INVESTOR PRESENTATION February 2018

Transcription

1 INVESTOR PRESENTATION February 2018

2 Disclaimer Please note that FAB pro forma consolidated financials at 31 December 2017 serve as the main basis of reference for our Management Discussion & Analysis Report (MDA) and Investor Relations presentation. Comparative figures have been reclassified where appropriate to conform to the presentation and accounting policies adopted in the pro forma condensed consolidated interim financial statements. FAB s audited consolidated financial statements as at 31 December 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 Journey 03 Operating Environment 04 Q4/FY 17 Financial Review Based on Pro forma financial information as of 31 December Appendix 3

4 Introducing FAB Result of the historic merger between two iconic Abu Dhabi-based franchises Largest bank in UAE and 2 nd largest in MENA by total assets and market capitalisation Highest rated bank in MENA with Aa3/AA-/AA- 1 (stable outlook) Strong liquidity profile and robust capital ratios Superior asset quality, cost efficiency and profitability metrics Excellent progress made so far in integration journey; Set to realise substantial synergy potential by Moody s/s&p/fitch 4

5 FAB at a glance Overview 19 Countries presence (ex UAE) 103 Branches in UAE 603 ATMs/CDMs FAB is the result of the historic merger between two iconic Abu Dhabi based franchises (FGB and NBAD) Largest UAE bank and 2 nd largest in MENA by total assets (AED 669 Bn) and market capitalisation (AED 112 Bn) Offers extensive range of products and services via market-leading Corporate and Investment Banking (CIB), Personal Banking (PB) franchises and subsidiaries Domestic network: 103 branches and 603 ATMs/CDMs across all 7 emirates Global presence: 19 countries (excluding UAE) Credit ratings Affirmation of 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- 1 EUROPE & AMERICAS (E&A) UK France Switzerland USA Brazil MIDDLE EAST & AFRICA (MEA) Moody s S&P Fitch RAM (Malaysia) R&I Japan LT Aa3 AA- AA- AAA A+ ST P-1 A-1+ F1+ P1 UAE Bahrain Oman Qatar Kuwait Jordan Lebanon Libya Egypt Sudan ASIA PACIFIC (APAC) Outlook Stable Stable Stable Stable Stable India Malaysia Singapore China/ Hong Kong South Korea All figures as on 31 December Moody s/s&p/fitch 5

6 FAB Share Profile Overview Listed on Abu Dhabi Securities Exchange (ADX) Symbol: FAB Number of shares issued: 10,898 million 1 Market cap 2 : AED 112 Bn (USD 30.4 Bn) Foreign Ownership Limit: 25% Strong shareholding structure 3 ADIC 33.5% Foreign (ex-gcc) 9.3% GCC (ex-uae) 1.4% Mubadala 3.7% Other UAE companies and individuals 52.1% Index Weightings 2 Abu Dhabi Securities Market Index ADSMI 35.2% Bloomberg GCC 200 financial Index BGCCFIN % Bloomberg EMEA Banks Index BEUBANK 1.9% 1 - Includes 42 Mn Treasury shares 2 - As on 31 December Ownership structure as of 31 December 2017, based on shares outstanding (net of treasury shares) 6

7 Leading UAE and regional bank Banking sector assets 1 (USD Bn) National champion 2 FY 17 Net Profit 1 (USD Bn) Total Assets 1 (USD Bn) Equity 1 Market Cap 3 (USD Bn) (USD Bn) Credit Ratings 3 (Moody s/s&p/fitch) Aa3 / AA- / AA- UAE A1 / BBB+ / A- KSA Aa3 / A / A+ Qatar Aa3 / A+ / AA- Kuwait Bahrain (9M 17) 34 (Sep 17) 4.3 (Sep 17) 5.8 NA / BBB / BBB+ Oman Baa2 / BB / BBB- 1 - Company and Central Bank information as of latest reported for 31 December 2017, except for Banking Sector Assets for Bahrain and Oman (30 Nov 2017) 2 - Defined as the largest bank in the country by total assets 3 - Based on 31 December 2017; Source Bloomberg 7

8 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. Nasser Ahmed Alsowaidi 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. Khalifa Sultan Al Suwaidi H.E. Sheikh Mohammed Bin Saif Bin Mohammed Al Nahyan H.E. Sheikh Ahmed Mohammed Sultan Al Dhaheri Vice Chairman of the Board Chairman of ETECH 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 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 8

9 Talented and Experienced Senior Leadership Abdulhamid M. Saeed Group CEO Andre Sayegh Deputy Group CEO & Group Head of Corporate & Investment Banking Zulfiqar Sulaiman Group Chief Operating Officer, Group Head of International Banking and Group Chief Integration Officer Hana Al Rostamani Group Head of Personal Banking Karim Karoui Group Head of Subsidiaries, Strategy & Transformation James Burdett Group Chief Financial Officer P K Medappa Group Chief People Officer Shirish Bhide Group Chief Credit Officer Arif Shaikh Group Chief Risk Officer Nurendra Perera Acting Group Chief Audit Officer Fadhel Al Ali Group Chief Customer Experience & Digital Officer 9

