#1Emirates NBD Investor Presentation August/September 2014 Emirates NBD#2Important Information Emirates NBD 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#3Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix Emirates NBD 3#4M bpd 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 UAE Oil production OPEC oil price (rhs) Source: Bloomberg, Emirates NBD Research UAE Oil Production (Ihs) Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 UAE Economic Update Highlights . 2014 growth estimates revised upwards to 5%. Oil production has been broadly stable in Q2 2014. Hydrocarbons is not expected to contribute significantly to overall growth in 2014. Non-oil sector expected to be main driver of UAE growth in 2014. PMI data reached a record high in June, on the back of strong output and new order growth, reflecting improved domestic and external demand. Inflation expected to accelerate to an average 3.0% in 2014 from an average of 1.1% in 2013, on higher housing costs and rising input prices. Real GDP Growth Forecasts UAE Country UK US Saudi 2008 2009 2010 2011 2012 2013 2014F 2015F 3.2% -4.8% 1.6% 4.9% 4.7% 5.2% 5.0% 4.8% China 9.6% 9.2% 10.4% 9.3% 7.7% 7.7% 7.0% 7.3% Eurozone 0.4% -4.4% 2.0% 1.6% -0.3% 0.1% 0.5% 1.5% 2.1% Hong Kong -2.5% 6.8% 4.8% 1.5% 2.9% 3.2% 3.5% India 8.2% 6.6% 9.4% 7.7% 4.8% 4.7% 4.8% 5.5% Japan -1.0% -5.5% 4.7% -0.5% 1.5% 1.5% 2.0% 1.5% Singapore 1.9% -0.6% 15.4% 5.3% 2.5% 3.9% 3.8% 3.9% -0.8% -5.2% 1.7% 1.1% 0.3% 1.7% 2.5% 2.0% -0.3% -2.8% 2.5% 1.8% 2.8% 1.9% 3.0% 3.5% 8.4% 1.8% 7.4% 8.6% 5.8% 3.8% 4.7% 4.0% Source: Bloomberg, Emirates NBD Research Feb-14 Apr-14 Jun-14 140 59 2014 20 58 120 100 57 USD per barrel 56 55 g$$གྷཐ88 54 53 52 51 50 Jan-10 Mar-10 Source: Markit/HSBC May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 UAE PMI - Non Oil Private Sector Activity Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 4 Emirates NBD#56% 5% 4% 3% 2% 1% 0% -1% -2% Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 60-IոՐ Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Source: Bloomberg, Emirates NBD Research Jan-11 Apr-11 EIBOR UAE Economic Update (cont) Highlights Total bank loan growth reached 8.3% y-o-y in April. The growth rates for loan and deposit growth have been broadly stable in the first four months of the year Money supply grew at the fastest rate since November 2008, reaching 23.6% y-o-y in April. This reflects strong growth in both demand deposits and quasi money (FX and longer term dirham deposits) 3M EIBOR rate continued to ease as liquidity in the banking system improved. The spread between 3M EIBOR and 3M LIBOR is now at the lowest level since October 2008 • Dubai CDS tightened to a post crisis low of 135 bps mid-June, before widening slightly to current levels around 156bp, reflecting confidence in the economic recovery and prospects for growth going forward. EIBOR - LIBOR spreads UAE CDS spreads 730 630 530 430 330 230 130 30 60-լոՐ Dubai (Ihs) Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Oct-10 Jan-11 Jan-1 Apr-11 Jul-11 Oct-11 Jan-12 Jan-12 Abu Dhabi (rhs) 280 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Source: Bloomberg, Emirates NBD Research Bank deposit and loan growth* 230 180 130 80 30 ⚫LIBOR Spread 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 -4% Feb-10 Apr-10 Jun-10 Aug-10 Source: UAE Central Bank, *loan growth gross of provisions Bank deposits (% y/y) Bank Loans (% y/y) Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 5 sdq Emirates NBD#6Dubai Economic Update Dubai: Real GDP growth Highlights Dubai's economy expanded 4.6% in 2013 as manufacturing, hospitality and transport and logistics expanded robustly. The construction sector also contributed positively to growth for the first time since 2008, albeit marginally at 1.3% y-o-y GDP growth expected to accelerate to 5% in 2014 on the back of continued growth in tourism and hospitality, boosting trade, transport and associated services as well as a faster recovery in the construction sector. Infrastructure spending ahead of Expo 2020 will remain the main driver of growth in the construction sector, although the delivery of recently launched residential developments will also contribute over the next few years % y/y 6% of oo -2% -4% Composition of Dubai GDP Other Dubai GDP by Sector (%) - 2013 5% Hosp. 5% Financial servcs. 11% Trade 29% Transport, comm. 15% Manuf. 