fgb investor presentation › ... › investor-presentations › 2014 › q4-2014.pdf ·...
TRANSCRIPT
1/40
FGB Investor Presentation
March 2015
2/40
Disclaimer
This presentation provides information in summary form only and is not intended 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.
No presentation ,express or implied, is made as to the fairness accuracy, completeness or correctness of information contained in this
presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, synergies, returns,
benefits or statements in relation to future matters contained in the presentation.
The forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on numbers or
estimates or assumptions that are subject to change (and in many cases are outside the control of FGB and its directors) which may
cause the actual results or performance of FGB to be materially different from any future results or performance expressed or implied
by such forward looking statements.
To the maximum extent permitted by law, FGB disclaims any responsibility for the accuracy or completeness of any information
contained in this presentation including any forward-looking statements and disclaims any responsibility to update or revise any
information or forward-looking statement to reflect any change in FGB’s financial condition, status or affairs or any change in the
events, conditions or circumstances on which a statement is based.
To the maximum extent permitted by law, neither FGB nor its related bodies corporate, directors, employees or agents, nor any other
person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any direct, indirect or
consequential loss arising from the use of this presentation or its contents or otherwise arising in connection with it.
This presentation should be read in conjunction with other publicity available material. Further information including historical results
and a description of the activities of FGB is available on our website, www.fgb.ae
3/40
Contents
• Operating Environment
• FGB Profile
• Q4/FY’14 Performance Review
4/40
UAE Economic OverviewREAL GDP GROWTH (YOY % CHANGE)
UAE federation was established in 1971 and comprises of sevenEmirates
Politically stable country and highly favorable business climate
Second largest economy in the GCC; Total population estimatedat 9.3 Million
7th largest oil reserves in the world (92 Bn boe)
FY14 nominal GDP estimated at USD 416Bn
2015f and 2016f Real GDP growth both seen at 3.5%, down from4.7% in 2014e due to lower oil prices
According to the IMF, UAE fiscal deficit could reach 3.5% of GDPboth in 2015f and 2016f before returning to surplus in 2017
SOLID FUNDAMENTALS
Source: IMF, Moody’s, UAE National Bureau of Statistics, 2013 GDP
UAE GDP BREAKDOWN BY SECTOR
Agriculture1%
Mining &Quarrying
39%
Manufacturing9%
Electricity,Gas, Water
2%Construction9%
Trade,Restaurant &
Hotels12%
Transport8%
Real Estate &BusinessServices
10%
Finance7%
GovernmentServices
1%
Other2%
BUDGET BALANCE (AS % GDP)
0
2
4
6
8
2010 2011 2012 2013 2014e 2015f 2016f
%
Real GDP Growth Oil Real GDP GrowthNon-Oil Real GDP Growth
-8.0
-4.0
0.0
4.0
8.0
12.0
2010 2011 2012 2013 2014e 2015f
%
5/40
Abu Dhabi Economic Overview
Sharjah
ABU DHABI
Dubai Ajman
Umm al-Quwayn
Ras al-Khaymah
Fujairah
Largest Emirate in the UAE accounting for more than 80%of the country’s total land area
Abu Dhabi Nominal GDP estimated at USD 261.6Bn inFY14e1, that’s 63% of UAE overall nominal GDP
51.4% of 2013 GDP generated from the hydrocarbon sector
Major non-oil GDP contributors include: construction andreal estate, manufacturing, logistics, and wholesale andretail trade
Transition underway towards a more diversified economywith a particular focus on the infrastructure and servicessectors inline with Abu Dhabi Plan 2030
ABU DHABI AT A GLANCE
1 Source: Moody’s Credit Analysis Report on Government of Abu Dhabi published on 26 January 20152 Source: Statistics Center Abu Dhabi (SCAD)
ABU DHABI - KEY STATISTICS
Economic Structureand Performance 2013 2014e 2015f
Nominal GDP (USD Bn) 259.6 261.6 213.3
Nominal GDP (% change) 4.8 0.8 -18.4
Real GDP (% change) 5.2 4.1 2.5
Inflation Rate (CPI, % change) 1.3 3.0 3.2
Crude Oil Export Price (avg USD/b) 108.8 100.7 55.0
GovernmentFinance 2013 2014e 2015f
Gen. Gov Revenue/GDP (%) 45.5 43.8 33.1
Gen. Gov Expenditures/GDP (%) 29.0 27.7 34.2
Gen. Gov. Financial Balance/GDP (%) 16.5 16.1 -1.1
Gen. Gov. Debt/GDP (%) 2.7 2.7 3.2
6/40
Plan Abu Dhabi 2030
Strata
ClevelandClinic
ParisSorbonne
ZayedUniversity
New YorkUniversity
Masdar City
Masdar City
Ferrari World Abu Dhabi
EmiratesPalace
EtihadTowers
Yas MarinaCircuit
ENERGY Masdar City - the world’s first carbon neutral, zero-waste to landfill, car-free city
powered entirely by alternative energy sources. Masdar Institute – an institute developed with Massachusetts Institute of Technology
(MIT) with the aim to develop the emirate’s human capital and develop research inalternative energies.
