#1Emirates NBD Investor Presentation February/March 2011 Emirates NBD#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 Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 3#4UAE Economic Update Highlights Real GDP Growth Forecasts The IMF joined the private sector consensus in upgrading its growth forecast for the UAE late last year, taking it to 2.4% for 2010 and 3.2% in 2011. At Emirates NBD we expect 2.5% and 4.0% respectively. 2008 2009 2010 2011 UAE 7.4% (3.0%) 2.5% 4.0% UK ■ Local growth is benefiting from the price of, and the demand for, hydrocarbons and recovering world trade. (0.1)% (4.9%) 0.5% 1.5% Eurozone 0.3% (4.1%) 1.0% 1.5% Germany 0.7% ■ Despite rises in global commodity prices, local inflation has remain subdued with inflation at the end of 2010 standing at 1.7% y/y. The latest UAE Purchasing Managers Index for January shows that economic expansion remains underway, with strength in orders, activity, employment and purchasing accelerating. Rising costs, however, were beginning to squeeze corporate profit margins slightly. Despite debt market tensions in the Eurozone, local CDS spreads have remained well behaved relatively speaking with little to no contagion. Promising signs for oil (USD) Singapore Hong Kong (4.7%) 3.5% 2.5% US 0.0% (2.6%) 3.0% 3.0% China 9.6% 9.1% 10.0% 9.5% Japan (1.2%) (6.3%) 2.0% 1.5% 1.8% (1.3%) 14.5% 5.0% 2.2% (2.8%) 6.6% 5.0% Source: Emirates NBD forecasts 160 140 120 100 80 60 40 20 0 2001 2002 2003 2004 2005 2006 2007 ― Brent oil $ per Barrel Source: Bloomberg Emirates NBD 2008 2009 2010 Rolling 1-year moving average UAE GDP Composition (%) UAE GDP by Sector (2009) 100% AED 915b = Financials 6% Tourism & Agriculture 2% leisure 2% Others 1% Components of UAE GDP (2009) 100% AED 915b = Net Exports 6% Transport & comms 7% Oil & Gas 29% Govt. 8% Real estate + 2011 8% Trade 9% Construction 11% Manufacturin g 16% Source: National Bureau of Statistics Govt. Purchases 19% Private Consumption 48% Private Investment 27% 4#5Dubai Economic Update Highlights Dubai is the 3rd largest centre for re-exports in the world which itself represents 44% of GDP Dubai is a strategically located international trading hub with some of the world's best air and sea ports serving over 205 destinations ■ In Dubai six 'strategic thrusts' for growth include travel and tourism; financial services; professional services; transport and logistics services; trade and storage; and construction. Very large investments in infrastructure will have highly positive effects on the long run development and productivity of the emirate Lower inflation, stable USD and property market declines have enhanced Dubai's cost-competitiveness Strength in emerging market currencies leaves UAE markets relatively cheap by comparison. Dubai's Strategic Location Dubai 2008 GDP breakdown UAE GDP by Emirate (2008) 100% AED 934b = Others 11% Dubai GDP by Sector (2008) = 100% AED 300b Financial Services. 8% Others 5% Oil 2% Abu Dhabi 57% Dubai 32% Manufacturi ng 14% Construction / Real Estate 24% Trading & Communicat ion 47% Source: UAE Ministry of Economy Dubai Trade in 2010 (AED billion) Emirates NBD 700 600 500 400 300 200 100 יייוון 2005 2006 2007 2008 2009 Q3 2010* Imports Exports & Re-Exports * Annualized. Source: Dubai Statistics Centre; includes Direct Foreign Trade and Free Zone & Customer Warehouse Trade 5#6UAE Banking Market Update Highlights UAE Banking Sector Growth (AED billion) UAE Banking sector is the largest by assets in the GCC 1,800 The sector is dominated by 23 local banks which account for more than 75% of banking assets; 28 foreign banks account for the remainder 1,600 1,400 1,662 1,562 1,480 1,223 UAE loan growth has outstripped deposit growth before H1 2008 1,200 UAE Banking system liquidity tightened in 2008 due to outflow of c. AED 180b of speculative capital and the Global credit/liquidity crisis following the Lehman's collapse Government intervention during H2 2008 and 2009 helped improve liquidity and capitalisation: - Additional liquidity facilities from UAE Central Bank - AED 50b deposited into local banks; option to convert to LT2 capital Deposit & capital market guarantees announced - Tier 1 injections by Abu Dhabi (AED 15b) and Dubai Governments (AED 4b) Source: UAE Central Bank, EIU, Emirates NBD estimates 1,000 859 800 639 600 448 331 367 400 200 273 321 387 506 643 758 934 915 948 0 2002 2003 2004 2005 2006 2007 Banking Assets Nominal GDP 2008 Loans & Advances 2009 2010 Deposits Composition of UAE Banking Market (AED billion) Loans 205 883 1,088 Deposits 200 850 1,050 Assets 295 ■ Emirates NBD 1,367 Other Banks Source: UAE Central Bank, 31 December 2010 Loans and Assets presented gross of impairment allowances Emirates NBD 1,662 GCC Banking Market Banking Assets USD billion Assets % GDP UAE(1) 453 175% W KSA 377 91% Kuwait 147 133% Bahrain(2) 45 45 212% Oman 41 Qatar 32 1) Includes Foreign Banks; 2) Excludes Foreign