14% Constr. & RE 21% Emirates NBD 5.0% 5.0% 4.6% 4.1% 3.5% 3.5% 3.0% -4.3% -6% 2008 2009 2010 2011 2012 2013 2014f 2015f Source: Dubai Statistics Centre, Emirates NBD Research Dubai's fastest growing sectors -10 -15 -20 2505 10 0 -5 15252 Manuf Fin. Serv. 15 2010 % yly 2011 Trans. & Comm. Hospitality Trade Constr. & RE 2012 2013 Source Dubai Statistics Centre, Emirates NBD Research Source: Dubai Statistics Centre, Emirates NBD Research 6#7Dubai Economic Update (cont) Emirates NBD Highlights • Tourism continues to be a key driver of Dubai's growth with Dubai International, the world's second busiest international hub enjoying strong passenger growth of 9.2% in Jan-May 2014 over the same period last year,, despite major runway refurbishment in May/June. Growth has been driven by new partnerships (for example with Qantas), network expansion and the opening of new routes to Eastern Europe, North & South America, Australia and Asia. Hotel occupancy averaged 85% in Jan-May 2014, broadly unchanged from the same period last year. Hotels were able to increase rates by more than 7% on average year-to-date, despite a 7.4% increase in the supply of hotel rooms in Dubai. Dubai's non-oil foreign trade value increased 5.9% y-o-y in Q1 2014. Hotel occupancy and RevPAR Mn Dubai Airports passenger traffic TTT 76543210 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Passenger traffic (Mn people) (lhs) Jul-13 Source: Dubai Airports, Emirates NBD Research Sep-13 Nov-13 Jan-14 Mar-14 NU!! 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% May-14 Jul-14 Passenger traffic (% y/y) (rhs) Dubai: External trade growth trends 100% 80% 60% 40% 20% 0% -20% -40% -60% Jan-09 Apr-09 60-յոՐ Oct-09 Jan-10 Apr-10 11 Jul-10 Oct 10 Oct-10 Jan-11 Apr-11 Jul-11 سلسل اساسي Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 RevPAR (% y/y) Hotel Occupancy (%) Source: STR Global, Emirates NBD Research Apr-14 Jul-14 1,000 60% 800 600 400 200 0 ให 40% 20% 0% -20% -40% 2006 2007 2008 2009 2010 2011 2012 2013 Imports (Ihs) Imports (% y/y) (rhs) Source: Dubai Statistics Centre Exports & Re-Exports (lhs) Exports & Re-exports (% y/y) (rhs) 7#82500 2000 1500 1000 500 Price per sq ft (In AED) Jan-06 90-լոՐ Jan-07 Jul-07 Jan-08 Dubai Economic Update (cont) Highlights Residential real estate prices were flat m-o-m across most segments in June, according to Cluttons, and annual growth rates continue to slow. Values are still 13-25% below their 2008 peaks, depending on the sector, with mid-range units having made up the most ground. Commercial property lease rates continue to rise, with prime office space up 21.1% y-o-y and secondary commercial space up 22.2% y-o- y in Q2 2014. No. of licenses in '000s 120 100 Business Licenses issued* Dubai Residential Property Prices Source: DSC, *Licenses issued by DED only (excludes Freezones) Dubai Commercial Property Lease Rates Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Mid range villa Mid range apt High end villa Source: Cluttons via Bloomberg, Emirates NBD Research Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 500 450 400 350 300 250 200 150 100 50 0 Lease rates per sq ft (In AED) 80 60 40 20 0 -20 2010 2011 New Licenses ■Renewed 2012 Cancelled Mar-06 Dec-06 Sep-07 Jun-08 Mar-09 Dec-09 Sep-10 -Low end apt Prime office Secondary office Source: Cluttons via Bloomberg, Emirates NBD Research Jun-11 Mar-12 Dec-12 Sep-13 Jun-14 88 2013 Emirates NBD#9UAE Banking Market Update Emirates NBD Highlights UAE Banking sector is the largest by assets in the GCC; sector is dominated by 23 local banks which account for more than 75% of banking assets; 28 foreign banks account for the remainder In the past couple of years the Central Bank of the UAE has sought to play a stronger role in the oversight and governance of the Banking Sector in the UAE This has resulted in a new regulatory regime with various regulations being considered covering areas such as liquidity risk, large exposures and mortgage caps amongst others. AED Bn UAE Banking Sector Growth (AED Bn) 2,500 2,000 1,500 1,000 500 0 2002 33 273 2003 36 321 2004 448 ■Banking Assets ■Nominal GDP 643 1,223 758 1,456 1,157 387 639 2005 506 2006 859 954 2010 2011 2012 2013 1,479 2014 2,237 1,559 Composition of UAE Banking Market (AED Bn) Gross Loans 268 1,165 1,433 GCC Banking Market UAE(1) Banking Assets USD Bn KSA Deposits 253 1,147 1,400 Assets 348 1,889 Emirates NBD Other Banks Source: UAE Central Bank Statistics as at Jun 2014, ENBD data as of H1 2014. Qatar Kuwait Bahrain(2) 48 Oman 64 Assets % GDP(3) 609 547 71 260 198 73 143 120 106 138 1) Includes Foreign Banks; 2) Excludes Foreign Banks; 3) GDP data is for FY 2014 forecasted. Oman, UAE and Kuwait as at Jun 2014; Qatar and KSA as at Jul 2014 and Bahrain as at May 2014; Source: UAE Central Bank; National Central Banks and Emirates NBD forecasts 6#10Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix Emirates NBD 10 10#11Summary • One of the largest financial institutions (by asset size) in the GCC • Flagship bank for Dubai Government • 56% owned by Dubai Government . Emirates NBD Consistently profitable; despite significant headwinds during the global financial crisis • Fully fledged, diversified financial services offering • Ever increasing presence in the UAE, the GCC and globally • Well positioned to grow and deliver outstanding value to its shareholders, customers, and employees 11#12Emirates NBD at a glance A leading bank in UAE Market share in UAE (at 30 Jun 2014): Assets c.15.6%; Loans c.18.7% - Deposits c.18.1% Retail market shares (estimated at 30 Jun 