TOURISM
Hotels Etihad Towers Emirates Palace St. Regis Abu Dhabi Rocco Forte Hotel Qasr Al Sarab Desert Resort Ritz-Carlton Abu Dhabi Eastern Mangroves Hotel
Entertainment
Yas Marina Circuit Ferrari World Abu Dhabi Yas Waterworld Abu Dhabi Al Ain Wildlife Park Shopping malls
EDUCATION Universities: Paris Sorbonne Abu Dhabi, New York University, and Zayed University
AVIATION, AEROSPACE & DEFENCE Strata is a composite aero structures manufacturing facility, wholly-owned by
Mubadala, which has formed partnerships with a number of leading aerospacecompanies to establish manufacturing programs at a new plant in Al Ain.
HEALTHCARE, EQUIPMENT & SERVICES Cleveland Clinic Abu Dhabi will offer a 364-bed hospital organized into five institutes,
digestive disease, eye, heart & vascular, neurological, respiratory and critical care.
Source: Abu Dhabi Council for Economic Development (June 2012)
7/40
GDP Per Capita(2)Oil Production(1)LT Ratings(Moody’s, S&P, Fitch)
Abu Dhabi in the GCC context
Kuwait
Qatar
Saudi Arabia
Abu Dhabi
Bahrain
Oman
Aa2, AA, AA
Aa2, AA, NR
Aa3, AA-, AA
Aa2 , AA, AA
Baa2 (-), BBB, BBB
A1, A, NR
3.1mn bpd+
2.0mn bpd+
11.5mn bpd+
0.4mn bpd+
0.9mn bpd+
USD 44,032
USD 93,536
USD 25,778
USD 28,707
USD 21,272
USD 74,927
1 Source: BP Statistical Review of World Energy (June 2014)2 2015 forecasts - Source: 2014 IMF data for all, except Abu Dhabi (Moody’s)Note: Unless otherwise indicated, all outlooks are stable; (-) Negative outlook
3.0mn bpd+
8/40
Figures in AEDBn Dec’14 Dec’13 YoYChange
Total Assets, net 2,211 2,004 10%
Loans and Advances, net 1,284 1,179 9%
Customer Deposits 1,421 1,279 11%
LDR 90% 92% (200bps)
CAR 18.1% 19.3% (120bps)
Tier 1 capital 16.2% 16.9% (70bps)
UAE Banking Sector Landscape
UAE Banking sector comprises 51 banks (23 local, 28foreign)
Strong track record of systemic support as evident throughthe measures taken at the onset of the financial crisis
As of Dec’14, system L/D ratio stood at a historical low of90% implying a net deposit surplus of AED 138Bn
Loan book grew 9% YoY during 2014 against 11% forcustomer deposits
HIGHLIGHTS KEY INDICATORS1
1 Source: UAE Central Bank
SYSTEM LOAN-TO-DEPOSIT RATIO AT A HISTORICAL LOW
90%
80%
85%
90%
95%
100%
105%
110%
Dec'03 Dec'04 Dec'05 Dec'06 Dec'07 Dec'08 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 Dec'14
SYSTEM DEPOSIT SURPLUS AT AED 138BN
(100)
(50)
-
50
100
150
Dec'03 Dec'04 Dec'05 Dec'06 Dec'07 Dec'08 Dec'09 Dec'10 Dec'11 Dec'12 Dec'13 Dec'14
AED
Bn
9/40
Contents
• Operating Environment
• FGB Profile
• Q4/FY’14 Performance Review
10/40
FGB Summary Profile
Leading UAE franchise; #1 UAE bank by net profit and #3 by total assets; 11%and 10% market shares in loans and deposits respectively
Superior fundamentals in terms of growth, NIMs, cost efficiency, asset qualityand profitability
Strong Credit Ratings: A2 by Moody's and A+ by Fitch
Comfortable liquidity position and access to multiple funding channels
Strong risk management culture and stable management team
Business model re-aligned to drive sustainable value creation
Robust capital position: Basel II total CAR at 17.5% and Tier 1 capital ratio at16.2% as of Dec’14
11/40
UAEcompanies
andindividuals
86.4%
ForeignInvestors
9.8%
GCC (ex-UAE)3.8%
FGB Overview
GLOBAL FOOTPRINTRATINGS
1 Subsidiary4 Rep Offices
21 branches in the UAEand 2 branches overseas
Doha
Singapore
Mumbai
Hong KongFGB-Libya
Tripoli
UAE
LONG TERM RATING OUTLOOK
A2(Since 2007) Stable
A+(Since 2007)
Stable
A+ Stable
AAA Stable
Incorporated in 1979 and headquartered in Abu Dhabi
Wide range of financial products and services offeredthrough a network of 21 branches in the UAE. In addition,FGB is present through branches in Doha and Singapore,and rep offices in Mumbai, Hong Kong, Seoul and London.The Bank also has a JV in Libya.
