#1Emirates NBD Investor Presentation August/September 2009 Emirates NBD بنك الإمارات بنك دبي الوطني NBD) Emirates Bank#2Important 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 into 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 herein 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. Emirates NBD 2#3Contents Emirates NBD UAE Economy and Banking Market Financial and Operating Performance Merger Update Strategy and Outlook 3#4UAE Economic Update Highlights Real GDP Growth Forecasts (1) ■ UAE was impacted by external shocks including weaker oil prices, a credit squeeze, and declining world trade ■ UAE's accumulated surpluses over recent years enable it to engage in powerful counter-cyclical fiscal policies Monetary policy is also responding to the crisis, with rates being cut and liquidity provided. More steps are expected to be forthcoming 2008 2009 2010 UAE 7.4% 0.0% 3.0% UK 0.7% (3.5%) (0.3%) Eurozone 0.7% (3.0%) (0.2%) Germany 1.0% (3.3%) (0.2%) ■ Correction provides potential to put growth back on a more sustainable long-term path US 1.1% (3.5%) 1.4% China 9.0% 5.7% 7.6% ■ Dubai is a strategically located international trading hub with some of the world's best air and sea ports serving over 205 destinations Japan (0.7%) (6.7%) 0.8% Singapore 1.3% (4.6%) 2.2% Promising Signs for Oil (US$) UAE Real GDP - YoY (%)(1) 160 140 100 120 ≈ ± 2 ¤ ON 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Brent oil $ per barrel Rolling 1 year moving average 1) EIU, Emirates NBD forecasts Emirates NBD 20 20 15 10 5 LO 0 -5 2006 2007 I Government spending Fixed Investment 2008 Private consumption Real GDP grow th 2009 2010 Export G&S 4#5UAE Banking Market Update Highlights UAE L&R growth has outstripped deposit growth in recent years UAE Banking system liquidity tightened in Q3 2008 due to outflow of c. AED 180b of speculative capital & the Global credit/liquidity crisis following the Lehman's collapse Dubai and Abu Dhabi CDS spreads have widened on concerns over Dubai Inc.'s debt and concerns over the real estate market Government intervention has been welcome: AED 50b backstop facility from MOF UAE Banking Sector Growth (AED billion) 859 639 448 AED 70b set aside for direct injection into UAE banks; AED 50b deposited to date; option to convert to LT2 capital 331 367 Deposit & capital market guarantees announced: formal documentation soon 1,480 1,523 1,223 - Abu Dhabi Government injected AED 16b of Tier 1 capital into the Abu Dhabi banks Dubai Government injected AED 4b of Tier 1 capital into Emirates NBD Government of Dubai announced a $20b bond program of which $10b was bought by the UAE Central Bank Dubai and Abu Dhabi Government CDS Spreads (bps) 859 698 599 485 386 261 294 2002 2003 2004 2005 2006 I Banking Assets Nominal GDP 2007 Loans & Advances 2008 H1 2009 - Deposits Source: Central Bank statistics, Emirates NBD forecasts and Bloomberg GCC Banking Market 1,000 Country Banking assets (USD billion) 800 UAE (1) 600 Saudi Arabia 400 Kuwait 134 Qatar 111 200 Bahrain (2) 48.5 0 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oman 36 1) Includes Foreign Banks Abu Dhabi Govt 5yr CDS Dubai Govt 5yr CDS 2) Excludes off-shore banking units Source: Markit Partners; Bloomberg Emirates NBD Assets/Nom. (GDP %) 403 172 351 79 89 75 Source: National Central Banks December 2008 and Emirates NBD forecasts 124 264 5#6Emirates NBD is the Largest Bank in the UAE and GCC by Assets UAE Ranking by Assets (US$ billion) UAE Ranking by Equity (US$ billion) UAE Ranking by Profits (US$ million)(2) Emirates NBD 76.8 Emirates NBD 8.5(1) Emirates NBD 575 NBAD 49.3 First Gulf Bank 5.7 NBAD 457 ADCB 42.1 ADCB 5.4 First Gulf Bank 415 First Gulf Bank 32.3 NBAD 5.2 Mashreq 264 Mashreq 26.3 Mashreq 3.0 DIB 224 DIB 23.9 DIB 2.4 ADCB 179 UNB 19.3 UNB 2.2 UNB 157 ADIB 15.8 ADIB 1.5 CBD 137 CBD 9.9 CBD 1.4 ADIB 117 GCC Ranking by Assets (US$ billion) GCC Ranking by Equity (US$ billion) GCC Ranking by Profits (US$ million) (2) Emirates NBD 76.8 Emirates NBD 8.5(1) Al Rajhi Bank 934 Nat. Comm. Bank 68.5 Al Rajhi Bank 7.3 SAMBA 671 NBAD 49.3 Nat. Comm. Bank 7.2 Nat. Comm. Bank 606 SAMBA 47.2 Riyad Bank 7.1 Emirates NBD 575 Al Rajhi Bank 46.1 First Gulf Bank 5.7 Qatar National Bank 558 Riyad Bank 46.1 Nat. Bank of Kuwait 5.6 NBAD 457 Nat. Bank of Kuwait 42.1 ADCB 5.4 Nat. Bank of Kuwait 435 ADCB 42.1 SAMBA 5.2 First Gulf Bank 415 Qatar National Bank 40.4 NBAD 5.2 Arab National Bank 384 Kuwait Finance House 37.6 Qatar National Bank 4.9 Saudi British Bank 383 1) Emirates NBD's Tangible Shareholder's Equity is US$ 6.8b 2) Profits half year ended 30th June 2009 UAE KSA Kuwait Qatar Bahrain Source: Bank Financial Statements, 30th June 2009 Emirates NBD 6#7Contents Emirates NBD UAE Economy and Banking Market Financial and Operating Performance Merger Update Strategy and Outlook 7#82008 Financial Results Highlights Full Year 2008 Net Profit down 7% from 2007 Cash dividend of 20% and stock dividend of 10% Q4 2008 Net Profit of AED 14m (AED 1.2b in Q4-2007) Financial performance impacted by mark to market & impairments on investment securities of AED 1.8b - mark to market on credit default swaps (CDS) of AED 455m Core business continued to perform strongly despite a more challenging environment in Q3 & Q4 2008 Key Performance Indicators AED million Net Interest Income Year to 31 Dec 2008 Variance vs. 2007(1) 5,834 +43% Fee & Other Income 3,861 +37% Investment & CDS MTM (1,248) (694%) Total income 8,447 +19% Operating expenses (3,356) +23% Operating profit before impairment 5,092 +16% allowances Impairment allowances: (1,653) +125% (642) +36% Investments (1,011) +283% Operating profit 3,439 (6%) Amortisation on intangibles (96) +17% Associates 339 (10%) Net profit 3,681 (7%) Cost: income ratio (%) 39.7% +1.5% Net interest margin (%) 2.01% +0.12% EPS (AED) 0.73 (7%) Return on average shareholders' equity (%) 19.1% (6%) As at Variance vs. AED billion 31 Dec 2008 31 Dec 07(1) Total assets 282.4 +11% Loans Deposits 208.9 +26% 162.3 +15% Capital Adequacy Ratio (%) 11.4% (1.7%) " 2008 Core net profit reached AED 5.9b, up 49% from 2007 Core cost to income ratio improved during the year, esp. during the 2nd half as cost measures implemented & synergies realised Core Business Performance (AED billion) Full Year +49% Q4 Results MTM & Impairment of Investments Statutory Year on Year Credit 5.9 4.0 2.3 0.1 +2% 3.9 3.7 0.05 0.02 1.26 1.26 1.18 1.25 2007 2008 Q407 Q408 Note 1: 2007 comparatives are presented on a pro forma basis Note 2: Core business trends exclude mark to market impacts and impairments on investment and other securities. Emirates NBD 8#9H1 2009 Financial Results ☐ Highlights Operating profit before impairment allowances of AED 3,693m - up 26% from H1 2008 of AED 2,928m - up 71% from H2 2008 Net Profit of AED 14m AED million ☐ H1 2009 Net Profit of AED 2,111m - down 20% from H1 2008 of AED 2,648m - up 104% from H2 2008 of AED 1,033m Improvement of equity & bond markets resulted in modest positive impact from mark to market valuations during Q2 2009 ■ H1 2009 operating costs of AED 1,807m - - up 3% from H1 2008 of AED 1,751m Key Performance Indicators Half year ended 30 June 2009 Variance vs. H1 2008 Net Interest Income 3,643 +33% Fee & Other Income 1,578 (22%) Investment & CDS MTM 279 (409%) Total income 5,500 +18% Operating expenses (1,807) +3% Operating profit before impairment allowances 3,693 +26% Impairment allowances: (1,611) +215% Credit (1,409) +687% Investments (202) (39%) Operating profit 2,082 (14%) Amortisation on intangibles (47) +15% Associates 76 (72%) 2,111 (20%) 32.9% (4.6%) 2.58% +0.6% 0.38 (20%) Return on average shareholders' equity (%) 18.9% (8.0%) As at Variance vs. 30 June 2009 31 Dec 2008 281.9 (0.2%) Loans 216.6 +3.7% Deposits 170.5 +5.1% Capital Adequacy Ratio (%) 19.0% +7.6% * Emirates NBD's net profit adjusted for its actual share of Union Properties published net losses in H1 2009 equals AED 1,989m 9 - up % from H2 2008 of AED 1,605m ■ Credit impairment allowance of AED 1,409m, reflecting expected increase in NPL ratio to 1.56% (FY 2008: 0.95%; Q1 2009: 1.19%) and additional portfolio impairment allowances in H1 2009 of AED 731m ■ Total assets at AED 281.9b, stable compared to AED 282.4b at end- 2008 ■ Customer loans at AED 216.6b, up 4% from AED 208.9b at end-2008 ■ Customer deposits at AED 170.5b, up 5% from AED 162.3b at end- 2008 Significant strengthening of capital ratios Net profit* Cost: income ratio (%) Net interest margin (%) EPS (AED) AED billion Total assets Emirates NBD#10Net Interest Margins Highlights H1 2009 Net Interest Margin (NIM) of 2.58% up 60pbs from 1.98% in H1 2008 - up 38pbs from 2.17% in H2 2008 ■ Increase in H1 2009 NIM primarily driven by re-pricing of loans & and the benefit of proactive balance sheet management ■ Q2 2009 NIM of 2.40% up 52pbs from 1.88% in Q2 2008 down 34pbs from 2.76% in Q1 2009 ■ Reduction in Q2 2009 NIM from Q1 2009 in line with expectations: reduced differential between US$ Libor and Eibor; increased cost of funding deposits; partly offset by Qtrly NIM Net Interest Margin Trends 2.76 2.40 2.09 2.37 1.97 1.96 1.92 1.92 1.89 1.88 2007 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Note: Net interest margin calculated based on annualised quarterly net interest income divided by Average Total Assets (ATA) Net Interest Margin Drivers (%) - benefit of continued re-pricing on assets ■ NIM is expected to reduce further towards the end of the year to C.2.0%: differential between US$ Libor and Eibor is expected to reduce further continued pressure on cost of deposits Emirates NBD 0.04% (0.19%) 2.76% (0.21%) 2.40% Q1 09 Repricing of Assets High Yield Deposits Reduced differential between Eibor Q2 09 & Libor 10#11Operating Costs and Efficiency Highlights ■ The cost to income ratio declined by 2.0% from 34.9% in Q1 2009 to 32.9% in H1 2009 ■ The core cost to income ratio increased from 33.7% for Q1 2009 to 34.6% in H1 2009 ■ The Group has continued to invest in technology, infrastructure and governance whilst optimising its variable cost base on existing businesses ■ Emirates NBD continues to expand its branch network and business capability in Abu Dhabi and is investing in Private Banking and SME businesses ■ Emirates NBD is continuing to target a mid-30s core business cost to income ratio for FY 2009 Income vs. Cost Growth (AED million) 4,769 +10% 1,751 5,222 +3% Cost to Income Ratio Trends Cost:income ratio Core cost:income ratio 39.7 38.2 39.0 38.9 37.9 38.3 37.4 37.6 34.9 38.3 34.6 35.7 36.7 35.4 34.6 33.7 32.9 2007 2008 2009 Q1 H1 Q3 FY Q1 Q3 FY Q1 H1 Note: Cost to income ratios are presented on a year-to-date basis; Core cost to income ratio excludes impact of MTM on investments and other securities in 2008 and 2009 H1 1,751 1,807 H1 2008 H1 2009 Note: Income is presented excluding MTM/Impairments on Investments/CDS H1 2008 Emirates NBD Operating Cost Drivers (AED million) 32 32 (79) 36 32 35 1,807 Existing Business New Technology Premises Goverance H1 2009 Business & Control 11#12Asset Quality Loans and Receivables Highlights ☐ Loan portfolio is balanced and well secured ▪ Emirates NBD's credit quality remains healthy across the Bank's corporate and retail portfolios Prudently provided for exposure to Al