INVESTOR PRESENTATION November 2017
Disclaimer Please note that FAB pro forma consolidated financials at 30 September 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 reviewed consolidated interim financial statements as at 30 September 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
Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q3/9M 17 Financial Review Based on Pro forma financial information as of 30 September 2017 3
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 Superior asset quality and cost efficiency and strong internal capital generation capacity Excellent progress made so far in robust and ambitious 18-24 month integration journey Set to realise substantial synergy potential by 2020 4
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 Q3 17 Appointment of CIO and external consultants Appointment of Senior Leadership team Integration Steering Committee (ISC) and Integration Management Office (IMO) established 7 th Dec Merger approved by shareholders at General Assembly Meetings 24 th April Name change from National Bank of Abu Dhabi to First Abu Dhabi Bank (FAB) approved by shareholders at General Assembly Meeting Finalisation of organisational structure and operating model Brand roll-out across local and international network 11 th Dec Filing of special resolution and start of credit objection period 5
FAB at a glance Overview 19 Countries presence (ex UAE) 115 Branches in UAE 625 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 644 Bn) and market capitalisation (AED 111 Bn) Offers extensive range of products and services via market-leading Corporate and Investment Banking (CIB) and Personal Banking (PB) franchises Domestic network: 115 branches and 625 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 30 September 2017 1 - Moody s/s&p/fitch 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 111 Bn (USD 30.3 Bn) Foreign Ownership Limit: 25% Strong shareholding structure 3 ADIC 33.5% Foreign (ex-gcc) 9.2% GCC (ex-uae) 1.4% Mubadala 3.7% Other UAE companies and individuals 52.2% Index Weightings 2 Abu Dhabi Securities Market Index ADSMI 34.9% Bloomberg GCC 200 financial Index BGCCFIN200 4.0% Bloomberg EMEA Banks Index BEUBANK 1.8% 1 - Includes 43 Mn Treasury shares 2 - As on 30 September 2017 3 - Ownership structure as of 30 September 2017, based on shares outstanding (net of treasury shares) 7
Leading UAE and regional bank Banking sector assets 1 (USD Bn) National champion 2 9M 17 Net Profit (USD Bn) Total Assets 1 (USD Bn) Equity 1 Market Cap 3 (USD Bn) (USD Bn) Credit Ratings (Moody s/s&p/fitch) 720 2.2 175 27.0 30.3 Aa3 / AA- / AA- UAE 609 1.9 119 16.4 27.4 A1 / BBB+ / A- KSA 367 2.8 218 21.0 30.9 Aa3 / A / A+ Qatar 209 0.8 85 10.5 14.8 Aa3 / A+ / AA- Kuwait Bahrain 189 0.5 34 4.3 5.3 NA / BBB / BBB+ Oman 81 0.3 29 4.7 2.8 Baa2 / BB+ / BBB 1 - Company and Central Bank information as of latest reported for 30 September 2017, except for Banking Sector Assets for Kuwait and Oman (31 August 2017) 2 - Defined as the largest bank in the country by total assets 3 - Based on 30 September 2017; Source Bloomberg 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 9
Talented and Experienced Senior Leadership Abdulhamid M. Saeed Group CEO Andre Sayegh Deputy Group CEO & Group Head of CIB Zulfiqar Sulaiman Group Chief Integration Officer & Acting Group Head of International Banking 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 Khalaf Al Dhaheri Group Chief Operating 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 10
Strategy built on core strengths 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) 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 % 9M 17 Group revenue 49% 35% 6% 10% 12