1,454 employees
Listed in 2002; Market cap of AED 69.6Bn (USD 18.9Bn) as ofFebruary 26th, 2015
A LEADING UAE FRANCHISE OWNERSHIP STRUCTURE* (AS OF DEC’14)
Seoul
London
* FGB’s Foreign Ownership Limit (FOL) is at 25%
12/40
1996-1999
History & Key Milestones
1979 FGB is incorporated in Ajman with an initial focus on Corporate Banking
Abu Dhabi ruling family acquires 45% stake and designates new management team
2001 New vision, brand identity and introduction of new business segments: Retail and Treasury & Investments
2002 Listing on Abu Dhabi Exchange
2005 Net profit crosses the AED 1Bn (USD 272 Mn) mark
2006 - Introduction of Islamic banking services- Rated A by Fitch (followed by A+ in 2007) and A2 by Moody’s
2007 First overseas office in Singapore
2011 Net profit crossed the USD 1Bn mark
2013-Acquisition of Aseel and Dubai First-FGB becomes the #1 UAE Bank in termsof net profit with USD 1.3Bn
2009 New offices in Qatar and India
2012 New office in Hong Kong
- New rep offices in London and Seoul- Maintained position of #1 UAE Bank by
Net Profit at USD 1.54Bn2014
13/40
ABDULHAMIDMOHAMMED SAEED
BOARD MEMBER
FGB MANAGING DIRECTOR
Vice Chairman of EmiratesIntegrated Telecom Co (DU)
Board Member of:Emirates Investment AuthorityAbu Dhabi Securities Exchange
Mubadala DevelopmentCompany
H.H. SHEIKH TAHNOON BIN ZAYED AL NAHYAN – CHAIRMAN
CHAIRMAN OF AMIRI FLIGHT
CHAIRMAN OF ROYAL GROUP
14/40
Corporate Governance
Board of Directors
ManagementCommittees
Wholesale Banking CreditCommittee
Compliance & Ops RiskCommittee
Consumer Banking CreditCommittee
HR Steering Committee
Asset Liability Committee
Real Estate Committee
Investment Committee
IT Steering Committee
BoardCommittees
Executive Committee Risk & Compliance Management Committee
Remuneration & Nomination Committee Audit Committee
Enterprise RiskManagement
GroupHead of Enterprise Risk Management
Group CRO
Credit Risk Market Risk ALM Risk OperationalRisk
ComplianceRisk Basel II / IIIERM
Strong & Independent Governance framework covering all material risks across the Group
15/40
Business Segments
Original core business of theBank
Customer base includes largecorporate & multi-nationalclients and financialinstitutions
Services include debt markets(advisory, bilateral, &syndicated loans, DCM, projectand structured finance),transaction banking (cash,trade, liabilities), CorporateFinance, and Islamic Finance(bilateral trading, tradefinance) supported by treasurysales (hedging, FX, rates,commodities)
Organized geographicallyacross UAE and internationallocations (Singapore, Libya,Hong-Kong, Qatar, India, UKand South Korea)
Core Banking Revenue Drivers
Focus on key customersegments: Emirati, Mass, SME,Wealth
Leverage product innovation,analytics, and alliances tocreate differentiation
Investing for the future andenhancing customerexperience throughtechnology and processimprovements
Positioning as Bank of Choicefor UAE Nationals
Manage National Housing Loanprogram for Abu Dhabigovernment
Manages FGB’s wholesalefunding activities and liquidity,interest rate and foreignexchange risk, and proprietaryinvestment portfolio
Provides bespoke riskmanagement solutions to theBank’s clients across FX,Interest Rate, Credit andCommodity asset classes
Also provides client investmentsolutions via structuredproducts, asset management,equity brokerage and margintrading
Strong growth opportunitiesproviding an access point tothe global markets byleveraging on strongcorrespondent bankingrelationships