Gosaibi / Saad Groups ▪ Increase in delinquencies and non-performing loans is within expectations ■ NPL ratio, excluding impaired investment securities, increased to 1.56% in H1 2009 from 0.95% reported in FY 2008 (Q1 2009: 1.19%) ■ Added AED 731m to portfolio impairment provisions in H1 2009 as a measure of prudence in the current environment (Q1 2009: AED 224m) NPL and Coverage Ratios Loan Portfolio by Sector - H1 2009 Transport & 100% = AED 222.1b Communication, 3% Manufacturing, 5%- Contracting, 5%- Trade, 5%- Real Estate, 15% Personal - Corporate, 7% Note: Loans and advances before provisions -Others, 4% -Sovereign, 14% Banks, financial institutions & investment companies, 10% Personal - Retail, 12% Services, 20% Retail Loan Portfolio by Sector - H1 2009 100% = AED 26.5b 3.5% 130% 118% 3.0% 110% 120% 105% 103% 104% 106% Others, 8%- 104% 110% 2.5% Islamic Financing, 100% 3% 2.0% 1.6% Time Loans, 11% Personal Loans, 31% 90% 1.5% 1.2% 1.0% 1.0% 1.0% 0.9% 1.0% - 80% Overdrafts, 3% 1.0% 70% 0.5% 60% 0.0% 50% Mortgages, 18% Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Car Loans, 17% Credit Cards, 9% NPL Ratio % -Coverage Ratio % Note: NPL and Coverage ratios for 2008 & 2009 exclude investment securities classified as loans & receivables Emirates NBD 12#13Consumer Bank Emirates NBD Asset Quality Real Estate Exposure Wholesale Bank Exposures to Real Estate and Contracting Sector is 15.8% and 5.2% of the corporate portfolio respectively Emirates NBD is very selective in financing real estate sector. Extent of finance is generally limited to: 70% of construction cost excluding land or 60% of cost including land (land valued at lower of cost or market value) 60% of purchase price for completed properties Exposure is mainly to top tier names with diversified business interests and multiple sources of repayment Financing now restricted to Emirates of Dubai & Abu Dhabi. ■ Repayment experience is satisfactory Approximately 65% of the portfolio has a repayment maturity of < 3 years Careful monitoring of the Real Estate, Construction and related sector exposures expecting economic slow down Mortgage portfolio is relatively small; AED4.7b as both EBI and NBD are recent entrants into the mortgage market Mortgage finance offered across a select range of premium developers, including Dubai Properties, Emaar, Nakheel, Aldar and Sorouh Emaar, Dubai Properties & Nakheel account for 77% of the mortgages financed by ENBD ■ Villas account for approximately 42% of the portfolio; Completed properties account for 76% of the portfolio Average LTV is 75% on original value ■ More than 75% of the customers have only one mortgage loan from ENBD ■ Lending criteria are revisited regularly to ensure that the quality of the loan portfolio remains good Mortgages portfolio performance is good: Focus on high income customer segments, 90% of portfolio comprises of customers with income > AED 25K per month, low delinquency and provision rates 13#14Asset Quality Investments & Trading Securities Highlights ■ Write-downs and impairments reflected a market-wide downturn in 2008 ■ Relative stabilisation and improvement of equity and bond markets in first half 2009 resulted in lower adverse impact due to mark to markets and impairments on investment securities ☐ Underlying quality of investment portfolio remains good and some losses on fixed income securities will reverse if held to maturity and no credit event occurs ■ Portfolio is being monitored and managed closely by senior management committee to reduce exposure where opportunities arise or where future distress in anticipated Equity Market Performance DFM Index MSCI UAE Index MSCI GCC Index MSCI Far East Index MSCI World Index Q408 Source: Bloomberg; Reuters Emirates NBD H1 2009 MTM Impact AED million Total Balance P&L impact Income Impairm. Cumulative changes in FV Investment Securities Trading Securities 16,853 (41) (110) 395 614 142 Subtotal 17,467 101 (110) 395 Investment Securities in L&R 2,332 (92) H1 2009 FY 2008 19,799 22,009 101 (202) 395 (793) (1,011) (1,810) Bond Market Performance Abu Dhabi CDS 5yr -iTraxx Snr Fin Series 9 Q109 Q209 Q408 Q109 Q209 14#15Asset Quality Investments & Trading Securities (cont'd) Composition by Type: H1 2009(1) 100% = AED 17.5b Hybrid instruments, 0% Trading securities, 4% Other, 16% Government bonds, 6% Equity, 17%- Corporate / FI bonds, 57% Available for Sale 64% Composition by Category: H1 2009(1) 100% = AED 17.5b Trading Securities, 4% Fair Value through P&L, 11% Composition by Category: H1 2009(2) FV through P&L -Held to Maturity, 3% Available for Sale, 82% Held to Maturity 81% 82% International Regional Domestic 20% 11% 7% 9% 2% 6% Government Corporate / Bonds Equity Others Bonds Equity FI Bonds Hybrid Instruments Others H1 2009 100% = AED 14.4b 1) Excl. investment securities in L&R of AED 2.3b 2) Excl. investment securities in L&R of AED 2.3b and Trading Securities of AED 0.6b Emirates NBD H1 2009 100% = AED 1.9b 18% Government Corporate / FI Bonds Bonds H1 2009 100% = AED 0.6b 15#16Capital Adequacy Highlights Capital adequacy ratio at 19.0% in Q2 2009 (FY 2008: 11.4%) Capital Ratios (AED billion) 100 20% 90 19.0% 16.2% 18% ■ Tier 1 capital increased from 9.4% at end-2008 to 12.1% at Q2 2009 due to: 80 13.1% 70 15% 11.4% 12.1% 60 10.5% 9.7% 13% 50 9.4% - profit generation for H1 2009 exceeding FY 2008 dividend payment by AED 1.1b 40.0 10% 40 34.5 8% 30 22.7 24.7 14.4 13.8 20 4.4 - 5% 4.5 - issuance of AED 4b Tier 1 perpetual securities in Q2 2009 to ICD ■ Tier 2 capital increased by AED 10.0b in H1 2009 due to: conversion of MOF deposits into LT2 capital (AED 