Prestigious awards highlight FAB s strength and industry expertise Best FX provider in UAE Best Overall Bank for Cash Management Best Bank for Liquidity Management in MENA Best Investment Bank in the United Arab Emirates Best Bank for Financing in the Middle East Best Bank in the UAE Most Innovative Investment Bank in the MENA region 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 Best Fixed Income of the Year UAE Asset Manager of the Year 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 13
Leading market position FAB dominates GCC and MENA league tables 1 ytd with market share double of nearest peer 14.3% Market share GCC loan league tables 12.7% Market share MENA loan league tables FAB ranked amongst world s safest banks 2 #1 safest bank in UAE and Middle East #4 safest bank in Emerging Markets #17 safest commercial bank worldwide #31 safest bank worldwide 1 - Bloomberg 2 - Global Finance 2017 rankings 14
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) 634.4 649.1 660.4 624.6 644.1 339.4 334.4 345.2 321.3 328.3 362.6 379.2 393.9 377.3 378.9 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 TANGIBLE EQUITY (AED Bn) OPERATING INCOME (AED Mn) NET PROFIT (AED Mn) 69.2 71.9 68.0 70.7 73.3 5,468 5,102 5,188 4,686 4,611 3,184 2,854 2,926 2,562 2,605 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 15
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) (%) 2.4 2.4 2.2 2.2 2.2 2.8 2.7 2.6 3.2 3.0 118.5 124.6 121.8 111.6 109.0 28.4 28.3 27.2 27.5 27.6 9M'16 FY'16 Q1'17 H1'17 9M'17 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 9M'16 FY'16 Q1'17 H1'17 9M'17 NON-INT INC / REVENUES (%) CET1 & CAR (%) ROTE (%) RORWA (%) CET1 CAR 38.7 34.4 38.3 32.1 31.0 17.1 16.6 17.1 17.8 18.0 15.9 15.7 16.1 14.8 14.3 2.2 2.3 2.4 2.2 2.2 13.8 13.3 13.8 14.4 14.6 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 9M'16 FY'16 Q1'17 H1'17 9M'17 9M'16 FY'16 Q1'17 H1'17 9M'17 16
Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q3/9M 17 Financial Review Based on Pro forma financial information as of 30 September 2017 17
A robust 18-24 month integration journey 2016 2017 2018 / 2019 Q3 Q4 Q1 Integration Execution Integration roadmap execution Synergies realisation Mobilisation Integration Design & Planning Staff relocation IT & Operations integration Full organisation structure & operating model Culture and change management Day 1 readiness Branding Day 1 18
Excellent progress since merger completion Finalisation of organisational structure and operating model Harmonisation of Group policies and risk framework IT system integration on track Integration of subsidiaries progressing well Network optimisation underway Merger benefits materialising ahead of plan Network and channel re-brand in progress 19
Network and channel re-brand in progress Headquarters Business Park, Abu Dhabi Rebranded ATMs/ CDMs FAB Metro Station Dubai 20
Merger benefits materialising ahead of plan Cost synergies In AED Ahead of plan at ~AED 280 Mn ytd, already exceeding FY 17 guidance of ~AED 250 Mn ~280Mn ~250Mn Cost synergies realised to-date represent 28% of 2020 annual run-rate target of AED 1 Bn YTD as of Sep'17 2017 guidance ~385Mn In AED One-time integration costs 268Mn Well under control at AED 268 Mn ytd In line with FY 17 guidance of ~AED 385 Mn YTD as of Sep'17 2017 guidance 21
Validated synergies significantly higher than preliminary assessment Cost synergies validated at ~AED 1Bn 1 up from preliminary assessment of AED 500Mn % of smaller bank cost base 50% Benchmark 2 ~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 2017 2018 2019 2020 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 - April 3 rd 2017 merger update 2 - Based on European banks mergers average 22
