Mashreq Bank FY 2015 Results
Disclaimer The material in this presentation is general background information about MashreqBank’s activities current at the date of the presentation. It does not constitute or form part of and should not be construed as, an offer to sale or issue or the solicitation of an offer to buy or acquire securities of MashreqBank in any jurisdiction or an inducement to enter into investment activity. Although MashreqBank UAE has obtained the information provided from sources that should be considered reliable, it cannot guarantee its accuracy or completeness. The information provided is purely of an indicative nature and is subject to change without notice at any time. The person retrieving information is responsible for its selection and all aspects of its use. The information may only be used by the person retrieving it. The person retrieving the information may not transfer, duplicate, process or distribute it. The person retrieving the information is obliged to follow all instructions from MashreqBank concerning its use. No part of the content of this presentation may be copied. 2
FY 2015 Results >Performance highlights >Financial results 3 3
Performance highlights > Stable growth in operating income (2.3% Y-o-Y) > Slight decline in NIMs (3.1% in 4Q 2015 vs 3.2% in 4Q 2014) > Consistently high fee and other income proportion (42.8%) > Steady growth in customer deposits (7.5%) > Improving asset quality and enhanced coverage (Coverage 145.0%, NPL to advances 2.8%) > Diversified revenue base – 22% contribution from international operations 4
Financial highlights – Consolidated Income statement [AED million] Consolidated Income statement Comments 2015 2014 ∆ % > Operating income up by 2.3% Operating income 5,978 5,845 2.3% driven by 7.3% growth in net interest income Operating expense 2,473 2,210 11.9% > Operating expenses grew by 11.9% Operating profit 3,505 3,635 (3.6)% Impairment charges 1,000 (7.0)% 1,075 > Impairment charges decreased by 7.0% due to improved asset quality and recoveries Net profit * 2,435 (2.1)% 2,486 > Net profit stable at AED 2.4 bn. 5 * Includes Minority Interest
Financial highlights – Consolidated Balance sheet [AED million] Consolidated Balance sheet Comments 31 Dec 2015 31 Dec 2014 ∆ % > Total assets up by 8.8% Total Assets 115,157 105,840 8.8% > Customer loans and advances at Loans & Advances 60,166 58,046 3.7% AED 60.2 billion, increased by 3.7% > Customer deposits up by 7.5% predominantly led by 61.9% Customers’ deposits 73,635 68,488 7.5% growth in Islamic deposits; CASA increased by 6.8% to form 61.7% of total deposits Total Equity 18,486 9.3% 16,919 > Total Equity increased to ~AED 18.5 billion > Risk weighted assets increased Risk weighted assets 113,514 6.5% 106,628 by 6.5% to reach AED 113.5 billion 6
Financial track record Strong capital adequacy, high liquidity, improved portfolio quality and enhanced returns 31 Dec 2015 30 Sep 2015 31 Dec 2014 Capital adequacy Tier I Capital Ratio 15.9% 15.6% 15.3% 16.9% 16.7% 16.6% Total Capital Ratio Liquidity 29.9% Liquid Assets to Total Assets 28.1% 27.7% 81.7% 79.9% 84.8% Advances to Deposits Asset quality 145.0% 148.0% 120.4% NPL Coverage Ratio 2.8% 2.9% 3.7% NPL to Gross Advances Performance 2.2% 2.3% 2.5% ROA 14.2% 14.7% 15.7% ROE 3.1% 3.1% 3.2% Net Interest Margin 41.4% Efficiency Ratio 40.9% 37.8% 42.8% Fee and other income to total income 42.8% 46.5% 7
FY 2015 results >Key highlights >Financial results 8 8
Operating income, expense and net profit [AED million] Operating income and expenses Net profit Operating income Operating expenses -13.7% 1,518 1,519 1,443 +0.8% 644.0 556.0 551.4 650 597 603 4Q 2014 3Q 2015 4Q 2015 Cost 39.3% 42.8% 41.8% efficiency 4Q 2014 3Q 2015 4Q 2015 Operating income split by segments Key Points > FY 2015 Operating Income grew by 2.3% Y-o-Y while 5.85 5.98 expenses grew by 11.9% 6% 4% 7% 8% > On a Q-o-Q basis 4Q 2015 operating income increased by Others 5% 5% 5.3% while expenses increased by 7.7% Insurance 22% 18% > Efficiency ratio stood at 41.4% for FY 2015 as compared Islamic 10% 9% to 37.8% in FY 2014 International > Net profit for the quarter decreased by 13.7% Y-o-Y and Treasury & 28% 31% increased by 0.8% Q-o-Q Capital markets > Retail banking accounted for the largest portion of 2015 Retail 24% Operating Income with 31% contribution, followed by 22% Corporate Corporate Banking and International Banking 2014 2015 9
