RAKBANK. Investor Relations Presentation FY 2015

RAKBANK Investor Relations Presentation FY 2015

RAKBANK Profile Establishment The National Bank of Ras Al Khaimah was founded in 1976. It underwent a major transformation in 2001 as it rebranded into RAKBANK and shifted its focus from Corporate Banking to Retail Banking. RAKBANK is a public joint stock company headquartered in the emirate of Ras Al Khaimah (RAK). It has 35 branches and over 250 ATMs in the UAE. In late January 2013, the Bank launched its Islamic Banking unit AMAL. Strategy Ownership RAKBANK is listed on the Abu Dhabi Securities Exchange (ADX) and 52.77% of the Bank s shares are owned directly and indirectly by the government of RAK. The market capitalization of RAKBANK is AED 10.476 billion (US$ 2.85 billion) as of 31 December 2015. The Board of Directors consists of the RAK ruling family and businessmen and professionals from UAE and Australia. Awards & Recognition Since 2001, the strategy focus has been on Retail and Small Business Banking in which the Bank enjoys a strong foothold. In late 2013, the Bank increased its lending in the traditional SME and Commercial Banking segment and more recently into Corporate Banking to diversify its portfolio further. During 2015, the Bank acquired a majority stake in RAK Insurance Company and launched a Remittance service as it moves ahead with its diversification strategy. Going forward, the Bank plans to become a broad-based financial services company by taking advantage of opportunities that enhance revenue and market share through acquisitions and new business. 1 st in the UAE by Return on Assets and 26 th globally according to The Banker's Top 1000 Bank Rankings 2015 Best Mobile Banking Initiative for MobileCash and Best SME Bank in the Middle East for RAKFinance at The Asian Banker Middle East Retail Product Awards 2015 2 nd Best Performing Commercial Bank in the GCC according to the 2015 darien analytics survey 22 nd most valuable brand in the GCC in 2015 according to BrandFinance Mena 50 Best Segment Solution award for RAKBANK World MasterCard Credit Card at the MasterCard Innovation Forum 2015 Best Digital Bank in the Middle East among 100 banks in the MENA region during the Genesys Summit 2015. EMEA Customer Innovation Award, Genesys G-Force Awards 2015 Best Service Innovation (Customer Web-Chat), Ethos UAE Service Olympian Awards 2015 Best Mobile App, Ethos UAE Service Olympian Awards 2015 2

RAKBANK Profile Subsidiaries Subsidiary Ownership Country Purpose RAK Insurance 79.23% UAE RAK Islamic Finance Company 99.99% UAE To develop insurance products To sell Shariacompliant products Ratings Rating Agency Last Update Deposits Outlook Support September 2015 Baa1 / P-2 Stable 2 RAKFUNDING CAYMAN LTD Back Office Support Services (BOSS) 99.99% Cayman Islands 80% UAE To enable the issuance of bonds To provide back office support services August 2015 BBB+ / F2 Stable 2 RAK Technology 80% UAE To supply information technology support August 2015 A- / A2 Stable 2 Regulatory Framework The Central Bank of the UAE Regulations cover both Conduct of Business and prudential regulations. Acts as the clearing house for all AED payments. Conducts a detailed inspection of the bank on annual basis. Anti Money laundering and Suspicious Cases Unit of the CB-UAE acts as the FIU of the UAE. Securities & Commodities Authority (SCA) & Abu Dhabi Securities Exchange (ADX) SCA is the main regulator of funds houses, custodians, capital market operations, stock exchanges and financial brokerage business in the UAE. RAKBANK complies with all listing requirements stipulated by ADX. Insurance Authority (IA) IA is concerned with regulating and supervising the UAE insurance sector to promote the role of the insurance industry and ensure fair and effective competition. 3

