Emirates NBD Banking Sector Update

-50 bps 50 50 -150 Jan-08 Source: Bloomberg Emirates NBD 150 250 UAE Economic Update (cont'd) Highlights Liquidity conditions have tightened, even as Eibor rates have remained largely flat. ■ Bank lending remains relatively weak at 2.2% y-o-y in August. Deposit growth has slowed and banks' holdings of certificates of deposits have declined. ■ Dubai CDS spreads have widened again since the end of July, largely on the back of global developments. Consequently, debt issuance has fallen sharply over the summer. bps Source: Bloomberg, Emirates NBD Research 3M EIBOR - LIBOR spread tightens further in Q3 2011 18 350 864 Jan-09 Jan-10 Jan-11 16 14 12 10 208 642 YoY Growth % -2 Aug-09 Sep-09 Oct-09 Nov-09 Source: UAE Central Bank Dec-09 Jan-10 CDS spreads have widened again in Q3 2011 550 170 500 150 450 130 400 350 110 300 90 250 200 70 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Dubai (lhs) Abu Dhabi (rhs) Bank deposit and loan growth Bank deposits Bank Loans Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 5

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