Jordan Ahli Bank. Investor Relations

Transcription

1 Jordan Ahli Bank Investor Relations

2 Disclaimer This presentation does not constitute or form a part of an offer or solicitation of an offer, invitation, recommendation to subscribe for or purchase any of the products or services mentioned herein, buy or sell securities, or enter into any transaction. The sole purpose of this investor presentation is to provide useful information to investors. The information herein is not intended to be used as a general guide to investing and does not constitute investment advice or as a source of any specific investment recommendations as it has not been prepared with regard to the specific investment objectives, financial situations or particular needs of any particular person. This presentation does not contain all information that is material to investors. By attending the meeting by which this presentation is made or by reading this presentation you agree to be bound by the following limitations. Material provided in this presentation is general background information about the processes and activities performed by the Jordan Ahli Bank, current at the date of the presentation, and believed accurate by Jordan Ahli Bank. Information is provided in a summarized form and does not contain complete content. Some relied on information contained in this presentation has been obtained from sources considered by Jordan Ahli Bank to be reliable in all material respects. However, the accuracy, fairness and completeness thereof are not guaranteed by Jordan Ahli Bank and its employees and its third-party suppliers shall have no liability for errors or omissions with respect to the service or its delivery, regardless of the cause or source of such error or omission. Recipients of this presentation must determine for themselves what reliance they should place on financial statements, forecasts and assumptions and should not make any investment decision solely based on the information contained in this presentation. You are advised to exercise your own independent judgment (with the advice of your professional advisers as necessary) with respect to the risks and consequences of any matter contained herein. Jordan Ahli Bank expressly disclaims any liability and responsibility for any damage or losses you may suffer from your use of or reliance on the information contained herein. Jordan Ahli Bank does not undertake any obligation to update or revise the information contained in this presentation to reflect events or circumstances occurring after the date of this presentation or to reflect the occurrence of unanticipated events. This presentation is a copyright of Jordan Ahli Bank and should not be reproduced or redistributed partially or fully in any shape or manner without the written consent of Jordan Ahli Bank. 2

3 Contents Jordan s Macro Outlook Jordan Ahli Bank Overview The Main Key Drivers Our Commitment to Corporate Governance DNA Program Outcomes Our Subsidiaries Innovation and Fintech An Investment Opportunity Board of Directors Members Executive Management Members Key Financial Achievements Financial Performance Share Information Jordan Ahli Bank Rating Our Commercial Correspondent Worldwide Network Awards 3

4 Jordan s Macro Outlook The unfolding of the global financial crisis during 2008 had its toll on many countries, Jordan was no exception. Its real GDP growth slipped 5 percentage points to reach around 3% in In 2011, yet another major exogenous shock hit Jordan s economy, namely; what came to be called the Arab Spring, particularly, the Syrian crisis, which presented major economic, political and social challenges, the effect of which are still present today. In the wake of these unfortunate events, Jordan responded by introducing major political and economic reforms supported by the wise leadership of H.M. King Abdullah II. Political reforms included the establishment of the Constitutional Court and the Independent Commission for Elections. Almost 1/3 of the Constitution was amended by Parliament. Economic reform measures included the withdrawal from generalized subsidies in the energy and water sectors and the redirection of part of the savings to cash transfers that better target the poor and the vulnerable. Further fiscal measures were taken to consolidate Jordan s fiscal balance. In terms of other structural reforms, Jordan is working on removing rigidities in the labor market and enhancing the business environment and good governance as well as access to finance. Jordan s main orientation is to create the right environment for the private sector, domestic and international, to be the main driving force in the economy. Accordingly, Public - Private Partnerships acquire a special significance and the government is active in promoting this mechanism. In Jordan it is believed that non-economic factors such as the rule of law, freedom of expression, and human rights, are equally important in raising productivity. The government will ensure continual efforts towards maintaining international standards in these areas. Finally, on this point, the rate of return on investment projects should be competitive compared to the rates of return in other countries or other regions. The monetary and fiscal policies are anchored in achieving the levels of interest, inflation and real exchange rates consistent with maintaining competitiveness. The process of reform is not inherently popular and policy choices had to be made. The strong political will and leadership of H.M. King Abdullah II made those reforms possible, facilitating negotiations of all measures with Parliament and other sectors of Jordan s civil society. In summary, the reforms aim to maintain macroeconomic stability while performing a major transformation in the role of the public sector from providing privileges such as public employment and subsidies to one of providing basic economic services, social protection, better governance and competitive environment for the private sector. 4

