#1ت البراك الغير لي البنك العربي ARAB BANK ARAB BANK Arab Bank Group INVESTOR RELATIONS PRESENTATION December 31, 2016#2TABLE OF CONTENTS General Information • Financial Data & KPIs • Credit Rating • Stock Information • Corporate Governance • Disclaimer • Appendix#3GENERAL INFORMATION 3#4A strong heritage with deep roots... GENERAL INFORMATION HISTORY Arab Bank was established in 1930, and is registered as a Jordanian publicly listed company. • PROFILE • • Arab Bank, headquartered in Amman, Jordan, is the largest global Arab banking network with over 600 branche spanning five continents. Arab Bank is listed on the Amman financial market and represents almost 25% of the market capitalization. Arab Bank provides a wide range of financial products and services for individuals, corporations and other financial institutions. The Bank's products and services cover consumer banking, corporate and institutional banking, as well as treasury services. Key Financial Highlights 2015 2016 Total assets $49.0bn $47.5bn Loans $23.8bn $23.7bn Customer deposits $35.2bn $33.6bn Owners' equity $8.0bn $8.2bn Revenue $1.91bn $1.93bn Net income before tax $719m $791m Net profit $442m $533m#5Arab Bank's core strengths A well-provisioned loan portfolio. NPLs coverage ratio stood at 116% The ratios are as of December 31, 2016 Net operating income amounted to USD 1.1 billion as of December 31, 2016 An established brand name with strong equity and core values One of the most important providers of trade finance in the region Well controlled operating expenses Superior geographic diversification Liquidity ratio with LTD of 70.4% Strong capitalization and a CAR of 15.7% according to Basel III requirements 5#6Spanned in a global network... Arab Bank Corporate Structure Sister Company ARAB BANK (SWITZERLAND) LTD. Arab Bank Switzerland is a sister company owned by Arab Bank shareholders, and it provides asset management and investment counselling for high net worth clients. Branches • Jordan • Offshore Banking Unit - Bahrain • Palestine • Algeria . Egypt • Morocco • UAE • Yemen Qatar • New York • Bahrain • Singapore • Lebanon Subsidiaries B EuropeArabiank Arab Bank Australia الشيخة العجيبة الوطنية المثلجية ATB انت الفرش تونس Europe Arab Bank (100%) provides corporate and institutional banking, private banking and treasury services. Arab Bank Australia (100%) provides commercial and retail banking services. Islamic International Arab Bank PLC (100%) provides a full range of Islamic banking products and services in Jordan. Arab National Leasing Company (100%) provides financial leasing services. Arab Tunisian Bank (64.2%) provides corporate and retail banking products and services. Al Nisr al-Arabi Insurance Company (50%) provides a full range AL-NISR AL-ARABI INSURANCE of insurance services. PART OF ARAB BANK GROUP Major Associates العربي anb QOD بقلم عمان العربي OMAN ARAB BANK T-BANK Arab National Bank (40%) provides commercial, Islamic, treasury and investment products and services in Saudi Arabia. Oman Arab Bank (49%) provides corporate, retail, investment banking and trade finance products and services in Oman. Turkland Bank (50%) provides corporate and commercial banking services in Turkey. • Arab Sudanese Bank (100%) • Arab Group for Investment Company (100%) • Al Arabi Investment Group (100%) • Arab Company for Shared Services - UAE (100%) • Arab Gulf Tech for IT Services - UAE (100%) • Arab Bank Syria (51.29%) 10#7Our entities... Always within your reach Arab Bank is the largest global Arab banking network, with over 600 branches spanning five continents through Arab Bank PLC branches, subsidiaries, its sister company and associates: Country Since Branches Employees Palestine 1930 32 897 Jordan 1934 120 4,179 Lebanon 1944 10 313 Egypt 1944 40 1,170 Qatar 1957 4 134 Bahrain 1960 6 185 Morocco 1962 5 130 Switzerland** 1962 2 115 UAE 1963 9 444 Yemen 1972 7 215 Saudi Arabia* 1980 152 4,403 USA 1982 1 5 Oman* 1984 65 1,264 Tunisia 1982 130 1,411 Far East 1984 3 53 Australia 