Q2 2013 Results Presentation July 22, 2013 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
Q2 2013 Financial Results Highlights Highlights Key Performance Indicators • Net profit of AED 972 million , Better/ Better/ AED million Q2 2013 Q2 2012 Q1 2013 improved by +50% vs. Q2 2012 and (Worse) (Worse) +16% vs. Q1 2013 Net interest income 1,913 1,639 17% 1,748 9% • Net interest income improved by Non-interest income 1,007 860 17% 882 14% +17% y-o-y and +9% q-o-q 2,920 2,499 2,630 11% Total income 17% • Non-interest income improved by (973) (894) (909) (7%) Operating expenses (9%) 17% y-o-y and by 14% q-o-q; core Amortisation of fee income improved by 6% q-o-q (16) (20) (15) (7%) 20% intangibles • Costs increased by 6% y-o-y, 4% Pre-impairment 1,931 1,585 22% 1,706 13% q-o-q while Cost to Income Ratio operating profit improved by 3.3% y-o-y and 2.1% q- (997) (954) (888) Impairment allowances (4%) (12%) o-q after excluding acquisition costs relating to the Egypt Operating profit 48% 934 631 818 14% transaction Share of profits of 41 21 26 • Continued balance sheet de-risking 90% 54% associates and conservative provisioning (3) (5) 40% (7) Taxation charge 57% resulted in net impairment allowances of AED 997 million Net profit 972 647 50% 837 16% • Net loans increased 11% y-o-y and 33.3% 35.8% 2.5% 34.6% 1.3% Cost: income ratio 5% q-o-q Net interest margin 2.48% 2.28% 0.2% 2.39% 0.09% • Deposits increased 3% q-o-q and Better/ Better/ 11% y-o-y AED billion 30-Jun-13 30-Jun-12 31-Mar-13 (Worse) (Worse) • Headline LTD ratio at 101% Loans 231.8 208.2 11% 220.6 5% vs.100% at end of Q2 2012 Deposits 230.4 208.4 11% 223.0 3% 3
Net Interest Income Net Interest Margin (%) Highlights • NIM increased by 9 bps from 2.39% in Q1 2013 to 2.96 2.48% in Q2 2013 which coupled with balance sheet 2.85 Qtrly NIM growth resulted in an increase in net interest income YTD NIM which is 9% higher than the previous quarter 2.69 2.63 2.63 2.63 • Q2 2013 NIM increase is driven mainly by higher 2.53 spreads in loans and deposits partly offset by 2.48 2.47 2.45 decrease in treasury spreads 2.42 2.39 2.47 2.43 2.42 2.39 2.28 2.35 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Net Interest Margin Drivers (%) Q4 2012 to Q2 2013 0.01 0.02 2.47 2.48 0.04 0.04 0.03 0.04 0.13 2.39 0.04 Q4 2012 Loan Deposit Treasury Other Q1 2013 Loan Deposit Treasury Other Q2 2013 Spreads Spreads Spreads Spreads Spreads Spreads 4
Funding and Liquidity Loan to Deposit (LTD) Ratio (%) Highlights • Headline LTD ratio of 100.6% at Q2 2013 107.0 • The LTD ratio is being managed within a target range 105.1 LTD Ratio (%) of 95%-105% • Liquid assets* of AED 32.2 billion as at 30 June 2013 102.0 100.6 (11% of total liabilities) 99.9 99.2 98.9 • Issued AED 2.42 billion medium term debt during 2013 97.9 96.3 via private placements • Issued AED 3.6 billion of Tier 1 capital notes • Issued AED 2.75 billion of Tier 2 notes in March 2013 • Repaid AED 1.3 billion of subordinated debt Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 • Repaid AED 7.8 billion to Ministry of Finance in H1 2013 Composition of Liabilities and Maturity of Debt Issued (AED million) Composition of Liabilities Maturity Profile of Debt/Sukuk Issued 100% = AED 21.4 billion Others Debt / Sukuk Issued 5,910 7% Banks 4% 10% 3,069 2,932 2,617 2,299 1,562 1,502 1,254 200 43 78% Customer deposits 2013 2014 2015 2016 2017 2018 2019 2020 2022 2023 5 *including cash and deposits with Central Banks but excluding interbank balances and liquid investment securities