5 Jordan s Macro Outlook Jordan is transitioning from the costly generalized subsidies to targeted forms of social protection. Those reforms are beginning to show the desired results. The budget deficit came down from around 10.3% of GDP in 2014 to an expected 3.2% of GDP in 2017 and an expected 1.8% in GDP real growth rate is expected to be 2.5% in 2018 and 3.0% by Jordan s stock of debt is around 95% of GDP and is expected to decline to 93.5% by end of 2018 and to 77% of GDP by As the above numbers suggest, Jordan seems to be facing the same dilemma that many countries are facing today, namely; fiscal discipline or austerity budgets vs. economic growth. In fact, this need not be the case. It may well be that the opposite is true, namely; that the balance in public finances is an essential ingredient of a competitive investment climate and economic growth. Furthermore, the modest capital spending government budget need not be a constraint to economic growth as there are other sources for economic growth. Raising productivity is one obvious source of growth. Partnership between the public sector and the private sector (Jordanian and International) is another way to increase capital spending. The government has prepared an economic stimulus package over the period which has around 14 capital spending projects, half of which can be implemented in partnership with Jordanian and international private sectors. On the other hand, the Central Bank of Jordan injected liquidity in the banking system, providing financing for MSMEs amounting to US$250 million. The coming period should witness an emphasis on raising the productivity of human resources, continue with Jordan s e-government program, reform the public sector and ensure proper governance, accountability, and the rule of law. Forward looking, political stability, the rule of law, and empowering all sectors of society has added resilience and optimism to Jordan s economy. Furthermore, the educated national force in Jordan compliments the business friendly environment and helps attract FDI flows. Most importantly, wise and humane management, at the highest level of governance is a blessing that Jordan enjoys. Finally, Jordan has demonstrated that despite the difficulties inherent in the reform process, and despite the extraordinary burdens due to the Syrian crisis and other regional crisis, reforms can and should be realized, in order to continue to play its positive and moderating role in the region. 5

6 Jordan: Selected Economic Indicators & Macroeconomic Outlook Real GDP at Market Prices (% Growth) Actual Figures IMF Expectations Government & Government Guaranteed Debt Gross Public Debt (in percent of GDP) Actual Figures IMF Expectations

7 Jordan: Selected Economic Indicators & Macroeconomic Outlook Overall Fiscal Balance Including Grants (in percent of GDP) 2 Actual Figures IMF Expectations Current Account Balance - Including Grants (in percent of GDP) Actual Figures IMF Expectations

8 Jordan Ahli Bank Overview The Beginning of the Journey The Dream of Establishing Jordan Ahli Bank Towards the end of the 1940s, the idea of establishing Jordan Ahli Bank presented itself to the late Yousef Muasher when the migration of Palestinians to Jordan in 1948 put life into the Jordanian market. With the support of the late Suleiman Sukkar, the dream flourished and became a reality in Regional Presence The Bank continued to grow and established its first branch outside Jordan in 1961 in Al-Hamra, Beirut, later renamed Al- Ahli International Bank (AIBL). During H1 2014, Ahli Bank completed the sale of its entire 98% stake in the Lebanese subsidiary (AIBL). In 1971 the Bank continued its overseas expansion perogram to the Gulf region by contributing 25% of the share capital of Dubai Bank LTD, Diversity and Expansion of Services Ahli Bank exercised the first merger of a financial institution in Jordan by adding The Business Bank to its operations, in addition to Philadelphia Investment Bank In efforts to diversify Ahli Bank s operations, Jordan Ahli Bank founded Ahli Microfinance Company (1999), Ahli Brokerage Company (2006), in addition to Ahli Financial Leasing Company (2010).These independent subsidiaries are wholly owned by the Bank. In support of the bank s ambition to embrace innovation in customer experience, products and services, it launched its latest subsidiary, the Ahli Fintech Accelerator (2017). The Bank Today Commencement of Operations On April , the Bank sent a circular to shareholders informing them of the commencement of its operations on April In 1958, the Bank opened a branch in Nablus which was the second of a series of branches and the first in the West Bank. It also raised its capital to JD 1 million. International Reach In 1981, the Bank used a computer for the first time, leading to fast-paced and automated operations. In 1985, the Bank established its first presence outside the Arab world by opening its offshore banking unit in Limassol/Cyprus. Shared Prosperity The Bank today is now focused on becoming a true shared value organization, where a holistic value proposition to customers, employees, regulators, society, and shareholders 8 is coordinated and vastly enhanced.