2014): Personal loans c.14% Home loans c.4% - Auto loans c.15% Credit cards c.17% - Debit cards c.24% Fully fledged financial services offerings across retail banking, private banking, wholesale banking, global markets & trading, investment banking, brokerage, asset management, merchant acquiring and cards processing Credit Ratings Long Term Short Term Outlook M Baa1 P-2 Stable Moody's Fitch Ratings GCAPITAL A+ F1 Stable A A1 Stable intelligence Emirates NBD Largest Branch Network in the UAE Dubai 102 Ras al-Khaimah (3) Abu Dhabi 25 Sharjah 16 Umm al-Quwain (2). Other Emirates 9 Total 152 Ajman (2) Dubai (102) - Fujairah (2) Sharjah (16) Abu Dhabi (25) International Presence Branch ● Rep office Egypt (72 branches) Conventional Islamic Total 99 53 152 12#13Emirates NBD is one of the Largest Banks in the UAE and GCC as at 30 Jun 2014 UAE Ranking by Assets (AED Bn) NBAD Emirates NBD Emirates NBD 348 FGB 198 ADCB 198 DIB 123 ADIB 106 Mashreq 104 UNB 92 CBD 46 RAK 35 GCC Ranking by Assets (AED Bn) QNB 470 NCB 427 NBAD 348 Emirates NBD 348 Al Rajhi 289 NBK 261 KFH 218 SAMBA 210 Riyad Bank 210 FGB 198 Emirates NBD UAE Ranking by Shareholder's UAE Ranking by Profits (AED Equity (AED Bn) Mn) NBAD 2,829 NBAD FGB 32 ADCB 25 DIB 17 UNB 16 Mashreq 16 ADIB 13 CBD 7 RAK 6 36 FGB 2,680 32 Emirates NBD ADCB |2,350 2,010 DIB 1,278 Mashreq 1,160 UNB 1,025 ADIB 862 RAK 700 CBD 581 GCC Ranking by Shareholder's Equity (AED Bn) GCC Ranking by Profits (AED Mn) QNB NCB Emirates NBD Al Rajhi NBAD 36 NBK 36 SAMBA 35 472003 54 45 54 QNB 5,113 NCB 4,859 Al Rajhi 3,579 NBAD 2,829 FGB 2,680 SAMBA 2,445 Emirates NBD 2,350 Riyad Bank 33 SABB 2,192 FGB 32 Riyad Bank 2,170 26 KFH ADCB 2,010 13 Source: Bank Financial Statements and Press Releases, Bloomberg#14Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix Emirates NBD 14 14#15Profit and Balance Sheet Growth in Recent Years Emirates NBD Revenues and Costs (AED Bn) Profits (AED Bn) Revenues Costs Pre-Provision Operating Profits Net Profits +2% +4% -2% -1% 11.9 4.2 10.8 8.5 3.3 3.3 9.7 9.9 10.2 3.6 3.6 3.8 7.7 2.5 3.1 6.6 6.3 6.5 5.3 4.9 5.1 5.0 6.3 +27% 7.0 1.8 1.5 .9 1.9 2.3 1.2 2.3 0.3 2.6 2.3 +30% +12% 4.8 2.1 4.1 4.9 +35% 1.4 3.3 3.1 3.2 0.8 1.3 5.5 4.9 4.8 5.2 5.5 2.1 2.2 1.8 1.6 1.7 1.9 1.9 3.7 3.3 3.2 3.3 3.6 1.5 1.8 1.3 2009 2010 2011 2012 2013 H1 14 20092010201120122013 Hồ 14 2009 2010 2011 2012 2013 H1 14 Assets and Loans (AED Bn) Assets Loans 20092010201120122013 H1 14 Deposits and Equity (AED Bn) Deposits Equity +5% +3% +8% 342 348 +8% 282 286 285 308 238 242 215 196 203 218 240 253 200 214 35 181 193 26 26 28 29 31 35 2009 2010 2011 2012 2013 H1 2009 2010 2011 2012 2013 H1 14 14 37 2009 2010 2011 2012 2013 H1 2009 2010 2011 2012 2013 H1 14 14 Equity is Tangible Shareholder's Equity excluding Goodwill and Intangibles.; All P&L numbers are YTD, all Balance Sheet numbers are at end of period Source: Financial Statements 15#16H1-14 Financial Results Highlights • • Highlights Net profit of AED 2,350 Mn for H1 improved 30% y-o-y Net interest income rose 25% y-o-y helped by an improved asset mix due to retail and Islamic growth, CASA growth leading to lower cost of funds and a contribution of 6% from Egypt Non-interest income improved 31% y-o-y boosted by increases in trade finance income, brokerage & asset management fees, gains from legacy property sales and a contribution of 4% from Egypt Cost to income ratio improved 4.2% y-o-y. Excluding one-offs, cost to income ratio would have been 31.4%. Costs increased 12% y-o-y due to staff and occupancy costs linked with rising business volumes and partially offset by a control of other costs. Egypt contributed 8% of the increase Provisions of AED 2,613 Mn boosted the coverage ratio by 7.2% in H1 to 64.7% AD ratio of 95.6% within 90-100% management range NIMS improved 33bp y-o-y to 2.77% due to improving asset and deposit mix and contribution from Egypt Key Performance Indicators Emirates NBD Better/ Better / AED Mn H1-14 H1-13 H2-13 (Worse) (Worse) Net interest income 4,559 3,661 25% 4,478 2% Non-interest income 2,483 1,889 31% 1,829 36% Total income 7,042 5,550 27% 6,307 12% Operating expenses (2,137) (1,914) (12%) (2,281) 6% Pre-impairment operating profit Impairment allowances Operating profit Share of profits from associates 4,905 3,636 35% 4,026 22% (2,613) (1,884) (39%) (2,829) 8% 2,292 1,752 31% 1,197 91% 121 67 82% 80 51% Gain on disposal of stake in associates/subsidiaries Taxation charge n/a 202 (100%) (63) (10) (537%) (31) (104%) Net profit 2,350 1,808 30% 1,448 62% Cost: income ratio (%) 30.3% 34.5% 4.2% 36.2% 5.9% Net interest margin (%) 2.77% 2.44% 0.33% 2.80% (0.03%) AED Bn 30-Jun-14|30-Jun-13 % 31-Dec-13 % Total assets 348.3 334.8 4% 342.1 2% Loans 241.8 231.8 4% 238.3 1% Deposits 252.9 230.3 10% 239.6 6% 16#17Q2-14 Financial Results Highlights Emirates NBD • Highlights Net profit of AED 1,308 Mn for Q2 improved 35% y-o-y and 25% q-o-q Net interest income rose 22% y-o-y helped by an improved asset mix due