One-time integration costs revised higher, yet compare favorably with benchmark One-time integration costs revised to ~AED 1.1Bn 1 vs. preliminary assessment of AED 600Mn % of validated cost synergies 110% Benchmark 2 120 140% 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% 2017 2018 2019 Target Phasing 35% 35% 30% Integration costs exclude strategic investments in key enablers, estimated at ~AED 350Mn over the next 3 years 1 - April 3 rd 2017 merger update 2 - Based on European banks mergers average 23
Laying the right foundation for long term sustainable growth How we will measure our success by 2020 1 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 1 14-15% 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) 24
Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q3/9M 17 Financial Review Based on Pro forma financial information as of 30 September 2017 25
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 3 +5.6% 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 3 2016e 2017f 2018f Real GDP Growth (% change) 3.0 1.3 3.4 Nominal GDP (USD Bn) 349 379 401 Qatar 166 Inflation (CPI, % change) 1.8 2.1 2.9 Mining and quarrying 17% Kuwait 118 General govt revenue (% GDP) 28.5 26.8 27.3 Construction and Real Estate 17% Others 5 31% Oman Bahrain 72 34 General govt expenditure (% GDP) 32.6 30.4 29.5 Fiscal balance (% GDP) (4.1) (3.7) (2.2) Gross Debt (% GDP) 20.7 20.7 20.8 1 - OPEC; boe (barrel of oil equivalent) (December 2016) 2 - Federal Competitiveness and Statistics Authority, 2016 Nominal GDP 3 - IMF World Economic Outlook, October 2017 4 - WAM 5 - Others include Agriculture, Utilities, Transportation, Communication, Government and Other activities 26
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 Sep'17 Other Macro Indicators 2017f Debt/GDP 1 (%) UAE PMI in Expansionary Territory 2 60 17.0 20.7 Saudi Arabia 27.1 44.5 54.4 90.6 UAE Kuwait Oman Qatar Bahrain 55 50 45 40 55.9 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 5 AED 129 Bn Net Deposit Surplus as of Sep 17 3 EIBOR Vs LIBOR (%) AED Bn 108% 350 103% 104% 300 98% 100% 98% 100% 96% 94% 92% 90% 94% 94% 92% 250 200 150 100 50 0 (50) (100) 16-17 1-71 -35 18 Net Deposit Surplus/ Deficit -1 69 100 139 85 96 L/D ratio, net 129 110% 100% 90% 80% 70% 60% 50% 0.0 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 1 - Source: IMF World Economic Outlook October 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 3 - UAE Banking Indicators have been adjusted retrospectively in order to reflect accounting adjustments related to the National Housing Loan Program 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 LIBOR 3M EIBOR 3M E-L Spread (RHS) 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 27
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 4 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* 29% 41% Oil GDP Target real GDP 6 51% Non-Oil GDP 64% 2005 2016 2030 Target Economic Structure and Performance 1 2014 2015 2016 Real GDP growth (% change) 4.4 4.9 2.8 Nominal GDP (USD Bn) 261 212 198 Inflation Rate (CPI, % change) 3.2 4.3 2.0 Revenue/ GDP 39.6 34.1 36.2 Expenditures/ GDP 39.4 39.4 39.8 Balance/ GDP 0.2 (5.3) (3.6) 1 - Abu Dhabi 2017 Bond Prospectus, Statistical Year Book of Abu Dhabi, (SCAD) July 2017, preliminary estimates 2-2017 forecasts - Source: IMF World Economic Outlook (October 2017) 3 - IMF, 2016 (assuming Abu Dhabi is a separate country) 4 - IMF quoted by Reuters, November 2017 5 - S&P Abu Dhabi, February 2017 6 - Abu Dhabi Economic Vision 2030, SCAD 28