9 Jordan Ahli Bank Overview Wise leadership, inspired management and ambitious vision for international growth Snapshot Geographical Presence Jordan Ahli Bank caters to numerous segments of the market. It offers innovative and efficient services that deliver added value to meet a diverse range of banking needs with speed while achieving the highest level of customer care and satisfaction. Cyprus One Branch Jordan The Bank s customer dedication and commitment to exceptional service is at the very core of the Bank s identity and culture. Jordan Ahli Bank strives to embody the values of excellence and specialization in all the services and products it offers, both banking and non-banking, and the values of creativity and innovation which drive the Bank s strategy of adapting and growing to meet the changing demands of customers. Palestine 9 Branches 13 ATMs 56 Branches 119 ATMs Wholly Owned Subsidiaries Ahli Microfinance Company was established in 1999 as the first company engaged in microfinance & small business loans in the private sector. Ahli Brokerage was established in 2006 and provides brokerage services and trading in securities listed in the Amman Stock Exchange. Ahli Financial Leasing was established in 2010 to provide financial leasing services to all the production sectors according to a modern financing method and through financing capital assets. Ownership Structure Category Type & Nationality Owners Above 5% Al- Ahli for Financial Technology Private Shareholding Company (PSC) was established in 2017, engaged in providing guidance, advice, startup and growth funding through a platform for fintech startups. 10.3% 3% 15.2% 4.1% 5.50% 10.38% 36.2% 50.5% Individuals Companies Institutions Joint + Organizations +Mutual Funds 80.7% Jordanian Arab Foreign 6.45% 10% Byblos Bank Social Security Corporation Jordan Worsted Mills Ltd Jordan Investor Center 9

10 Jordan Ahli Bank Overview Our Vision, Mission and Values Vision Mission Values We are committed to improve the financial inclusion and prosperity of the communities we serve, to innovate profound customer experience and value, to earn the loyalty of our employees, and to provide shareholders with the sustainable growth and return on their investment. A specialized financial solutions provider that delivers valuable services through, innovation, operational excellence, and customer centricity. Shared Prosperity Transparency and Credibility. Customer Centricity. Full commitment to the laws, regulations and best practice corporate governance principles Creating a corporate culture that embraces innovation Superior Employee Experience 10

11 The Main Key Drivers Corporate Governance Framework Comply with international standards of corporate governance framework audited by third party Ensure complete separation of duties between the role of the board of directors and the executive team Embracing a culture of full disclosure and transparency The composition of the board of directors includes fully independent board members as per global best practices Extremely active and effective BOD and sub-committees, with charters, KPIs, and regular self assessment A very strong executive team with low succession planning risk Shared Prosperity Framework A clear and measurable value proposition to all key stakeholders including local communities, regulators, customers, employees and shareholders Global Market Leadership opportunity to lead the shared value agenda for financial services Financial inclusion as a strategic goal Ethical business framework An advanced CSR function, with GRI reporting Close and continuous engagement with all stakeholders Innovation and Fintech A brand new, state of the art IT Enterprise Infrastructure (T24) Centralizing and automating bank operations Soon to deploy our new, seamless omnichannel experience 2 nd bank in the region to launch an API Sandbox to encourage innovation and integration with fintech startups Heavy focus on creating superior Employee Experience (EX) and Customer Experience (CX) as the banks redesigns its operational model Launched Ahli Labs to attract intrapreneurship, entrepreneurs in residence, and deploy our own IP Launched Ahli Fintech Accelerator to accelerate and invest in the deployment of Fintech startups and technologies with local, regional and global growth potential. 11