10 Strategy built on core strengths Our Vision: Creating value for our customers, employees, shareholders and communities to grow stronger through differentiation, agility and innovation. 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 Business Segments Segment CORPORATE & INVESTMENT BANKING PERSONAL BANKING SUBSIDIARIES HEAD OFFICE Coverage and offering Covers corporate and institutional clients through dedicated client segments Offers Credit facilities, Global Transaction Services, Corporate Finance, Islamic Finance and Global Markets products to both UAE and international clients Targets retail, affluent, private banking and SME customer segments Product offerings range from day-to-day banking products such as current accounts, deposits, credit cards and loans to more sophisticated investment solutions and business banking products and services Complementary offerings provided across real estate and property management, brokerage, conventional and Islamic consumer finance Centralised enablement functions: HR, operations, finance, strategy, investor relations, risk management, credit management, corporate communications, legal & compliance, internal audit, procurement, treasury operations, integration management office and administrative support Wide range of diverse distribution and sales channels, including mobile and internet banking, branches and direct sales agents Manages National Housing Loan program for Abu Dhabi government % FY 17 Group revenue 48% 35% 7% 10% 11

12 Key financials at a glance Balance sheet & Income Statement - Based on Pro forma Financial Information TOTAL ASSETS (AED Bn) LOANS & ADVANCES (AED Bn) CUSTOMER DEPOSITS (AED Bn) Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 TANGIBLE EQUITY (AED Bn) OPERATING INCOME (AED Mn) NET PROFIT (AED Mn) ,102 5,188 4,686 4,611 5,049 2,854 2,926 2,562 2,605 2,822 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 12

13 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) FY'16 Q1'17 H1'17 9M'17 FY'17 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 FY'16 Q1'17 H1'17 9M'17 FY'17 NON-INT INC / REVENUES (%) CET1 & CAR (%) ROTE (%) RORWA (%) CET1 CAR Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 FY'16 Q1'17 H1'17 9M'17 FY'17 FY'16 Q1'17 H1'17 9M'17 FY'17 13

14 Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q4/FY 17 Financial Review Based on Pro forma financial information as of 31 December Appendix 14

15 Integration exceeds expectations All planned milestones successfully delivered in Q Finalisation of organisational structure and operating model Harmonisation of Group policies and risk framework CIB product and pricing harmonisation completed Subsidiaries: Integration of real estate and property management businesses completed, integration of islamic finance subsidiaries on track; brokerage business rebranded (FAB Securities) Network optimisation o IT system integration on track; to be completed around the end of 2018 (adequate planning, resourcing and tight risk management) o PBG product and pricing harmonisation o Strategic review/ implementation of international value proposition o Ongoing network optimisation (UAE + international) o Further process refinements/simplification and automation UAE network and channel external re-brand completed; in progress across international locations Purchase Price Allocation exercise is substantially complete Culture and change management 15

16 Integration exceeds expectations Merger benefits evident since 2016 G&A expenses BAU 1 In AED Mn 27.9% 29.3% 28.6% 30.2% 28.3% CI ratio 27.0% 1 4,448 5,225 FGB 1,766 5,552 FGB 1,856 6,030-5% 5,745 FGB 1,947 FGB 1,848-8% 5,274 Cost reduction = AED 756Mn FGB 1,446 FAB NBAD 3,002 NBAD 3,459 NBAD 3,696 NBAD 4,083 NBAD 3, Excluding integration/ merger transaction-related costs and amortisation of intangibles (merger-related) 16

17 Integration exceeds expectations Synergy financials Increasing run-rate cost synergy target Synergies significantly ahead of target in 2017 IT system integration around end of 2018 to unlock substantial merger benefits in addition to other initiatives (incl. process simplification, automation, and network optimisation - UAE and international) Raising 2020 full annual run-rate by 50% to AED ~1.5Bn Integration costs on track Initial phasing Revised phasing ~250Mn % 65% 85% 100% 33% 55% 85% 100% ~500Mn ~1Bn ~1.5Bn 2017 guidance 2017 actual 2020 initial target 2020 revised target In AED In AED Higher integration costs vs 2017 guidance reflect acceleration of integration plan; estimated phasing revised accordingly On track with one-time integration cost target of AED 1.1Bn, to be fully absorbed by 2019 Initial phasing Revised phasing 385Mn % 35% 30% 42% 30% 28% 463Mn 330Mn 307Mn 2017 guidance 2017 actual 2018 est 2019 est 1.1Bn 17

18 Laying the right foundation for long term sustainable growth How we will measure our success by Growth-oriented culture 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 1 >13.5% 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) 18

19 Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q4/FY 17 Financial Review Based on Pro forma financial information as of 31 December Appendix 19

20 UAE Economic Overview 2 nd largest economy in GCC USD 379 Bn 2017f Nominal GDP 3 UAE 6 th largest oil reserves ~95 Bn boe 1 On path to strong recovery 1.3% 3.4% 2017f 2018f Real GDP Growth % Increase in 2018 Federal Budget 4 UAE federation established in 1971 Comprising 7 Emirates Estimated population 3 (2016): 9.9 Mn Diversified and competitive economy 83% non-oil sector contribution to nominal GDP 2 16 th most competitive economy (WEF 2016/2017) Manufacturing 10% Diversified Economy 2 Trade, Restaurants & Hotels 15% Finance 10% Nominal GDP 3 (USD Bn) Saudi Arabia 679 UAE 379 Economic Structure and Performance e 2017f 2018f Real GDP Growth (% change) Nominal GDP (USD Bn) Qatar 166 Inflation (CPI, % change) Mining and quarrying 17% Kuwait 118 General govt revenue (% GDP) Construction and Real Estate 17% Others 5 31% Oman Bahrain General govt expenditure (% GDP) Fiscal balance (% GDP) (4.1) (3.7) (2.2) Gross Debt (% GDP) OPEC; boe (barrel of oil equivalent) (December 2016) 2 - Federal Competitiveness and Statistics Authority, 2016 Nominal GDP 3 - IMF World Economic Outlook, October WAM 5 - Others include Agriculture, Utilities, Transportation, Communication, Government and Other activities 20