Banks Saudi, UAE, Kuwait, Qatar as at 31 Dec 2010; Bahrain, Oman as at 31 Oct 2010 Source: UAE Central Bank; National Central Banks and Emirates NBD forecasts 29% 83% 6#7Contents Emirates NBD Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 7#8Summary Emirates NBD Largest financial institution (by asset size) in the GCC Flagship bank for Dubai and the UAE Governments 56% owned by Dubai government Consistently profitable; despite significant headwinds during the last two years 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 Emirates NBD 8#9Emirates NBD at a Glance Largest Bank in UAE No.1 Market share in UAE: Assets c.18%; Loans c. 19% Deposits c.19% Retail market shares (estimated): - Personal loans c.22% - Home loans c.7% Auto loans c.11% Credit cards c.9% Debit cards c.17% Fully fledged financial services offerings across retail banking, wholesale banking, global markets & trading, investment banking, brokerage, asset management, merchant acquiring and cards processing Credit Ratings Emirates NBD Moody's (¹) A3 Fitch (2) A+ Capital Intelligence 1) Moody's Long-term rating on negative outlook 2) Fitch Individual Rating "C" on credit watch negative Emirates NBD A+ Largest Branch Network in the UAE Dubai 96 Ras al-Khaimah (3) Abu Dhabi 18 Umm al-Quwain (2) Sharjah 12 Other Emirates 9 Ajman (2) -Fujairah (2) Total 135 Dubai (96) Sharjah (12) Abu Dhabi (18) International Presence Conventional 105 Islamic Total 30 135 9#10Emirates NBD is the Largest Bank in the UAE and GCC by Assets As at 31 December 2010 UAE Ranking by Assets (AED billion) UAE Ranking by Equity (AED billion) UAE Ranking by Profits (AED million) (1) Emirates NBD 286.2 Emirates NBD 27.7 NBAD 3,683 NBAD NBAD 211.4 24.1 FGB 3,420 ADCB FGB 178.3 24.1 Emirates NBD 2,339 FGB 140.8 ADCB 19.6 UNB 1,350 DIB* 84.8 MASQ 11.8 ADIB 1,024 MASQ 84.8 UNB 9.8 RAK 1,003 UNB 81.8 DIB* 9.2 DIB * 964 ADIB 75.3 ADIB 8.1 CBD 821 CBD 38.5 CBD 5.9 MASQ 803 RAK RAK 21.4 3.4 ADCB 391 GCC Ranking by Assets (AED billion) GCC Ranking by Equity (AED billion) GCC Ranking by Profits (2) (AED million) Emirates NBD 286.2 Al Rajhi Bank 29.7 QNB 225.3 NBK 29.1 Al Rajhi Bank QNB 6,631 5,753 NBAD 211.4 Riyad Bank 27.9 SAMBA 4,343 (1) SAMBA 183.5 Emirates NBD 27.7 NBK 3,939 Al Rajhi Bank 181.0 SAMBA 25.1 NBAD 3,683 ADCB 178.3 QNB 25.0 FGB 3,420 NBK 168.4 NBAD 24.1 Riyad Bank 2,766 Riyad Bank 168.2 FGB 24.1 Banque Saudi Fransi 2,743 FGB 140.8 ADCB 19.6 Emirates NBD 2,339 Banque Saudi Fransi 118.5 Banque Saudi Fransi 17.4 Arab National Bank 1,871 1) Shareholders' Equity for Emirates NBD is AED 33.7b. The number shown is Tangible Shareholder's Equity which excludes goodwill and intangibles Source: Bank Financial Statements and Press Releases for 31 December 2010, Bloomberg * DIB Assets and Equity as at 30 September 2010; Net profits for 9 months ended 30 September 2010 are annualized. Emirates NBD 10 10#11Contents Emirates NBD Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 11#12Profit and Balance Sheet Growth in Recent Years Revenue Revenues and Costs (AED billion) Costs 4.7 3.9 +20% 7.1 8.4 10.8 9.7 +19% 3.6 3.4 3.0 3.1 2.8 2.7 1.8 1.3 2005 2006 2007 2008 2009 2010 2005 2006 2005 2006 2007 2008 2009 2010 Assets and Loans (AED billion) Assets 166 111 +21% 282 282 286 254 Loans 109 69 +23% 215 209 197 166 Deposits 95 56 70 70 +23% Net Profits (AED billion) 3.9 2007 -4% 3.7 3.3 2008 2.3 2009 2010 Deposits and Equity (AED billion) 200 181 162 141 Equity (1) +16% 28 26 19 20 20 15 13 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 1) Equity is Tangible Shareholder's Equity excluding Goodwill and Intangibles. Source: Financial Statements, Aggregation of Emirates Bank International and NBD results Emirates NBD 12#132010 Financial Results ■ ◉ 2010 Financial Results Highlights Total income of AED 9,721m; -10% from AED 10,794m in 2009 Income includes write-downs of investment properties of AED 214m Improvement of 14% in operating expenses from 2009 to AED 3,053m in 2010; Cost to income ratio improved by 1.5% to 31.4% Operating profit before impairment allowances of AED 6,668m; -8% from AED 7,243m in 2009 Impairment allowances of AED 3,190m; 4% lower than AED 3,319m in 2009 Union Properties investment reduced by AED 1.0b in 2010 through recognition of share of losses and impairment Net profit of AED 2,339m; -30% from AED 3,343 in 2009 Capital ratios remain strong; CAR 20.1% and T1 12.8% at end 2010 ■ Deposits grew by 10% from end-2009 levels while loans declined 8%, improving the loan to deposit ratio to 99% from 118% at end-2009 " ■ Q4 2010 Financial Results Highlights Total income of AED 2,262m; -9% from AED2,496m in Q4 2009; -13% from AED 2,589m in Q3 2010 Improvement of 13% in operating expenses from Q4 2009 to AED 758m in Q4 2010; 4% higher costs compared with AED 726m in Q3 2010 Operating profit before impairment allowances of AED 1,504m; -7% from AED 1,620m in Q4 2009; -19% from AED 1,863m in Q3 2010 