12 The Main Key Drivers Robust Balance Sheet Clearing the loan portfolio of bad debt Re-enforcing the debt coverage ratio Targeting quality customers Diversifying our loan portfolio into the three main segments (Retail, SME, and Corporate) Set new concentration limits internally Re-enforce collection efforts Re-enforce liquidating our real estate portfolio Re-enforce internal sources of liquidity Maintain our very wide diverse base of depositors Re-enforce our capital base and CAR Our Balance Sheet is adequately capitalized and provides a sufficient cushion for any unforeseen losses. CASA is now one of our main priorities in order to minimize the effects of the upcoming interest rate hikes. A Sustainable Profit Making Engine Manage the net interest margin Re-enforce the net interest income Re-enforce the non-interest income Making the bank more slim and rationalize the operating expenses Reduce the cost to income ratio to below industry in the medium term Branch and CX model redesign to incorporate superior and efficient customer experience 12

13 Our Commitment to Corporate Governance Board of Directors Trust Integrity Becoming Amongst the best banks in MENA to fully comply with international Corporate Governance standards Regular 3rd party assessment of board governance practices Reliability Transparency Executive Management Clear Separation of Duties Between Board and Executive Team Focus on Long Term Value Creation, Results, and an engaged, accountable, value driven corporate culture 13

14 Enablers Key Board Roles Evaluation Framework for Board of Directors 1. Gaining insight and foresight the Board as a whole and individual board members are aware of key policy, legislation and economic drivers alongside the current and future needs of key stakeholder, opportunities and threats, and the extent to which the organization can effectively respond to these stakeholder needs and environmental conditions. 2. Clarifying priorities and defining expectations the Board has debated, agreed and clearly communicated a set of strategic priorities for the organization and how it expects these priorities to be delivered. 3. Holding to account and seeking assurance the Board is able to understand and critically appraise performance information, holds management to account and is reasonably assured that management is delivering these priorities in line with its expectations. The Board has the right balance of skills, knowledge and experience to govern the company effectively. The Board engages with its internal and external stakeholders on a timely basis. The Board s committee structure is clear and provides members with assurance to discharge their duties effectively. The Boards meeting agenda and forward plan insures that members are focusing on the right areas at the right time. The information received by board members is comprehensive, accurate easy to understand, timely and appropriate. Board members operate effectively as a team, striking the right balance between trust and challenge. The Chairman is an effective leader of the Board. The Board and members of the Board are continually improving as a group and as individuals. All of the above enablers will need to be taken into account in the evaluation framework, which ever approach JAB decides to take. Source: Deloitte 14

15 Our Commitment to Corporate Governance The Board of Directors various subcommittees are delegated with clear responsibilities in line with the Central Bank of Jordan and Jordan Securities Commission Governance regulations and the Bank s strategies and objectives. These committees are detailed as follows: Corporate Governance Committee Strategies & Information Technology Committee Board Facilities (Executive) Committee Audit Committee Risk and Compliance Committee In assessing Jordan Ahli Bank compliance with the Corporate Governance for Listed Shareholding Companies Instructions issued 2017 by Jordan Securities Commission, the audit committee s assessment on work procedures as carried out by the Bank indicates that such procedures are being closely monitored through financial control, internal and external audit, as well as risk and compliance management. Nominations and Remunerations Committee 15

16 DNA Program Outcome Highly robust and effective delivery channels Compliance, Strong Control Environment Shared Service Centers Enable Centralization Automation and STP Customer Centric Design Data Management, Analytics, and BI Highly Configurable Strong Sales and Marketing Capabilities 16

17 Our Subsidiaries Ahli Microfinance Investing in funds and funding sources in financing individuals/small enterprises in industrial, commercial, tourism and services sectors. Relying on assets as a primary source of repayment and guarantee, financial leasing services are carried out through conducting financial and technical studies on the funded assets. Ahli Financial Leasing Ahli Brokerage License to carry out brokerage operations and provide financial services, with continuing development of its brokerage security systems and operating IT systems with enhanced electronic security procedures. Providing guidance, advice, startup and growth funding through a platform for FinTech startups. Locally, regionally and internationally. Ahli Fintech Accelerator Al- Ahli for Financial Technology Private Shareholding Company (PSC) 17