to retail and Islamic growth, CASA growth leading to lower cost of funds and a 5% contribution from Egypt Non-interest income improved 37% Key Performance Indicators Better/ Better / AED Mn Q2-14 Q2-13 Q1-14 (Worse) (Worse) Net interest income 2,327 1,913 22% 2,232 4% Non-interest income 1,382 1,007 37% 1,101 26% Total income 3,709 2,920 27% 3,333 11% Operating expenses (1,087) (989) (10%) (1,050) (4%) y-o-y Pre-impairment 2,622 1,931 36% 2,283 15% operating profit y-o-y. Impairment allowances Operating profit Share of profits from associates (1,345) (997) (35%) (1,267) (6%) 1,277 934 37% 1,016 26% 60 41 46% 61 (2%) boosted by increases in trade finance income, asset management fees, gains from legacy property sales and a contribution of 3% from Egypt Cost to income ratio improved 4.6% Excluding one-offs, cost to income ratio would have been 31.1%. Costs increased 10% y-o-y due to staff and occupancy costs linked with rising business volumes and partially offset by a control of other costs. Egypt contributed 6% of the increase Provisions of AED 1,345 Mn boosted the coverage ratio by 4% in Q2 to 64.7% AD ratio of 95.6% within 90-100% management range Gain on disposal of stake in associates/subsidiaries Taxation charge n/a n/a (29) (3) (741%) (35) 17% Net profit 1,308 972 35% 1,042 25% Cost: income ratio (%) 29.3% Net interest margin (%) 2.78% 33.9% 2.48% 4.6% 31.5% 0.30% 2.75% 2.2% 0.03% AED Bn 30-Jun-14 31-Dec-13 % 31-Mar-14 % • Q2-14 NIMS improved to 2.78% due to improving asset and deposit mix Total assets 348.3 342.1 2% 347.1 0% Loans 241.8 238.3 1% 239.7 1% Deposits 252.9 239.6 6% 251.5 1% 17#18Net Interest Income Highlights NIMs improved 3 bps in Q2-14 and improved 33 bps from 2.44% in H1-13 to 2.77% in H1-14 Emirates NBD Net Interest Margin (%) 2.83 2.78 2.76 2.75 2.77 • Loan spreads improved in Q2 and year-on-year due to growth in balances of higher yielding retail and Islamic assets 2.62 Treasury spreads improved y-o-y due to strong investment performance coupled with cheaper cost of wholesale funding 2.47 2.48 2.58 2.45 2.42 ☐ 2.39 2.35 The benefit from growth in CASA has been offset by a drop in interest rates 2.43 2.44 2.28 2014 NIM guidance revised upwards from 2.5-2.6% to due to successful balance sheet optimisation 2.7-2.8% Net Interest Margin Drivers (%) Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Qtrly NIM YTD NIM Q2-14 vs. Q1-14 H1-14 vs. H1-13 2.77 0.00 2.78 0.00 0.17 0.04 (0.01) (0.07) 0.24 2.75 2.44 (0.01) Q1 14 Loan Deposit Treasury Other Spreads Spreads Spreads Q2 14 Q2 13 Loan Deposit Treasury Other Spreads Spreads Spreads Q2 14 18#19Non Interest Income • • Highlights Non-interest income improved 31% y-o-y and 36% from the previous half year due to a rise in fee income, brokerage income, and income from legacy property sales and investment securities Positive trend in core gross fee income due to a rise in credit card business and trade finance volumes as well as a doubling in brokerage and asset management fees Property income improved significantly due to increased profit from sale of inventory and disposal of a legacy site Investment securities income up 41% due to strong investment portfolio performance Core Gross Fee Income Trends (AED Mn) Emirates NBD Composition of Non Interest Income AED Mn Core gross fee income H114 H1 13 Better / (Worse) Q2 14 Q2 13 Better/ (Worse) 2,177 1,668 31% 1,146 876 31% Fees & commission expense (361) (185) (95%) (204) (115) (77%) Core fee income Property income / (loss) 1,816 324 1,483 22% 942 163 99% 209 761 24% 124 69% Investment 343 243 41% 231 122 89% securities Total Non Interest Income 2,483 1,889 31% 1,381 1,007 37% Core Gross Fee Income Trends (AED Mn) 2,177 302 53 83 70 1,668 +31% +11% 1,146 1,031 876 908 817 310 253 253 268 186 69 98 47 50 43 530 571 431 410 434 145 171 162 180 167 Q2 13 Q4 13 H1 13 Trade finance Fee Income & AM fees Brokerage Forex, Rates H114 Q3 13 Forex, Rates & Other Brokerage & AM fees Trade finance Q1 14 Q2 14 Fee Income & Other 19#20Operating costs and Efficiency Highlights Costs increased 10% y-o-y in Q2 due to staff and occupancy costs on the back of higher business volumes and the inclusion of the Egyptian business Excluding Egypt, costs only increased by 4% y-o-y Cost to Income Ratio Trends 38.8 • • Emirates NBD 34.5 34.1 Cost to Income Ratio improved by 2.2% q-o-q to 29.3%. Adjusted for one-offs Cost to Income Ratio would be 31.4% for H1-14 and 31.1% for Q2-14 35.4 31.5 30.3 33.9 33.5 31.5 29.3 The longer term management target for cost to income ratio is 33% We will invest more in the future, within this parameter, on systems and people to help support business growth and this process has already been set in motion in Q3-14 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 CI Ratio (YTD) CI Ratio Operating Cost Trends (AED Mn) Operating Cost Components (AED Mn) 2,137 +10% 1,228 989 1,053 139 36 85 (36) 93- 1,050 1,087 -19- 811 79 79 +4% 715 613 614 620 664 83 81 81 65 88 81 86 111 