Impairment allowances of AED 201m; 79% improvement from AED 945m in Q4 2009 and 84% improvement from AED 1,241m in Q3 2009 Net profit of AED 403m; +126% from AED 178m in Q4 2009; -6% from AED 424m in Q3 2010 1) Investment properties income includes rental income and realised /unrealised gains/(losses) on investment properties 2) Investments/CDS income includes dividend income and realised /unrealised gains/(losses) on investment, trading and CDS securities Emirates NBD Key Performance Indicators Change Q4 Q4 Change AED million 2010 2009 (%) 2010 2009 (%) Net interest income 6,795 7,412 -8% 1,620 1,924 -16% Fee & other income 2,583 2,773 -7% 578 679 -15% Investment properties(1) (188) (42) +346% (45) (56) -19% Investment/CDS Income (2) 531 651 -18% 109 (51) -315% Total income 9,721 10,794 -10% 2,262 2,496 -9% Operating expenses (3,053) (3,551) -14% (758) (876) -13% Operating profit before impairment allowances 6,668 7,243 -8% 1,504 1,620 -7% Impairment allowances: (3,190) (3,319) -4% (201) (945) -79% Credit (2,930) (2,971) -1% (96) (863) -89% Investment securities (260) (348) -25% (105) (82) +28% Operating profit 3,478 3,924 -11% 1,303 675 +93% Amortisation of intangibles (94) (94) 0% (23) (24) 0% Associates (1,024) (477) +114% (869) (475) +83% Share of profits (664) (161) +311% (509) (159) +220% Investment impairment (360) (316) +14% (360) (316) +14% Taxation charge (21) (10) +115% (8) 2 n/a Net profit 2,339 3,343 -30% 403 178 +126% Cost: income ratio (%) 31.4% 32.9% -1.5% 33.5% 35.1% -1.6% Net interest margin (%) 2.52% 2.81% -0.29% 2.41% 2.85% -0.44% EPS (AED) 0.37 0.58 -35% 0.06 0.02 +186% ROE (%) 10.3% 16.2% -5.9% 6.9% 3.2% -3.7% 31 Dec 31 Dec Change AED billion 2010 2009 (%) Total assets 286.2 281.6 +2% Loans 197.1 214.6 -8% Deposits 200.0 181.2 +10% Capital Adequacy Ratio (%) 20.1% 18.7% +1.4% Tier 1 Ratio (%) 12.8% 11.9% +0.9% 13#14Income Q4 2010 NIM of 2.41%; -10bps from 2.51% in Q3 2010: Net Interest Margin Trends (%) 3.01 Negative mix impact of declining loan balances and rising customer deposits with deployment of increased liquidity in lower yielding assets ■ 2010 NIM of 2.52%; -29bps from 2.81% in 2009: - Negative mix impact of declining loan balances and rising customer deposits with deployment of increased liquidity in lower yielding assets Increased deposit funding costs Partly offset by increased loan spreads due re-pricing of loans Qtrly NIM 2.85 2.76 2.65 2.60 2.59 2.54 2.51 2.41 2.21 2.01 2.05 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Note: Net interest margin is calculated based on Average Interest Earning Assets (AIEA) ■ Core gross non-interest income increased by AED 44m or 1% from 2009: Non-interest Income Trends (AED million) Movement in Core Gross Non-Interest Income (AED million) +23 -28 +20 +84 -54 - 12% growth in acquiring income - 2% growth in fee income, despite lower origination volumes 3% growth in forex and rates income - 5% decline in trade finance income - 27% drop in brokerage and asset management fees 3,333 3,377 2009 Fee Income Acquiring business Forex & Rates Trade finance Brokerage & AM fees 2010 Note: Core gross non-interest income excludes the impact of Investment Properties, Investment/CDS income and 'Other' income Emirates NBD 14#15Operating Costs and Efficiency Highlights ■ The cost to income ratio improved by 1.5% from 32.9% in 2009 to 31.4% in 2010 Operating costs declined by 14% to AED 3,053 million in 2010: - 11% improvement in staff costs driven primarily by post-integration rationalisation 4% improvement in occupancy, equipment and operations costs due to ongoing efficiency improvements in IT and Operations - 22% improvement in advertising, marketing and communications - costs mainly due to new branding costs incurred in 2009 51% improvement in other costs due to stringent control over discretionary cost and excess accrual reversals in 2010 Operating Cost Components (AED million) 100% = AED 3,053 million Advertising, marketing & communication Other costs 6% Cost to Income Ratio Trends Cost to income ratio (YTD) 38.5 37.6 37.4 35.8 34.9 33.7 32.9 32.7 32.2 32.2 31.4 30.8 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Operating Cost Trends (AED million) 5% Occupancy, equipment & operations 25% Staff costs 64% Emirates NBD 3,551 -232 -33 -48 -185 3,053 2009 Staff costs Occupancy, equipment & Advertising, marketing & Other costs 2010 operations communication 15#16Credit Quality Loans & Receivables and Islamic Financing Highlights ■ The Bank continues to pro-actively manage credit quality Impaired loans as a percentage of gross loans increased to 10.0% in Q4 2010 from 8.1% in Q3 2010 and 2.6% in Q4 2009 Full required provision for Dubai World made in Q3 2010 and exposure included in impaired loans (3) ■ Added AED 335m to PIP in 2010; total PIP of AED 2.2b at end-2010 representing 1.4% of unclassified lending credit RWAS ■ 80% of Saad and Al Gosaibi exposure provided at end-2010 