18 Innovation and Fintech Jordan Ahli Bank has formed an Innovation Function in a pioneering move toward reshaping the banking sector in Jordan. This department is focused on developing and enhancing the services the bank offers customers while integrating the latest developments seen in Financial Technology (FinTech) globally, whilst also ensuring the successful implementation of the bank s strategic plans. Successful implementation of FinTech Hackathon competition. The FinTech Hackathon focused on providing youth and university students with a venue to collaborate and showcase their innovative FinTech ideas to a panel of judges, whereby 3 winners were announced and were rewarded for their innovations. Launching Ahlibot, the first banking bot in Jordan. Offers users the opportunity to chat with the bot to learn more about the banking services offered through the bank Launching the Ahli Sandbox. A virtual test environment with dummy data that mimics the bank s internal systems In 2018, the Innovation department will focus on encouraging and structuring internal innovation within the bank by focusing on developing innovative solutions and upgrading the customer experience (CX), and the employee experience (EX). 18

19 Innovation and Fintech Al- Ahli for Financial Technology Private Shareholding Company (PSC) a platform where local, regional and international financial industry startups (both new and well established businesses) can receive guidance, advice, startup and growth funding, as well as various forms of support from Ahli Bank. Bootcamp Access to Ahli Bank Executives Ahli Fintech Accelerator Ability to integrate with banking systems, including product design and user acceptance testing Ability to interface with Ahli Bank Customers 19

20 An Investment Opportunity Key Points Market Position Commentary One of the leading banks in Jordan in terms of size (Assets, Credit Facilities and Customer Deposits). Management/ Management/G Governance Governance Strong governance led by a team of heavily experienced management, along with an ambitious and highly qualified board of directors. Financial Performance High revenues in 2016 and 2017 enabled the bank to take aggressive provisions to improve the strength and quality of its portfolio and debt coverage ratios. Asset Quality Substantial improvement in credit policies and asset quality across all segments. Liquidity/Capita Capitalization Capitalization Reasonable capitalization along with strong liquidity levels ALM Continuously working to achieve the optimal Cost-to-Income ratios by lowering Cost of Funds, increasing revenues, and controlling expenses 20

21 Board of Directors Members Mr. Saad Nabil Mouasher Chairman H.E. Dr. Umayya Salah Toukan Vice Chairman Independent Members Byblos Bank Jordan Investor Center Muasher Investment and Trading Company Rep. Mr. Alan Wanna Rep. H.E. Mr. Wasef Azar Rep. Mr. Imad Mouasher Rajai Muasher and Brothers Company Rep. Mr. Rafiq Muasher ZI&IME Saudi Company The Social Security Corporation Rep. Mr. Aladdin Sami Rep. Ms. Areej Obaidat Mr. Nadim Muasher Mr. Mahmoud Malhas Member Member Mrs. Ibtissam El Ayoubi Member Independent Mr. Tarek Jallad Member Independent Unprivileged Support Dr. Tarek Hammouri Member Independent 21

22 Executive Management Members CEO/ General Manager Deputy CEO/ General Manager Treasury, Investment and Financial Institutions Operations and Shared Services Center Human Resources and Logistics Innovation Finance Corporate Banking and Project Finance Small and Medium Enterprise Banking Foreign Branches Manager Consumer Banking Services Remedial Credit Risk Management Compliance Internal Audit Mr. Mohammad Musa Daoud Dr. Ahmad Alhussein Ms. Lina Bakhit Mr. Rami Da na Mr. Mohammad Bashar Albakri Mr. Rami Al Karmi Mr. Basel Al Naber Mr. Jafar Majdalawi Mr. Ammar Al Said Mr. Tareq Imaish Mr. Zeid Al Khateib Mr. Esam Qaqeesh Mr. Mouin Bahou Dr. Micheal Numan Mr. Khalid Abu Esh-Shaer Mr. Iyad Ammari 22