Dec'15 Government Public Sector/GREs Private Sector NBFI Non-Residents Dec'16 Government Public Sector/GREs Private Sector NBFI Non-Residents Sep'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%; full implementation by 2019 Figures in AED Bn Sep 17 Dec 16 YTD Sep 16 YoY Total Assets, net 2 2,530 2,485 1.8% 2,423 4.4% Loans and Advances, net 2 1,467 1,446 1.5% 1,439 1.9% Customer Deposits 2 1,596 1,542 3.5% 1,488 7.3% LDR 2 92% 94% -200bps 97% -500bps Lending to Stable Resources Ratio 3 86.0% 86.2% -20bps 88.2% -220bps CAR 4 18.7% 18.9% -20bps 18.6% +10bps Tier 1 capital 4 17.1% 17.3% -20bps 16.3% +80bps 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 15 +28 +57 +0.1 +28 Dec 16 +36 +15 +11 +3 Sep 17-23 -11 1,452 +6.2% 1,542 +3.5% 1,596 +6 +16 +55 +17 + 9 +15 +1 +13-6 -12 26% 28% 1,466 +6.0% 1,554 +1.7% 1,580 1 - Based on Sep 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 29
Contents 01 Introducing FAB 02 Integration Journey 03 Operating Environment 04 Q3/9M 17 Financial Review Based on Pro forma financial information as of 30 September 2017 30
Q3/9M 17 Summary Financials Nine Months Quarterly Income Statement - Summary (AED Mn) 9M'17 9M'16 YoY % Q3'17 Q2'17 QoQ % Q3'16 YoY % Net interest Income 9,565 10,079-5 3,182 3,180 0 3,350-5 Fees & commissions, net 2,429 2,918-17 788 860-8 979-20 FX and investment income, net 2,299 1,450 59 552 598-8 581-5 Other non-interest income 191 753-75 89 49 82 558-84 Total Operating Income 14,484 15,201-5 4,611 4,686-2 5,468-16 Operating expenses (4,259) (4,370) -3 (1,344) (1,399) -4 (1,473) -9 Impairment charges, net (1,822) (2,074) -12 (562) (620) -9 (707) -21 Non Controlling Interests and Taxes (310) (289) 8 (100) (105) -5 (103) -4 Net Profit 8,093 8,468-4 2,605 2,562 2 3,184-18 Basic Earning per Share 1 (AED) 0.95 1.00-5 0.92 0.90 2 1.13-19 Balance Sheet 2 - Summary (AED Bn) Sep'17 Dec'16 Ytd % Jun'17 QoQ % Sep'16 YoY % Loans and advances 328.3 334.4-2 321.3 2 339.4-3 Customer deposits 378.9 379.2 0 377.3 0 362.6 4 CASA (deposits) 112.4 108.5 4 113.5-1 109.8 2 Total Assets 644.1 649.1-1 624.6 3 634.4 2 Equity (incl Tier-1 capital notes) 99.1 97.0 2 96.6 3 91.4 8 Tangible Equity 3 73.3 71.9 2 70.7 4 69.2 6 Key Ratios (%) 9M'17 9M'16 YoY (bps) Net Interest Margin 1 2.22 2.43-21 Cost-Income ratio (ex-integration costs) 27.6 28.4-80 Cost of Risk (bps) 1 71 79-8 Non-performing loans ratio 3.0 2.8 19 Provision coverage 109.0 118.5-954 Loans-to-deposits ratio 86.6 93.6-696 Return on Tangible Equity 4 (RoTE) 14.3 15.9-169 Return on Risk-w eighted Assets (RoRWA) 2.2 2.2 0 CET1 ratio 14.6 13.8 79 Capital Adequacy ratio 18.0 17.1 91 1 - 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 346 Mn 9M 17) and amortisation of intangibles 31
Q3/9M 17 Key Performance Highlights Solid 3 rd quarter results with Net Profit up 2% sequentially; 9M 17 Group Net Profit up 2% yoy excluding gains on sale of properties Solid risk-adjusted returns reflecting successful balance sheet optimisation Excellent progress in integration journey, merger benefits materialising ahead of plan Strong fundamentals: healthy asset quality, ample liquidity and strengthened capital position On track to meet full year financial targets 32
Solid risk-adjusted returns reflecting successful balance sheet optimisation Sep'16 Sep'17 In AED Bn Successful balance sheet optimisation led to 3% yoy reduction in RWAs while total assets grew 2% 634.4 +2% 644.1 507.7-3% 494.1 Total Assets RWAs Solid risk-adjusted returns with RoRWA managed stable yoy, a significant achievement RoRWA at 2.2%, stable yoy In AED Mn YoY Variance: Headline: -18% Adjusted: -4% YoY Variance: Headline: -4% Adjusted: +2% 3,184 473 2,605 4 8,468 8,093 540 34 2,711 2,601 7,928 8,059 Q3'16 Q3'17 9M'16 9M'17 Adj Group Net Profit Gains on sale of investment properties 33
On track to meet full year financial targets 9M 17 ACTUAL FY 17 GUIDANCE LOAN GROWTH -3% Low single digit negative CORE REVENUE 1 GROWTH Headline revenue down 5% Flat C/I RATIO (EX-INTEGRATION COSTS) 27.6% ~28% COST OF RISK 2 71bps 70-75 bps ROTE 3 14.3% ~ 14% 1 - Excluding property-related one-offs and AFS investment gains 2 - Year-to-date annualised 3 - Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl. Tier 1 notes coupon (AED 346Mn) and amortisation of intangibles 34