21 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 Dec'17 Other Macro Indicators 2017f Debt/GDP 1 (%) UAE PMI in Expansionary Territory Saudi Arabia UAE Kuwait Oman Qatar Bahrain 45 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 AED 155 Bn Net Deposit Surplus as of Dec 17 3 Libor-Eibor spread has tightened AED Bn (50) % 110% 105% 100% 95% 90% 85% 80% FED rate hikes (100) 75% Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan Net Deposit Surplus/ Deficit L/D ratio, net LIBOR 3M EIBOR 3M E-L Spread (RHS) 1 - Source: IMF World Economic Outlook October 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 3 - UAE Banking Indicators have been adjusted retrospectively in order to reflect accounting adjustments related to the National Housing Loan Program 21

22 Abu Dhabi The Capital 87% of UAE land area 1 Umm al Quwain Ras al Khaimah Ajman Sharjah Dubai Ajman Fujairah ABU DHABI Estimated population 1 : 2.9 Mn Major contributor to UAE GDP 1 4 th Highest GDP per capita in the world 3 Highest ratings in MENA On clear path to recovery and economic diversification 72% USD 198 Bn 2016 Nominal GDP USD 68,337 1 (2016) Aa2 / AA / AA Moody s / S&P / Fitch 0.3% 3.2% 2017f 2018f non-oil sector contribution to nominal GDP 1 Real GDP growth 2 Mining and quarrying 28% On track to meet Plan Abu Dhabi 2030 targets Nominal GDP breakdown by sector Manufacturing 7% Construction and Real Estate 19% Trade, Restaurants & Hotels 7% Finance 10% Others 4 29% 1 - Abu Dhabi 2017 Bond Prospectus, Statistical Year Book of Abu Dhabi, (SCAD) July 2017, preliminary estimates 2 - IMF quoted by Reuters, November IMF, 2016 (assuming Abu Dhabi is a separate country) 4 - Others include Agriculture, Utilities, Transportation, Communication, Government and Other activities 5 - Abu Dhabi Economic Vision 2030, SCAD 41% Target real GDP 5 Oil GDP 51% Non-Oil GDP 64% Target Economic Structure and Performance Real GDP growth (% change) Nominal GDP (USD Bn) Inflation Rate (CPI, % change) Revenue/ GDP Expenditures/ GDP Balance/ GDP 0.2 (5.3) (3.6) 22

23 Dec'15 Government Public Sector/GREs Private Sector NBFI Non-Residents Dec'16 Government Public Sector/GREs Private Sector NBFI Non-Residents Dec'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 90% UAE CB Basel III capital guidelines effective from 1st Feb 2017 with min. CET 1 set at 7.0%; full implementation by 2019 Figures in AED Bn Dec 17 Dec 16 YoY Total Assets, net 2 2,586 2, % Loans and Advances, net 2 1,472 1, % Customer Deposits 1,627 1, % LDR 2 90% 93% -300bps Lending to Stable Resources Ratio % 86.2% -160bps CAR % 18.9% - Tier 1 capital % 17.3% +10bps 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 Dec ,472 1,563 1, % +4.1% 27% 28% , % 1, % 1, Based on Dec 17 Financials of 10 largest UAE listed banks by Total Assets 2 - Source: UAE Central Bank, UAE Banking Indicators have been adjusted retrospectively in order to reflect accounting adjustments related to the National Housing Loan Program 3 - 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) 4 - Basel 2 23

24 Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q4/FY 17 Financial Review Based on Pro forma financial information as of 31 December Appendix 24

25 Q4/FY 17 Key Performance Highlights Resilient performance in transitional year Reported Net Profit at AED 10.9Bn, down 4% yoy; EPS at AED 0.96 Adjusted Group Net Profit at AED 11.5Bn, broadly in line with 2016 Delivering top returns for our shareholders in year 1 Proposing cash dividends of AED 7.6Bn DPS of AED 0.70, 11% higher than 2016 pro forma Integration journey exceeds expectations Synergies significantly ahead of target in 2017 Raising cost synergy 2020 annual run-rate target by 50%; Integration costs firmly on track Robust balance sheet and healthy fundamentals Capital position comfortably in excess of regulatory requirements Strong liquidity position, healthy asset quality and solid profitability Looking ahead with confidence Macro and business tailwinds to support 2018 performance FAB positioned well to achieve successful integration and capture future growth opportunities 25

