0% 2.1% CAR 17.8% 1.2% 2.2% 13.2% 14.4% Jun'16 Jun'17 CET1 AT1 Tier II RWAs & Return on RWAs 1 Annualised RoTE 2 (YTD) RWAs RoRWA 2.1% 2.1% 2.3% 2.4% 2.2% % 15.9% 15.6% 16.1% 14.7% Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 H1'16 9M'16 FY'16 Q1'17 H1' Year-to-date annualised 2 - Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl Tier 1 notes coupon and amortisation of intangibles 32

33 Segmental Performance Corporate & Institutional Banking (AED Mn) Resilient performance despite subdued loan demand and increased market volatility Headline revenue slightly up yoy (+1.2%) mainly supported by Transaction Banking and Global Markets. Positive momentum in Corporate Finance in Q2 expected to strengthen into second half Operating Income Profit after taxes 4,692 4,748 3,548 3,716 Net profit up 4% yoy supported by provision reversals thanks to optimisation of risk assets Market-leading CIB franchise recognised by numerous awards including Best Bank for Financing in the Middle East and Best Investment Bank in the UAE at the 2017 Euromoney Middle East Awards Personal Banking (AED Mn) Revenues lower yoy (-9%) mainly due to slowdown in retail spending and competitive pressures Continued focus on optimising balance sheet mix by channeling liquidity towards higher risk-adjusted earning assets Business consolidation post merger and related cost savings led to notable reduction in operating expenses yoy 3,734 H1'16 Operating Income H1'17 Profit after taxes 3,417 In line with focus on innovation and digitisation, PBG launched various products including Etihad co-branded banking products and Samsung Pay (Mobile Wallet) 1, H1'16 H1'17 33

34 Segmental Performance (contd..) Subsidiaries (AED Mn) Revenues lower yoy (-15%) mainly due to lower IIS recoveries and non recurrence of property-related gains realised in H1 16 Net loss of AED 65 Mn as a result of higher impairments reflecting current economic cycle 727 Operating Income Profit after taxes H1'16 H1'17 (65) International (ex-uae) (AED Mn) The international business remains a key competitive advantage and differentiator for FAB as a significant contributor to liquidity and risk diversification H1 17 revenues stood at AED 1.23 Bn, contributing 12.5% to the Group s total revenues International deposits grew 5% and represent 26% of Group s total deposits as of June-end 2017 Operating Income Profit after taxes 1,287 1, H1'16 H1'17 34

35 Asset & Loan Mix Asset Mix Gross loans by counterparty (AED Bn) Investments 16% Others 9% AED Bn Cash & CB Balances 18% DFB and Reverse Repos 6% Loans and Advances 51% Dec' Jun'17 Banking Sector Personal/Retail Sector Corporate/Private Sector Public Sector Government Sector Gross loans by economic sector Net loans by geography* Gross loans by product Personal - Loans & Credit Cards 21% Government 5% Services 9% Other financial institutions 8% Agriculture 0.1% AED Bn Banks 5% Energy 6% Manufacturing 5% Construction 4% Real Estate 19% Trading 7% Transport and communication 9% Europe 9% Asia 5% GCC 2% MENA 2% * Based on booking centre America 2% AED Bn UAE 80% Real Estate 9% Trade related loans 6% Mortgage Loans 5% Personal Loans 10% AED Bn Credit Cards 2% Vehicle financing loans & others 0.4% Term Loans 62% 35

36 Investment breakdown Investments by type Investments by ratings AFS - Debt 74% AED 98.6 Bn HFT - Debt 15% HFT - Equity & Funds 1% Held to Maturity (Debt) 8% AFS - Equity & Funds 2% A 25% AA 35% AED 98.6 Bn BBB 14% BB & below 6% AAA 13% Unrated - Debt 4% Equity & Funds 3% Investments by geography Investments by counterparty Others incl A&NZ 1% USA 11% MENA (ex- GCC&UAE) 4% Asia 14% AED 98.6 Bn UAE 34% Corporate/ Pvt Sector 8% Banks 18% Supranatl 5% AED 98.6 Bn Sovereign 41% GCC 17% Europe 19% Covered Bonds 5% GREs 23% 36

37 Customer deposits Customer deposits (AED Bn) Total Customer Deposits CASA (%) Customer deposits by account type (AED Bn) Notice and time deposits Saving Accounts Margin Accounts Current Accounts Certificates of deposits % 30% 29% 29% 30% Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Dec'16 Jun'17 Customer deposits by Counterparty (AED Bn) Customer deposits by geography* Government sector Corporate / private sector Certificates of deposits Public Sector Personal/retail sector UAE 74% AED Bn Asia 2% GCC 2% Europe 18% MENA 3% America 2% Dec'16 Jun'17 * Based on booking centre 37