Subsidiaries: First Gulf LibyanBank, First Gulf Properties,Aseel Finance, Dubai First,Mismak Properties, FirstMerchant International,Radman Properties, FGIT
Associate companies: GreenEmirates Properties, First GulfFinancial Services*
Head Office support units:Audit, Financial Control, HR,Operations, Strategy andPlanning, PMO, Admin, Legal,Risk Management, CorporateCommunications
WHOLESALE BANKING CONSUMER BANKINGTREASURY &
GLOBAL MARKETS SUBSIDIARIES & OTHER
Incremental RevenueStreams
Note: % of Assets as of December-end 2014. % of Revenue for the full year 2014.*In October 2014, the Bank entered into a sale and purchase agreement in respect of its investment in First Gulf Financial Services (FGFS)to a third party for a total consideration of AED 38.2Mn. The sale will be effective in Q1 2015
43% 38%
% of Assets % of Revenue
23% 38%
% of Assets % of Revenue
23% 13%
% of Assets % of Revenue
11% 11%% of Assets % of Revenue
16/40
Aseel Finance to provide innovativeIslamic products to a broad base ofcustomers and businesses
Dubai First to provide specialistcredit card propositions to theexpanding UAE customer base
Enhance fee income throughcomprehensive propertymanagement of residential andcommercial real estate assetsacross the UAE
Geographic diversification throughexpansion of existing operationsand penetration in key markets
Focus on trade and financial flowsthrough the UAE into targetinternational locations
Sourcing and distribution of tradeand financing opportunities acrossthe FGB network
Build deeper client relationships,providing solutions and highquality service
Continue to target largecreditworthy UAE-based customers
Develop and strengthen acustomer-centric approachemphasizing on bespoke servicequality and product range
Three-Pillar Strategy
ORGANIC GROWTH OFCORE BANKING ACTIVITIES
SELECTIVE REGIONAL ANDINTERNATIONAL EXPANSION
SYNERGIES WITHSUBSIDIARIES AND ASSOCIATES
1 2 3
Our Mission:To Be the “First Choice” for customers
Our Vision:To Be Recognised as a World-Class Organization Maximizing Value For All Stakeholders
17/40
142.4159.2
176.9198.2
212.2
2010 2011 2012 2013 2014
Key Achievements (1/2)
TOTAL ASSETS (AED BN) LOANS & ADVANCES (AED BN) CUSTOMER DEPOSITS (AED BN)
SHAREHOLDERS’ EQUITY (AED BN) OPERATING INCOME (AED MN) NET PROFIT (AED MN)
95.6104.1
112.0125.6
139.7
2010 2011 2012 2013 2014
98.7 103.5119.3
138.0 141.3
2010 2011 2012 2013 2014
24.126.7
29.331.2
34.1
2010 2011 2012 2013 2014
6,305 6,4837,270
8,4219,240
2010 2011 2012 2013 2014
3,4203,707
4,1544,774
5,656
2010 2011 2012 2013 2014
18/40
Key Achievements (2/2)
NET INTEREST MARGIN (%) NPL RATIO (%) PROVISION COVERAGE (%)
COST TO INCOME RATIO (%) ROAE (%) ROAA (%)
3.63.8 3.7 3.7 3.6
2010 2011 2012 2013 2014
3.73.4 3.3 3.3
2.5
2010 2011 2012 2013 2014
89.498.4 96.1 91.1
126.7
2010 2011 2012 2013 2014
17.8 18.919.6
21.023.1
2010 2011 2012 2013 2014
14.7 14.614.8
15.8
17.3
2010 2011 2012 2013 2014
2.62.5 2.5
2.6
2.8
2010 2011 2012 2013 2014
19/40204.0
212.2
363.0
376.1
ADCB
FGB
ENBD
NBAD
139.7
140.6
194.3
246.0
FGB
ADCB
NBAD
ENBD
126.0
141.3
243.2
258.3
ADCB
FGB
NBAD
ENBD
11.6%
15.4%
16.0%
17.3%
ENBD
NBAD
ADCB
FGB
1.5%
1.6%
2.1%
2.8%
ENBD
NBAD
ADCB
FGB
4,050
5,139
5,579
5,656
ADCB
ENBD
NBAD
FGB
FGB vs. large domestic peers – FY’14NET PROFIT (AED MN)RETURN ON AVERAGE EQUITY RETURN ON AVERAGE ASSETS
TOTAL ASSETS (AED BN) LOANS & ADVANCES (AED BN) CUSTOMER DEPOSITS (AED BN)
20/40
Ranking
Profitability& Efficiency
Return on Average Equity % 17.3 15.4 11.6 16.0 #1