26 Resilient performance in transitional year Financial Highlights FY 17 vs. FY 16 In AED Mn FY 17 FY 16 YoY % Revenues 19,533 20,302-4 Operating expenses (5,875) (5,922) -1 BAU 1 costs (5,274) (5,745) -8 Integ/ merger transaction-related costs (463) (178) Amort. Intangibles (merger-related) (138) - Impairment charges (2,384) (2,664) -10 Reported Net profit 10,915 11,322-4 Adjusted Net profit 11,517 11,500 - EPS (AED) DPS (AED) Revenue 4% lower due to softer market conditions and portfolio optimisation BAU 1 Operating costs down 8% when excluding one-off integration/merger transaction-related costs and amortisation of intangibles identified as a result of PPA exercise Impairment charges 10% lower on the back of lower collective provisions and higher write-backs Reported Net Profit down 4%, yet broadly in line with 2016 on Adjusted basis DPS up 11% Key ratios % FY 17 FY 16 YoY (bps) C/I ratio (ex-integ costs) CoR (bps) NPL ratio Provision coverage L/D ratio RoTE CET1 ratio Industry-leading C/I ratio Healthy asset quality and improved coverage qoq due to PPA Strong liquidity position remains competitive strength Solid returns, above full year guidance Capital position as D-SIB comfortably in excess of regulatory requirements under Basel III 1 BAU Business as usual 2 CET1 ratio as per UAE CB s Basel III framework (without considering the transitional arrangements for 2017); 2016 ratio as per UAE CB s Basel II framework 26

27 Resilient performance in transitional year We have met or exceeded most elements of financial guidance FY 17 GUIDANCE FY 17 ACTUAL LOAN GROWTH Low single digit negative -1% Strong business momentum in second half, offset by asset optimisation and PPA adjustments CORE REVENUE 1 Flat -4% Revenues impacted by margin compression, subdued loan market and lower trade activity C/I RATIO (EX-INTEGRATION COSTS) ~28% 27.7% Disciplined cost control and substantial synergy realisation, above expectations COST OF RISK bps 69bps Cautious risk management and healthy asset quality ROTE 2 ~ 14% 14.8% (15.5% ex-integ.costs) Solid returns in transitional year 1 - Excluding property-related one-offs and AFS investment gains 2 - Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl Tier 1 notes coupon (AED 465Mn) and amortisation of intangibles 27

28 Delivering top returns for our shareholders in year 1 Board recommends cash dividends of AED 7.6Bn, highest combined dividend amount distributed by FGB and NBAD Proposed DPS of AED 0.70 is 11% higher than 2016 pro forma (AED 0.63) In AED Bn NBAD 1.4 FGB NBAD 1.7 FGB NBAD 1.9 FGB 3.9 NBAD 2.3 FGB 4.5 NBAD 2.3 FGB 4.5 FAB Note: Pending shareholders approval at AGM on Sunday 25 th February

29 PPA accounting Substantially complete as of 31 Dec 2017 Concept of PPA Impact As per IFRS 3 and Business Combination guidelines, the Bank is required to complete a Purchase Price Allocation exercise in order to determine the goodwill arising from the merger All acquired assets and assumed liabilities of NBAD should be recorded at fair value Fair value adjustments impact net asset value and goodwill calculation Intangible assets identified as a result of PPA to be amortised through P&L Post-PPA Intangible assets = AED 2.6Bn Accounting treatment To be amortised over 12 yrs Year 1 impact of AED 138Mn recorded in Q4 17 (ninemonth impact) Estimated impact on P&L for 2018 ~AED 185Mn NBAD Net Asset Value as of March AED Bn Pre PPA PPA impact Post PPA Loans and advances (2.9) Other Assets (1.9) Total assets (4.8) Total liabilities NBAD net asset value (pre-intangibles) 38.8 (5.1) 33.7 Intangibles identified NBAD net asset value 36.3 Goodwill calculation (AED Bn) Purchase Price Consideration (a) 53.6 NBAD Net Asset Value (b) 36.3 Goodwill (a)-(b) 17.3 Intangibles 2.6 Goodwill = AED 17.3Bn No amortisation To be annually tested for impairment Goodwill & Intangibles 19.9 Note: As of 31 Dec 2017, PPA exercise as per IFRS3 is substantially complete and no significant changes to NBADs net asset values are expected by 31 March

30 Robust capital position Even after PPA / FY 17 proposed dividends CET1 1 ratio progression 14.8% 14.5% CET1 Dec' % FY'16 Dividends 2.27% Capital generation 0.13% RWA impact PPA impact Basel III regulatory capital glide path % 0.05% Other movements 1.57% 12.9% Min 9% Min 9% CET1 Dec'17 FY'17 Proposed Dividends CET1 Dec'17 (Postdividends) CET1 comfortably in excess of minimum requirement of 9% for 2017 even after PPA impact and FY 17 proposed dividends Limited RWA impact: Credit RWA optimisation offset by increased Market RWA linked to higher client-related derivative volumes Strong internal capital generation capacity combined with continued RWA discipline to support future capital build-up; CET1 >13% by end of 2018 IFRS9 impact on CET1 estimated at 57-68bps Min. CET 1 7.0% 7.0% 7.0% Capital Conservation Buffer 1.25% 1.875% 2.50% D-SIB Buffer 0.75% 1.125% 1.50% Total Min. CET % 10.0% 11.0% Additional Tier1 (AT1) 1.50% 1.50% 1.50% Tier2 2.00% 2.00% 2.00% 1 CET1 ratio as per UAE CB s Basel III framework (without considering the transitional arrangements for 2017); 2016 ratio as per UAE CB s Basel II framework 2 AT1 (additional Tier 1) + Tier 2 capital requirement Min 3.5%; any shortfall in same to be met by CET1; Countercyclical buffer requirement (0 2.5%) as advised by UAECB, is nil in