10.2b of the AED 12.6b qualifies as T2 capital as at 30.06.09) redemption of AED 500m LT2 bonds in exchange for 3 year senior unsecured debt ■ Risk Weighted Assets (RWAs) fell by 3% from FY 2008 due to continued focus on RWA by management 10 18.1 20.4 20.7 25.5 - 3% 0 0% 2007 2008 Q1 09 Q2 09 T1 T2 -T1 % --CAR % Capital Movement Schedule FY 2008 to Q2 2009 (AED billion) Capital as at 31.12.08 Net profits generated Tier 1 Tier 2 Total 20.4 4.4 24.7 2.1 2.1 FY 2008 dividend paid (1.0) (1.0) Conversion of MOF deposits 10.2 10.2 Issuance of T1 securities 4.0 4.0 Cumulative changes in FV 0.3 0.3 Redemption of T2 securities Other (0.5) (0.5) 0.0 0.0 0.2 Capital as at 30.06.09 25.5 14.4 40.0 AED billion Q2 09 FY 08 Diff % Risk Weighted Assets 210.8 217.3 -3.0% Emirates NBD 16#17Funding and Liquidity Highlights Loan to Deposit Ratios (%) Liquidity in the UAE Banking system improved in H1 2009, helped by various Government initiatives 140% 129% 126% 127% 130% 122% ■ Formal deposit and capital markets guarantee documentation expected soon 118% 119% 117% 120% Funding remains stable and deposit mobilisation initiatives proving successful 110% 111% 109% 109% 100% 104% ■ Continue to access stable interbank lines and ECP market opening up 100% 100% 90% 98% ■ Liquidity backstop facilities of c. AED14b remain unused 80% ■ Term debt maturity profile is well within our funding capacity; repaid scheduled AED 3.7b in H1 2009 Q4 07 Q2 08 Q1 08 Headline LTD Ratio % Q3 08 Q4 08 Adjusted LTD Ratio %(1) Q1 09 Q2 09 Composition of Liabilities - H1 2009 (%) H1 2009 100% = AED 250.7b Customer deposits (incl. Islamic) Banks Debt and Sukuk issued Others 18% 20% 22% 10% 12% 12% 4% 5% 5% TH1 2009 FY 2008 TH1 2008 Maturity Profile: Debt Issued(2) (AED million) 100% = AED 25.0b 68% 7,615 63% 61% 6,648 1) Adjusted LTD ratio includes Debt Issued and Other Borrowed Funds in the denominator 2) Debt Issued includes EMTNS of AED of AED 19.5b and syndicated borrowings from banks of AED 5.5b 3) For 2009, AED 2,184m represents remaining maturities for the 6 months ended 31.12.2009 Emirates NBD 3,064 2,184 T 2009(3) 2010 2011 2012 1,054 216 0 2,765 1,432 0 2013 2014 2015 2016 2017 2018 17#18Divisional Performance Wholesale Banking Consumer Banking & Wealth Management Wholesale banking had another successful half year Continued success of transactions business Key focus during the first half of 2009 was on balance sheet optimisation, continued proactive management of credit quality, building non-risk based and fee generating businesses Revenue grew 44% year-on-year and 65% from H2 2008 ■ Loans grew 8% from end-2008 Deposits grew 12% from end-2008 AED billion 158 171 143 AED million +44% 82 77 74 2,808 1,947 1,701 H1 08 FY 08 H1 09 H1 08 H2 08 H1 09 Loans Deposits Revenue AED billion CWM continues to expand and build on distribution reach Distribution network strengthened to 99 branches ATM and SDM network now at 550 Revenue grew 10% year-on-year and decreased by 1% from H2 2008 due to lower fee income Loans declined by 7% from end-2008 Deposits grew 13% from end-2008 Emirates NBD 46 45 45 26 23 24 24 51 AED million +10% 1,425 1,585 1,565 H1 08 FY 08 H1 09 H1 08 H2 08 H1 09 Loans ■Deposits Revenue 18#19Divisional Performance (cont'd) Emirates Islamic Bank Network International Global Markets & Treasury Improved market conditions worldwide, specifically a recovery in equity markets, tightening of credit spreads and volatility of foreign exchange markets resulted in stronger client activity. Revenues for the first half of 2009 were AED 1,251 million compared with AED 34 million in the comparable period in 2008. AED million 15% increase in revenue versus H1 2008 due to 28% increase in processing revenues and 8% growth in acquiring revenues ■ Serves over 10,000 merchants and 47 banks and financial institutions in the region Key focus during the first half of 2009 was on balance sheet optimisation and increased caution on new underwriting ■ EIB revenue declined by 23% in H1 2009 (net of depositors' share of profit) year-on-year Financing receivables grew by 5% to AED 18.5b from end-2008; Customer Deposits grew 3% to AED 20.2b from end-2008 ■ 4 new branches in H1 2009 taking the total to 30 Emirates NBD AED billion 22 18 15 H1 08 1,251 34 270 H1 08 H2 08 H1 09 Revenue AED million +15% 88 146 169 168 H1 08 Revenue 20 20 FY 08 H2 08 H1 09 One-off investment income AED million 20 18 -23% 514 395 351 H1 09 H1 08 H2 08 H1 09 Financing receivables Customer accounts Revenue (net of depositors' share) 19#20Contents Emirates NBD UAE Economy and Banking Market Financial and Operating Performance Merger Update Strategy and Outlook 20 20#21Merger Update Integration fully on track We have achieved major milestones during the last year Successful integration of 92 smart deposit machines Emirates NBD's Large Corporate Unit (LCU) is inaugurated Treasury team-up together in one premise, and are now working as a single integrated FX trading entity Mobile and Online Banking integrated; enhanced functionalities and 13 payment partners available to all our customers New Core Banking system rolled-out in EBI 29-Apr- 2008 09-Jul- 2008 10-Jul- 2008 14-Jul- 2008 18-Aug- 2008 27-Aug- 2008 11-Oct- 2008 20-Feb- 2009 09-May- 2009 First staff move to Al Barsha, our new IT and Operations Processing Center Integration of ATMs completed to form the largest network in the UAE (545 ATMs) - Living the values Emirates NBD Culture Workshops complete the first phase; 107 workshops and 5,000 employees Credit cards platform at Network International integrated (Vision Plus) Integration milestones going forward Emirates NBD