1994 8 112 Algeria 2001 8 244 Syria 2005 19 278 Europe 2006 6 131 Turkey* 2006 33 608 Sudan 2008 3 80 * Associates: Arab National Bank (Saudi Arabia) [40%], Oman Arab Bank (Oman) [49%], T-Bank (Turkey) [50%]. **Sister Company: Arab Bank (Switzerland) 7#8FINANCIAL DATA & KPIs#9Strong and robust balance sheet AB Group - Consolidated Balance Sheet Assets Cash and due from banks Investment portfolio USD'000 Dec. 2015 USD'000 Dec. 2016 12,563,802 12,607,642 10,314,727 8,810,383 Loan portfolio - net 22,180,987 21,898,121 Investment in associates 2,916,290 3,077,008 Fixed assets - net 451,444 463,633 617,343 603,604 49,044,593 47,460,391 Other assets Total assets Liabilities & Owners' Equity USD'000 Dec. 2015 USD'000 Dec. 2016 Due to banks 3,712,479 4,024,184 Customer deposits & cash margin 35,242,318 33,643,578 Other liabilities & other provisions 2,074,215 1,628,093 Total liabilities 41,029,012 39,295,855 Capital & reserves 5,024,566 5,069,944 Other equity items 2,861,991 2,972,225 Total Equity Attributable to 7,886,557 8,042,169 Shareholders of the Bank Non-controlling interests 129,024 122,367 Total owner's equity 8,015,581 8,164,536 Total liabilities & owners' equity 49,044,593 47,460,391#10AB Group consolidated income statement * Income Statement USD'000 Dec. 2015 USD'000 Net interest income 1,091,138 Dec. 2016 1,114,518 Net commission 319,603 315,903 Group's share of profits of associates 356,981 334,964 Other revenue 140,638 161,027 Net operating revenue 1,908,360 1,926,412 Operating expenses 1,156,141 956,541 Net operating income 752,219 969,871 Provision for impairment - direct credit facilities 32,891 179,056 Net income before tax 719,328 790,815 Income tax 277,205 258,149 Net income after tax 442,123 532,666 Foreign operations continue to do well despite challenging economies in the region. 10#11AB Group key financial indicators Dec. Dec. Dec. Dec. Key Financial Indicators 2013 2014 2015 2016 Loan to deposit 67.1% 67.7% 67.6% 70.4% Cost to income 59.1% 55.2% 62.3% 58.9% Cost to income - Excluding Provision for Impairment & Non-recurring 42.0% 42.3% 42.3% 41.9% Expenses Return on equity 6.5% 7.3% 5.5% 6.5% Return on assets 1.1% 1.2% 0.9% 1.1% Capital adequacy - tier 1 15.15% 14.80% 14.20% 15.68%* Capital adequacy - total 15.15% 14.80% 14.20% 15.68%* NPL to gross credit facilities - excluding suspended interest 5.6% 5.2% 4.8% 4.9% NPL coverage ratio - excluding suspended interest 102% 106% 109% 116% * According to Basel III (CBJ requirements) 11#12Diversified and well controlled geographical coverage Loans Deposits Revenue Net Operating Income GCC 31% GCC 25% GCC 36% GCC Jordan 27% Jordan 36% Jordan 26% Jordan 19% North Africa 16% North Africa 15% North Africa 18% North Africa 18% Europe 10% Europe 10% Europe 8% Europe 3% MENA 10% MENA 12% Far East and Other Far East and 6% Other 2% Geographical diversification as of December 31, 2016 ΜΕΝΑ 10% ΜΕΝΑ 9% Far East and Other 2% Far East and Other 1% 50% 12#13Financial trends in recent years Assets in USD Billions 2012 Loans in USD Billions 45.98 2012 2013 46.86 2014 2015 2016 Equity in USD Billions 2012 48.81 Customer Deposits in USD Billions 22.51 2012 2013 23.09 2014 49.04 2015 47.46 2016 Revenue in USD Billions 7.70 2012 2013 7.77 2014 7.89 2015 8.02 2016 8.16 1.75 23.68 2013 2014 23.81 2015 23.67 2013 1.81 2014 1.88 2015 2016 1.91 1.93 2016 Net Income in USD Millions 2012 2013 2014 32.89 34.39 34.97 33.64 352 2015 442* 2016 35.24 502 577 533 * 2015 NIAT impacted by legal provision of $349 million. • Excluding the effect of foreign currency devaluations, the bank has shown a consistent solid growth during 2016 whereby loans and advances grew by 6% and customer deposits grew by 3%. 