Revenue trend reflects softer operating conditions yoy and non-recurrence of property gains Key Highlights Group Revenue managed at AED 14.5Bn reflecting softer operating conditions yoy and substantial one-off property gains booked in Q3 16 9M 17 NII down 5% yoy due to 21bps margin compression and balance sheet optimisation towards higher-risk adjusted earning assets Fees and commissions 17% lower yoy reflecting lower market loan and trade activity compared to 2016. FX and investment income up 59% yoy on AFS investment gains realised in Q1 17 Operating Income (AED Mn) 9M'17 9M'16 YoY % Q3'17 Q2'17 QoQ % Net interest Income 9,565 10,079-5 3,182 3,180 0 Fees & commissions, net 2,429 2,918-17 788 860-8 FX and investment income, net 2,299 1,450 59 552 598-8 Other non-interest income 1 191 753-75 89 49 82 Total Operating Income 14,484 15,201-5 4,611 4,686-2 1 - Includes gains on sale of investment properties Operating Income (AED Mn) Non-interest Income (AED Mn) Net interest income Non-interest income -16% 5,468 5,102 5,188 4,686 4,611 39% 34% 38% 32% 31% 61% 66% 62% 68% 69% -5% 15,201 14,484 34% 34% 66% 66% Other income Net FX & Investment income Net fees and commission income 2,118 1,755 26% 5% 27% 40% 1,985 3% 1,506 1,429 3% 6% 58% 40% 39% 46% 55% 39% 57% 55% -4% 5,121 4,919 15% 4% 28% 47% 57% 49% Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 9M'16 9M'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 9M'16 9M'17 35
NIM positively impacted by rate hikes Key Highlights Group NIM qoq: +9bps driven by asset repricing whilst funding costs tightly managed as synergies are realised Group NIM yoy: -21bps reflecting margin compression due to portfolio optimisation towards higher risk-adjusted earning assets and dilutive impact from deployment of short-term excess liquidity Performing loan yields: +19bps yoy and +14bps qoq reflecting corporate loan repricing following benchmark rate hike partly offset by margin compression and BS mix change mainly in Personal banking Cost of customer deposits: +4bps qoq and only +6bps yoy, indicating realisation of funding cost synergies despite rate hikes Net Interest Margin (%) Group NIM (Qtr) Group NIM (YTD) 2.43 2.39 2.40 2.28 2.21 2.20 2.29 2.22 2.21 2.19 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 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) 4.38 4.37 4.37 4.35 4.35 4.35 4.43 4.39 4.57 4.45 0.72 0.73 0.74 0.74 0.74 0.74 0.71 0.71 0.78 0.76 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Note: All percentage figures are annualised 36
Disciplined cost management and strong synergy realisation drive better operating efficiency Key Highlights Cost-Income Ratio (ex-integration costs) Operating expenses (ex-integration costs) reduced 7% yoy and 3% qoq, reflecting disciplined cost management and realisation of substantial synergies Cost synergies during the period were primarily driven by headcount rationalisation and vendor savings Integration costs stood at AED 268Mn (including AED 72Mn in Q3 17) and mainly relate to professional fees, severances and re-branding C/I ratio (ex-integration costs) stands at industry-leading level of 27.6%, improving from 28.4% in 9M 16 Qtr (%) YTD (%) 28.1 27.9 28.4 28.3 27.2 27.6 27.2 27.5 27.6 26.1 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Operating Expenses (ex-integration costs) (AED Mn) One-off Integration costs Operating expenses (ex-integration) 1,473 1,553 1,516 45 118 104 1,399 1,344 91 72 4,370 4,259 60 268 1,429 1,434 1,412 1,308-3% 1,272 yoy 4,310 3,991-7% yoy Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 9M'16 9M'17 37