July 2009 Rebranding across all branches will be completed - One bank across all channels Dec Legal merger will be completed Emirates Bank and NBD legally merged into one entity Core-Banking Roll-out to NBD: New system online for combined entity. Integration of all support units will be completed 21 21#22Merger Update Exceeded 2009 full year targets Target Synergies AED 346m of recurring annual synergies by the third year post merger, plus AED 26m of one-off synergies totalling AED 372m Actual H1 2009 Synergies (AED million) Achieved synergies of AED 328m - ahead of 2009 full year target by 33% 2009 Target vs. Actual Synergies 69% 169 ■ The recurring synergies below will be delivered 33% in year 1 (2008), 66% in year 2 (2009) and fully by 2010 350 300 % of 250- Synergies % of Smaller Base(1) Combined AED Base(1) 200 million 150 129 129 2008 2009 2010 Actual Benchmark Actual 100 100 Revenue 65 129 195 10.5% 5-10% 4.1% 50 Costs 50 100 151 22.2% 14-26% 8.3% 0 One-Off 9 17 26 Revenue Cost Total 124 246 372 Target 246 30 76% 17 One-off 328 33% Total 1) 2010 Synergy base used when computing synergy targets were 2006 financials, smaller base was NBD and combined was aggregated EBI and NBD Key Drivers of Revenue Synergies " Revenue synergies for 2008 and H1 2009: Largest distribution network of 129 branches & 652 ATMs and SDMs - Focus on cross selling- e.g. mortgages > AED 99m loans Enhanced market share/pricing advantages - e.g. FDs Embedded Customer efficiency framework - e.g. Tafawouq has tripled branch sales in Umm Suqeim & DCC - Increased corporate pricing power from enhanced scale Actual (H1 2009 annualised) Note 1: Base used when computing synergy targets were 2006 financials ■ Key Drivers of Cost and One-off Synergies Cost synergies for 2008 and H1 2009: Single Head-office in place Created efficiencies through unified business models Combined marketing & advertisement activities Staff efficiencies across all businesses One-off synergies for 2008 and H1 2009: - Projects & initiatives discontinued due to merger, namely Islamic banking set up previously planned in NBD Initiatives conducted in one group as opposed to the separate banks; e.g. Basel 2 regulatory requirements Emirates NBD 22 22#23Contents Emirates NBD UAE Economy and Banking Market Financial and Operating Performance Merger Update Strategy and Outlook 23 23#24Strategic Imperatives Optimise Balance Sheet Drive Profitability ■ Prudent lending growth - Support growth of important Group relationships in line with targeted asset/deposit ratios ■ Focus on funding - - Renewed focus on key market segments Leverage distribution network - Continue to maintain and develop wholesale sources of medium to long term funding Continued government action / support Improve product/customer profitability - Re-price and maximize product yields - Increase fee based income Improve overall cost position - - Drive performance improvement program - Increase process efficiency - Migrate customers to lower cost channels Enhance Risk Management Implementation of Basel II IRB approach ■ Advancement of Liquidity Risk Control and Management Alignment and integration of Economic Capital and Stress testing Framework Strengthen credit management and improve collection processes Emirates NBD 24 24#25Strategic Imperatives (cont'd) Evidence of success in H1 2009 Optimise Balance Sheet Capital Adequacy Ratio strengthened to 19.0% from 11.4% at end-2008 ■ Tier 1 increased in H1 2009 to 12.1% from 9.4% at end-2008 ■ Risk Weighted Assets declined by 3% from end-2008 compared to 4% growth in loans ■ Customer deposits grew by 5% from end-2008 compared to 4% growth in loans, improving the LTD ratio Drive Profitability ■ Net interest margin improved to 2.58% for H1 2009 from 2.01% in FY 2008 due to re-pricing of assets and benefits of balance sheet management ■ Core cost to income ratio of 34.6% for H1 2009 stable vs. 34.6% for FY 2008 and remains within target range of 35% ■ H1 2009 ROA of 1.50% vs. 1.37% for FY 2008 ■ H1 2009 ROE of 18.9% vs. 19.1% for FY 2008 Enhance Risk Management ■ Credit metrics remain healthy and within expectations ■ NPL ratio increased to 1.56% from 1.19% in Q1 2009 and 0.95% at end-2008 Emirates NBD 25 25#26Emerging Stronger from the Crisis Governance " Refocused senior management team Investor communication / disclosures Enhanced risk management & controls Emirates NBD Products & Services Segments & Customers ☐ Enhanced trade finance & cash management offering in WB Leverage asset management, investment banking, insurance & treasury capabilities in WM and CWM Enhanced Private Banking product scope Roll-out of new branch concept Sales transformation program Private Banking: Doubled number of RMs in UAE Priority Banking: New RM concept being rolled out SME Banking: New SME center concept being rolled-out and doubled number of RMS in UAE Financial Institutions / DCM Emirates NBD Markets & Regions Organic expansion internationally (e.g. KSA) Inorganic Expansion Branch expansion in underrepresented areas (e.g. Abu Dhabi) Finacle core banking system Oracle ERP Calypso & KTP Business Infrastructure Π CRM system Al Barsha IT and Operations Centre (OPC) 26 26#27Outlook ■ In 2009 the external environment combined with liquidity tightening and weakening demand should bring. GDP growth towards 0% in UAE ■ H1 2009 witnessed signs of stabilisation in the international debt and equity markets and an improvement in local liquidity conditions and sentiment. Uncertainties remain in the Global and regional environment and we remain cautious and are taking measures to offset the possible effects The