Emirates NBD Investor Presentation March 2017
2 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. Due to rounding, numbers and percentages presented throughout this presentation may not add up precisely to the totals provided. 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.
3 Operating Environment UAE Economic Update Highlights Real GDP growth forecasts • We estimate economic growth slowed to 3.0% in 2016 from 2013 2014 2015 2016F 2017F 3.8% in 2015. Higher oil output (2.7% y/y) would have S. Arabia 2.7 3.4 3.4 1.4 1.8 contributed around 0.7 percentage points to overall GDP UAE 4.6 3.1 3.8 3.0 3.4 growth. Non-oil growth slowed as external demand softened Qatar 4.6 4.2 3.7 4.3 5.2 Emirates NBD Profile and lower oil prices led to a slowdown in government spending. Kuwait 1.1 0.5 1.8 2.7 3.0 Oman 4.6 2.5 3.6 3.7 1.7 Bahrain 5.4 4.4 2.9 2.6 3.5 • The Emirates NBD Purchasing Managers’ Index (PMI) rose to GCC (average) 3.4 3.3 3.4 2.4 2.8 56.0 in February from 55.3 in January, a level last seen in Egypt 2.1 2.2 4.2 3.9 5.0 September 2015. The main driver was output, which expanded Jordan 2.8 3.1 2.5 3.0 3.5 at the fastest rate in eighteen months; new orders also rose at Lebanon 3.0 1.8 2.0 2.2 2.5 a faster pace in February, supported by improving external Tunisia 2.9 2.7 0.6 2.5 3.0 Morocco 4.4 2.0 4.4 2.1 4.8 demand. Financial & Operating Performance MENA (average) 2.8 2.2 3.7 3.2 4.5 Source: Bloomberg, Emirates NBD Research UAE PMI – Non oil private sector activity Oil Price and UAE oil production 62.0 3.2 125 3.0 60.0 100 USD per barrel 2.8 58.0 75 M bpd 2.6 56.0 50 2.4 Strategy 25 54.0 2.2 2.0 0 52.0 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 50.0 Appendix Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 UAE Oil Production (lhs) ICE Brent (rhs) Source: Markit / Emirates NBD Source: Bloomberg, Emirates NBD Research
4 Operating Environment Dubai Economic Update (1/3) Highlights Composition of Dubai GDP • Dubai GDP by Sector (%) – 2015 The Emirates NBD Dubai Economy Tracker Index eased Other Hosp. slightly to 56.2 in February from the two-year high reached 5% 6% in January. The Tracker Index in February was higher than Financial the average reading for 2016, signaling an acceleration in Trade servcs. Emirates NBD Profile economic growth at the start of this year. 29% 12% • Dubai’s economy expanded 2.4% y/y in Q1-16. Hospitality Manuf. (restaurant and hotels) was the fastest growing sector in 11% Constr. & RE Dubai in Q1-16, at 8.0% y/y, followed by Real Estate at 22% 5.3% y/y. Transport & Storage 15% Financial & Operating Performance Source: Dubai Statistics Centre Emirates NBD Dubai Economy Tracker Index Dubai: Key sector growth rates in Q1 2016 64 10 62 8 60 6 % y/y 58 8.4 4 56 5.3 Strategy 4.9 2 3.6 3.5 54 0.2 1.4 0 52 50 Appendix 48 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Source: Dubai Statistics Centre Source : Markit, Emirates NBD Research
5 Operating Environment Dubai Economic Update (2/3) Highlights Dubai Airports passenger traffic • 90 thousand tons 2800 Passenger traffic at the Dubai International Airport (DXB) rose to mn people 83.7 million in 2016, up by 7.2% y/y. 2600 80 • 2400 Passenger traffic rose by 9.7% y/y to 8.0 million in January 2017 70 Emirates NBD Profile and is expected to exceed 89 million at DXB by the end of 2017 2200 60 according to Dubai Airports. 2000 83.7 50 78.0 • 1800 Dubai’s hotel occupancy averaged 76.8% in Jan-Nov 2016 down 70.5 66.4 40 from 77.2% the same period a year ago. 57.7 1600 51.0 30 • 1400 The supply of hotel rooms in Dubai increased by 5.7% y/y in Jan- 20 1200 Nov 2016 to 87,170 rooms. The Department of Tourism and Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Commerce Marketing is targeting 140,000 to 160,000 hotel Financial & Operating Performance 2011 2012 2013 2014 2015 2016 rooms by 2020. Passenger traffic (LHS) Freight volumes (RHS) Source: Dubai Airports, Emirates NBD Research Hotel occupancy and RevPAR Top 10 visitors by nationality in 2016 100 25 India % 12.1% y/y growth 20 % of total 14.9mn visitors 90 15 80 10 Saudi Arabia 5 11.0% 70 0 Other 60 43.6% -5 -10 50 UK Strategy 8.4% -15 40 -20 Oman 30 -25 7.0% Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Germany Pakistan Appendix Average hotel occupancy rates, % (LHS) 3.1% US 4.1% Iran China Average revenue per available room, y/y growth, 3M MA (RHS) 4.1% 3.2% 3.6% Source: Department of Tourism and Commerce Marketing, Emirates NBD Research Source: STR Global, Emirates NBD Research
6 Operating Environment Dubai Economic Update (3/3) Highlights Business licenses issued* • Dubai residential real estate prices have eased further in 160 12 % y/y December 2016, although the rate of decline has slowed since 10 the beginning of 2016. Some segments of the market have Thousands 140 seen prices rise y/y in Q4 2016 8 Emirates NBD Profile • Average rents have declined y/y in December 2016, at a faster 120 6 rate than sales prices. Yields have eased since the start of 149.755 139.251 4 2016, but remain attractive, particularly on apartments. 128.644 100 116.385 • 108.438 2 Lower-priced segments of the market have fared better than the luxury segment. Low and mid-range villas’ prices were up 80 0 15.0% and 2.8% y/y respectively, while standard apartments’ 2011 2012 2013 2014 2015 Financial & Operating Performance prices declined 1.3% y/y in Q4-16. Total Licences (LHS) % y/y (RHS) Source: DSC, *Licenses issued by DED only (excludes Freezones) Dubai residential property prices Dubai transaction volumes 1600 200 Apartments Villas Apartments (LHS) Villas (RHS) 6 180 1400 3 160 1200 0 140 -3 1000 120 % y/y -6 100 Strategy 800 -9 80 600 -12 60 400 -15 40 Appendix -18 200 20 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Source: Phidar Advisory, Emirates NBD Research Source: Phidar Advisory, Emirates NBD Research
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