Emirates NBD Investor Presentation February 2015 1
Important Information Disclaimer The material in this presentation is general background information about the activities of Emirates NBD Bank PJSC (Emirates NBD), current at the date of this presentation, and believed by Emirates NBD to be accurate and true. It is information given in summary form and does not purport to be complete. Some of the information that is relied upon by Emirates NBD is obtained from sources believed to be reliable, but Emirates NBD (nor any of its directors, officers, employees, agents, affiliates or subsidiaries) does not guarantee the accuracy or completeness of such information, and disclaims all liability or responsibility for any loss or damage caused by any act taken as a result of the information. The information in this presentation is not intended to be relied upon as advice or a recommendation to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. An investor should seek independent professional advice when deciding if an investment is appropriate. Forward Looking Statements Certain matters discussed in this presentation about the future performance of Emirates NBD or members of its group (the Group), including without limitation, future revenues, earnings, strategies, prospects and all other statements that are not purely historical, constitute “forward-looking statements”. Such forward-looking statements are based on current expectations or beliefs, as well as assumptions about future events, made from information currently available. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “seek”, “believe”, “will”, “may”, “should”, “would”, “could” or other words of similar meaning. Undue reliance should not be placed on any such statements in making an investment decision, as forward-looking statements, by their nature, are subject to known and unknown risks and uncertainties that could cause actual results, as well as the Group’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements, such as changes in the global, political, economic, business, competitive, market and regulatory forces; future exchange and interest rates; changes in tax rates; and future business combinations or dispositions. Emirates NBD undertakes no obligation to revise or update any statement, including any forward-looking statement, contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. 2
Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix 3
UAE Economic Update Highlights Real GDP Growth Forecasts • 2014 GDP growth expectation revised down to 4.5% from 5.0% due to Country 2010 2011 2012 2013 2014F 2015F fall in oil price . Oil production has been flat on average in 2014, lower UAE 1.6% 4.9% 4.7% 5.2% 4.5% 4.3% than the 2% increase in output forecast earlier this year. 2015 GDP China 10.4% 9.3% 7.7% 7.7% 7.4% 7.0% growth forecast also revised lower to 4.3% from 4.8% on the basis that oil output likely to remain flat again this year Eurozone 1.9% 1.6% -0.7% -0.4% 0.8% 1.5% • Hong Kong 6.8% 4.8% 1.5% 2.9% 2.2% 2.7% Non-oil sector growth robust , according to Purchasing Managers’ Index, which reached record highs in Q3-14, on the back of strong India 9.4% 7.7% 4.8% 4.7% 4.8% 5.5% output and new order growth, reflecting improved domestic and Japan 4.7% -0.5% 1.8% 1.6% 0.5% 1.5% external demand Singapore 15.4% 5.3% 2.5% 3.9% 2.8% 3.2% • Inflation increased to 2.3% in 2014 on higher housing costs and rising UK 1.9% 1.6% 0.7% 1.7% 3.0% 2.5% input prices, up from 1.1% in 2013. Inflation expected to average 3% in US 2.5% 1.6% 2.3% 2.2% 2.0% 3.5% 2015 Saudi 4.8% 10.0% 5.4% 2.7% 3.6% 3.0% Source: Bloomberg, Emirates NBD Research UAE PMI – Non Oil Private Sector Activity UAE Oil production 3.5 140 62 3.0 120 60 USD per barrel 2.5 100 58 M bpd 2.0 80 56 1.5 60 1.0 40 54 0.5 20 52 0.0 0 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 50 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 OPEC oil price (rhs) UAE Oil Production (lhs) 4 Source: Bloomberg, Emirates NBD Research Source: Markit/HSBC