Return on Average Assets % 2.8 1.6 1.5 2.1 #1
Cost to Income % 23.1 35.5 30.0 34.0 #1
Net Interest Margin % 3.6 2.0 2.9 3.2 #1
Earning Per Share AED 1.4 1.1 0.8 0.7 #1
Asset QualityNPL ratio % 2.5 3.1 7.8 3.1 #1
Provision Coverage % 126.7 108.0 100.3 137.1 #2
Liquidity
Net Loans to Total Assets % 65.8 51.7 67.8 68.9 #3
Loans to Deposits % 98.9 79.9 95.2 111.5 #3
Liquid Asset Ratio % 17.2 21.9 21.1 15.2 #3
SolvencyTier 1 Capital % 16.2 15.0 18.0 17.0 #3
Capital Adequacy % 17.5 16.4 21.1 21.0 #3
FGB vs. large domestic peers – FY’14
21/40
Contents
• Operating Environment
• FGB Profile
• Q4/FY’14 Performance Review
22/40
Key Highlights
• Strong performance in 2014 with Full Year Net Profit up 18% YoY toAED 5,656Mn; EPS up 22% YoY to AED 1.42
• Dividend Distribution: 100% cash dividends,15.38% bonus shares; 2014 pay-out ratio at 69% vs. 63% last year
• FGB exceeded most elements of 2014 financial guidance and remains ontrack to achieve 2015 targets
• Key Ratios: 11% loan growth, 3.6% NIM, 23.1% C/I Ratio, 98.9% L/D ratio
• Asset quality : 95bps cost of risk, 2.5% NPL ratio, 126.7% provision coverage;General Provisions of AED 2.5Bn represent 1.6% of CRWA
• Capital Position is robust : Basel II CAR at 17.5% and Tier 1 capital at 16.2%after dividend distribution
• Strong Profitability: RoAE and RoAA at 17.3% and 2.8% respectively
23/40
Exceeded most elements of 2014 guidance
1 or 21% excluding the AED 4.0Bn Abu Dhabi Government perpetual notes2 or 12% excluding the AED 4.0Bn Abu Dhabi Government perpetual notes
2014 FINANCIAL GUIDANCE ACTUAL RESULTS
LOAN GROWTH 6%-8% 11%
REVENUE GROWTH Double-Digit 10%
NIMS ~20bps YoY contraction 11bps contraction
COST TO INCOME RATIO 21%-22% 23.1%
ASSET QUALITYNPL ratio ~3.0%
Provision coverage> 90%Cost of Risk: 1.1% - 1.2%
NPL ratio: 2.5%Provision coverage: 127%
Cost of Risk: 95bps
PROFITABILITY Sustainable MTRoAE target: 18%1 RoAE: 17.3%
CAPITAL MT Tier 1 capital floor: 14%2 Tier 1 Capital: 16.2%
24/40
Q4/FY’14 Summary FinancialsIncome Statement (AED Mn) FY'14 FY'13 YoY Q4'14 Q3'14 QoQ Q4'13 YoY
Net Interest and Islamic FinancingIncome
6,470 5,994 8% 1,626 1,596 2% 1,619 0%
Other Operating Income 2,770 2,427 14% 746 733 2% 856 -13%Operating Income 9,240 8,421 10% 2,372 2,329 2% 2,475 -4%G & A expenses (2,130) (1,766) 21% (602) (521) 16% (533) 13%Provisions/ Impairments (1,372) (1,820) -25% (177) (368) -52% (546) -68%Taxes (33) (33) 0% (14) (7) 100% (9) 56%Minority Interest (49) (28) 75% (29) (8) 263% (15) 93%Net Income 5,656 4,774 18% 1,550 1,425 9% 1,372 13%Earnings Per Share (AED) 1.42 1.16 22% 0.41 0.36 14% 0.33 24%
Balance Sheet (AED Bn) Dec'14 Dec'13 YoY Sep'14 QoQNet Loans & Advances 139.7 125.6 11% 132.7 5%Customer Deposits 141.3 138.0 2% 144.6 -2%Total Assets 212.2 198.2 7% 208.0 2%Shareholders’ Equity 34.1 31.2 9% 32.4 5%
Key Ratios (%) FY'14 FY'13 YoY (bps)Net Interest Margin 3.6 3.7 (10)Cost-to-Income 23.1 21.0 210Non-Performing Loan (NPL) 2.5 3.3 (80)Provision Coverage 126.7 91.1 3,560Loan-to-Deposit 98.9 91.0 790Return on Average Equity 17.3 15.8 150Return on Average Assets 2.8 2.6 20Capital Adequacy 17.5 17.4 10
25/40
125.6 123.4128.2 132.7
139.7
Dec'13 Mar'14 Jun'14 Sep'14 Dec'14
Asset Mix and Lending ActivityLOAN BOOK TREND (AED BN)
DEC’13 DEC’14
LOAN BOOK BREAKDOWN BY SECTORASSET MIX
• During Q4’14, total loans recorded their strongest quarterly increase with5.3% (+AED 7.0Bn) driven by continued strength in the services andmanufacturing sectors, as well as sustained momentum in the retailsegment