38 Liability mix and Wholesale Funding Liabilities mix Wholesale Funding (AED Bn) Jun 17 Customer Deposits 71% Syndicated loan 7.3 AED Bn Commercial Paper 3% Others 7% Due to Banks & Repos 11% Term Borrowings & Sub Debt 8% Medium Term Notes/Bonds 36.9 Subordinated debt 0.4 Total 44.6 Wholesale funding maturity profile (AED Mn) Syndicated Loan MTN/MTB 7,500 12,915 3,809 5,553 7,328 7, & Beyond 38

39 Revising FY 17 growth guidance, RoTE target intact H2 17 OUTLOOK REVISED FY 17 GUIDANCE LOAN GROWTH Demand recovery to be partly offset by continued balance sheet optimisation Low single-digit negative CORE REVENUE* GROWTH Healthy pipeline to support stronger non-interest revenue generation Flat C/I RATIO (ex-integration costs) Synergy realisation on track ~28% COST OF RISK 1 Prudent risk management bps ROTE 2 Continued focus on return optimisation ~ 14% *Excluding property-related one-offs and AFS investment gains 1 - Year-to-date annualised 2 - Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl Tier 1 notes coupon and amortisation of intangibles 39

40 CONTENTS 01 Introducing FAB 02 Integration update 03 Operating Environment 04 Q2/H1 17 Financial Review Based on Pro forma financial information as of 30 June Appendix 40

41 Transformational merger of equals Full service bank with leading consumer franchise Profitable, efficient and capital generative Strong entrepreneurial and sales culture Sophisticated wholesale business with strong product and industry expertise Underpinned by longterm strategic relations Strong conservative balance and liquidity from a diverse customer base Collectively beneficial to all stakeholders: Customers, Equity and Bond holders, employees and the society 41

42 Transaction Structure MERGER PROCESS POST MERGER STRUCTURE FGB shareholders NBAD shareholders shareholders shareholders 52.0% 48.0% FGB assets and liabilities vest in NBAD Combined entity Transaction structure was a statutory merger, with NBAD issuing 5,643 million new shares to FGB shareholders. Exchange ratio of NBAD shares for every one FGB Share 42

43 Compelling Strategic Rationale Transformational transaction a merger of equals Creates No. 1 bank in the UAE, internationally connected for its target clients to benefit all stakeholders Customers Combination of the best in class consumer and wholesale businesses and strong growth potential in Global Wealth Employees Fit for the changing regulatory landscape Equity holders Efficiency through cost and revenue synergies Lenders and bondholders Enhanced capacity through capital consolidation and strong core liquidity to capture strategic growth opportunities Society 43

44 Key financials at a glance Balance sheet & Income Based on Pro forma Financial Information TOTAL ASSETS (AED Bn) LOANS & ADVANCES (AED Bn) CUSTOMER DEPOSITS (AED Bn) Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 TANGIBLE EQUITY (AED Bn) OPERATING INCOME (AED Mn) NET PROFIT (AED Mn) ,954 5,466 5,097 5,189 4,662 2,682 3,184 2,854 2,926 2,562 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 44

45 Key financials at a glance - Ratios Based on Pro forma Financial Information NIM YTD (%) NPL RATIO (%) PROVISION COVERAGE (%) COST TO INCOME RATIO-YTD (EX-INTEGRATION COSTS) (%) H1'16 9M'16 FY'16 Q1'17 H1'17 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 H1'16 9M'16 FY'16 Q1'17 H1'17 NON-INT INC / REVENUES (%) CET1 & CAR (%) ROTE (%) RORWA (%) CET1 CAR Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Jun'16 Sep'16 Dec'16 Mar'17 Jun'17 H1'16 9M'16 FY'16 Q1'17 H1'17 H1'16 9M'16 FY'16 Q1'17 H1'17 45

46 Prestigious awards highlight FAB s strength and industry expertise in UAE and MENA FAB named Best Bank in the UAE NBAD Securities named Best Brokerage Company for the 2 nd year in a row Dubai First received the title of Best Consumer Finance Company in the region for the 3 rd year in a row FAB s Corporate and Investment Banking business received two titles for Best Investment Bank in the United Arab Emirates and Best Bank for Financing in the Middle East, reflecting the bank s leading standing locally and at a regional level as well FAB s Personal Banking business received two titles for Best Fixed Income of the Year and UAE Asset Manager of the Year FAB named Sukuk House of the Year - UAE for the 2 nd consecutive year 2017 Best Islamic Deal of the Year for Etihad Airways $1.5b Sukuk. FAB was Joint Structuring Bank and Joint Bookrunner 2017 Best Islamic Structured Trade Finance Deal of the Year for a $300m Murabaha on behalf of Al Marai. FAB was Joint Arranger and Joint Bookrunner FAB named Best Trade Finance Bank in MENA 46

47 THANK YOU! For more information, please visit or contact FAB Investor Relations team You can also download FAB s Investor Relations App to access latest corporate updates, FAB pro forma financial information and FGB/NBAD archives Join the movement GrowStronger.com