Loan Portfolio by Type - 2010(1) 100% = AED 205.4b Sovereign 26% Retail 10% Islamic 9% Corporate 55% Impaired Loans & Coverage Ratios (2) 101% 102% 105% 102% 109% 95% 98% Impaired Loans & Impairment Allowance Composition (AED million)(2) Impaired Loans Composition Impairment Allowance ■Investment Securities ■Retail 48% 40% ■Islamic Corporate 20,562 Composition ■Investment Securities ■Retail 15,155 Islamic Corporate 8,322 10.0% 5,831 5,947 8.1% 3,751 3,292 1.674 1,660 3,314 1.788 1.6% 1.8% 2.1% 2.4% 2.6% 2.9% 3.1% 682 539 822 464 1,305 2,685 3,386 828 1,304 2,947 3,484 1,316 789 361 981 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 I Impaired Loans Ratio % Q2 10 Q3 10 Q4 10 Coverage ratio % 673 265 2008 2009 2010 2008 2009 2010 1) Loans and advances before provisions 2) Impaired Loans, Impairment Allowances and Coverage ratios restated to include investment securities classified as loans & receivables; Impaired Loans ratio is calculated on gross loans & receivables 3) Impaired Loans, Impaired Loans Ratio and Coverage ratio for Q3 2010 restated accordingly Emirates NBD 16#17Credit Quality Retail and Corporate Loans & Receivables Corporate Credit Quality Impaired loan ratio 9.2% at Q4 2010 vs. 0.97% at Q4 2009 97% of the portfolio is to UAE customers where the Bank has long-standing relationships Exposure is mainly to top tier names with diversified business interests and multiple sources of repayment Environment necessitates renegotiation of certain customer accounts; amounting to AED 7.3b vs. AED 7.8b at Q4 2009: these reflect renegotiated repayment terms in line with underlying cash flows; and without sacrificing interest or principal Corporate & Sovereign Lending Portfolio • • . Real Estate & Contracting Exposures to Real Estate and Contracting Sector are AED 25.9b (16%) and AED 5.5b (3%) respectively Selectively financing real estate sector; extent of finance is generally limited to: - 70% of construction cost excluding land; and land and cost overruns to be financed by the owner Real Estate financing is restricted to Emirates of Dubai & Abu Dhabi Exposures to these sectors are mainly to diversified businesses having multiple repayment sources of repayment Repayment experience is satisfactory Approximately 52% of the Real Estate portfolio has a repayment maturity of < 3 years 100% Transport & communicat ion By Sector(1) AED 165.2b Contracting 3% 3% Manufacturi Trade 4% ng 5% Others 6% Sovereign 32% Personal - Corporate 6% Real Banks estate Services 9% & Fls 16% 16% Personal loans Portfolio AED 7.0b (33%) 50% of value is to UAE nationals; 60% of value is to government employees Personal loans are only granted subject to salary assignment Personal Loans losses well within original expectations No funding is given to applicants working in the real estate, contracting and hotel industries 2010 delinquency trends for over " 90 days are decreasing; entry rates into delinquency are stable and trending downwards " Credit Cards Portfolio AED 2.5b (12%) Product with highest yield in Retail Portfolio 90+ delinquencies better than industry benchmarks Measures taken to control exposures on unutilised limits 2010 delinquency trends improving Retail Lending Portfolio Car loans Portfolio AED 1.7b (8%) Portfolio balance has declined from end-2009 due to changes in credit policy Minimum Income threshold has been raised Mortgages Portfolio AED 4.1b (19%) Only offered for premium developers Completed properties account for 80% of the portfolio Average LTV is 75% on original value By Sector(1) 100% = AED 21.3b Others Overdrafts 5% 8% Car Loans 8% Down payment of 10-20% mandatory based on customer profiles Credit " > 75% of the customers have only one loan from Emirates NBD Cards 12% Time 2010 delinquency trends improving 2010 delinquency trends improving 1) Loans and advances before provisions; Corporate & Sovereign Lending sectoral breakdown as per "Analysis by Economic Activity for Assets" in note 50, page 79 of the 2010 Financial statements Personal Loans 33% Loans Mortgages 19% 15% Emirates NBD 17#18Capital Adequacy Highlights Capital adequacy ratio at 20.1% at end-2010 vs. 18.7% at end-2009 ■ Tier 1 ratio increased from 11.9% at end-2009 to 12.8% at end-2010 as profit generation for the period exceeded the FY 2009 dividend payment ■ Tier 2 capital increased to AED 15.9b vs. 15.2b at end-2009 mainly due to positive Cumulative Changes in FV and an increased proportion of qualifying Tier 2 capital, partially offset by redemption of Tier 2 securities Risk Weighted Assets (RWAs) declined by 3% from end-2009 levels 10.5% Capital Ratios - Basel II (AED billion) 18.7% 11.9% 20.1% 12.8% 41.8 43.6 8.4% 15.2 15.9 25.3 4.9 20.4 2008 T2 26.7 2009 T1 -T1 % Note: Core Tier 1 ratio was 10.9% as at end-2010 compared with 10.1% at end-2009 27.7 2010 CAR % Risk Weighted Assets - Basel II (AED billion) Capital Movement Schedule - Basel II 241.3 10.6 5.2 End-2009 