23 Key Financial Achievements 2017 Gross Income and Interest Revenues witnessed a positive growth of 2.4% and 5.4%, respectively, despite the Central Bank of Jordan s multiple interest rate hikes. Our cost control strategy began to bear fruit in 2017 where employee expenses dropped more than JD 3 million (i.e 7%). Provisions for impaired credit facilities also dropped significantly from JD 24 million to JD 11.9 million, as a result of our aggressive loan-book cleanup that we have adopted during the past two years. Operating profits increased significantly by 145%. Our Cost-to-Income ratio dropped from 69.3% to 68.0% and we are working towards levels that are lower than the industry average. An improvement in our asset base as the Net Credit Facilities to Total Assets has increased from 51.4% to 54.4%, marking an ideal utilization of funds which leads to a higher profitability. Rebalancing our loan book with an increased exposure to Real Estate lending (30% of total credit facilities extended). Credit risk exposure is concentrated in Jordan due to the geopolitical unrest in the region and challenging operating environment. Significantly lower NPLs (25% decline) which led to an NPL ratio of 8.8% vs %, in line with our loan book cleansing strategy. Our Debt Coverage ratio is also higher 83.8% compared to 70.1% which is also a direct outcome of lower NPLs. Capital Adequacy Ratio marked 14.12% as of the end of 2017 which was the result of a JD25 million Subordinated Debt that was issued in October to boost our Tier 2 capital. JABs leverage (11.2%) remained comfortable above the CBJ s minimum regulatory ratio of 6%. A higher Loan-to-Deposit ratio of 77.3% compared to 70% which supports higher interest revenue and profitability. 23

24 Overall Financial Performance as of 31/12/2017 Balance Sheet Items JD million % Change Total Cash & Equivalents Balance % Net Credit Facilities - NCF 1, , % Financial Assets % Total Assets 2, , % Customer Deposits 2, , % Shareholder's Equity % Paid-up Capital (par JD1) % Financial Highlights Key Ratios Loan to deposit ratio - LTD 68.9% 70.0% 77.3% Capital Adequacy Ratio - CAR 16.3% 13.33% 14.12% Non-Performing Loan Ratio 10.9% 11.35% 8.8% Coverage Ratio 65.6% 70.1% 83.8% Cost to Income Ratio 61.6% 69.3% 68.0% NCF to Total Assets 49.2% 51.4% 54.4% Liquid Assets to Total Assets 43.5% 42.0% 38.3% ROE 7.3% 2.1% 4.3% ROA 0.9% 0.2% 0.5% Dividend Payout per Share 10.0% 5.0% 5.0% Income Statement Items JD million % Change Interest Revenue % Net Int. and Com. Revenue % Gross Income % Provision for impaired C.F % Total Expenses % EBT and Provisions % Income before tax % Net Profit % Highlights Jordan Ahli Bank is the 6 th largest commercial Bank in Jordan with USD$ 3.85 billion in Total Assets. Our growing credit portfolio, along with significantly lower provisions, have contributed greatly to the 112% growth in Net Profits Jordan Ahli Bank has been very aggressive during the past two years with regards to provisions due to stronger deposits and a healthier credit portfolio which enabled us to improve the quality of our loan book. Several interest rate hikes in 2017 placed great pressure on the entire Jordanian banking sector, however we were able to mitigate financial impact through expanding our credit portfolio and strategically managing our customer deposits. 24

25 Asset Quality and Liquidity as of 31/12/ % Credit Performance Ratios 70.1% 83.8% Asset Liquidity 51.4% 49.2% 43.5% 42.0% 54.4% 38.3% 10.9% 11.4% 8.8% Non-Performing Loan Ratio Coverage Ratio NCF to Total Assets Liquid Assets to Total Assets Net Credit Facilities to Deposits Ratio Highlights 2, , , , % 70.0% 68.9% 1, , , % 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% Jordan Ahli Bank began reaping the benefits of its aggressive provisions strategy that was implemented in 2016 whereby our NPL ratio dropped from 11.4% in 2016 to 8.8% in 2017, in addition to an improved coverage ratio of 83.8 registered in 2017 compared to 70.1% in Continuous efforts towards larger settlements and recoveries, which will further reduce our NPL ratio. In an environment where other financial institutions are withholding from extending credit facilities, Jordan Ahli Bank managed to extend JD 37 million in 2017, registering an LTD ratio of 77.3%. Customer Deposits NCF to Deposits Ratio Maintaining a liquid yet balanced allocation of assets to ensure optimal distribution of funds and securing higher profitability. 25

26 Operating Performance and Profitability as of 31/12/2017 Cost to Income Ratio Profitability (JD Million) % 68.0% 63.7% % Income Breakdown (JD Million) Earnings Before Tax and Provisions Net Profit Gross Income Net Commission Revenue Net Interest Revenue Non Interest and Commission Income 26

27 Net Interest Revenue Breakdown as of 31/12/2017 Interest Revenue Breakdown (JD Million) Interest Revenue Interest Expense Net Interest Revenue Expenses Breakdown (JD Million) Employees expenses Depreciation & amortization Other expenses Provisions for impairment losses on DCF Impairment on assets seized by the Bank 27