13#14Revenue and net operating income Revenue (USD Million) Revenue by segment Dec. 2016 2012 1,011 444 294 1,750 2013 1,064 436 310 1,811 2014 1,075 454 348 1,877 2015 1,091 460 357 1,908 Other 19% Consumer 26% 2016 1,115 476 335 1,926 Interest Income Non-Interest Associates Net Income before Tax (USD Million) 2012 563 2013 741 2014 841 2015 719 2016 791 Treasury 15% Corporate 40% 14#15Profitability ratios Return on Assets Return on Equity 1.2% 7.3% 1.1% 1.1% 6.5% 6.5% 0.9% 5.5% 0.8% 4.6% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Cost to Income - Excluding Provision for Impairment & Non-recurring Expenses 43.1% 42.3% 42.3% 42.0% 41.9% 2012 2013 2014 2015 2016 EPS (USD) 1.01 0.93 0.64 0.81 0.67* 2012 2013 2014 2015 2016 * EPS equals USD 1.22 excluding legal provisions for 2015 15#16Asset quality and liquidity ratios Loan to Deposit 68.4% 67.7% 67.6% 67.1% 70.4% NPL Coverage Ratio - Excluding Suspended Interest 102% 106% 109% 116% 92% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Total Owners' Equity to Total Assets NPL to Gross Credit Facilities - Excluding Suspended Interest 6.8% 5.6% 16.7% 16.6% 16.2% 16.3% 17.2% 5.2% 4.8% 4.9% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 16#17Loan quality Highlights 1.50 1.38 • Arab Bank classifies the loan portfolio in compliance with IFRS requirements and the Bank's stringent guidelines, whichever is stricter. NPLs include old loans which are fully provided. The Bank is very cautious in writing off loans to safeguard its legal position for collection. The credit portfolio's quality remains strong despite regional conditions. As of December, 2016, the NPL coverage ratio stood at 116%, in line with the Bank's prudent provisioning policy. 73% of the Bank's loan book is composed of corporate clients, which is well-diversified across economic sectors and regions. Consumer loans represent 22% of the loan portfolio, and the amount of 90 days overdue represents only 1.6% of the consumer loan portfolio. 2012 Gov. 5% Consumer 22% 1.31 1.30 1.28 1.28 1.21 1.21 1.13 1.12 116% 109% 106% 102% 92% Provision (USD Billions) 2013 2014 2015 2016 NPL-Excluding Int. in Suspense (USD Billions) Banks & Fl 0% Coverage Ratio GCC 31% Jordan 27% Far East and Other Corporate 73% North MENA 10% 6% Africa Europe 16% 10% • Loans as of December 31, 2016 17#18Capital adequacy Highlights • Solid capital adequacy ratio well above Basel III requirements with CET1 and CAR to 15.68% as of December 31, 2016. • High quality capital; all comprised of CET1. • Solid leverage ratio well above Basel III & CBJ requirements. • High Liquidity ratios (Liquidity coverage ratio and Net stable funding ratio) well above Basel III and CBJ requirements. * According to Basel III (CBJ requirements) 2012 34.7 33.0 32.3 31.3 30.6 15.09 15.15 2013 2014 Risk Weighted Assets (USD Billions) CAR % 14.80 2015 14.20 18 2016* 15.68#19CREDIT RATING + 19#20Credit rating Agency Entity Rating Date Fitch Moody's Arab Bank PLC Arab Bank PLC - Jordan BBB-/Negative/F3 March 2016 Ba2/Stable/NP August 2016 Arab Bank PLC BB-/Negative/B November 2016 Standard & Poor's Arab Bank Group operating entities (Europe Arab Bank, Arab Bank Australia Ltd) BB+/Stable/B November 2016 International credit rating agencies (Moody's, Fitch, and Standard & Poor's) emphasized on the Banks' pioneer position supported by its solid business franchise, superior geographic diversification, well-known brand, strong management, and conservative financial policies which allow the bank to be rated above its sovereign and peers. "AB group has been a consistently solid performer, even during difficult domestic or regional operating conditions. The group's performance reflects its broad geographical diversification, its conservative attitude to risk, and a policy of making liquidity paramount.” (Fitch) "The group's top management has proven skills, capacity, and expertise to run the bank, in line with its strategy, which we view as well defined and prudently exercised." (S&P) 20 20#21STOCK INFORMATION 21 21#22• • Stock Information Arab Bank is the largest listed company on Amman stock exchange with a market capitalization of USD 5.6 billions as of December 31, 2016, representing almost 25% of total market. Arab Bank shares are traded in multiple lots of 18 shares coupled with 1 share of Arab Bank