1,914 204 192 226 94 97 176 167 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 H1 13 Staff Occupancy Other Cost cost Cost Egypt H114 Egypt Occupancy cost Other Cost Staff Cost Depr & Amort 20 20#21Credit Quality Emirates NBD Highlights Impaired Loan & Coverage Ratios (%) Impaired loans ratio improved by 0.3% q-o-q to 13.5% 80.1 70.1 72.3 76.1 64.7 Net impaired loans decreased by AED 0.2 Bn helped by repayments and recoveries 52.7 54.8' 57.5 60.7 H1-14 net impairment charge of AED 2.6 Bn driven principally by additional net specific Corporate and Islamic loan provisions Coverage ratio increased by 4% in Q2 to 64.7% 13.9 14.1 13.9 13.8 13.5 3.7 3.7 3.6 3.5 3.5 Total portfolio impairment allowances amount to AED 4.09 Bn or 2.7% of unclassified credit RWAs 10.1 10.4 10.3 10.2 10.0 Medium term management targets for Impaired Loan Ratio is 12% and Coverage Ratio is 80% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Impact of DW* % NPL ratio, excl. DW* Coverage ratio, excl. DW* % Coverage ratio, incl. DW* % Impaired Loans and Impairment Allowances (AED Bn) Impaired Loans Impairment Allowances -1% 34.7 35.9 36.1 36.0 35.8 19.7 20.8 21.9 23.1 +6% 18.3 9.4 9.4 9.4 9.3 9.1 0.5- 0.5 0.5 0.4 0.4 16.3 16.4 16.2 16.2 16.2 11.1 12.0 12.8 13.6 14.5 3.7 3.6 3.7 3.7 3.8 2.7 3.4 3.9 0.3 5.1 6.2 0.3 6.5 0.2 6.6 0.2 6.4 0.2 3.8/0.2 3.8 0.3 3.0 3.8/0.2 3.9 3.8 4.2 0.1 -0.1 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 DW* Core Corporate Retail Islamic Other Debt Securities *DW = exposure AED 9.14 Bn; provision AED 409 Mn 21#22• Capital Adequacy Emirates NBD Highlights CAR and T1 improved by 0.4% and 0.6% respectively in Q2-14 to 19.6% and 15.6% respectively resulting from: Capitalisation 18.5 19.0 19.6 19.2 19.6 increase in Tier 1 capital due to retained earnings 14.5 14.9 15.3 15.0 15.6 modest decrease in risk weighted assets Tier 1 Capital Ratio has improved by 1.1% y-o-y from 14.5% to 15.6% 42.8 43.6 44.7 43.6 44.4 9.2 9.4 9.9 9.4 9.0 33.6 34.2 34.8 34.2 35.4 In July 2014, we repaid the remaining AED 4.8 Bn of MOF Tier 2 Deposits. With this, the entire crisis era support has been repaid Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 T2 T1 T1 % CAR % Capital Movements (AED Bn) FY-13 to H1-14 (AED Bn) Capital as at 31-Dec-2013 Net profits generated Risk Weighted Assets - Basel II (AED Bn) Tier 1 Tier 2 34.7 Total -2% 9.9 44.6 2.3 - 2.3 231.1 229.8 226.9 227.6 226.5 0% FY 2013 dividend paid (1.4) (1.4) 13.8 13.8 3.4 2.3 14.9 2.8 14.9 2.4 18.6 2.7 Tier 1 Issuance Repayment of Tier 2 213.9 213.6 209.2 210.2 205.1 Amortisation of MOF T2 / sub debt (1.0) (1.0) Interest on T1 securities (0.2) (0.2) Tier 2 Issuance 0.1 0.1 Repayment of subordinated debt Q2 13 Goodwill (-) (-) Other Capital as at 30-Jun-2014 (0.1) (0.1) Q3 13 Operational Risk Q4 13 Q1 14 Market Risk Q2 14 Credit Risk 35.4 9.0 44.4 22#23Funding and Liquidity Emirates NBD • Highlights Headline AD ratio of 95.6% comfortably within the 90-100% management target range Liquid assets* of AED 46.9 Bn as at Q2-14 (15.4% of total liabilities) Debt maturity profile comfortably within funding capabilities Advances to Deposit (AD) Ratio (%) 102.5 102.0 100.6 99.9 99.5 99.2 98.9-- 95.3 95.6 Issued A$ 400 million of 5-year senior debt. Cheapest 5-year funding that the bank has raised in the last 6 years Modest maturity profile affords Emirates NBD ability to consider public and private debt issues opportunistically Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Target range 90-100% AD Ratio (%) Composition of Liabilities/Debt Issued (%) Liabilities (AED 305.4 Bn) Debt/Sukuk (AED 24.1 Bn) Customer deposits 83% ■Banks 5% ■ Others 4% ■Debt/Sukuk 8% ■Syn bank Loan borrow. secur. 1% 1% ■EMTNS 5% Maturity Profile of Debt Issued (AED Bn) Maturity Profile of Debt/Sukuk Issued 100% = AED 24.1 Bn 2.32 1.66 5.89 4.64 3.04 1.48 0.53 0.33 3.61 0.65 ■Sukuk 1% 2014 2015 2016 2017 2018 2019 2020 2022 2023 2024 *including cash and deposits with Central Banks but excluding interbank balances and liquid investment securities 23 23#24Loan and Deposit Trends Emirates NBD Highlights Gross loans increased by 1% q-o-q and by 2% from end 2013 Trend in Gross Loans by Type (AED Bn) +2% Consumer lending grew 1% q-o-q and by 5% from end 2013 250 254 259 262 265 +1% 195 196 197 • Islamic financing grew 4% q-o-q and by 6% from end 2013 188 191 26 27 28 29 29 • Deposits increased 1% q-o-q and by 6% from end 2013 35 35 36 36 38 1. 1. 1 1 1 CASA grew 2% q-o-q and by 14% from end 2013 Q2 13. Q3 13 Corporate Q4 13 Consumer Q1 14 Q2 14 Islamic* Treasury/Other More costly time deposits declined by 2% q-o-q and by 5% from end 2013 CASA deposits as a percentage of total deposits have increased to 57% in Q2-14 from 43% at the end of 2012 Trend in Deposits by Type (AED Bn) Gross Islamic Financing Net of Deferred Income +6% 252 253 +1% 230 229 2 229 240 3 107 105 110 112 107 127 141 144 116- 118 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Other Time CASA 24 24#25Loan and Deposit Composition Composition of Gross Loan Portfolio By Type (AED 265 bn) By Econ Sector (AED 265 bn) Trans Cont & 3% Others 2% Manuf. 