Loan and Deposit Trends Highlights Trend in Gross Loans by Type (AED billion) • Signs of modest pickup in new +12% underwriting across all business 249 238 segments with 12% growth in gross 234 +5% 227 223 189 181 loans from Q2 2012 179 • Gross loans given to customers of 172 176 26 22 23 BNP Paribas Egypt are AED 3.8 21 21 billion . 66% of these loans relate 33 34 34 30 30 to corporate customers 0 0 0 0 0 • Customer deposits of BNP Paribas Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Egypt are AED 7.3 billion. 54% of Corporate Consumer Islamic Treasury these deposits are CASA • Balance sheet optimisation Trend in Deposits by Type (AED billion) initiatives successful in improving deposit mix : – Growth of 11% in deposits +11% – CASA growth of 32% or AED 28 230 223 billion from Q2 2012 and 13% 214 214 208 2 +3% 2 1 1 112 from Q1 2013 1 – 50% of total deposits in the form 120 123 122 119 of CASA at end of Q2 2013 116 101 90 91 compared to 42% and 43% at end 88 of Q2 2012 and Q4 2012 respectively Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Other Time CASA 6
Non-Interest Income Highlights Composition of Non Interest Income (AED million) • Non-interest income improved by Better/ Better/ AED million Q2 2013 Q2 2012 Q1 2013 14% q-o-q and 17% y-o-y (Worse) (Worse) • Increase of 80% y-o-y and 52% q-o-q Core gross fee 823 10% 750 10% 748 income in income from non-core items due to: Fees & commission (53) 165% (24) 121% – Higher property income in Q2 (20) expense 2013 from the gain on sale of 770 726 6% Core fee income 6% 728 properties held as inventory due to Property income 116 5 2200% 32 263% a robust real estate market Investment securities – Lower investment securities 121 127 124 (2%) (5%) income / (loss) income in Q2 2013 due to higher Total Non Interest 1,007 17% 882 14% credit spreads 860 Income • Core fee income improved q-o-q and Trend in Core Gross Fee Income (AED million) y-o-y by 6% , key trends being: – Improvement in banking fee income (15% q-o-q and 27% y-o-y) arising +10% 823 from increased fee on Loan 747 750 +10% 674 645 Syndication as we reached out to 216 215 255 47 163 198 regional customers 37 31 17 32 384 334 303 308 279 – Improvement in brokerage/asset management fee income 176 158 157 165 164 (27% q-o-q and 52% y-o-y) Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 – Forex, Rates & Other was stable Forex, Rates & Other Fee Income q-o-q & was 16% lower y-o-y Brokerage & AM fees Trade finance 7
Operating Costs and Efficiency Highlights Cost to Income Ratio (%) • Q2 2013 Costs increased by 6% y-o-y (Excluding costs of the Egypt 35.9 35.8 acquisition). CI Ratio improved y-o-y 35.3 35.2 35.1 and q-o-q 34.6 • Excluding the BNP Paribas Egypt 33.3 numbers, the CI ratio would have been 33.1% at Q2 2013 • Costs increased by 7% q-o-q by Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 AED 64 million to AED 973 million in Q2 2013 resulting from: CI Ratio – BNP Paribas Egypt acquisition costs – AED 24 million Cost Composition (AED million) – BNP Paribas Egypt administrative costs – AED 18 million +9% – Increase in other costs by AED 20 973 million 958 909 894 875 3 +7% 79 8 76 69 – The cost to income ratio will be 619 534 579 managed to the longer term target 523 502 range of c.34%-35% 58 65 55 60 61 71 74 75 66 68 216 192 212 166 178 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Dubai Bank Occupancy cost Other Cost Staff Cost Depreciation 8
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