fundamentals of Emirates NBD's core business remains strong Success of Emirates NBD's merger even more pronounced in the current climate as the Bank is more resilient due to scale and is seen as a stronger counterparty We are a consolidator of choice in the region and are well placed to take advantage of any attractive opportunities that may arise. Emirates NBD 27 27#28Summary Emirates NBD ■ Solid first half financial and operating performance ■ Total income grew 18% year on year to AED 5.5b ■ H1 2009 Net profit reached AED 2.1b, a reduction of 20% versus H1 2008 Credit quality remains healthy Expected moderate increase in NPLs in H1 2009 to 1.56% from 0.95% in FY 2008 Capitalisation strengthened significantly; CAR at 19.0% & T1 at 12.1% Liquidity has improved in H1 2009 ■ H1 2009 annualised merger synergies achieved of AED 328m; ahead of FY 2009 target by 33% Integration fully on track for targeted completion by end-2009 Emirates NBD has a clear plan to navigate through the current environment Strategic imperatives include balance sheet optimisation, driving profitability and risk management enhancement ■ At the same time, the Bank is taking steps to ensure it emerges stronger from the crisis ■ Growth of the UAE economy is expected to slow down to 0% in 2009 ■ H1 2009 has witnessed some stabilisation in the environment. However, uncertainties remain and Emirates NBD is retaining its cautious stance ■ Emirates NBD is well positioned to take advantage of attractive opportunities 28 20#29Appendix#30Contents Emirates NBD Background on Emirates NBD Strategic Priorities Awards and Key Deals 30 50#31Emirates NBD Group Structure and Market Shares Banking Group Structure Emirates NBD (Parent Company) Other Financial Services Brokerage Processing Associates بنك الإمارات Emirates Bank بنك دبي الوطني NBD مصرف الإمارات الإسلامي Emirates Bank National Bank of Dubai EIS Asset Management Emirates Int'l Securities ETFS Union Properties EMIRATES ISLAMIC BANK Emirates Islamic Bank NBD Investment Bank Emirates Money NBD Securities Network International National General Insurance Emirates NBD Capital Limited ☐ EIS, KSA Market Profile Emirates NBD have 129 branches; Dubai 92, Abu Dhabi 16, Sharjah 9, Other Emirates 12 Emirates NBD have 652 ATMs and SDMS ☐ Emirates NBD market share in UAE: ☐ Assets c.19% Loans c.21% Deposits c.18% Retail market shares (estimated): Personal loans c.17%, Home loans c. 10% Auto loans c.20% Credit cards c.10% Debit cards c.18% EIS: Brokerage business ranked 5th by volume in the UAE (as of 30th June 2009) Source: UAE Central Bank; ENBD estimates International Securities NETWORK EIS Asset Management الاتحاد العقارية Union Properties INGD الوطنية للتأمينات العامة NATIONAL GENERAL INSURANCE Group Entities Emirates Bank & National Bank of Dubai are the primary companies of Emirates NBD group ■ Provide services and products to Retail, Wholesale & Treasury Customers. Fastest growing Islamic bank in UAE Provides Sharia compliant products to Retail and Corporate Banking clients. 99.8% owned by Emirates NBD Emirates NBD Capital Limited (formerly known as NBD Investment Bank) was incorporated on 31 May 2006 in the DIFC. Principal activity is Investment Banking. Emirates International Securities was established in 2001 with principal activity is brokerage on listed securities on DFM and ADSM. Network International established in 1994 and evolved into a leading credit card and payment services company. ■ Emirates Investment Services Limited was incorporated in DIFC in 2006 ☐ Principal activities are Investment Banking and Asset Management. Union Properties is an associate company [Ownership 47.8%] of Group Leading property development, investment and real estate services company in the UAE. National General Insurance Limited (N.G.I.), acquired in 1995 [Own 36.7%]. is active in providing general insurance cover for a wide range of products. Emirates NBD 31 4#32Building a Geographically Diversified Footprint London, UK Branch (est. 1986) Jersey Channel Islands ■ Branch (est. 1990) Subsidiary Trust Co. (est. 2001) Cairo, Egypt Cards Processing Center - NPC (est. 2007) Tehran, Iran Representative Office (est. 2002) Riyadh, Saudi Arabia Fully-fledged commercial branch (est. 2004) ■ Investment Banking went live in April 2008 Doha, Qatar QFC Branch Emirates NBD (est. 2007) Mumbai, India Representative Office (est. 2000) UAE Singapore Representative Office (est. 2006) Currently upgrading to branch license 32 22#33Strong Credit Ratings Current Ratings بنك دبي الوطني NBD بنك الإمارات Emirates Bank Moody's (1) A1 / P-1 A1/P-1 S&P (2) A-/A-2 A- / A-2 Fitch (3) AA- n/a Capital Intelligence AA- AA- 1) Moody's Long-term rating on review for possible downgrade 2) S&P Credit ratings on negative outlook 3) EBI's Long term Issuer Default rating is AA-; NBD has not been rated by Fitch. Support rating for both EBI and NBD is '1' Emirates NBD 33 83#34Profit and Balance Sheet Growth in Recent Years Revenues (AED billion) Net Profits (AED billion) 8.4 7.1 +33% 3.7 +11% 4.7 4.0 4.0 3.7 2.4 3.0 +18% 5.5 2.1 1.0 4.7 1.5 3.1 2.3 2.7 -20% 1.5 1.9 2.1 2006 2007(1) 2008 H1 09 2006 2007 (1) 2008 H1 09 Assets and Loans (AED billion) Deposits and Equity (AED billion) Assets Loans Deposits Equity(2) +27% 282 282 254 +35% 209 217 166 110 +30% +25% 19 162 171 15 141 95 20 20 25 25 2006 2007 2008 H1 09 2006 2007 2008 H1 09 2006 2007 2008 H1 09 2006 2007 2008 H1 09 1) The comparative results for 2007 were prepared on a pro forma basis, which assumed that the merger occurred on 1 January 2007 2) Equity for 2007, 2008 and H1 2009 is Tangible Shareholder's Equity which excludes