Dubai Economic Update Highlights Dubai: Real GDP growth • Dubai’s economy expanded 4.6% in 2013 broadly in line with 6% 5.0% 4.7% 4.6% forecast, as manufacturing, hospitality and transport and logistics 4.1% 3.5% 3.5% expanded robustly. The construction sector also contributed positively 4% 3.0% to growth for the first time since 2008, albeit marginally at 1.3% y-o-y 2% • GDP growth expected to accelerate to 5% in 2014 on the back of % y/y continued growth in tourism and hospitality, boosting trade, transport 0% and associated services as well as a faster recovery in the construction sector -2% • Infrastructure spending ahead of Expo 2020 will remain the main driver -4% of growth in the construction sector, although the delivery of recently -4.3% launched residential developments will also contribute over the next -6% few years 2008 2009 2010 2011 2012 2013 2014f 2015f Source: Dubai Statistics Centre, Emirates NBD Research Dubai’s fastest growing sectors Composition of Dubai GDP Other Dubai GDP by Sector (%) - 2013 Manuf Trans. & Comm. Trade 5% Fin. Serv. Hospitality Constr. & RE Hosp. 20 5% 15 Financial Trade 10 servcs. 29% 11% 5 % y/y 0 Transport, -5 comm. 15% -10 Manuf. 14% -15 Constr. & RE -20 21% 2010 2011 2012 2013 5 Source : Dubai Statistics Centre, Emirates NBD Research Source: Dubai Statistics Centre, Emirates NBD Research
Dubai Economic Update (cont) Highlights Dubai Airports passenger traffic • Tourism continues to be a key driver of Dubai’s growth with Dubai 7 30% International, the world’s busiest international hub enjoying strong 25% 6 passenger growth of 5.9% in 2014 over the same period last year, 20% 5 despite major runway refurbishment in May-July 15% 4 10% Mn • Growth has been driven by new partnerships (for example with 5% 3 Qantas), network expansion and the opening of new routes to Eastern 0% 2 -5% Europe, North & South America, Australia and Asia 1 -10% • 0 -15% Hotel occupancy averaged 78.5% in 2014 , down from 80% last year. Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 Increased supply of hotel rooms as Dubai adds capacity ahead of 2020 is likely to keep hotel occupancy rates under pressure until demand catches up • Dubai’s non-oil foreign trade value declined 3.7% y/y in H1 2014 Passenger traffic (Mn people) (lhs) Passenger traffic (% y/y) (rhs) Source: Dubai Airports, Emirates NBD Research Dubai: External trade growth trends Hotel occupancy and RevPAR 1,000 60% 100% 80% 800 40% 60% AED Bn 600 20% 40% 20% 400 0% 0% -20% 200 -20% -40% Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 0 -40% 2006 2007 2008 2009 2010 2011 2012 2013 2014e Imports (lhs) Exports & Re-Exports (lhs) RevPAR (% y/y) Hotel Occupancy (%) Imports (% y/y) (rhs) Exports & Re-exports (% y/y) (rhs) 6 Source: STR Global, Emirates NBD Research Source: Dubai Statistics Centre
Dubai Economic Update (cont) Highlights Business Licenses issued* • Residential real estate prices have continued to consolidate in 120 Q4 2014, and annual price growth has slowed as expected this No. of licenses in ‘000s 100 year. For the year to December, mid-range villa prices fell 6.7% and mid-range apartments grew by 4.7%. Higher transaction fees 80 and mortgage caps have helped to cool the market. 60 • The medium term outlook for residential real estate prices is 40 strong however, with Phidar Advisory forecasting a shortage of residential units in Dubai by the end of 2018. 20 • Commercial property lease rates also stabilised in Q4 2014. 0 Prime office space prices rose 17.5% y/y and secondary -20 commercial space rose 21.1% y/y, unchanged from Q3. 2010 2011 2012 2013 New Licenses Renewed Cancelled Source: DSC, *Licenses issued by DED only (excludes Freezones) Dubai Commercial Property Lease Rates Dubai Residential Property Prices 2500 500 450 2000 Price per sq ft (In AED) 400 Lease rates per sq ft (In AED) 350 1500 300 250 1000 200 150 500 100 50 0 0 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 Mid range villa Mid range apt High end villa Low end apt Prime office Secondary office 7 Source: Cluttons via Bloomberg, Emirates NBD Research Source: Cluttons via Bloomberg, Emirates NBD Research
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