31 Robust capital position Key Highlights Robust capital position with Basel III CET1 3 ratio at 14.5%, comfortably in excess of regulatory requirements Tier 1 capital ratio at 16.7% and total CAR at 17.8% (vs 17.0% and 18.2% in Dec 16) Credit RWA optimisation offset by increased Market RWA linked to higher client-related derivative volumes 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 14.8%, in line with full year guidance; RoTE ex-integration costs at 15.5% for RoTE guidance ~15% Strong capital ratios (Basel III) 3 CET1 14.8% 14.7% 14.9% 14.5% 13.9% Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 CAR 18.2% CAR 17.8% 1.2% 1.1% 2.2% 2.2% 14.8% 14.5% Dec'16 Dec'17 CET1 AT1 Tier II RWAs & Return on RWAs 1 RWAs RoRWA ROAA Annualised RoTE 2 (YTD) 2.3% 2.4% 2.3% 2.2% 2.3% 1.8% 1.8% 1.6% 1.6% 1.7% 15.7% 16.1% % 14.3% 14.8% Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 FY'16 Q1'17 H1'17 9M'17 FY' 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 3 As per UAE CB s Basel III framework (without considering the transitional arrangements for 2017); ratios prior to 2017 as per UAE CB s Basel II framework 31

32 Strong business momentum in Q4 drives revenues higher Key Highlights Q4 17 revenues up 10% qoq led by higher fees & commissions (F&C) on strong pipeline execution, and property gains FY 17 revenues managed at AED 19.5Bn (-4% yoy) reflecting softer operating conditions, portfolio optimisation initiatives as well as lower property compared to 2016 FY 17 NII down 3% yoy due to margin compression on asset optimisation and lower IIS, while higher volumes drove 4% sequential increase in Q4 17 F&C up 18% qoq on higher loan-related fees in CIB and higher credit card and insurance-related fees in PB. F&C 13% lower yoy reflecting lower market loan and trade activity compared to 2016 FX and investment income up 28% yoy on opportunistic AFS investment gains, mostly in Q1 17 Operating Income (AED Mn) Operating Income (AED Mn) FY'17 FY'16 YoY % Q4'17 Q3'17 QoQ % Net interest Income 1 13,106 13, ,363 3,244 4 Fees & commissions, net 3,362 3, FX and investment income, net 2,586 2, Other non-interest income Total Operating Income 19,533 20, ,049 4, Negative interest income booked on some placements has been reclassified to net FX income 2 Includes gains on sale of investment properties Non-interest Income (AED Mn) 2 1 Net interest income Non-interest income -1% +10% 5,102 5,188 4,686 4,611 5,049 34% 37% 31% 30% 33% 66% 63% 69% 70% 67% -4% 20,302 19,533 33% 33% 67% 67% Other income Net FX & Investment income Net fees and commission income 1,710 1,933 5% 3% 38% 57% 1,442 1,367 3% 6% 37% 36% 1,686 17% 28% 57% 40% 60% 58% 55% -5% 6,753 6,427 15% 7% 30% 40% 58% 52% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 FY'16 FY'17 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 FY'16 FY'17 32

33 NIM trend reflects margin compression and impact from placement of excess liquidity Key Highlights Net Interest Margin (%) Group NIM: -13bps qoq and -6bps yoy reflecting margin compression and the dilutive impact of deployment of short-term excess liquidity Group NIM (Qtr) Group NIM (YTD) Performing loan yields: +9bps yoy on the back of corporate loan repricing following benchmark rate hike; -15bps qoq primarily due to the increase in low-yielding loan volumes and tighter risk appetite in PB Cost of customer deposits: marginally up qoq and yoy, indicating realisation of funding cost synergies despite 3 rate hikes Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Performing Loan Yields (%) Cost of Customer Deposits (%) Performing Loans Yield (Qtr) Performing Loans Yield (YTD) Cost of Customer Deposits (Qtr) Cost of Customer Deposits (YTD) Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Note: All percentage figures are annualised 33

34 Strong synergy realisation drives better operating efficiency Key Highlights Cost-Income Ratio (%) Operating expenses BAU reduced 8% yoy, reflecting disciplined cost management and realisation of substantial synergies at an increased pace Headline operating expenses were lower 1% yoy and higher 20% qoq on higher Integration costs reflecting the increased pace of synergy realisation and merger-related amortisation of intangibles C/I ratio (ex-integration costs 1 ) stands at industry-leading level of 27.7%, improving from 28.3% in FY 16; ex-amortisation of intangibles (merger-related) C/I ratio stands at 27.0% C/I ratio (ex-integration) C/I ratio (ex-integration and merger-related amortisation of intangibles) FY'16 Q1'17 H1'17 9M'17 FY'17 Operating expenses trend (AED Mn) Amortisation of intangibles (merger-related) Integration / merger transaction-related costs Operating expenses (ex-integration) 1,553 1, ,616 1,399 1, ,434 1,412 1,308 1,274 1,280 5,922-1% 5, BAU 5,745-8% 5,274 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 FY'16 FY'17 1 Excluding integration/ merger transaction-related costs 34