• In 2014, FGB achieved significant success in the syndication businessbecoming 1st in UAE Syndicated Loan League Tables and 2nd in MENA LoanMandated Arranger League Tables*
• FY’14 loan growth stood at 11.2% YoY, largely exceeding the 6%-8% initialtarget range
• In light of the strong growth in loans during the period, liquid assets ratiolanded at 17% as of December-end 14, against 20% last year
HIGHLIGHTS
+11%
LiquidAssets
20%
Loans &Advances
63%
Investments9%
Inv.Properties
4%
Other4% Liquid Assets
17%
Loans &Advances
66%
Investments8%
Inv.Properties
4%
Other5%
Agriculture1%
Energy1% Trading
6%Construction
4%
Transportation2%
Retail Loansand cards
23%Retail
Mortgages2%
RetailMortgages -
NHL12%
Personal -Others
3%
Government0%
Securities/Share
Financing1%
Real Estate10%
FinancialServices
6%
Services15%
Public Sector9%
Manufacturing5%
Others0%
*Source: Bloomberg
26/40
138.0129.6
137.5 144.6 141.3
Dec'13 Mar'14 Jun'14 Sep'14 Dec'14
Liquidity
• Following some volatility in Q4, customer deposits ended 2014
showing a 2.4% YoY increase
• Plain vanilla L/D ratio stood at 98.9%, within 90-100% target range;
Regulatory Advances to Deposits ratio remained well below the
regulatory ceiling at 83.5%
• CASA deposits represent 21% of Dec’14 deposit base against 20%
last year
CUSTOMER DEPOSITS TREND (AED BN)
DEPOSITS BY SECTORLIQUIDITY RATIOS (%)
HIGHLIGHTS
+2%
91.095.2
93.2 91.8
98.9
80.6 82.4 80.7 79.1
83.5
Dec'13 Mar'14 Jun'14 Sep'14 Dec'14
L/D ratio Regulatory Advances-to-Deposits Ratio
Government& PublicSector
34%
Corporate36%
Retail14%
InternationalDivision
3%
NHLDeposits
13%
27/40
Dec’14
Syndicated loan 3,306
Bank loans 183
EMTN 5,751
Medium term bonds 2,226
Repurchase agreements 208
Sukuk 4,224
Total 15,898
Funding MixLIABILITY MIX
• During 2014, FGB was successful in accessing newfunding sources by tapping into new markets including:
– Debut 5-year AUD 250Mn (AED 744Mn) bond inApril ’14
– 10-year EUR 100Mn (AED 446Mn) issuance inJuly’14
– 5-year Pro-Bond of JPY 10Bn (AED 307Mn) inJuly’14
• In Jan’15, the Bank proceeded with the full pre-paymentof USD 900Mn syndicated loan due in December 2015
MATURITIES (AED MN)WHOLESALE FUNDING (AED MN)
DEC’13 DEC’14
HIGHLIGHTS
3,676*3,919
4,373
26
3,079
379 446
2015 2016 2017 2018 2019 2023 2025
Customerdeposits
70%
Due toBanks
3%
Borrowings,EMTN,Sukuk
8%
Other4%
Equity16%
Customerdeposits
67%
Due toBanks
6%
Borrowings,EMTN,Sukuk
7%
Other4% Equity
16%
*Includes syndicated loan of USD 900Mn (AED 3,306Mn)
28/40
35% 29% 28% 31% 31%29% 30%65% 71% 72% 69% 69%
71%70%
Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 FY'13 FY'14
Net Interest and Islamic Financing Income
Other Income (inc. share of profit from assoc.)
2,2882,475 2,251 2,3292,372
8,421
9,240
Key Revenue Movements and NIMs
• Revenue growth of 10% YoY (+AED 819Mn) was primarilydriven by :
– +AED 476Mn increase in net interest and Islamicfinancing income thanks to higher volumes andsustained NIMs
– +AED 346Mn addition in core fees and commissionssupported by enhanced event-driven fees andstrong momentum in the credit card business
– +AED 52Mn FX& Derivatives income supported byhigher transactions
• FY’14 NIM were successfully managed at 3.58% down byonly 11bps YoY vs. our expectation of 20bps decline
KEY MOVEMENTS IN OPERATING INCOME (AED MN)HIGHLIGHTS
NET INTEREST MARGIN (%) - YTD REVENUE BREAKDOWN (AED MN)
8,421 9,240
+476 -22 +346 -33 +52
FY'13 Net Interestand Islamic Fin.