Shareholders, Directors & Management Ownership Structure Board of Directors H.E. Mohamed Omran Alshamsi Chairman 28.4% 15.8% 3.0% 52.8% Government of Ras Al Khaimah Foreigners UAE Citizens H.E. Sheikh Salem Al Qasimi Mr. Ahmed Essa Al Naeem Mr. Yousef Obaid Al Nuaimi Mr. Salem Ali Al Sharhan Mr. Rajan Khetarpal Director Director Director Director Director GCC Nationals Mr. Allan Griffiths Director CEO s Profile Management Peter England Peter England became the CEO of RAKBANK on 1 st November 2013. Before joining RAKBANK, Peter spent seven years as the Head of Retail Banking at CIMB Bank Berhad a subsidiary of CIMB Group and one of the largest banks in ASEAN where he managed CIMB Bank Malaysia s business lines for individual and small enterprise customers and worked on developing a wide range of conventional and Islamic products and services. Peter was elected member of RAK Insurance Board of Directors on 30 August 2015. Deepak Majithia Geoffrey Stecyk K.S. Ramakrishnan Vikas Suri Ian Hodges Raghuveer Mehra Abdul Karim Juma Rahul Oberoi Mahadevan Radhakanthan Saleh Ali Saleh Chief Financial Officer Chief Operating Officer Chief Risk Officer MD, Treasury MD, Retail Banking MD of Credit & Assets, Retail Banking Director, Islamic Banking MD, Wholesale Banking Director of Credit, Wholesale Banking Director, RAK Business 4

Business Segments Retail Banking Wholesale Banking Treasury Insurance Retail Banking customers are serviced through a network of 35 branches, over 250 ATMs, as well as Online, Phone, and Mobile Banking solutions. Sales takes place across all channels and through 2000+ mobile staff. This segment has a strong fee-based income from the sale of Bancassurance and investment products, foreign exchange, trade services, Debit Cards and Prepaid Cards. RAKBANK re-established its presence in the SME and Commercial sector in late 2013 and selectively re-entered the Corporate lending sector in 2015. It also shifted the SME unit to the Retail segment and renamed the Business Banking segment to Wholesale Banking in line with its effort to increase penetration into larger businesses and to focus on growing Corporate and Commercial Banking, Trade Sales, Financial Institutions Lending, and Asset Based Finance. The main activities of the Treasury business include money market activities, investments in debt and equity securities, foreign exchange transactions with other banks, and financial institutions including the UAE Central Bank. In addition, the segment is the custodian of liquidity and primarily supports the growth of Retail and Wholesale Banking. The Bank sees an opportunity for growth in its business by diversifying into the local insurance market. With a controlling stake in RAK Insurance, the Group are collaborating on manufacturing and selling insurance products to enhance revenue and market share and ensure that customers enjoy a more wholesome experience. Contribution to Assets Contribution to Operating Income Retail Banking Wholesale Banking Treasury Insurance Unallocated Cost 2.9% 2.4% 100% 1.9% 80% 21.7% 23.6% 2.8% 6.9% 60% 40% 72.6% 65.2% 20% 100% 80% 60% 40% 20% Retail Banking Wholesale Banking Treasury Insurance 5.7% 1.4% 1.0% 5.5% 2.8% 92.9% 90.7% 0% FY 2014 FY 2015 0% FY 2014 FY 2015 5

FY 2015 Highlights Financial Snapshot Notes AED millions FY 2015 FY 2014 Growth % Net Interest Income 3,048 2,757 10.6% Non-Interest Income 891 798 11.7% Total Income 3,939 3,555 10.8% Operating Expenditures -1,479-1,505 (1.8%) Operating Profit Before Provisions for Impairment 2,461 2,050 20.0% Provisions for Impairment -1,055-595 77.3% Total Operating Income grew by AED 384 million year-on-year. Operating Expenses decreased by AED 26.7 million year-onyear. As the Group continues to focus on cost optimization, Cost-to- Income ratio dropped to 37.5% compared to 42.3% by the end of the previous year. Consolidated Operating Profit Before Provisions for Impairment grew by AED 411 million year-on-year. Net Profit 1,405 1,455 3.4% Balance Sheet Highlights AED billions FY2015 FY2014 Y-o-Y Growth Growth % Y-o-Y Total Assets 40.5 34.8 5.7 16.4% Gross Loans and Advances 28.5 25.8 2.7 10.6% Notes Gross Loans and Advances saw an increase of AED 2.7 billion year-on-year across most of the Bank s Retail and Wholesale Banking portfolios. Commercial, Corporate Lending, and Asset Based Finance (under the Wholesale Banking segment) recorded a growth of 138.1% year-on-year. Deposits 27.8 24.6 3.2 12.9% 6