Switzerland. Shareholders Structure Institutions 39% A strong and diversified base of shareholders. An attractive share price with 10.7 P/E ratio, and 0.68 P/B ratio as of December 31, 2016. A dividend yield of 5% as of December 31, 2016. Governments 25% Individuals 31% Mutual Funds 1% Others 4% 22 22#23Stock information Share Price in USD as of December 31 EPS 10.23 0.64 0.43 2012 0.93 11.04 2013 Dividend per Share 0.43 Stock Price 1.01 10.01 9.10 8.70 0.18 2014 0.81 0.67* 0.36 0.43 2015 2016 * EPS equals USD 1.22 excluding legal provisions for 2015 11.04 10.01 10.23 9.10 8.70 14.55 14.42 13.85 12.51 12.74 2011 Book Value Stock Price 2013 2014 2015 2016 23#24CORPORATE GOVERNANCE#25Corporate governance Arab Bank adopts the latest corporate governance regulations according to the best practices and Central Bank of Jordan instructions. • • Arab Bank's Board of Directors, led by Mr. Sabih Taher Masri, Chairman of the board, is composed of 12 members, all non-executives elected for a period of four years by the General Assembly. The board meets at least six times a year and has strong adherence to good corporate governance standards. Board of Directors Member Name Mr. Sabih Taher Masri H.E. Dr. Bassem Ibrahim Awadallah H.E. Mr. Suleiman Hafez Suleiman Masri Mr. Saleh Saad Al-Muhanna Chairman Vice Chairman On Behalf / Ministry of Finance, Saudi Arabia Mrs. Nazik A. A. Odah / Al-Hariri Mr. Mohammed Ahmad Al-Hariri Dr. Izzidine Kanakrieh H.E. Mr. Khaled Anis (Zand Irani) Mr. Wahbe Abdullah Tamari Mr. Bassam Wael Kanaan Mr. Abbas Farouq Zuaiter H.E. Mr. Alaa Arif Batayneh On Behalf/Jordan Social Security Fund On Behalf / Abdul Hameed Shoman Foundation 25#26Corporate governance structure • Board committees: - Audit committee - Risk management committee Credit committee Corporate governance committee Strategy committee - Nomination and remuneration committee IT governance committee • Executive committees High asset & liability committee - Senior credit committee Operational risk committee IT steering committee • - Country committees Local asset & liability committee - Country credit committee - • Country management committee Supported by three lines of control/defense 26#27Disclaimer The material in this presentation has been prepared by Arab Bank plc (the "Bank") and represents general background information about Arab Bank Group (the "Group") activities current at the date of the presentation. The information in this presentation is given in a summary form and does not assume to be complete and it is not intended to be relied upon as advice to investors or potential investors. Some of the information relied on by the Bank in this presentation is obtained from sources available to the public and believed to be reliable, but the Bank does not guarantee its accuracy, completeness or correctness. The presentation has been prepared for information purposes only and is not and does not form part of any offer for sale or solicitation of any offer to subscribe for or purchase or sell any securities nor shall it form the basis of or be relied on in connection with any contract or commitment whatsoever. While the information included in the presentation document has been prepared in good faith, neither the Bank nor its related entities, directors, employees or agents, nor any other person, accepts any liability from reliance on this presentation document. The Bank bears no responsibility in any instance for loss which may result from reliance on the information in this presentation. This presentation should be read in conjunction with other publically available material. It is not to be relied upon as such in any manner as legal, tax or investment advice and should not be used in substitution for the exercise of independent judgment and each recipient hereof shall be responsible for conducting its own investigation and analysis of the information contained herein in conjunction with other publically available information. Forward-Looking Statements ⚫ It is possible that this presentation could 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. The inclusion of such forward looking statements shall not be regarded as a representation by the Bank that its objectives or plans will be achieved. 