28 Loan Book and Funding Breakdown as of 31/12/2017 Gross Loan Breakdown Liabilities Breakdown 11% 18% 68% 11.4% 79% 7% 3% 1.4% 0.8% Loans and Promissory Notes Real Estate Loans (Retail) Overdraft Accounts Government and Public Sector Credit Cards Customer Deposits Cash Margins Other Liabilities Banks and Fis Deposits 28

29 Customer Deposits Breakdown as of 31/12/2017 CASA and Time Deposits (JD Million) With the recent interest rate hikes in Jordan, Jordan Ahli Bank is working to lower its cost of funding through introducing new Saving Account products which have significantly lower costs. This strategy will lower interest expense paid and widen our customer base to reach the optimal mix of CASA vs. Time Deposits 1,782 2,067 1, % 62.22% 60.83% 12.53% 12.49% 15.75% 28.04% 25.28% 23.41% Current and Call Accounts Saving Deposits Time Deposits 29

30 Credit Facilities as of 31/12/2017 Credit Facilities by Sector (JD Million) Financial Industry Trade Real Estate Agriculture Public Facilities and Services Stocks Individuals Government Other Credit Facilities by Segment (JD Million) % 1% 45% % 1% 44% Highlights All sectors are considered essential for building a healthy and well diversified portfolio, however we are focused on the Trade Sector as well as Real Estate due to their relative low risk and sustained profitability demonstrated over the years. 43% 44% Individuals and Corporate lending remains to be dominant, while we remain keen on expanding our SME portfolio. Corporates Individuals SME's Government and Public Sector 30

31 Assets Breakdown as of 31/12/2017 Balance and deposits at banks and FIs 7% Other 7% Cash and Balance at Central Banks 11% Corporate Bonds 11% Loans 54% Investments 21% Equity 5% Bonds 95% Treasury Bills & Bonds 89% JOD 2,729 m JOD 573 m JOD 543 m 31

32 Provisions Evaluation as of 31/12/2017 Credit Facilities Provisions Breakdown % 2% 12% 2% 22% 64% 26% 60% Net Operating Income (Excl. Provisions) (JD Million) Corporates Individuals SME's Property Loans Total Provisions to Total Expenses (%) % 12.1% Gross Income Operating Expenses excl. Prov Total Expenses Provisions 32

33 Risk Ratios as of 31/12/ % Cost of Risk CoR 5.65% 5.65% Risk Weighted Assets RWA JD Millions 1,731 1,961 2, % 13.33% 14.12% Capital Adequacy Ratio CAR

34 Ahli Bank Growth Against Sector and Peers as of 31/12/2017 Earnings Before Interest Rate and Tax Total Expenses Provisions for Impaired Credit Facilities % 18.00% 74.90% 6.80% 35.20% 4.80% -3.20% Ahli Bank Peers Sector -8.70% Ahli Bank Peers Sector % Ahli Bank Peers Sector Coverage Ratio Cost of Risk 83.77% 85.12% 5.65% 4.42% 3.94% 81.99% Ahli Bank Peers Sector Ahli Bank Peers Sector 34

35 Ahli Share Information Ahli Share Price / (High, Closing & Low) Mar-18 High Low Closing Price 15% Dividend Payout (Dividend per Share) Highlights 10% 10% 10% 10% 10% 10% 8% 6% 5% 5% JD million Dec Dec Price - JD/share Market Capitalization - JD Earnings per share (EPS) - JD Book Value per share (BVPS) - JD Price to Earnings (P/E) - times Price to Book Value (P/BV) - times Dividend per Share - % 5.00% 5.00% Dividend Yield - % 4.35% 4.24% 35

36 Ahli Share Information Ahli Share Price vs. Banking Index ( % Change) 15.0% 10.0% 10.4% 5.0% 0.0% -5.0% -2.6% 2.7% -0.8% -7.9% 0.9% 3.4% -0.8% -2.5% 0.9% 3.4% 2.5% -0.8% -10.0% January February March April May June July August September October November December January February March Ahli Closing Banking Index Ahli Dividend Yield (%) 8.13% 8.85% 8.20% 6.99% 7.58% 8.00% 6.41% 5.22% 4.35% 4.24% 3.42% * Jordan Ahli Bank distributed a 10% stock dividend in 2012, 5% in 2016, and 5% in Highlights Jordan Ahli Banks share price has been fairly more volatile than the Banking index itself. This however is an opportunity for investors to capitalize on such movements as the ASE Index has been relatively flat for the past 3 years, averaging 2,144 points. Jordan Ahli Bank s dividend yield has historically exceeded the market and proved to be a sound and profitable investment for long term investors. 36

