Emirates NBD Investor Presentation November 2016
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 • UAE economy grew 3.8% in 2015. Non oil sector growth 2013 2014 2015 2016F 2017F slowed to 3.3% last year from 5.3% in 2014. S. Arabia 2.7 3.4 3.4 1.4 1.8 UAE 4.6 3.1 3.8 3.0 3.4 • Oil output in the UAE rose 1.7% y/y in Jan-Sep 2016. Although Qatar 4.6 4.2 3.7 4.2 5.1 Emirates NBD Profile non-oil growth is expected to slow further this year, we still Kuwait 1.1 0.5 1.8 2.4 3.0 expect headline real GDP to expand 3.0% in 2016. Oman 4.6 2.5 3.6 3.3 3.1 Bahrain 5.4 4.4 2.9 2.6 3.5 • The September PMI eased further to 54.1 from high of 55.3 in GCC (average) 3.4 3.3 3.4 2.4 3.0 July and 54.7 in August. The decline was due to slower growth Egypt 2.1 2.2 4.2 3.9 5.0 Jordan 2.8 3.1 2.5 3.0 3.5 in output, new orders and employment. The data suggests that Lebanon 3.0 1.8 2.0 2.2 2.5 the economy gained momentum in Q3 relative to H1 2016. Tunisia 2.9 2.7 0.6 2.5 3.0 Morocco 4.4 2.0 4.4 2.1 4.8 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 60 3.2 125 59 3.0 100 58 USD per barrel 2.8 57 75 M bpd 56 2.6 50 55 2.4 Strategy 54 25 2.2 53 2.0 0 52 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 51 Appendix 50 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 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 Dubai: Real GDP growth • 6.0 Dubai’s economy expanded 4.1% y/y in 2015, up from 5.2 3.5% in 2014. Wholesale & retail trade remains the largest 4.6 5.0 sector in the economy, and expanded 4.0% in 2015. 4.2 4.0 3.9 Hospitality (restaurant and hotels) was the fastest growing 4.0 Emirates NBD Profile sector in Dubai in 2015, at 8.0% y/y 3.0 % y/y 2.8 3.0 2.5 • The ENBD Dubai Economy Tracker Index declined only 2.0 marginally in September to 55.1 from 55.7 in August. Output continued to rise at a very sharp rate in September, 1.0 with this index only fractionally lower than the July peak. 0.0 The new work index is also relatively high at 57.9 but has Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 slowed since July and August. Financial & Operating Performance 2014 2015 Source: Dubai Statistics Centre, Emirates NBD Research Emirates NBD Dubai Economy Tracker Index Dubai: Key sector growth rates in 2015 62 10 60 8 58 6 % y/y 56 4 8.0 5.7 54 5.0 Strategy 4.4 2 4.0 3.4 0.4 52 0 50 48 Appendix Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Source: Dubai Statistics Centre, Emirates NBD Research Source : Markit, Emirates NBD Research
5 Operating Environment Dubai Economic Update (2/3) Highlights Dubai Airports passenger traffic • 45 mn people 1800 Passenger traffic at the Dubai International Airport (DXB) rose thousand tons to 55.9 million in Jan-Aug 2016, up by 7.0% y/y. 1700 40 1600 • Passenger traffic is expected to exceed 85 million at DXB by 35 1500 Emirates NBD Profile the end of 2016, according to Dubai Airports. 30 1400 • 40.5 Dubai’s hotel occupancy averaged 76.1% in Jan-Sep 2016, 38.3 1300 25 32.7 unchanged compared to the same period in 2015. 1200 29.6 27.9 20 24.6 • 1100 The supply of hotel rooms in Dubai increased by 5.8% y/y in 15 1000 Jan-Sep 2016 to 86,151 rooms with the Department of Jan-Aug Jan-Aug Jan-Aug Jan-Aug Jan-Aug Jan-Aug Tourism and Commerce Marketing (DTCM) targeting 140,000 2011 2012 2013 2014 2015 2016 Financial & Operating Performance to 160,000 hotel rooms by 2020. Passenger traffic (LHS) Freight volumes (RHS) Source: Dubai Airports, Emirates NBD Research Hotel occupancy and RevPAR Composition of Dubai GDP 100 25 Dubai GDP by Sector (%) – 2015 % y/y growth Other 20 Hosp. 90 5% 15 6% 80 10 Financial Trade 5 servcs. 70 29% 0 12% 60 -5 Strategy -10 Manuf. 50 11% -15 40 Constr. & RE -20 22% 30 -25 Transport & Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Storage Appendix Average hotel occupancy rates, % (LHS) 15% Average revenue per available room, y/y growth, 3M MA (RHS) Source: Dubai Statistics Centre 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 September 2016, although the rate of decline has slowed business licences % y/y since the beginning of 2016. 10 Thousands 140 • Emirates NBD Profile 8 Rents have declined on an annual basis in September, more or less aligned with the annual fall in sales prices. 120 6 149.755 • 139.251 4 Real estate sector is likely to continue to face challenges 128.644 100 116.385 through 2016 with several factors contributing such as lower 108.438 2 oil prices weighing on confidence, increased supply, USD strength and economic developments in investors’ home 80 0 2011 2012 2013 2014 2015 markets. Financial & Operating Performance 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 -6 100 800 Strategy -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 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Source: Phidar Advisory, Emirates NBD Research Source: Phidar Advisory, Emirates NBD Research
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