Goodwill and Intangibles 165 Note: Prior Year 2006 is the aggregation of Emirates Bank International and NBD; Year 2007 & 2008 excludes amortization of intangibles Source: Financial Statements, Aggregation of Emirates Bank International and NBD results Emirates NBD 34 ==#35Contents Emirates NBD Background on Emirates NBD Strategic Priorities Awards and Key Deals 35#36Optimise Balance Sheet Initiatives Maintain and Develop 1 Wholesale Funding and Capital Sources ■ Continue to monitor market conditions and investor demand through ongoing dialogue and non-deal specific investor road shows ■ Innovative & opportunistic funding and capital initiatives (e.g. Tier 2 bond conversion, explore securitisation opportunities) ■ Risk weighted asset initiatives (e.g. investment portfolio rationalisation) ■ Develop stable and longer-term interbank funding by leveraging long-term regional and international relationships (e.g. bilateral arrangements) Continued 2 Government Action/Support ■ Government action at Federal and Emirate level continues to reap gains ■ Active engagement with regulators and key government bodies on policy development and monetary/ fiscal actions Expected formal deposit and capital market guarantees 3 ■ Product related initiatives: Value, e-saver, high yield deposits ■ Proactive retention driven by dedicated retail retention team Capture Deposit Opportunities ■ Intensified sales effort and incentives in corporate and retail businesses ■ Re-focus on cash-rich corporate sectors (e.g. hospitals, schools, insurance companies, professional firms, etc.) Emirates NBD 36#37Optimise Balance Sheet Initiatives (cont'd) 4 Launch Private Banking 5 Affluent / SMB Re-launch ■ Build up team and proposition Add relationship managers to drive liability sales 6 Focused Network Expansion Emirates NBD - Upgrade existing, qualified bank customers - Expand model into neighboring countries ▪ Revised value proposition & operating model Liability focus Service promise for affluent Focus on emerging affluent ■ New low cost channel branches Aligned to key micro-markets Focus outside Dubai ■ New ATMs & CDMs; optimise use of ATM/CDM network 37 37#38Drive Profitability Initiatives Streamline 1 Processes and Productivity 2 Optimise Overall Cost Base Emirates NBD ■ Leverage the recent significant investment in technology and infrastructure to streamline processes and improve productivity - Finacle core banking system - Oracle Financials - ERP Consolidation of data centres at Al Barsha Oracle HR Management System Calypso Treasury Management System Integrated Internet Banking platform Creating a scalable platform for future growth ■ Tighter governance of costs ■ Redeployment of staff from lower volume front-end activities to governance areas such as controls, collections and liability generation ■ Acceleration of integration cost savings initiatives ■ Align organisation and management model to new economic environment - Co-location/integration of functions Eliminating duplicated systems & processes Purchasing savings through rationalisation of suppliers, leveraging scale and renegotiation of contracts 38#39Drive Profitability Initiatives (cont'd) 3 Maximise Product Yields and Margins Product re-pricing across corporate and retail portfolios. Shift product mix; e.g. focus on affluent and private banking customers ■ Proactive balance sheet management to optimise funding costs ■ Grow asset management; e.g. grow principal guaranteed & regional products ■ Expand range of insurance products, e.g. bancassurance 4 Increase Fee Based Income ■ ■ Leverage prime-banker status with key corporate customers to gain larger wallet share of fee income Augment existing corporate product base by tailored products to optimise value; e.g. on-line trade, Escrow Account, enhanced trade finance & cash management products Emirates NBD 39#40Enhance Risk Management Initiatives 1 Enhance Risk Management Framework 2 ■ ■ ■ ■ Developed Risk Model Governance Framework, Risk Strategy and comprehensive MIS capability Development of Basel II Standardized Approach capital calculator for Emirates NBD completed in line with UAE Central Bank Developed Basel II compliant internal Rating system for corporate, SME and FI customers and development of Rating Masterscale Implemented group-wide Internal Capital Adequacy Assessment Process (ICAAP) in line with the Basel Il guidelines Developed application and behavioral scorecards for Retail products ■ Developed home loans application model ■ Enhancement of current PIP methodology for Corporate and Retail segments ■ Completed technical VaR implementation for trading desks Implemented initial pricing & valuation engine for the existing Treasury Sales Book Improve Collections ■ In-source field collections to improve efficiency Expand tie up with international recovery agencies ■ Set up retail restructuring/workout unit Emirates NBD 40 40#41Enhance Risk Management Initiatives (cont'd) Corporate ■ Sectoral caps harmonized for all Emirates NBD corporate counterparties ■ Exposures to all economic sectors being carefully monitored ■ Prudence in renewing existing facilities ■ Intensified credit monitoring and controls Delegated authority matrix reviewed ■ Review of securities to ensure quality and adequacy of coverage Financial Institutions ■ Review of counterparty limits & reduction as appropriate ■ Intensified utilization monitoring Strengthen 3 Credit Policy ■ Liquidation of investments on a best effort basis Emirates NBD Retail ■ Active revision of policies to ensure NPLs within acceptable ranges ■ Roll out new scorecards ■ Ongoing review of sectoral risk