Income
InvestmentIncome
Fees andcommissions
Other income FX&Derivatives FY'14
+10%
3.693.73
3.683.61 3.58
Dec'13 Mar'14 Jun'14 Sep'14 Dec'14
29/40
1,766 2,130
21.0%23.1%
FY'13 FY'14
Operating expenses (AED Mn) C/I ratio (YTD)
Non-Interest Revenues and Cost Efficiency
• Revenue diversification continues to be a key area of focuswith non-interest revenues growing by 14% YoY
• Core fee and commission income increased by 22% and 9%respectively while credit card fees grew by 40% YoY
• 21% YoY growth in operating expenses mainly reflects theconsolidation of Dubai First and Aseel Finance as well ashigher investments in human resources and infrastructureto lay the foundations for future growth and success
• 23.1% Dec’14 C/I ratio remained in line with medium termexpectations despite slightly missing FY guidance
FY’14 NON-INTEREST REVENUES
COST EFFICIENCY
HIGHLIGHTS
FY’14 NON-INTEREST REVENUE BREAKDOWN
+21%
CommissionIncome
21%
Fee Income27%Credit card
fees21%
Investmentincome
6%
FX &Derivatives
7%
Property andother Income
18%
*Including share of profit from associates
In AED Mn FY’14 FY’13 YoY %
Commission Income 575 527 9%
Fee Income 748 612 22%
Credit card fees 571 409 40%
Investment income 169 190 -11%
FX & Derivatives 195 142 37%
Property and otherincome* 512 547 -6%
Total 2,770 2,427 14%
30/40
Dec’14 Dec’13 YoY % Sep’14 QoQ %
NPLs 3,533 4,287 -18% 3,717 -5%
Provisions 4,478 3,905 15% 4,521 -1%
Specific 1,975 2,151 -8% 2,012 -2%
General 2,503 1,754 43% 2,509 0%
Credit QualityNPL RATIO AND PROVISION COVERAGE (%)
• FY’14 NPL ratio improved for the third consecutive quarterto 2.5% as of Dec’14, down from 3.3% last year vs. initialguidance of 3.0%; NPLs declined by AED 754K YoY inabsolute terms
• Provision coverage strengthened to 126.7% primarily as aresult of the general provisioning build up throughout theyear (+43% YoY)
• Cost of Risk came out better than expected at 95bpsagainst 1.34% in FY’13 and initial target range guidance of1.1%-1.2%
• General Provisions at AED 2.5Bn represent 1.6% of CRWA
NPLS AND PROVISIONS (AED MN)COST OF RISK (%) - YTD
HIGHLIGHTS
3.33.4
3.02.7
2.5
91.1 96.0110.2
121.6126.7
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2.0
2.5
3.0
3.5
4.0
4.5
FY'13 Q1'14 H1'14 9M'14 FY'14
NPL ratio Provision Coverage
1.34 1.37
1.25
1.15
0.95
FY'13 Q1'14 H1'14 9M'14 FY'14
31/40
Capital Strength (Basel II)CAPITAL ADEQUACY RATIO (%)
• After dividend distribution, Basel II total CAR and tier 1
capital ratios remained quasi-stable YoY at 17.5% and
16.2% respectively
• RWA grew by 7% YoY in light of the growth in assets and
off-balance sheet balances
• FGB’s medium term Tier 1 capital floor under Basel II
remains at 14%
RISK WEIGHED ASSETS (AED BN)CAPITAL BASE (AED BN)
HIGHLIGHTS
16.3%17.6% 17.7% 18.2%
16.2%
17.4%19.0% 18.9% 19.5%
17.5%
Dec'13 Mar'14 Jun'14 Sep'14 Dec'14
Tier I Ratio BASEL II CAR
30.0 31.6 32.9 34.432.1
28.2 29.4 30.7 32.129.8
Dec'13 Mar'14 Jun'14 Sep'14 Dec'14
Total Capital Tier 1 capital
172.4166.5
173.8 176.3183.6
Dec'13 Mar'14 Jun'14 Sep'14 Dec'14
32/40
3,479
9,240
3,5311,227 535
468
WBG CBG T&GM Others Real Estate FGB Group
Business Segment ContributionsASSETS BREAKDOWN
• Continued focus on enhancing core capabilities and onmaximizing synergies between the three corebusinesses: Wholesale & International Banking Group(WBG), Consumer Banking Group (CBG), and Treasury &Global Markets Group (T&GM)
• These three pillars represent 89% of Group total assetsas of Dec’14
• WBG and CBG generated 38% each to FY’14 Grouprevenues, T&GM provided 13%
SEGMENTAL REVENUE BREAKDOWN AND CONTRIBUTIONS TO GROUP REVENUE (AED MN)
HIGHLIGHTS
WBG43%
CBG23%
T&GM23% Real
Estateactivities
5%
Other6%
WBG38%
CBG38%
T&GM13%
RealEstate
activities5%
Other6%
33/40
86% 85%
14%15%
FY'13 FY'14UAE operations International Operations
3,2653,479
Wholesale Banking Group - WBGOPERATING INCOME (AED MN)
• Continued focus on incomediversification supported 7% YoYgrowth in revenues to AED 3,479Mn
• International operations generated15% of WBG operating income thatis 6% of Group revenues
• WBG Net Profits represent 41% ofGroup Profits