to end-2010 (AED million) Tier 1 Tier 2 Total 223.9 13.1 3.2 217.2 Capital as at 31.12.09 26,654 15,178 41,832 13.8 2.3 Net profits generated 2,338 2,338 FY 2009 Dividend paid (1,112) (1,112) 225.4 207.6 201.1 Interest onT1 securities (262) (262) Cumulative changes in FV Reduction in unqualifying Tier 2 capital 776 776 389 389 2008 Redemption of T2 securities 2009 2010 Other Credit Risk ■Market Risk Operational Risk Capital as at 31.12.2010 (474) (474) 74 5 79 27,692 15,874 43,566 Emirates NBD 18#19Funding and Liquidity Highlights Liquidity continues to improve and deposit mobilisation initiatives proved successful; headline LTD ratio 99% at end-2010 Liquidity backstop facilities of AED 39.3b unused; net liquid assets of AED 31.8b at end-2010 vs. AED 3.9b liability position at end-2009 ■ Access to wholesale funding remained challenging during 2010 : improvement in debt markets seen recently term debt maturity profile well within funding capacity ; total wholesale debt represents 8% of liabilities net reduction in debt outstanding of AED 4.7b in 2010 completed AED 857m auto loan securitisation in Q3 2010 raised AED 2,193m from long-term corporate loan repurchase transaction in Q4 2010 Composition of Liabilities (%) 2009 = 100% AED 249.6b Loan to Deposit Ratios (%) Headline LTD Ratio % -Adjusted LTD Ratio % 129% 126% 127% 122% 119% 117% 118% 118% 111% 103% 101% 99% 109% 109% 108% 103% 100% 101% 102% 98% 98% 92% 90% 88% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Note: Adjusted LTD ratio includes Debt Issued and Other Borrowed Funds, Sukuk Payable and Tier 1 Capital Notes in the denominator Maturity Profile: Debt Issued (AED million) 100% AED 19.4b = Debt / Sukuk Others 4% Issued 10% Banks 13% Emirates NBD Customer deposits 73% 2010 = 100% AED 252.5b Debt / Sukuk Others. 5% Issued 8% Banks 8% 3,799 Customer deposits 79% 8,051 2,193 244 1,892 1,036 1,344 857 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note: Debt Issued includes EMTNs of AED 13.6b and syndicated borrowings from banks of AED 5.5b 19#20Divisional Performance Corporate Banking Consumer Banking & Wealth Management Key focus during the period was on balance sheet optimisation, continued proactive management of credit quality, building non-risk based and fee generating businesses ■ Revenue declined 9% year-on-year due to a 9% reduction in net interest income resulting from declining loan balances and 10% lower fee income from lower trade finance and new underwriting activity Loans decreased by 7% from end-2009 Dedicated focus on liquidity management resulting in strong 13% growth in deposits ■ CWM maintained and strengthened its position in challenging market conditions ■ Continued expansion in Private Banking business; now 60 RMs; Private Banking customer deposits continued to grow ■ Revenue declined 2% year-on-year as strong 19% growth in fee income was offset by a reduction in net interest income of 8% due to increased deposit costs and declining loan balances Deposits grew 11% from end-2009 ■ Total number of branches at end-2010 totaled 105 with an ATM & SDM network of over 620. Emirates NBD AED billion 172.4 161.1 94.2 83.2 AED million -9% 4,835 4,400 2009 2010 2009 2010 ■Loans ■Deposits ■Revenue AED billion AED million 66.1 -2% 59.7 3,387 3,322 22.8 17.8 2009 2010 2009 2010 ■Loans ■ Deposits ■Revenue 20 20#21Divisional Performance (cont'd) Global Markets & Treasury Network International Emirates Islamic Bank ■ Revenue increased by 19% in 2010 to AED 701m driven primarily by growth in trading revenues partly offset by a contraction in the spreads generated from interbank funding and the mix impact of increased net liquid assets GM&T continued to develop products to meet customer demand as well as ensure that alternative sources of funding were utilised ■ The first ever auto-loan securitisation in the region was completed, raising over USD 200m of long term funding. Revenue stood at AED 372m in 2010, broadly flat compared to 2009 Processing income grew 8% while acquiring revenues were broadly flat as reduced margins offset a 13% growth in acquiring volumes In December 2010, Emirates NBD entered into a strategic partnership with Abraaj Capital involving a 49% stake sale of NI ■ Serves over 11,000 merchants and 60 banks and financial institutions in the region ■ EIB revenue declined 9% year-on-year to AED 767m in 2010 (net of customers' share of profit) ■ Income includes AED 214m write-down on investment properties; underlying income growth of 16% Financing receivables declined 11% to AED 15.9b from end- 2009 ■ Customer accounts grew by 23% to AED 25.3b from end-2009 ■ Total number of EIB branches at end-2010 totaled 30 with an ATM & SDM network of 86. AED billion AED million +19% 701 590 2009 2010 ■Revenue AED million +0% 371 372 2009 2010 ■Revenue AED million 25.3 +16% 20.5 214 18.0 15.9 2009 2010 ■Financing receivables ■Customer accounts Note: Stand-alone Financial