CoR benefits from RWA optimisation Key Highlights Impairment Charges, net (AED Mn) & CoR Impairment charges (net) down 12% yoy driven by higher recoveries and lower collective impairment charges resulting from balance sheet optimisation NPLs up 3% yoy primarily due to retail-led NPL formation NPL ratio improved sequentially by 19bps on the back of lower NPLs coupled with higher loan balances Impairment Charges, net 80 73 72 66 Cost of Risk(bps)* 79 67 71 Portfolio is adequately provisioned with coverage at 109%; Collective provisions at 1.67% of Credit RWAs 702 572 640 620 562 2,066 1,821 Annualised cost of risk at 71bps at lower end of 70-75bps full year guidance NPLs and Provisions (AED Mn) Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 9M'16 * annualised Provision Coverage & NPL ratio 9M'17 Sep'17 Jun'16 QoQ% Dec'16 YTD% Sep'16 YoY% Provision Coverage (%) NPL Ratio (%) NPLs 10,233 10,497-3% 9,280 10% 9,895 3% Provisions 11,153 11,713-5% 11,565-4% 11,729-5% 2.8 2.7 2.6 3.2 3.0 Specific 4,105 4,629-11% 4,325-5% 4,581-10% General 7,049 7,084-1% 7,240-3% 7,148-1% 119 125 122 112 109 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 38
Strong lending momentum in third quarter; liquidity remains highly comfortable Key Highlights Loans and Advances 1 (AED Bn) Loans and advances 1 Loan book increased +2% qoq on the back of strong lending momentum in 3 rd quarter driven by selective trade finance lending offering attractive risk-adjusted returns 339.4 334.4 345.2 321.3 328.3 Loans were down -2% ytd as new origination was offset by balance sheet optimisation and corporate repayments Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Customer Deposits and other accounts 1 Customer deposits broadly stable qoq and ytd CASA grew 4% ytd to AED 112 Bn highlighting FAB s strong deposit franchise and leading cash management solution Liquidity position remains highly comfortable with loan-to-deposit ratio of 86.6% Sep-end 17 LCR stands above the Basel III glide path Customer Deposits 1 (AED Bn) 362.6 379.2 393.9 377.3 378.9 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Loan-to-deposit ratio 1 (%) 93.6 88.2 87.6 85.2 86.6 Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 1 - Restated net of National Housing Program loans and deposits 39
Strengthened capital position on RWA optimisation Key Highlights Strong capital ratios Group capital position strengthened with CET1 ratio and total CAR at 14.6% and 18.0% respectively (vs. 13.8% and 17.1% in Sep 16) CET1 CAR 17.1% CAR 18.0% 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 14.3%, in line with full year guidance 13.8% 13.3% 13.8% 14.4% 14.6% 1.1% 1.2% 2.1% 2.2% 13.8% 14.6% Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Sep'16 Sep'17 CET1 AT1 Tier II RWAs & Return on RWAs 1 Annualised RoTE 2 (YTD) RWAs RoRWA 2.2% 2.3% 2.4% 2.2% 2.2% 15.9% 15.7% 16.1% 507.7 493.5 494.7 482.8 493.9 14.5% 14.3% Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 9M'16 FY'16 Q1'17 H1'17 9M'17 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
Segmental Performance Corporate & Investment Banking (AED Mn) Resilient performance across the business despite subdued loan demand and increased market volatility Operating Income Profit after taxes Headline revenue slightly down yoy (-2%) mainly due to lower market loan and trade volumes compared to 2016 Net profit up 4% yoy supported by provision reversals thanks to optimisation of risk assets 7,205 7,033 5,201 5,393 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 9M'16 9M'17 Personal Banking (AED Mn) Revenues lower yoy (-8%) 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 Continuous focus on enhancing product offering and value proposition, through innovation and digitisation Profit after taxes 5,573 1,641 9M'16 Operating Income 5,129 1,516 9M'17 41