3% com. Trade 4% Islami Retail 11% C* RE 15% 14% Sover Corpo rate Fin Inst 9% eign 37% 38% Ret. 19% Islamic Lending Portfolio* Credit card By Type (AED 38 bn) Wakala receivabl es Others 6% Istissna'a 3% 3% 2% Ijara Murabah 29% a 57% *Islamic loans net of deferred income Per. - Sov. 37% Emirates NBD Corporate and Retail Lending Portfolio Per. - Corp. 1% Per. - Corporate & Sovereign Loans Retail Loans (AED 29 bn) (AED 197 bn) Others 4% Manuf. 4% Trade Trans. & Com Cont. 3% 3% Overdr Corp. afts 0% 7% Others 15% Serv. 6% Sov. 50% Fin Inst Person al 36% 11% Car Loans Credit 11% RE 17% Cards 15% Time Loans 3% Mortga ges 13% Deposits by Type By Econ Sector (AED 38 bn) By Type (AED 253 bn) Sov. Per. - Retail 48% RE 19% 0% Fin Inst 10% Serv. 5% Per. - Others Corp. 3% 4% Trade 5% Manuf. TranSo&t. com2% 2% 2% Others 2% Time 41% CASA 57% Islami C 18% By Type (AED 253 bn) Conve ntional 82% 25 25#26Associates and Joint Ventures Emirates NBD Composition of Associates and Joint Ventures Income Statement AED Mn H1 14 H1 13 Better/ (Worse) Q2 14 Q2 13 Better/ (Worse) National General 36 24 50% 10 12 (17%) Insurance Network International 84 42 100% 50 29 72% Bank Islami Pakistan 1 1 0% 1 0 n/a Total 121 67 81% 61 41 49% Balance Sheet AED Mn 30-Jun-14 31-Dec-13 Better/ (Worse) 31-Mar-14 Better/ (Worse) National General Insurance 186 160 17% 187 (0%) Network International Bank Islami Pakistan 1,486 1,451 2% 1,486 0% 20 20 0% 16 23% Total 1,692 1,631 4% 1,689 0% Highlights Union Properties (UP) no longer classified as Associate: During 2013, ENBD disposed of 32.6% of UP shares in the market Since percentage of holding is less than 20%, ENBD does not have significant influence in UP UP holding has therefore been accounted as AFS investment from 21 August 2013 Network International accounted for as a jointly controlled entity from the start of 2011 with a carrying value of AED 1.5 Bn 24.8% stake in Bank Islami Pakistan acquired as part of Dubai Bank 26 26#27Egyptian Business Overview Highlights Financials Emirates NBD • • Full service commercial banking platform: • • Corporate Banking: focused on large corporate and MNCs; serves c.4,000 clients Retail Banking: High growth segment; serves c.246,000 clients Wide presence in Egypt through 72 branches and 185 ATMs Financially sound with robust profitability and a healthy balance sheet AED Mn Year 2013 (from 9-June-13) H1-14 Net interest income 225 222 Non-interest income 133 104 Total income 358 326 • Improving Cost to Income Ratio Operating expenses (193) (158) Pre-impairment operating profit 165 168 Impairment allowances (22) (14) Net Loans Deposits Operating profit 143 154 100% = AED 3.7 Bn 100% AED 9.1 Bn Taxation charge (30) (51) Other Net profit 113 103 1% Time AED Bn 31-Dec-13 30-Jun-2014 32% 45% Retail Net Loans 3.7 3.5 55% 67% Deposits 9.0 9.1 Corporate CASA Impaired Loan Ratio (%) 0.2% 0.5% Cost to Income Ratio (%) 53.8% 48.0% 27#28Divisional Performance Wealth Management Retail Banking & Islamic Banking . RBWM continued to improve its position during the quarter Revenue improved 1% q-o-q and 10% y-o-y Deposits grew 7% from end 2013, driven mainly by CASA growth Loans grew 5% from end 2013 driven by growth in personal loans, credit cards and auto loans Emirates NBD AED Bn Balance Sheet Trends Revenue Trends AED Mn +10% +5% 108.6 101.1 1,388 1,406 +7% 1,277 +1% 446 468 388 The bank has improved its distribution as part of its channel optimization strategy and had and 99 branches as at Q2 27.4 28.8 524 ATMs 889 941 937 Q4 13 Loans Q2 14 Q2 13 Q1 14 Q2 14 Deposits NFI NII Islamic Banking revenue improved 18% q-o-q and 31% y-o-y to AED 496 Mn in Q2 Balance Sheet Trends AED Bn Revenue Trends AED Mn +8% • Financing receivables grew 8% in H1-14 +31% . Customer accounts declined by 2% in H1-14 due to a decrease in expensive wakala deposits At Q2-14, El had 53 branches and ATM & CDM network of 176 Islamic Banking business continues to develop through a strengthened core franchise coupled with an expansion of retail, SME, and corporate offerings 30.0 29.4 496 (-2% 25.8 1 420 1+18% 24.0 378 I 151 115 100 278 305 345 Q4 13 Q2 14 Financing receivables Customer accounts I Q2 13 Q1 14 Q2 14 NFI NII 28#29Divisional Performance (cont'd) Wholesale Banking Global Markets & Treasury Emirates NBD • • The decrease y-o-y and q-o-q is due to internal management adjustments for term funding and does not affect total Bank income Loans were broadly stable from end 2013 as new underwriting offset normal loan repayments Deposits grew by 8% from end 2013 Main focus during Q2-14 was on continued strategy evolution by building center of excellence around key sectors and geographic locations to enhance customer service quality and share of wallet, increased cross-sell of Treasury and Investment Banking products and larger Cash Management and Trade Finance