Statements for Network International and Emirates Islamic Bank may differ from the above due to consolidation adjustments Emirates NBD 843 767 2009 2010 ■Revenue Inv Prop Write-down 21 21#22Contents Emirates NBD Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy and Outlook 22 22#23Two years on from the crisis, the Bank is better positioned for the future Capital Ratios - Basel II Loan to Deposit Ratios Liquid Assets 20.1% 7.3% 20.4% Stronger capital base 10.5% 2.0% and liquidity 8.5% 9.7% 11.1% 12.8% 129.0% 109.0% -9.5% 99.0% 88.0% 2008 2010 ■Net Liquid Assets Ratio (%) 2008 2010 T1 T2 2008 2010 Stronger Margins and Cost to Income Ratio 2.52% 2.18% ■Headline LTD (%) Adjusted LTD (%) Income and costs (AED billion) ■Liquid Assets Ratio (%) Distribution Network income generating 39.7% ability and improved efficiency Significantly de-risking the balance sheet 135 9.7 8.4 31.4% 120 3.4 3.1 2008 2010 2008 CI Ratio (%) Impaired Loans -NIM (%) ■Income 2010 Costs Investments (AED billion) 19.6 10.0% 1.6% 2008 2010 Impaired Loans Ratio (%) 2008 2010 ■Branches Impairment Charge (AED billion) 3.5 0.6 1.7 15.0 2.9 1.0 2.9 1.4 0.6 2008 2010 2008 2010 Investment Securities Associates Credit ■Investments Completed largest Financial Services Merger in the Region, with scalable new-generation platforms and strong brand, culture and franchise Emirates NBD 23 23#24Emirates NBD's strong brand, culture and franchise بنك الإمارات دبي الوفني ) Truth: Over 650 ATMs Reality: Who needs maps? Emirates NBD the Emirates NBD Where the world comes to bank Emirates NBD Emirates NBD Truth: Over 110 branches Reality to find بنك الإمارات دبي الوطني ) وجهة العالم للاعمال المصرفية The Banker GLOBAL FINANCE من . 110 الإمارات دبي الوطني الموقعة الاكالوريا بالقرب منك middle east investor relations society award winner 2010 EUROMONEY 24 24#25Summary of major achievements in 2010 Optimise Balance Sheet Drive Profitability Achievements Proactive Liquidity Management by the Group has resulted in significant improvement of liquidity, manifested through strong increase in customer deposit base both in Wholesale as well as Consumer Banking - Strengthening of Cash Management facilities in Corporate banking paired with dedicated deposit gathering effort through RMs - Further build-up of Private Banking with increase in RMs from 55 to 60, resulting in Net New Money of more than AED 10b and generating operating profits of more than AED 100m in 2010 compared to break-even profitability in 2009 - Dedicated retention team in Retail Banking helped to limit outflow of deposits in mass retail - Active management strategies included build up of high quality Liquidity Asset Buffers (LAB) and selective approach to capital market for Medium Term funds - Successful securitisiaton of auto loan and corporate loan repurchase transaction generating AED 3b of long-term funding Further deleveraging and reduction of asset book - Reduction of Retail and Corporate asset portfolios through continued caution on new underwriting - AED 1.8b reduction in investment and trading securities portfolio Sale of 49% stake in NI to Abraaj to realise value and generate capital for further investments ▪ Enhancement of revenues on Corporate side through continued re-pricing of loan portfolio ■ Successful Retail banking efforts to increase NFI along several dimensions (FX, Credit cards and Investment Income), resulting in 19% growth in CWM non-interest income Significant improvement of overall cost position, e.g., - Efficiency gains and further capturing of merger synergies has led to staff cost reduction of AED 232m – High spend transparency, tight vendor management and increased operations efficiency reduced non-staff cost by AED 266m CAR strengthened to 20.1% from 18.7% at end-2009 ■ Tier 1 increased to 12.8% from 11.9% at end-2009 Deposits grew by 10% from end-2009 vs.8% decrease in loans, lowering the LTD ratio to 99% Significant profit on sale of NI stake expected in Q1 2011 ■ 2010 costs improved by 14% to AED 3,053m million from 2009 ☐ ROE of 10.3% for 2010 despite significant impairments on credit and associate investments Emirates NBD 25#26Summary of major achievements in 2010 Achievements Enhance Risk Management Selectively Invest in Platforms for Growth ■ Stress Testing - The Group advanced its comprehensive multi-period Stress Testing framework, which supports senior management in identifying and managing risks in the portfolio in order to ensure adequate capitalisation even under adverse economic conditions Internal models Stable second generation internal rating models with improved predictive power developed and implemented for the loan portfolios. Ensured smooth migration without disrupting the underwriting process - Optimised the application of credit scorecards at every stage of the customer lifecycle i.e. underwriting, account management, collections and re-underwriting resulting in improved