35 CoR continues to benefit from RWA optimisation Key Highlights Impairment Charges, net (AED Mn) & CoR Impairment charges (net) down 10% yoy driven by lower collective provision charges resulting from balance sheet optimisation and higher write backs Impairment Charges, net Cost of Risk(bps)* 76 NPLs up 14% yoy primarily due to retail-led NPL formation Portfolio is adequately provisioned with coverage at 120%; Collective provisions at 1.9% of Credit RWAs Cost of risk improved to 69bps for FY 17, better than full year guidance of 70-75bps; 2018 guidance: bps ,664 2,384 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 * annualised FY'16 FY'17 NPLs and Provisions (AED Mn) Provision Coverage & NPL ratio Dec'17 Sep'17 QoQ% Dec'16 YoY% Provision Coverage (%) NPL Ratio (%) NPLs 10,597 10,233 4% 9,280 14% Provisions 12,728 11,153 14% 11,565 10% Specific 4,581 4,105 12% 4,325 6% General 8,147 7,049 16% 7,240 13% Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 35

36 Strong corporate loan origination in Q4; deposits higher on Govt inflows Key Highlights Loans and Advances* (AED Bn) Loans and advances* Loan book increased 1% qoq as strong loan origination in Q4 17 was partially offset by continued balance sheet optimisation and fair value adjustments linked to PPA Loans were down 1% yoy as new origination was offset by balance sheet optimisation and corporate repayments in a overall subdued loan market Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Customer Deposits and other accounts* Customer deposits up 4% qoq and yoy, on higher government deposit inflows CASA grew 7% yoy highlighting FAB s strong deposit franchise and leading cash management solution Customer Deposits* (AED Bn) Liquidity position remains highly comfortable with loan-to-deposit ratio of 83.5% Dec-end 2017 LCR of 112% stands above the Basel III glide path Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 Loan-to-deposit ratio* (%) Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 *Restated net of National Housing Program loans and deposits 36

37 Business Performance Corporate & Investment Banking (CIB) AED Bn 48% of Group Revenue -5% +0.3% +7% Strong business momentum in Q4 17 led to 6% sequential growth in revenue, while FY 17 revenues were down 5% on subdued loan market and lower trade activity % Strong revenue growth was recorded in our Cash Management business through a significant increase in mandates and strong Investment book returns in Global Markets Despite a subdued loan market, we were able to successfully execute landmark transactions across Corporate Finance, specifically in Advisory and Syndicated Loan markets Revenue Expenses Loans Deposits Our UAE business overall delivered a strong year on year result with risk adjusted returns higher Personal Banking Group (PBG) AED Bn Disciplined cost management and realisation of synergies resulted in lower costs by 11% yoy 35% of Group Revenue -8% Revenue Expenses -3% -13% Loans -3% Deposits PBG delivered a resilient performance in 2017 amidst a slowdown in retail spending and continued asset mix optimisation along with tighter risk appetite leading to margin compression Higher credit card and insurance-related fees in 4Q 17 supported a 2% sequential growth in operating income Operating expenses reduced by 13% yoy indicating tight cost control and realisation of substantial synergies post-merger Loans were 3% lower yoy reflecting disciplined lending and tighter risk appetite First FAB branded credit card FAB Visa Infinite Credit Card launched post-merger 37

38 Business Performance (continued ) Subsidiaries % of Group Revenue 1,662-21% 1,309 AED Mn AED Bn FAB enjoys a highly diversified business model supported by -9% complementary offerings provided across real estate management, +25% Islamic banking, brokerage, and credit cards through its subsidiaries % FY 17 Revenues were down yoy, primarily due to lower property-related income Integration of the real estate and property management businesses was completed along with re-branding of the brokerage business into FAB Securities; integration of the Islamic Finance subsidiaries is underway Revenue Expenses Loans Deposits International (Middle East & Africa, Asia Pacific and Europe & Americas) % AED Mn AED Bn +15% FAB s international business remains a key competitive advantage and differentiator for the Bank as a significant contributor to liquidity and risk diversification 2,569 2, % % FY 17 revenues were AED 2.43 Billion, down 5% yoy, primarily reflecting FX devaluation International revenues contributed 12% to Group s total revenues While loans increased by 3%, FAB s solid core deposit franchise led to a 15% growth in international deposits in 2017 Revenue Expenses Loans Deposits As of December-end 2017, international loans and deposits represent 20% and 27% respectively of total Group loans and deposits 38

39 Outlook Sustained global economic growth 2-3 Fed rate hikes expected in 2018 Economy/ Banking Sector Expansionary budgets across the GCC supported by firming oil prices > USD 50/barrel UAE GDP growth to accelerate to 3.4% (vs. 1.3% in 2017), led by Abu Dhabi recovery and pick up in government spending Faster economic growth to support credit growth ~mid-single digit Transition under way towards Basel III and IFRS9 implementation 2018 will be a year of consolidation: core businesses positioned well to achieve growth and deliver further operating efficiencies FAB Continued progress in integration journey with IT systems integration as next key milestone and end point of merger (around end of 2018) Strategic review/ implementation of international value proposition Process to obtain CMA and SAMA licenses in KSA well underway 39