WHOLESALE GROSS LOAN PORTFOLIO (DEC’14)TOTAL ASSETS (AED BN)
HIGHLIGHTS NET PROFITS (AED MN)
80.9
91.3
Dec'13 Dec'14
+7%
84% 92%
16%8%
FY'13 FY'14UAE operations International Operations
2,161 2,344+8%
Government& PublicSector
9%
Abu DhabiPrivateSector
42%
DubaiPrivateSector
19%
Other UAEPrivateSector
5%
Non UAE-based
Corporates25%
+13%
34/40
Consumer Banking Group - CBGOPERATING INCOME (AED MN)
• Continued focus on product innovationand enhanced customer experience
• CBG revenues grew 4% YoY toAED 3,531Mn with Net Profitincreasing by 9% YoY to AED 2,042Mn
• Wealth Management , SME loans andcredit cards continued to grow, bringingtheir combined share in CBG gross loanportfolio to 22%
CONSUMER GROSS LOAN PORTFOLIO (DEC’14)TOTAL ASSETS (AED BN)
HIGHLIGHTS NET PROFITS (AED MN)
*Auto loans and overdrafts
46.749.9
Dec'13 Dec'14
+7%
3,386 3,531
FY'13 FY'14
1,8682,042
FY'13 FY'14
PersonalLoans39%
Abu DhabiGovernment
NationalHousing
Loans34%
Credit Cards8%
OtherMortgage
Loans4%
Loans toSMEs
6%Wealth
Management8%
Others*0%
+4%+9%
35/40
Treasury & Global Markets – T&GMOPERATING INCOME (AED MN)
• T&GM revenues recorded a solid 10%increase to AED 1,227Mn while netprofits improved by 11% toAED 1,106Mn
• 91% of FGB’s investment portfolio is ininvestment grade fixed income ofwhich 67% is allocated to the GCC
• The average duration of the portfolio is3.2 years
INVESTMENT PORTFOLIO1 (DEC’14)TOTAL ASSETS (AED BN)
HIGHLIGHTS NET PROFITS (AED MN)
1AED 16.7Bn as of December-end 2014
52.448.3
Dec'13 Dec'14
-8%
1,1151,227
FY'13 FY'14
9971,106
FY'13 FY'14
+10% +11%
Bonds90%
Equities1%
Funds1%
PrivateEquity
8%
36/40
Land in AbuDhabi28%
Dev.Properties
in AbuDhabi41%
Land inDubai
4% Dev.Propertiesin Dubai
5%
PropertiesGenerating
RentalIncome
22%
Real Estate ActivitiesOPERATING INCOME (AED MN)
• Real estate revenues were stable YoY toAED 468Mn as 2013 revenues included gainson exchange of property for AED 185Mn
• Excluding this non-recurring item, real estaterevenues would show a 65% YoY growth
• During 2014, real estate revenues includedAED 168Mn gain on sale of property in linewith the Bank’s strategy to reduce exposure tothe property sector
• Rental yield in FY14 landed at 6.1%significantly improving from 3.7% last year
INVESTMENT PROPERTIES PORTFOLIO1 (DEC’14)TOTAL ASSETS (AED BN)
HIGHLIGHTS NET PROFITS (AED MN)
1AED 8.5Bn as of December-end 2014
9.910.5
Dec'13 Dec'14
468 468
FY'13 FY'14
+6%
+0%
415 405
FY'13 FY'14
-2%
37/40
2014 Dividend Distribution
2014 2013 2012 2011 20101
NET PROFIT (AED MN) 5,656 4,774 4,154 3,707 3,420
CASH DIVIDEND (AED MN) 3,900 3,000 2,500 1,500 900
CASH DIVIDEND (% OF CAPITAL) 100% 100% 83% 100% 60%
BONUS SHARES (% OF CAPITAL) 15.38% 30% - 100% -
DIVIDEND PAYOUT RATIO(% OF NET PROFIT) 69% 63% 60% 40% 26%
BASEL II CAPITAL ADEQUACYAFTER DIVIDEND DISTRIBUTION2 17.5% 17.4% 18.7% 18.0% 19.5%
1 Shares bought back in 2010: 5% of capital2CAR adjusted from Tier 2 MoF Loan
38/40
2015 Financial Guidance
FY 2015
LOAN BOOK GROWTH High Single-Digit
REVENUE GROWTH Double-Digit
NIMS 25bps – 35bps decrease
EXPENSES C/I Ratio: 23%-24%
ASSET QUALITY CoR ~ 100bps
NET PROFIT GROWTH Low Double-Digit
ROAE* 18%
TIER 1 CAPITAL* 15%-16%
*Including perpetual notes
39/40
Middle East Investor Relations Society (ME-IRS) 2014 Conference and Awards:
Best Investor Relations by CFO in the Middle EastBest Company for Corporate Access in the Middle East
Best Practice Investor Relations - UAECommercial Bank of the Year - UAE
SME banking sector category award at the Enterprise Agility Awards
“Employer of Choice” at the GCC Best Employer Brand Awards 2014
“New Market Trailblazer of the Year” for Bancassurance
Ranked 8th on the “Top 500 Companies in theArab World” list 2014 (4th leading bank and 2nd leading UAE bank)
Best Bank in the UAE 2014Best Wealth Management Firm 2014
Best Premium Banking Service 2014Best Bancassurance Product 2014
Best Bank Award for Trade Finance and Corporate Banking
FGB 2014 Awards
40/40
Thank you!For more Information, contact FGB Investor Relations Department: [email protected] visit our corporate website www.fgb.ae