Key Ratios Key Ratios Ratios FY 2015 FY 2014 Y-o-Y Return On Equity 19.3% 22.2% - 2.9% Efficiency Net Interest Margin 8.0% 8.3% - 0.3% Cost to Revenue 37.5% 42.3% - 4.8% Return On Assets 3.7% 4.4% - 0.7% Asset Quality Liquidity Solvency Coverage Ratio 81.4% 87.1% - 5.7% Gross Impaired Loans Ratio 3.2% 2.4% 0.8% Lending to Stable Resources Ratio 83.3% 88.2% - 4.9% Liquid Asset Ratio 19.1% 20.0% - 0.9% Capital Adequacy Ratio* 24.4% 26.5% - 2.1% Tier One* 24.4% 26.5% - 2.1% *Including current year profit and proposed dividend (subject to approval from shareholders and final approval from the UAE Central Bank) 7

Balance Sheet Overview Breakdown of Assets by Type (as at 31.12.15) Assets and Gross Loans & Advances (AED billions) 10.1% 0.4% 2.2% 2.0% 12.1% 68.5% 4.7% Cash and Balances with UAE Central Bank Due from other Banks Loans and Advances, Net Investment Securities Property and Equipment Goodwill and Intangible Assets Others 50 40 30 20 10 0 Total Assets Gross Loans and Advances 40.6 34.8 30.1 27.3 28.5 25.8 20.6 22.4 Analysis of Debt Securities (as at 31.12.15) Notes 27.5% 27.3% AA to A- BBB+ to BBB- Gross Loans and Advances increased by 10.6% year-on-year to AED 28.5 billion by the end of the year. Total Assets grew by AED 5.7 billion through the year compared to 31 December 2014. 45.2% Unrated UAE Government and GRE debt 8

Asset Breakdown Breakdown by Product (AED billions) 7 6 5 4 3 2 1 0 2.61 2.34 1.63 Expat Loans 5.54 4.60 3.90 4.10 3.75 3.16 3.38 2.83 3.67 3.04 2.91 2.06 National Loans Auto Loans Mortgage Loans Retail Credit Cards 1.13 0.95 0.92 4.68 6.50 5.95 1.19 1.46 0.80 0.99 1.04 0.52 0.43 0.4 0.12 0.10 Others Rakfin SME Commercial Banking Wholesale 31-Dec-13 31-Dec-14 31-Dec-15 FI Loans ABF Loans by Geography, by Value (31.12.2015) Notes Abu Dhabi Dubai Sharjah Ajman 12.6% 3.6% 5.2% 0.3% 11.5% Year-on-year total loans from Retail Banking grew by 5.4% and total loans from Wholesale Banking grew by 138.1%. Healthy growth in all the Retail lending portfolios with the exception of the National loans portfolio where new lending has been limited. Ras Al Khaimah Fujairah 66.8% 9

Asset Quality Non-Performing Loans (AED millions) Net Credit Loss Impaired Loans Impaired Loans to Gross Loans & Advances 800 600 400 200 0 3.2% 2.5% 2.4% 2.4% 914.4 516.5 539.8 618.8 2.00% 0.00% 5% 4% 3% 2% 1% 0% 3.8% 2.5% 1.1% 1.6% Coverage Ratio Notes 100% 50% 62.8% 73.3% 87.1% 81.4% The Bank has been diversifying the product mix into lower risk business by growing the traditional Commercial, FI, and Asset Based Finance portfolio under its Wholesale Banking segment. Coverage Ratio is lower due to the increase in the nonperforming loans of SME and Wholesale Banking. Rising NCL because of Personal Loans, RAKFinance, and SME Loans. 0% 10

Liabilities Customer Deposits (AED billions) Notes 30 25 20 15 10 5 0 Time Current Savings Call Islamic 3.5 2.0 2.6 1.3 0.9 1.0 1.2 3.6 2.7 3.4 3.7 7.8 9.6 11.6 13.5 9.2 7.1 5.5 5.9 Customer deposits were up by AED 3.2 billion year-on-year. The deposits from the Retail and Wholesale Banking segment amounts to 88.8% and 9.1% of the total deposits respectively. During the year, the Bank successfully raised an additional USD 300 million funding as an add-on to its existing USD 500 million 3.250% bond due 24 June 2019 (additional info in the appendix). Deposit Value by Segment (31.12.2015) Customer Deposits by Value (31.12.2015) Liabilities Mix (31.12.2015) 2.1% Retail Banking (Including SME) Wholesale Banking Treasury 88.8% 9.1% Abu Dhabi Sharjah Fujairah 8.3% 12.8% 8.9% 0.1% 1.6% Dubai Ajman Ras Al Khaimah 68.3% Customer Deposits Equity Debt security issued (EMTN) Other Liabilities Due to other Banks 2.7% 2.6% 7.1% 68.6% 19.0% 11