37 Ahli Share Performance Market Cap. JOD Total Volume Annual Share T.O - % P/BV ,500,000 15,673, % ,300,000 12,438, % ,000,000 50,125, % ,750,000 10,623, % ,250,000 12,418, % ,825,000 11,978, % 0.71 March ,850,000 2,440, % Annualized 0.74 * Free Float of Shares is 60.2% as of March

38 Jordan Ahli Bank Rating Capital Intelligence Ratings Has affirmed the Financial Strength Rating (FSR) of Jordan Ahli Bank at (BB) with a "Negative Outlook" changed from "Stable Outlook" in June Current Last Changed from Sovereign Long-Term Short-Term Outlook Foreign Currency Long-Term Short-Term Financial Strength Support Outlook Foreign Currency Financial Strength BB- B Negative BB- B BB 3 Negative Negative BB B Stable BB B BB 3 Stable Stable Dec 13 - May 17 Dec June 17 June 17 Rating Drivers Rating has been supported by the following factors: Abundant liquidity Long established franchise has been one strong factor Market Share growth in Jordan (Loans, Customer Deposits) Moderate increase of Loan-Loss Reserve coverage for Non-Performing Loans (NPLs) Rating has been constrained by the following factors: A high Non-Performing Loans to gross loans ratio despite a decline was noted in the first half of 2017; still high related party lending Capital adequacy ratio (CAR) dropped significantly, following Basel III implementation Dividend payout ratio sharply increased Below sector average profitability metrics (Weakened markedly in 2016) Low internal capital generation due to very high dividend payout ratio (as mentioned in Point No 3) Comparatively high concentration in Jordan sovereign debt Challenging Domestic and regional operating environment 38

39 Jordan Ahli Bank Rating Rating Rational Credit Adequacy Ratio (CAR) The bank's CAR declined to a just adequate level in 2016, mainly owing to the combination of significantly lower net profit together with substantially higher dividend payout ratio. The implementation of Basel III in September 2016 together with accelerated growth in risk-weighted assets also negatively affected the CAR CAR rebounded to a satisfactory level after the issuance of 25M JOD subordinated Bond in October 2017 Liquidity JAB s liquidity position remains solid JAB continues to have a very sound liquid and net liquid asset ratios, mainly a reflection of very low usage of interbank funds, together with large holdings of Jordanian government securities. Performance Outlook The bank's operating profitability will continue to be pressured by a high cost structure and reduced NIM, the later due to declining spreads on government securities as well as increasing funding costs. Management will continue to address the relatively high level of NPLs by write-offs and off-balance sheet transfers of NPLs, which will reduce NPL ratio. Cautious lending policy is being maintained by the management as well as preserving capital policy. Development of retail lending is expected to improve loan granularity over time and concurrently diversify credit risk and revenue stream. 39

40 Our Commercial Correspondent Worldwide Network *Jordan Ahli Bank has a large number of strategic ties with more than 100 prime banks in all six continents. 40

41 Awards Best Bank for Small and Medium Projects by JFEX Awards Payment Card Industry Data Security Standard (PCI DSS) V3, by the PCI Security Standards Council (PCI SSC) SME Financing Excellence Award granted by the World Union of Arab Bankers Golden Award of Excellence in Corporate Social Responsibility by the Arab Organization for Social Responsibility Most Active Issuing Bank in the region by the EBRD Trade Facilitation Program Best Creativity Award by the Pan Arab Web Awards Academy in association with Microsoft Corporation and the Business Software Alliance 41

42 Ahli Investor Relations P.O. Box: 1578 Amman Jordan Tel: Fax: Useful Links Securities Depository Center Jordan Securities Commission Central Bank of Jordan Ministry of Industry, Trade and Supply Amman Stock Exchange Corporate Governance Guidelines ahli.com/corporategovernance