Emirates NBD Investor Presentation May 2014 1
Important Information Disclaimer The material in this presentation is general background information about Emirates NBD's activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take in to account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. The information contained here in has been prepared by Emirates NBD. Some of the information relied on by Emirates NBD is obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. Forward Looking Statements It is possible that this presentation could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and 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. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are 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 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 growth estimated at 4.5%, from 4.6% in 2013. Oil Country 2008 2009 2010 2011 2012 2013F 2014F 2015F production has been broadly stable in Q1 2014 at 2.7mn bpd. UAE 3.2% -4.8% 1.7% 3.9% 4.4% 4.6% 4.5% 4.5% Hydrocarbons is not expected to contribute significantly to China 9.6% 9.2% 10.4% 9.3% 7.7% 7.7% 7.0% 7.3% overall growth in 2014. Eurozone 0.4% -4.4% 2.0% 1.6% -0.7% -0.5% 0.5% 1.5% • Non-oil sector expected to be main driver of UAE growth Hong Kong 2.1% -2.5% 6.8% 4.8% 1.5% 2.9% 3.5% 3.8% in 2014. PMI data reached a record high in March, on the India 8.2% 6.6% 9.4% 7.7% 4.8% 4.6% 4.8% 5.5% back of strong new order growth, reflecting improved Japan -1.0% -5.5% 4.7% -0.5% 1.5% 1.5% 2.5% 1.5% domestic and external demand. Singapore 1.8% -0.9% 14.9% 5.3% 1.9% 4.0% 3.8% 4.0% • Inflation expected to accelerate to an average 3.0% in 2014 UK -0.8% -5.2% 1.7% 1.1% 0.3% 2.7% 2.5% 2.0% from an average of 1.1% in 2013, on higher housing costs US -0.3% -2.8% 2.5% 1.8% 2.8% 1.9% 3.0% 3.5% and rising input prices. Saudi 8.4% 1.8% 7.4% 8.6% 5.8% 3.8% 4.2% 4.3% Source: Bloomberg, Emirates NBD Research UAE PMI – Non Oil Private Sector Activity UAE Oil production 3.5 140 59 58 3.0 120 57 USD per barrel 2.5 100 56 M bpd 2.0 80 55 1.5 60 54 1.0 40 53 52 0.5 20 51 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 50 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 OPEC oil price (rhs) UAE Oil Production (lhs) 4 Source: Bloomberg, Emirates NBD Research Source: Markit/HSBC
UAE Economic Update (cont) Highlights UAE CDS spreads • Total bank loan growth eased to 5.63% y-o-y in October from a Dubai (lhs) Abu Dhabi (rhs) 750 250 2013 peak of 7.35% y-o-y in August. UAE loan growth shows a steady 230 650 improvement, particularly in the retail and personal loan segment 210 • Deposit growth in the UAE still outpaces loan growth ; bank deposits 550 190 grew 10.6% y-o-y in October, and the cumulative increase in bank 170 450 bps bps deposits year-to-October 2013 was AED117.3bn, compared with a 150 350 AED92.6bn increase in deposits over the same period 2012; 130 consequently, the loans-to-deposit ratio was at 90.1%, near the lowest 110 250 level in at least five years. 90 150 • 3M EIBOR rate continued to ease as liquidity in the banking system 70 50 50 improved. Dubai CDS remained near multi-year lows, reflecting Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 confidence in the economic recovery and prospects for growth going forward. Source: Bloomberg, Emirates NBD Research EIBOR – LIBOR spreads Bank deposit and loan growth* EIBOR LIBOR Spread 6% 18% Bank deposits (% y/y) Bank Loans (% y/y) 5% 16% 14% 4% 12% 3% 10% 2% 8% 6% 1% 4% 0% 2% -1% 0% Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 -2% -2% Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 -4% 5 Source : Bloomberg, Emirates NBD Research Source : UAE Central Bank, *loan growth gross of provisions
Dubai Economic Update Highlights Dubai: Real GDP growth • Real GDP growth for Dubai estimated at 4.5% in 2013, as 6% 4.7% manufacturing, trade and hospitality expanded robustly. The 4.5% 4.5% 5% 4.4% construction and real estate sectors also contributed positively to 4% 3.2% 3.0% 2.8% growth for the first time since 2008. 3% • GDP growth expected to accelerate to 4.7% in 2014 on the back of % y/y 2% continued growth in tourism and hospitality, boosting trade, transport 1% and associated services. The sharp recovery in real estate prices 0% should boost construction as new projects are launched. -1% • Infrastructure spending ahead of Expo 2020 is expected to underpin -2% activity in the construction sector over the medium term; hosting the -3% -2.4% event estimated to add 0.5pp to Dubai’s growth over 2015-2017. 2008 2009 2010 2011 2012 2013f 2014f 2015f Source: Dubai Statistics Centre, Emirates NBD Research Dubai’s fastest growing sectors Composition of Dubai GDP (H1 2013) Hotels Dubai GDP by Sector (%) - H1 2013 Manuf. Trade Hosp. 5% Trans. & comm. Fin Servcs. Constr. & RE 30 25 Fin Servcs. 20 Trade 12% 29% 15 % y/y 10 Trans. & comm. 5 14% 0 -5 Other Manuf. 3% -10 RE 16% 21% -15 H1 2010 H1 2011 H1 2012 H1 2013 6 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 7 25% Dubai International, the world’s second busiest international hub 6 20% enjoying strong passenger growth of 13.5% in Jan-Feb 2014 5 over the same period last year. 15% 4 Mn • Growth has been driven by new partnerships (for example with 3 10% Qantas), network expansion and the opening of new routes to 2 5% Eastern Europe, North & South America, Australia and Asia. 1 • 0 0% Hotel occupancy averaged 88% in Jan-Feb 2014, broadly Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 unchanged from the same period last year. Hotels were able to increase prices by more than 10% on average year-to-date, despite a 6% increase in the supply of hotel rooms in Dubai. 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% 40% AED Bn 600 20% 20% 0% 400 0% -20% -40% 200 -20% -60% Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 0 -40% 2006 2007 2008 2009 2010 2011 2012 2013 Imports (lhs) Exports & Re-Exports (lhs) RevPAR (% y/y) Hotel Occupancy (%) Imports (% y/y) (rhs) Exports & Re-exports (% y/y) (rhs) 7 Source: STR Global, Emirates NBD Research Source: Dubai Statistics Centre
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