40 Financial guidance 2018 FINANCIAL GUIDANCE 2020 AMBITIONS GROWTH Loan Revenue Mid-single digit Low single-digit EFFICIENCY C/I Ratio (ex-integration costs) ~26%-27% ~25% ASSET QUALITY Cost of Risk bps PROFITABILITY Net profit growth Mid single-digit RoTE 2 ~15% 16-17% CAPITAL Basel III CET1 >13% >13.5% (vs % previously) 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 40

41 Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q4/FY 17 Financial Review Based on Pro forma financial information as of 31 December Appendix 41

42 Q4/FY 17 Summary Financials Full Year Quarterly Income Statement - Summary (AED Mn) Note FY'17 FY'16 YoY % Q4'17 Q3'17 QoQ % Q4'16 YoY % Net interest Income a 13,106 13, ,363 3, ,392-1 Fees & commissions, net 3,362 3, FX and investment income, net a 2,586 2, Other non-interest income Total Operating Income 19,533 20, ,049 4, ,102-1 Operating expenses (5,875) (5,922) -1 (1,616) (1,344) 20 (1,553) 4 Incl: Integration costs b (463) (178) 161 (198) (70) 183 (118) 68 Amortisation of intangibles (merger-related) (138) - - (138) Impairment charges, net (2,384) (2,664) -10 (562) (562) 0 (590) -5 Non Controlling Interests and Taxes (358) (394) -9 (48) (100) -52 (105) -55 Net Profit 10,915 11, ,822 2, ,854-1 Adjusted Net Profit c 11,517 11, ,159 2, ,972 6 Basic Earning per Share (AED) d a) Negative interest income booked on some placements has been reclassified to net FX income; NIM has been restated accordingly b) Integration costs prior to 2017 are merger transaction-related costs c) Adjusted Group Net Profit is stated before amortisation of intangibles (merger-related) identified as a result of the purchase price allocation, and excluding one-off integration costs d) Basic EPS based on attributable profits to equity shareholders' excluding Tier-1 notes coupon and outstanding shares 42

43 Q4/FY 17 Summary Financials Balance Sheet - Summary (AED Bn) Note Dec'17 Dec'16 YoY % Sep'17 QoQ % Loans and advances e Customer deposits e CASA (deposits) Total Assets e Equity (incl Tier-1 capital notes) Tangible Equity f e) Restated net of National Housing Program loans and deposits f) Tangible equity is shareholders' equity net of Tier-1 capital notes, goodwill & intangibles Key Ratios (%) Note FY'17 FY'16 YoY (bps) Net Interest Margin a Cost-Income ratio (ex-integration costs) Cost of Risk (bps) i Non-performing loans ratio j Provision coverage j Loans-to-deposits ratio e Return on Tangible Equity (RoTE) g Return on Risk-weighted Assets (RoRWA) CET1 ratio h Capital Adequacy ratio h g) Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl coupon on Tier-1 capital notes (AED 465Mn - FY'17) and amortisation of intangibles (AED 159 Million - FY'17) h) As per UAE Central Bank's Basel III framework; figures prior to Dec 2017 are based on UAE CB's Basel II framework; CET1 ratio is based on Tier-1 capital net of perpetual notes as a percentage of risk weighted assets i) Loan-related impairment charges (net) as a percentge of average gross loans and advances (net of interest in suspense) j) Gross loans and advances net of interest in suspense Rounding differences may appear in above table 43

44 Asset & Loan Mix Asset Mix Gross loans by counterparty (AED Bn) Investments 16% Others 9% AED Bn Dec 17 Cash & CB Balances 21% DFB and Reverse Repos 5% % 6% 22% 21% 53% 56% Banking Sector Personal/Retail Sector Corporate/Private Sector Public Sector Loans and Advances 49% 17% 16% 1% 1% Dec'16 Dec'17 Government Sector Gross loans by economic sector Net loans by geography¹ Gross loans by product Manufacturing Energy 6% Construction Agriculture 0.1% 7% 3% Personal - Loans & Credit Cards 21% Government 1% Services 7% Other financial institutions 8% AED Bn Dec 17 Banks 6% Real Estate 26% Trading 7% Transport and communication 8% GCC 2% Europe 9% Asia 5% MENA America 2% 2% AED Bn Dec 17 UAE 80% Overdrafts 4% Vehicle financing loans & others 0.4% Credit Cards 2% Personal Loans 9% Mortgage Loans 5% Real Estate 10% AED Bn Dec 17 Trade related loans 7% Term Loans 63% 1 - Based on booking centre 44

45 Investment breakdown Investments by type Investments by ratings HFT - Debt 17% HFT - Equity & Funds 1% A 28% BBB 12% AFS - Debt 73% AED Bn Dec 17 AFS - Equity & Funds 2% Held to Maturity (Debt) 7% AA 35% AED Bn Dec 17 AAA 13% BB & below 7% Unrated Debt 2% Equity & Funds 3% Investments by geography Investments by counterparty UAE 36% Asia 16% AED Bn Dec 17 Europe 17% GCC 15% MENA (ex- GCC&UAE) 4% USA 11% Others incl A&NZ 1% Banks 20% Covered Bonds 4% Corporate/ Pvt Sector 7% GREs 22% Supranatl 4% AED Bn Dec 17 Sovereign 43% 45