penetration Balance Sheet Trends AED Bn 0% 187.6 186.7 Revenue Trends AED Mn -3% 1,136 1,146 1,097. --4% 337 331 354 82.6 88.8 +8% 799 815 743 Q4 13 Q2 14 Q2 13 Q1 14 Q2 14 Loans Deposits NFI NII Revenue at AED 220 Mn in Q2-14 declined by 10% q- o-q but improved 111% y-o-y • Net interest income improved on the back of balance sheet positioning and hedging Improved gains from investments in Q2-14 Revenue Trends AED Mn +111% 244 220 -10% 104 182 197 178 63 22 -74 Q2 13 Q1 14 Q2 14 NFI NII 29 29#30Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix Emirates NBD 30 30#31Emirates NBD continues to operate with a clear vision and mission... VISION To be globally recognized as the most valued financial services provider based in the Middle East. Emirates NBD MISSION Everyday we make our customers' life simpler by providing solutions that help them fulfill their financial aspirations. 31#32...and with a focused longer-term strategy built on 5 core building blocks 1 Deliver an excellent customer experience 3 4 5 Drive core business Run an Drive efficient organization geographic expansion 2 Build a high performing organization 32 32 Emirates NBD#331 2 3 2013 Strategic Imperatives Summary of Key Achievements Deliver an excellent customer experience Build a high performing organization Drive core business Customer Service Excellence embedded in organizational culture Emirates NBD • Continued investments to enhance digital capabilities across the bank Building the leading multi-channel bank in the UAE . Significant enhancements to Emirates NBD value proposition for Nationals • Increased staff engagement across Group • Wholesale Banking transformation progressing well • Retail & Islamic franchises continue outperforming market • Consolidation of WM platform completed 4 Run an efficient organization • Organizational streamlining though elimination of overlaps • IT lean transformation on-going • End-to-end transformation of key bank processes 5 Drive geographic expansion System enhancements across International locations • Indonesia rep office opened in Q4 • Acquisition of BNP Paribas Egypt completed; Integration underway 33 33#341 2014 Strategic Priorities Emirates NBD 2 3 4 LO 5 Deliver an excellent customer experience Build a high performing organization Drive core business Run an efficient organization Drive geographic expansion • Continue on Group wide Service Excellence Program • Continue to lead the way on multi-channel banking in the UAE • Drive customer service through social media, and expand to other platforms • Continue to drive Nationalization efforts (training/ recruiting) • Raise employee engagement to be at par with best in class global banks Improve performance management and accountability across Group Continue to transform Wholesale Banking franchise • Fortify Retail franchise and turbo-charge Islamic franchise • Focus on legacy NPLs and Tail management • Diversification of Income Streams, improved Capital Efficiency and stronger Liquidity Streamlining of organizational set-up • Consolidate and rationalize operations & platforms • Integrate Egypt business into Emirates NBD Group (Target completion: Q2 2015) • Selectively pursue organic growth in current international markets 34#35Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix Emirates NBD#36Outlook Emirates NBD Economic Outlook . . • 2014 GDP growth expectations for the UAE have been revised upwards to 5% due to a strong expansion in the non-oil private sector. 2014 GDP growth expectations also revised upwards to 5% for Dubai as manufacturing, hospitality, transport and logistics expanded robustly. Also buoyant real estate and construction sectors will boost growth In 2014 Dubai residential property price growth slowed significantly for villas and apartments Inflation expected to rise to 3% in 2014 from 1.1% in 2013 on the back of higher housing costs and higher input prices Emirates NBD has improved its capital and funding profile allowing it to take advantage of the expected future growth in Dubai and the region As Dubai continues to grow we expect a further positive trend in impaired loans leading to a stronger balance sheet 36#37Summary Emirates NBD Profitability Income Net Interest Margin • Pre-impairment operating profit of AED 4,905 Mn in H1-14, up 35% y-o-y • Net profit of AED 2,350 Mn improved 30% y-o-y • Total income improved 27% y-o-y to AED 7,042 Mn in H1-14 helped by an improving asset mix, efficient funding base and strong fee income • NIMS stable at 2.77% in H1-14. • Guidance revised upwards to 2.70-2.80% CI Ratio Provisions • Cost to Income ratio improved by 4.2% y-o-y to 30.3% in H1-14 • H2-14 spend is expected to grow as we invest in systems and people to support future business growth • Conservative provisioning with net impairment allowances of AED 2,613 Mn in H1-14 boosting the coverage ratio to 64.7%, up 12% from a year ago • NPL ratio improved by 0.3% to 13.5% in Q2-14 due to further recoveries Credit Quality • Coverage ratio improved by 4.0% to 64.7% in Q2-14 Capital and Liquidity Outlook • Capital and liquidity position extremely strong offering resilience for the future • Tier 1 ratio improved by 1.1% y-o-y to 15.6% in Q2-14 • The Bank will continue to implement its successful strategy and consolidate our position as a dominant player in the UAE and the region 37#38Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix Emirates NBD#392014 Awards Emirates NBD Emirates NBD wins 'Best debt house' at EMEA Finance's Middle East Banking Awards 2013 Emirates NBD Asset Management named ‘UAE Asset Manager of the Year' for second consecutive year, at the 5th annual MENA Fund Manager Performance Awards 2014 Emirates NBD Asset Management awarded 'MENA Equity Fund of the Year' for the Emirates MENA Top Companies Fund, at the 5th annual MENA Fund Manager Performance Awards 2014 Emirates NBD Asset Management awarded 'Balanced Fund of the Year' for the Emirates MENA Opportunities Fund, at the 5th annual MENA Fund Manager Performance Awards 2014 Emirates NBD wins 'Banking & Finance Customer Care Excellence Award' at the 8th annual Middle East Government and Business Customer Care Excellence Awards 2014 Emirates NBD ranked 25 on the Power 100 Social Media Rankings compiled by The Financial Brand Emirates NBD named 'Best Local Bank - United Arab Emirates' at the 2014 annual Euromoney Private Banking and Wealth Management Survey Emirates NBD wins a 'Silver' and 'Bronze' award in the Social Media category, at the 2014 Dubai Lynx Awards 39#402014 Awards Emirates NBD Emirates NBD named 'Middle East Regional Bank of the Year' at the International Financing Review (IFR) Middle East Awards 2013 Emirates NBD wins 'Best Sports Marketing Campaign' at Sports Industry Awards Emirates NBD wins 'Best Consumer Credit Product award' and 'Best Risk Management award' for its Personal Loan business at the 2014 Asian Banker's 'International Excellence in Retail Financial Services Awards' Emirates Money named the "Best Non-Bank Consumer Finance Business" at the Asian Banker Middle East Banking Products and Projects 2014 Awards Emirates NBD wins awards for 'Best New Card' and 'Best Customer Engagement Program' at the Smart Cards Middle East 2014 Emirates NBD named 'Social Brand of the Year' at MENA Digital Awards Emirates NBD Man Utd Card Awarded 'Best International Sports Affinity Co-brand Card in the UAE for 2013' by MasterCard Emirates NBD wins "Best Social Media Engagement" award at the Asian Banker Middle East Banking Products and Projects 2014 Awards 40#412014 Awards Emirates NBD Emirates NBD named UAE's "Best Foreign Exchange Provider 2014" by Global Finance Emirates NBD wins "Best Treasury Management Project" award in the Middle East at the Asian Banker Middle East Banking Products and Projects 2014 Awards Emirates NBD named 'Most impressive emerging market financial institution borrower' by Global Capital (formerly Euroweek) at the Global Capital Bond Awards 2014 Emirates NBD receives top honors for the 'The Best Prepaid Card Marketing Campaign 2013' at the Middle East Pre-paid Cards Summit 41 41#42Large Deals Concluded in 2014 WAHA CAPITAL PJSC الواحة كابيتال WAHA CAPITAL USD 750,000,000 TERM AND REVOLVING FACILITIES MARCH 2014 EMIRATES CENTRAL COOLING SYSTEMS CORPORATION EMPOWER ENERGY SOLUTIONS USD 600,000,000 TERM LOAN FACILITY MARCH 2014 Mandated Lead Arranger & Bookrunner Emirates NBD Mandated Lead Arranger and Book runner Emirates NBD TAWEELAH ALUMINIUM EXTRUSION COMPANY (TALEX) LLC TALEX J Towoch Aluminium Extrusion Company LLC. شركة الطويلة تسحب الألمنيوم ذ م م USD 140,000,000 TERM LOAN FACILITY MAY 2014 Mandated Lead Arranger Emirates NBD MERCURIA MERCURIA Emirates NBD ALLANA INTERNATIONAL LIMITED EMIRATES TELECOMMUNICATIONS CORPORATION افكو IFFCO USD 450,000,000 TERM AND REVOLVING CREDIT FACILITIES APRIL 2014 Initial Mandated Lead Arranger & Bookrunner Emirates NBD SEKERBANK Şekerbank S اتصالات etisalat EUR 3,150,000,000 MULTI CURRENCY TERM LOAN FACILITY APRIL 2014 Mandated Lead Arranger Emirates NBD TURKIYE FINANS KATILIM BANKASI Turkey's Finance Türkiye Finans USD 2,650,000,000 REVOLVING CREDIT FACILITY JUNE 2014 USD 32,000,000 AND EUR $5,500,000 DUAL CURRENCY TERM LOAN FACILITY JUNE 2014 Mandated Lead Arranger USD 253,500,000 AND EUR 72,000,000 SYNDICATED DUAL CURRENCY MURABAHA FINANCING FACILITY JUNE 2014 Mandated Lead Arranger Emirates NBD Emirates NBD Initial Mandated Lead Arranger, Joint-Coordinator and Bookrunner Emirates NBD#43Large Deals Concluded in 2014 Emirates NBD DANA GAS EXPLORATIONS FZE دانة غاز DANAGAS USD 100,000,000 DUAL TRANCHE TERM LOAN AND MURABAHA FACILITY JUNE 2014 Initial Mandated Lead Arranger, Bookrunner and Co-ordinator Emirates NBD B.B. ENERGY 9B AB Energy USD 175,000,000 REVOLVING CREDIT FACILITY JUNE 2014 Mandated Lead Arranger Emirates NBD#44Investor Relations PO Box 777 Emirates NBD Head Office, 4th Floor Dubai, UAE Tel: +971 4 201 2606 Email: [email protected] Emirates NBD 44 44