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. • Arab Bank undertakes no obligation to revise or update any forward looking statement contained within this presentation, regardless whether those statements are affected as a result of new information, future events or otherwise. The Bank holds copyright to this presentation document, unless expressly indicated otherwise or is self-evident from its nature written permission from the Bank is required to republish the presented information on the Bank or to distribute such information. This shall apply regardless of the purpose for which it is to be republished or distributed. 27#28APPENDIX#29Group balance sheet December, 31 2015 USD '000 December, 31 2016 USD '000 December, 31 2015 USD '000 December, 31 2016 USD '000 ASSETS Cash and balances with central banks Balances with banks and financial institutions Deposits with banks and financial institutions Financial assets at fair value through profit or loss Financial derivatives - positive fair value Direct credit facilities at amortized cost Financial assets at fair value through other comprehensive income OWNERS' EQUITY 9 472 381 7 809 343 2 992 403 4 622 181 99 018 176 118 831 980 58 235 698 516 58 011 Share capital Share premium Statutory reserve Voluntary reserve General reserve 22 180 987 21 898 121 General banking risks reserve 479 038 470 912 Other financial assets at amortized cost 9 003 709 7 640 955 Reserves with associates Foreign currency translation reserve Investment revaluation reserve 1 540 896 1 225 747 798 443 977 315 1 141 824 363 458 1 540 896 (402 682) (267 672) 926 615 1 225 747 753 065 977 315 1 141 824 363 458 926 615 (284 609 ) (260 621) Investment in associates 2 916 290 3 077 008 Retained earnings 1 502 867 1 738 225 Fixed assets 451 444 463 633 Total Equity Attributable to Shareholders of the Bank 7 886 557 8 042 169 Other assets 500 479 472 203 Deferred tax assets 58 629 73 390 Non-controlling interests TOTAL ASSETS 49 044 593 47 460 391 Total Owners' Equity 129 024 8015 581 LIABILITIES TOTAL LIABILITIES AND OWNERS' EQUITY 49 044 593 122 367 8 164 536 47 460 391 Banks and financial institutions' deposits 3 636 734 3 752 999 Customer deposits 32 799 228 31 082 152 Cash margin 2 443 090 2 561 426 Financial derivatives - negative fair value 53 705 Borrowed funds 75 745 52 517 271 185 Provision for income tax Other provisions Other liabilities Deferred tax liabilities 235 918 242 377 145 235 259 795 1 627 254 1 072 128 12 103 Total Liabilities 41 029 012 1 276 39 295 855 29 29#30Group Income Statement December, 31 2015 USD '000 December, 31 2016 USD '000 REVENUE Interest income Less: interest expense Net interest income Net commissions income Net interest and commissions income Foreign exchange differences Gains from financial assets at fair value through profit or loss Dividends on financial assets at fair value through other comprehensive income Group's share of profits of associates Other revenue TOTAL INCOME 70 827 14 315 5 430 356 981 50 066 1 908 360 EXPENSES Employees' expenses Other expenses Depreciation and amortization Provision for impairment - direct credit facilities at amortized cost Other provisions TOTAL EXPENSES Profit before income tax Less: Income tax expense Profit for the Year 1 815 895 724 757 1 091 138 319 603 1 410 741 1 865 835 751 317 1 114 518 315 903 1 430 421 61 185 5 147 7813 334 964 86 882 1 926 412 440 652 647 238 52 041 32 891 16 210 439 105 338 397 47 661 179 056 131 378 1 189 032 1 135 597 719 328 790 815 277 205 258 149 442 123 532 666 Attributable to: Bank shareholders Non-controlling interests Total Earnings per share attributable to Bank Shareholders - Basic and Diluted (US Dollars) 430 830 522 187 11 293 442 123 0.67 10 479 532 666 0.81 30 30