46 Liability mix and Wholesale Funding Liabilities mix Wholesale Funding (AED Bn) Dec 17 Syndicated loan 7.3 Customer Deposits 70% AED Bn Dec 17 Others 6% Term Borrowings & Sub Debt 8% Medium Term Notes/Bonds 34.8 Subordinated debt 0.4 Commercial Paper 4% Due to Banks & Repos 12% Total 42.6 Wholesale funding maturity profile (AED Mn) Syndicated Loan MTN/MTB 7,707 5,903 7,331 7, ,278 10, & Beyond 46

47 Customer deposits Customer deposits (AED Bn) Customer deposits by account type (AED Bn) CASA (%) Total Customer Deposits Notice and time deposits Saving Accounts Margin Accounts Current Accounts Certificates of deposits % 1% 7% 9% 4% 3% 25% 26% 29% 29% 30% 30% 29% Dec'16 Mar'17 Jun'17 Sep'17 Dec'17 63% 61% Dec'16 Dec'17 Customer deposits by Counterparty (AED Bn) Customer deposits by geography 1 Government sector Public Sector Corporate / private sector Personal/retail sector Certificates of deposits % 9% 20% 18% 38% 34% UAE 73% AED Bn Dec 17 GCC 2% Asia 1% Europe 19% 20% 19% 15% 20% Dec'16 Dec' Based on booking centre MENA 3% America 3% 47

48 Prestigious awards highlight FAB s strength and industry expertise in UAE and MENA Best FX provider in UAE Best Overall Cash Management Bank in the Middle East Best Bank for Liquidity Management in the Middle East Safest Bank in the UAE Safest Bank in the Middle East 4th Safest Bank in Emerging Markets 17th Safest Commercial Bank 31st Safest Bank in the World Best Investment Bank in the United Arab Emirates Best Bank for Financing in the Middle East Most Innovative Investment Bank in MENA Best Bank in the UAE Best Brokerage Company (NBAD Securities) Best Consumer Finance Company in MENA (Dubai First) Best Fixed Income of the Year UAE Asset Manager of the Year 48

49 Prestigious awards highlight FAB s strength and industry expertise in UAE and MENA - Best Trade & Supply Chain Finance Solution - Most Outstanding Islamic Banking Window - Digital Leader Award - Government - Best Seamless Government Experience - UAE Asset Manager of the Year - Best Trade Finance Bank in MENA - Sukuk House of the Year - UAE - Best Islamic Deal of the Year - Best Islamic Structured Trade Finance Deal of the Year 49

50 Executed Landmark Transactions in 2017 DCM LCM CA/ECM Abu Dhabi Crude Oil Pipeline USD bn Senior Secured 3.650% due % due 2047 Joint Global Coordinator & Joint Bookrunner October 2017 Government of Abu Dhabi USD 10.0 bn Senior Unsecured 2.500% due % due % due 2047 Joint Bookrunner October 2017 APICORP USD 500 mn Senior Sukuk 3.141% due 2022 Joint Bookrunner October 2017 Emaar Development USD 1.5 billion Murabaha Facility Sole Coordinator, Sole Bookrunner & Security Agent September 2017 Dubai Metro Department of Finance USD 1.1 billion Term Loan Facility Mandated Lead Arranger & Facility Agent August 2017 Saudi Electricity USD 1.75 billion Term Loan Facility Mandated Lead Arranger & Bookrunner August 2017 ADNOC USD 6 billion Term Loan Facility Joint Coordinator, Mandated Lead Arranger & Bookrunner November 2017 Vedanta Resources USD 1.0 bn Senior Unsecured Notes 6.125% due 2024 (7NC4) Joint Global Coordinator and Joint Bookrunner July 2017 National Bank of Kuwait USD 750 mn Senior Unsecured Notes 2.750% due 2022 Joint Bookrunner May 2017 Government of Indonesia USD 3.0 bn Senior Unsecured Dual Tranche Sukuk 3.400% due % due 2027 Joint Bookrunner March 2017 Kuwait Food USD billion Term Loan Facilities Sole Bookrunner, & Facility Agent June 2017 African Export-Import Bank USD 1.65 billion Term Loan Facility Mandated Lead Arranger & Bookrunner June 2017 Reliance Industries USD 1.75 billion Term Loan Facility Mandated Lead Arranger & Bookrunner March 2017 ADNOC Distribution USD 2.25 billion Term Loan Facility Sole Coordinator, MLA, Bookrunner and Facility Agent November 2017 Majid Al Futtaim USD 500 mn Reset Subordinated Notes 5.500% Perpetual NC5.5 year Joint Bookrunner February 2017 Government of Hong Kong USD 1.0 bn Senior Sukuk 3.132% due 2027 Joint Bookrunner February 2017 Oman Telecommunications USD 600 million Term Loan Facility Mandated Lead Arranger & Bookrunner May 2017 Vedanta Plc USD 575m Term Loan Mandated Lead Arranger & Bookrunner 2017 EMAAR Development AED 4.8bn Initial Public Of f ering Joint Global Coordinator, Joint Bookrunner & Lead Receiving Bank Nov ember

51 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 Scan to download Join the movement at GrowStronger.com