appetite Eligibility norms for company approvals raised ■ Increase in income norms ■ Debt Burden ratios scaled down and reduction in loan multiples ■ Target end-user mortgage users (i.e. reduce LTVs and limit mortgages per customer) 41 44#42Contents Emirates NBD Background on Emirates NBD Strategic Priorities Awards and Key Deals 44 42#432008 and H1 2009: Awards The Banker Awards 2017 GLOBAL FINANCE Emirates NBD was honored by H.H. Sheikh Mohamed Bin Rashid Al Maktoum, the Ruler of Dubai and Vice President & Prime Minister of the UAE, for its role in boosting investments and attracting businesses from around the world Rick Pudner, Chief Executive Officer of Emirates NBD was awarded the 'Banker of the Year Award' by The Banker Middle East Emirates NBD has been named as Best Emerging Market Bank & Best Foreign Exchange Bank in the UAE for the year 2008 by Global Finance Magazine. Global Finance Magazine named the bank as Best Bank, Best Emerging Market Bank and Best Trade Finance Provider in the UAE in May 2009 Superbrands Superbrands council honored Emirates NBD with three Superbrands awards for Group's 'Emirates Bank', 'National Bank of Dubai' and 'meBank' brands at the Superbrands Tribute Event held in April 2008 MIRATES NBD Emirates NBD was awarded 'Best Bank in the UAE', for the year 2008 by The Banker 2008 siness 'Best Retail Bank' Arabian Business Magazine 2008 Emirates NBD 43 43#44Large Deals Concluded 2008 and H1 2009 Emirates Aluminum Deer Fields Town Square Project Archirodon Group N.V. Limitless LLC emal Emirates Aluminium Deer Fields US$ 4.94b Project Finance Facility February 2008 Mandated Lead Arranger, Sub- Underwriter and L/C Issuing Bank Borse Dubai AED 360m Term Loan Facility March 2008 Mandated Lead Arranger DEWA حكومة دبي ARCHIRODON Saudi Bin Laden مجموعة بن لادن السعودية SAUDI BINLADIN GROUP US$ 225m Revolving Multi-currency Credit Facility March 2008 Mandated Lead Arranger LIMITLESS US$ 1.2b (Dual currency AED/USD) Syndicated Mudaraba Facility March 2008 Initial Mandated Lead Arranger, Underwriter & Bookrunner SR 3.2b Project Facilities March 2008 Mandated Lead Arranger DEWA حكومة الي بورصة دبي GOVERNMENT OF DUBAI هيئة كهرباء ومياه دبي GOVERNMENT OF DUBAI هيئة كهرباء ومياه دبي Borse Dubai US$ 5.8b (Dual currency GBP/USD) US$ 2.2b AED 3.2b Syndicated Loan Facility Syndicated ljara Facility Sukuk al ljara April 2008 April 2008 April 2008 Initial Mandated Lead Arranger, Underwriter & Bookrunner Mandated Lead Arranger Mandated Lead Arranger & Bookrunner Emirates NBD Dubai World Dubai World Axiom Telecom LLC axiom telecom Baximum Communication US$ 5b Term Loan and Revolving Credit Facilities June 2008 US$ 400m Dual Currency (AED/USD) Import/Purchase Finance (Islamic/Conventional) Facility June 2008 Mandated Lead Arranger, Underwriter & Bookrunner Initial Mandated Lead Arranger, Underwriter & Bookrunner 44#45Large Deals Concluded 2008 and H1 2009 (cont'd) The Palm Vacation Club FZE (A Subsidiary of IFA Hotels & Resorts KSCC) للفنادق والمنتجعات HOTELS & RESORTS Dubai Aerospace Enterprise Limited ENOC Supply & Trading LLC Dae Dubai Aerospace Enterprise اينوك ENOC AED 367.3m Corporate Term Loan Facility June 2008 Initial Mandated Lead Arranger, Underwriter y Bookrunner US$ 1,000m Syndicated Loan Facility July 2008 Mandated Lead Arranger, Bookrunner and Underwriter US$ 500m Multicurrency Syndicated Commodity Murabaha July 2008 Mandated Lead Arranger, Bookrunner and Underwriter Nakheel Real Estate Finance Limited ENOC Processing Company LLC Investment Corporation of Dubai اينو United Arab Shipping Company SAG الملاحة العربية المتحدة UASC US$ 500m Syndicated Financing Facility July 2008 Mandated Lead Arranger, and Bookrunner Majid Al Futtaim Group LLC MAJID AL FUTTAIM GROUP US$ 1,000m Syndicated Term Loan & Revolving Credit Facility July 2008 Mandated Lead Arranger Drydocks World LLC Commercial Real Estate Company KSCC INVESTMENT CORPORATION OF DUBAI Drydocks World فارية AL-TIJARIA NAKHEEL AED 4.4b Syndicated Receivables Financing Facility August 2008 Mandated Lead Arranger, Underwriter & Bookrunner ENOC AED 771m Islamic Financing Facility August 2008 Mandated Lead Arranger US$ 6b Syndicated Term Finance Facility August 2008 Mandated Lead Arranger US$ 2.2b Syndicated Term Loan Facility September 2008 Mandated Lead Arranger, Underwriter & Bookrunner US$ 155m Syndicated Murabaha Facility October 2008 Mandated Lead Arranger Emirates NBD 45 45#46Large Deals Concluded 2008 and H1 2009 (cont'd) Maritime Industrial Services Co. Ltd. Inc. Dubai Aerospace Enterprise Limited Al Ghurair Centre LLC Borse Dubai Limited Dae Dubai Aerospace Enterprise Borse Dubai US$ 2.5b Saudi Bin Ladin Group Ltd (Public Buildings & Airports Division) مجموعة بن لادن السعودية SAUDI BINLADIN GROUP US$ 84.8m Syndicated Project Facilities December 2008 Mandated Lead Arranger, Bookrunner and Underwriter US$ 725m US$ 347m Syndicated Loan Facility Syndicated Musharaka Facility December 2008 February 2009 Mandated Lead Arranger, Bookrunner and Underwriter Mandated Lead Arranger and Bookrunner Syndicated Term Loan Facility February 2009 Mandated Lead Arranger SR 3.15b Syndicated Project Facilities February 2009 Mandated Lead Arranger Dubai Electricity & Water Authority The Government of Dubai, Department of Finance (Dubai Civil Aviation) cr61 dewa US$ 2,200m Syndicated Loan Facility April 2009 Mandated Lead Arranger and Coordinating Bank حكومة دبي GOVERNMENT OF DUBAI US$ 635m Syndicated ljara Facility April 2009 Mandated Lead Arranger Emirates NBD 46 46#47Contact Details: Ben Franz-Marwick Head, Investor Relations Tel: +971 4 201 2604 Email: [email protected]