Capitalization Equity Breakdown* (AED billions) Capital Adequacy Ratio (CAR) Share Capital Reserves Retained Earnings 8 6 4 2 0 1.8 2.1 1.5 1.2 3.0 3.4 3.7 3.9 1.5 1.7 1.7 1.7 *2015 - Includes a non-controlling interest of AED 38.2 million 30% 25% 20% 15% 28.8% 29.0% 26.5% 24.4% Risk Weighted Assets (AED billions) Notes 30 20 17.7 19.6 23.7 26.8 CAR dropped in 2015 due to higher loan growth and the acquisition of RAK Insurance. The Bank continues to have one of the highest CARs among banks in the UAE. 10 0 12

Profitability Profitability (AED billions) Cost-to-Income Ratio 5 4 3 2 1 2.9 Total Income Net Profit 3.9 3.6 3.2 1.40 1.43 1.45 1.40 50% 45% 40% 35% 44.3% 43.8% 42.3% 37.5% 0 30% Annualized Returns Net Interest Margin 30% 20% 10% 0% ROE ROA 27.0% 23.4% 22.2% 19.3% 5.4% 5.0% 4.4% 3.7% 10% 9% 8% 7% 6% 5% 8.9% 8.6% 8.3% 8.0% 13

Appendix

USD 300 million Tap Transaction Summary Investors by Geography Investors by Type Issuer Guarantor RAKFUNDING CAYMAN LTD The National Bank of Ras Al Khaimah (P.S.C) MENA Europe Asia Banks Insurance Funds Private Banks Guarantor Rating Baa1 (Moody's) / BBB+ (Fitch) Format Status Listing Tap Size Trade Date Regulation S only Senior Unsecured Irish Stock Exchange USD 300mn 23-Feb-15 22% 17% 61% 34% 6% 7% 53% Fungibility Date Fungible on 02 March 2015 Maturity 24-Jun-19 Tap Price 100.88% Tap Spread MS + 142.9bps Transaction Highlights On February 23 rd 2015, The National Bank of Ras Al-Khaimah P.S.C. ( RAKBANK ), successfully priced, via an interday execution, a USD300mn tap of its outstanding USD500mn 3.250% notes due 2019, bookrun by NBAD in June 2014. The announcement of the reopening of the notes was released to the market on Monday 23 rd at 8:00am London time. The tap price guidance was set at 100.875% +/- 0.125%. The cash price at the time of announcement was 101.50%. A global investor call took place at 09:00am London. By 11:15am London, the orderbook was in excess of USD500mn and final tap price was set at 100.875%. An unexpected issue size of USD300mn was indicated. The books went subject at 11:30am London. The transaction was launched at 12:00pm London time for a final tap amount of USD300mn. The tap price equates to a spread of MS+142.9bps. This is the fourth occasion RAKBANK has tapped the international debt capital markets and second tap following the reopening in 2006 of its floating notes due 2010. 15

Disclaimer The material in this presentation has been prepared by the National Bank of Ras Al Khaimah (P.S.C), United Arab Emirates ( RAKBANK ) and is general background information about RAKBANK s activities and is not intended to be current as on the date of the presentation. This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast or financial information, should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, you should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk. This presentation may contain forward looking statements based on numbers or estimates or assumption that are subject to change including statements regarding our intent, belief or current expectations with respect to RAKBANK s businesses and operations, market conditions, results of operation and financial condition, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements. RAKBANK does not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside RAKBANK s control. Past performance is not a reliable indication of future performance. RAKBANK disclaims any responsibility for the accuracy, fairness, completeness and correctness of information contained in this presentation including forward looking statements and to update or revise any information or forward looking statement to reflect any change in RAKBANK s financial condition, status or affairs or any change in the events, conditions or circumstances on which a statement is based. RAKBANK nor its related bodies corporate, directors, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any direct, indirect or consequential loss arising from the use of this presentation or its contents or otherwise arising in connection with it.