Turn- Around-Times, better pricing, lower credit losses and a significant improvement in collections - Advanced the RAROC framework for the wholesale portfolios to ensure consistent and optimal underwriting and pricing decisions Completion of establishing the new Emirates NBD brand; brand valued at USD 1.2b by The Banker (February 2011), an increase of 41% over the previous year with a #1 ranking in the UAE and a ranking of #132 worldwide ■ Continue to build Private, Priority and SME banking businesses and expanded retail presence in Abu Dhabi through opening an additional Retail branch in Abu Dhabi, inauguration of the 1st SME Banking centre in Abu Dhabi with 11 staff, 5 additional Private Banking RMs and opening of 2 Priority Banking centres in Abu Dhabi Expanded distribution capability, with 3 net new branches in 2010 and additional 95 ATM/SDMS Singapore representative office upgraded to branch and build-up of KSA operations; KSA revenue and operating profit more than doubled and tripled respectively in 2010 ■ Continue to evaluate inorganic opportunities Underlying credit metrics within expectations Impaired loans ratio increased to 10.0% from 2.6% at end- 2009 ■ Retail portfolio delinquencies improving Emirates NBD 26 26#27Strategic Imperatives are Evolving Gradual Shift in Focus from Strengthening the Bank to Growth Acceleration 2008 Crisis Manage ment Emirates NBD 2009 2010 Strengthening the Bank 2011 2012 Growth Acceleration 1. Optimise Balance Sheet • Capitalisation Liquidity 2. Enhance Profitability • Operating efficiency Margins and fee generation 3. Enhance Risk Management 4. Selective Investment in Growth Areas 1. Optimise Balance Sheet • Capital allocation • Funding Efficiency 2. Drive Profitability • Key account planning Customer service/retention 3. Enhance Platforms 4. Measured Investment in Growth Areas 27 27#28Strategic Imperatives for 2011 Optimise Balance Sheet and Capital allocation Drive Profitability Enhance Platforms Measured Investment in Platforms for Growth Objectives Increase lending activities in identified pockets of growth, e.g. SME lending, cards, ... ■ Further diversifying funding sources with a focus on reducing cost of funding ■ Review all Group companies (subsidiaries and associate companies) and decide on divestment opportunities, increasing stakes or complementary acquisitions Management focus on yield optimisation ▪ Extending Key account planning capturing a larger share of wallet of existing broad customer base through Cross-sell Treasury and Investment Banking services to corporate clients ■ Increasing fee income through enhanced sales efficiency for FX, investment and banc-assurance products Improve customer retention and deliver distinctive customer service ■ Continue implementation of revised spend control processes Capturing significant efficiency and process improvements through Outsourcing ■ Further enhance employee proposition through talent/leadership development as well as performance and retention management ■ Continued enhancement of the Group wide Risk strategy and alignment of policies to defined risk appetite Roll-out of Group wide service Excellence effort as part of a change management program along all customer touch points Exploit domestic opportunities - Implementation of Private Banking growth plan and strengthening SME segment - Continued distribution network expansion/optimisation - Continued roll-out of Abu Dhabi growth plan Exploit international opportunities - Implementation of organic growth plan for KSA and detailing growth strategies for all other existing locations - Proactively pursuing inorganic regional expansion opportunities Emirates NBD 28#29Network International Strategic Partnership with Abraaj Capital Transaction Summary & Strategic Rational ■ On 22 December 2010, Network International (NI) entered into a strategic partnership with Abraaj Capital to accelerate the expansion of the company Abraaj will acquire a 49% stake in NI for a price of around AED 2 billion which includes a sum contingent upon attainment of profitability targets and a portion financed by Emirates NBD ■ The transaction is subject to relevant regulatory approvals is expected to be closed in the first quarter of 2011 ■ NI is the region's largest payment and cards processing service provider serving over 11,000 merchants and 60 banks and financial institutions in the region ■ NI is now at a strategic junction where significant growth opportunities are available both organically and inorganically and has developed a focused strategy to expand into other high-growth geographies in the Middle East and Africa and the Indian Subcontinent In this context, the strategic partnership with Abraaj will bring significant expertise and value to the business: - - Accelerating the growth trajectory of NI through leveraging Abraaj's industry expertise and access to their portfolio companies Extend NI's geographic presence (e.g. Pakistan, India, Turkey and Levant) Development of global distribution and strategic alliances Advancing and executing successful acquisition strategies Working with CEOs and CTOs to optimise technology strategy and processes Emirates NBD Financial Impact on Emirates NBD ■ In 2010, the assets and liabilities are disclosed as assets held for sale under IFRS 5 Upon completion of the transaction, expected in Q1 2011: Profit on sale of 49% stake recognised Due to effective joint control post-closing NI ceases to be a subsidiary of the Group and will be accounted for as a jointly controlled entity in accordance with IAS 31 The remaining 51% retained is fair valued at the date of closing, resulting in an unrealised profit Contingent earn-out will be considered as a contingent asset in accordance with IAS 37 and only recognised as income once receipt is virtually certain Network International Financial Results and Position Balance Sheet (AED million) Cash in Bank Other assets 2010 560 Income Statement (AED million) Income 2010 372 3 Operating Expenses (178) Assets held for sale 828 Other (5) Liabilities held for sale (484) Net Profit 189 Net Assets 907 Share capital 50 Reserves 62 Retained earnings 795 Shareholders' Equity 907 Note: Income Statement represent contribution to Emirates NBD; Balance Sheet represents stand-alone Financial Position for NI 29 29#30Outlook Emirates NBD ■ While economic activity remained relatively subdued in 2010, the satisfactory agreement on Dubai World restructuring and confidence and core economic sectors in Dubai continue to show signs of recovery ■ Dubai remains well-positioned: ■ Due to its strategic location and advanced infrastructure, Dubai remains unrivalled as the region's key economic, trading and financial hub ■ Lower inflation, stable USD and property market declines have enhanced Dubai's cost-competitiveness Underlying economic activity in traditional trade, manufacturing and tourism sectors are showing signs of recovery Capital markets access for Dubai Government and commercial entities is improving Emirates NBD is optimistic about the expected economic recovery and is well placed to take advantage of selected growth opportunities ■ Global economic recovery is expected to continue ■ UAE GDP is expected to recover to c.2.5% in 2010 and c. 4.0% in 2011 Expected resolution of remaining key debt restructurings expected to further improve confidence and economic activity ■ The financial sector is showing signs of emerging from the deleveraging process which commenced at the end of 2008 Emirates NBD 30 30#31Summary Emirates NBD ■ Robust financial performance despite significant impairments on credit portfolio and associate investments ■ Cost rationalisation initiatives proving successful evidenced by reductions in absolute levels of expenses and in the cost to income ratio Significantly improved liquidity metrics and strong capital ratios due to success of balance sheet optimisation initiatives Credit quality remains pro-actively managed and within expectations Dubai World specific provision made in 2010; 80% of Saad & Gosaibi exposure provided ■ Portfolio impairments at AED 2.2 billion or 1.4% of credit RWAS ■ Continued focus in 2010 on balance sheet optimisation, profitability and risk management enhancement while selectively investing in platforms for growth ■ Dubai remains well-positioned as the region's key economic, trading and financial hub ■ Emirates NBD is optimistic about the expected economic recovery and is well placed to take advantage of selected growth opportunities Emirates NBD 31 34#32Emirates NBD APPENDIX Awards 32 22#332010 Awards BEST BANK AWARD ARD 2010 GLOBAL FINANCE middle east investor relations society award winner 2010 The Banker The Banker December 2010 - "Largest Bank in the Middle East" Award by Global Finance October 2010 - "Best Investor Relations in the Middle East" Award by ME-IR Society / Thomson Reuters Extel June 2010- Banker Middle East Award 2010 in the "Best Use of Technology" April 2010- Banker Middle East - Products Award for "Best Personal Loan" Emirates NBD 33 33#342010 Awards The Banker D March 2010- 2010 Financial Sector Technology (FST London) award for "Systems Integration Project of the Year" March 2010- Sh. Mohammed bin Rashid Al Maktoum "Supporters of the Arts Award" February 2010- "The number one banking brand in the Middle East" Award by The Banker February 2010- "Best Private Bank in the UAE" in Euromoney Private Banking survey for 2010 Emirates NBD 34#35Investor Relations PO Box 777 Emirates NBD Head Office, 4th Floor Dubai, UAE Tel: +971 4 201 2606 Email: [email protected] Ben Franz-Marwick Head, Investor Relations Tel: +971 4 201 2604 Email: bernhardf@emirates nbd.com Emilie Froger Investor Relations Coordinator Tel: +971 4 201 2606 Email: [email protected] Beena Mahesh Investor Relations Tel: +971 4 2012699 Email: [email protected] ( Emirates NBD