Operating income mix [AED million; %] Net interest income 1) Net fee and other income 1) +3.8% Other Income Inv. Income Fee & Comm. 678 649 +0.3% 575 271 228 190 868 871 839 425 408 427 (18) (6) (23) 4Q 2014 3Q 2015 4Q 2015 4Q 2014 3Q 2015 4Q 2015 % of % of operating 45% 43% operating 55% 60% 57% 40% income income Net interest margin 2) [%] Key Points > FY 2015 Net Interest Income increased by 7.3% Y-o-Y 3.22% 3.10% 3.08% driven by 9.0% increase in average loan growth; on a Q-o-Q basis Net Interest Income increased by 0.3%. 4Q 2015 Net interest income increased by 3.8% on a YOY basis > Net Fee & other income increased by 12.9% Q-o-Q primarily driven by an increase in Fee & Commission & other income > Non interest income as % of total income remained high at 42.7% for 4Q 2015 > Slight decline in NIMs during the year 4Q 2014 3Q 2015 4Q 2015 1) NII component booked under Investment income as per IFRS, has been reclassified under NII in the above representation 10 2) Based on annualized quarterly NII and average assets for the quarter
Asset mix [AED billion; %] Total Assets and Loans & Advances Gross Loans portfolio split as of December 2015 Total Assets Manufacturing 6.0% Loans & Advances Construction 0.5% 8.1% 112.3 115.2 19.0% 111.4 106.9 105.8 Trade Transport & Comm. 58.0 58.5 58.4 60.2 56.7 Services 19.5% Financial institutions Personal 28.8% Govt / Public sector Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 8.0% Other 1.1% Loans to 9.0% total 55% 52% 52% 52% 53% assets Asset split by segments Key Points > Total assets increased by 8.8% to reach AED 115.2 105.8 (100%) 115.2 (100%) billion, as compared to AED 105.8 billion in December 9% 2014 10% Others 4% 4% 6% 7% > Loans & advances increased slightly by 3.7% in the year Insurance to reach AED 60.2 billion led by Personal, Trade & Govt. Islamic 27% 29% /Public Sector International > Personal segment contributes 28.8% of the Gross Loans 13% Treasury & 14% > Diversified loans portfolio with no individual sector Capital markets 13% 13% accounting for >20% of the total corporate loan portfolio Retail > Assets mix fairly balanced between domestic and 28% Corporate 26% international locations with International business accounting for 28.5% of the assets as of December 2015 Dec-14 Dec-15 11
Liability mix [AED billion; %] Customer deposits Liability mix 88.9 (100%) 96.7 (100%) 75.3 73.1 73.6 71.2 68.5 5% 4% 1% 1% 10% 2% 2% 9% 7% 8% Repo Medium term loans Insurance Funds Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Due to banks 77% 76% Other liabilities Customer deposits split comparison (Nov 2015) Customer deposits Mashreq Group 1 UAE banking sector 2 Dec-14 Dec-15 38% Time deposits 45% 57% Current A/c 44% Liabilities split by segments 5% Savings A/c 11% 88.9 (100%) 96.7 (100%) 6% 4% 3% 2% 6% Key Points 9% Others Insurance 22% 22% > Customer deposits accounted for 76% of total liabilities, Islamic maintained from December 2014 9% 9% International > Customer deposits increased by 7.5% as compared to 21% Treasury & December ‘14 24% Capital markets > CASA formed a majority portion of customer deposits at Retail 62% as compared to overall market at 55%; Time deposits 35% Corporate 28% contributed 38% of total deposits vs 45% for the market > Corporate Banking accounts for the largest portion of Dec-14 Dec-15 liabilities at 27.7% followed by Retail Banking at 23.8% 1) Represents data of Mashreq Group including overseas deposits as of December 2015 2) Represents data of UAE banking sector as of November sourced from Central Bank Statistical Bulletin (excluding government deposits and commercial pre-payments 12
Asset quality and liquidity [AED billion; %] NPLs and % of Gross Loans NPL Coverage Ratio [%] NPL % of Gross Loans NPLs % 148.0% 145.0% 138.4% 2.8 131.0% 3.0 2.7 2.7 10 120.4% 2.5 2.2 8 2.0 2.0 6 1.5 3.7% 3.7% 3.7% 4 2.9% 2.8% 1.0 2 0.5 0.0 0 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Liquid assets trend Key Points > NPLs stand at AED 2.0 bn as of December 2015; NPL as % of total assets Liquid assets % of Gross loans is currently at 2.8% % > Coverage ratio in December 2015 has improved to 30% 30% 29% 28% 28% 35 30 reach 145.0% vs. 120.4% in December 2014 30 25 > Continuing with a prudent provisioning policy, Mashreq 25 has set aside net allowance for impairment of AED 318 20 million in 4Q 2015 20 34.4 15 33.4 31.1 31.2 15 29.4 > Liquid assets to total assets as of December 2015 was 10 10 at 30%, as compared to 28% in December 2014 and 5 28% in September 2015 5 0 0 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 13
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