Segmental Performance (contd..) Revenues lower yoy (-37%) mainly due to lower interest in suspense recoveries and non recurrence of property-related gains realised in 9M 16 Net loss of AED 18Mn as a result of higher impairments reflecting current economic cycle Integration of real estate and property management businesses was completed; Integration of Islamic finance subsidiaries is underway Subsidiaries (AED Mn) 1,468 Operating Income 655 Profit after taxes 921 (18) 9M'16 9M'17 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 9M 17 revenues stood at AED 1.83 Bn, contributing 12.6% to the Group s total revenues International deposits grew 7% and represent 27% of Group s total deposits as of September-end 2017 Profit after taxes 1,957 1,017 9M'16 Operating Income 1,834 892 9M'17 42
Asset & Loan Mix Asset Mix Gross loans by counterparty 1 (AED Bn) Investments 16% Others 8% AED 644.1 Bn Sep 17 Cash & CB Balances 18% DFB and Reverse Repos 7% 347.7 341.3 22.3 23.3 77.5 71.0 184.5 183.9 Banking Sector Personal/Retail Sector Corporate/Private Sector Public Sector Loans and Advances 51% 58.8 58.6 4.6 4.5 Dec'16 Sep'17 Government Sector Energy Agriculture 5% 0.1% Personal - Loans & Credit Cards 21% Government 1% Gross loans by economic sector 1 Services 9% Manufacturing Other financial institutions 8% 6% Construction 4% AED 341.3 Bn Sep 17 Banks 7% Real Estate 24% Trading 7% Transport and communication 8% Asia 5% GCC 2% Net loans by geography 2 Europe 10% MENA 2% America 1% AED 328.3 Bn Sep 17 1 - AED 13.6 Bn reclassified from Government to Corporate/Private sector and Real Estate category 2 - Based on booking centre UAE 80% Overdrafts 5% Vehicle financing loans & others 0.4% Credit Cards 2% Personal Loans 9% Mortgage Loans 5% Gross loans by product Real Estate 10% AED 341.3 Bn Sep 17 Trade related loans 8% Term Loans 60% 43
Investment breakdown Investments by type Investments by ratings HFT - Debt 18% HFT - Equity & Funds 1% A 29% BBB 12% AFS - Debt 72% AED 105.0 Bn Sep 17 Held to Maturity (Debt) 7% AFS - Equity & Funds 2% AA 33% AED 105.0 Bn Sep 17 AAA 13% BB & below 8% Unrated Debt 2% Equity & Funds 3% UAE 33% Investments by geography Europe 18% Investments by counterparty Corporate/ Pvt Sector 8% Supranatl 4% AED 105.0 Bn Sep 17 GCC 16% Banks 21% AED 105.0 Bn Sep 17 Sovereign 40% Asia 16% Others incl A&NZ 1% MENA (ex- GCC&UAE) 5% USA 11% Covered Bonds 4% GREs 23% 44
Liability mix and Wholesale Funding Liabilities mix Wholesale Funding (AED Bn) Sep 17 Customer Deposits 70% AED 544.6 Bn Sep 17 Commercial Paper 4% Others 6% Due to Banks & Repos 12% Term Borrowings & Sub Debt 8% Wholesale funding maturity profile (AED Mn) Syndicated loan 7.3 Medium Term Notes/Bonds 36.9 Subordinated debt 0.4 Total 44.6 Syndicated Loan MTN/MTB 7,910 13,085 5,898 7,330 7,124 2,842 2017 2018 2019 2020 2021 & Beyond 45
Customer deposits 362.6 Customer deposits (AED Bn) CASA (%) Total Customer Deposits 379.2 393.9 377.3 378.9 Customer deposits by account type (AED Bn) Notice and time deposits Saving Accounts Margin Accounts Current Accounts Certificates of deposits 379.2 378.9 2.8 4.6 26.8 30.8 15.0 13.9 93.2 98.5 241.4 231.1 30% 29% 29% 30% 30% Sep'16 Dec'16 Mar'17 Jun'17 Sep'17 Dec'16 Sep'17 Customer deposits by Counterparty (AED Bn) Customer deposits by geography 1 Government sector Corporate / private sector Certificates of deposits Public Sector Personal/retail sector 379.2 378.9 26.8 30.8 75.9 76.8 142.5 135.2 UAE 73% AED 378.9 Bn Sep 17 GCC 2% Asia 2% Europe 18% 76.0 71.4 58.0 64.7 Dec'16 Sep'17 1 - Based on booking centre MENA 3% America 3% 46
THANK YOU! For more information, please visit www.bankfortheuae.com or contact FAB Investor Relations team ir@bankfab.com 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