mashreq...source: emirates nbd, federal customs authority, hotel and airport authorities of uae, dp...

Mashreq

INVESTOR PRESENTATION

March 2017

2

50 years…

S P I R I TSocially

Responsible

Passionate

about clientsInnovative

Respect for

colleaguesIntegrity Transparent

“To be the region’s most progressive bank

enabling innovative possibilities for our

clients, colleagues and communities”

3

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage

Structure and Leadership

Strategy

Financial track record

Trading history, rating and dividends

Corporate governance

Accolades

4

3.22.82.8

2.42.31.9

KuwaitOmanKSA QatarBahrain UAE

UAE is the 2nd largest economy in the GCC, with promising economic growth

prospects

UAE - The second largest economy in the GCC Average Real GDP Annual Growth

Rate – 2016E-21F (%)

Ba2 A1 Baa1 Aa2 Aa2 Aa2

Sovereign Rating

by Moody’s

60 638 32 110 375 157

Nominal GDP per Capita – 2016

(USD thousand)

GDP Breakdown by Sector – 2015

(%)Nominal GDP

2016 (USD billion)

SOURCE: IMF WEO October 2016,CIA & OPEC, Moody‘s Ratings, National Bureau of Statistics 2016

UAE ECONOMY – MICROECONOMIC OUTLOOK

▪ Second largest economy in the GCC with GDP of USD

375 billion in 2016

▪ Well diversified economy with oil & gas contributing only

~23% of the total GDP

▪ Despite fall in oil prices, UAE economy remains strong

with current account surplus at 1.1% of GDP in 2016E

▪ Holds 8.1% of the proven OPEC crude oil reserves,

primarily concentrated in Abu Dhabi

▪ Young population with ~61.3% aged between 25-54 years

and a literacy rate of ~94%

UAE Qatar

60.7

Oman

15.1

Kuwait

38.126.1

KSA

24.119.9

Bahrain

11%

13%

6%3%

10%

13%

10% 23%

1%

10%

Construction

Wholesale Retail Trade

Financial Corporations

Government Services

Other

Real Estate

Transport, Storage & Communication

Crude Oil and Natural Gas

Agriculture

Manufacturing

5

1 Rank out of 138 economies


Current Account Balance to GDP – 2016E

(%)

Govt. Net Borrowing to GDP – 2016E

(%)

Global Competitiveness Index – 2016-17 Ranking1 Inflation to Remain Stable Over the Medium Term

(%)

One of the best ranked economies on global competitive index among the

GCC nations

SOURCE: IMF WEO October 2016, World Economics Forum-Global Competitiveness Index 2016

3.53.97.6

13.013.514.7

OmanBahrain KuwaitUAEQatarKSA

1816

Kuwait Oman

66

Bahrain

48

KSAQatar

29

38

UAE

3.61.1

1.84.76.6

21.3

UAE KuwaitQatarBahrainKSAOman

3.53.33.23.1

3.64.1

2017F 2018F 2019F 2020F2016F2015E

6


Scores Highest Among GCC on Govt.

Effectiveness Index1

Among the Best Ranked in GCC on Rule of Law

Index1

Highest Ranking in GCC on Control of Corruption

Index1

Enforcement of Contracts - Ranked Best in GCC

Solid institutional and policy framework as reflected by relatively higher

scores among the GCC nations

0.05

0.300.40

0.60

1.00

0.70

KuwaitKSABahrainOmanUAEQatar

-0.3

0.10.30.3

1.11.2

KuwaitKSAOmanBahrainQatarUAE

0.1

0.20.30.6

1.0

1.5

KuwaitKSAOmanBahrainQatarUAE

112101

8670

58

18

QatarOmanKuwait BahrainSaudi

Arabia

UAE

1 Score ranges from -2.5 (weak) to 2.5 (strong)

SOURCE: World Bank – Worldwide Governance Indicators, World Bank- Doing Business

7

Non-oil growth is supported by strong hospitality and logistics sectors


Non-oil growth continues to be steady with PMI remaining

above 50

Emirates NBD UAE PMI index

Increasing rate of growth

The hospitality sector, especially in Dubai, is one of the major

growth drivers …

Hotel guests (million) Air passengers (million)

50 – no change on previous month

Increasing rate of contraction

14.914.2

13.2

11.010.0

4.44.13.5

2.82.4

20162015201420132012

8478

7066

58

252320

1715

20162015201420132012

Abu DhabiDubai

2.3 2.4 2.4 2.5 2.6

2016

3.4

0.8

2015

3.3

0.8

2014

3.2

0.8

2013

3.1

0.7

2012

2.9

0.6

Abu DhabiDubai

16.115.615.213.613.3

603 668 685 696952 962

170

185 199

211219 232 244

419 402

2012

1,057

2011

928

114

Exports

Re-exports

20161

1,563

2015

1,556

2014

1,072

132

2013

1,065

148

Imports

… along with the logistic sector, which has been growing

continuously over the last three years.

UAE container volumes (TEU million)

UAE air freight (million tonnes)

Non-oil direct trade flows have witnessed steady growth over the

last few years

UAE non-oil direct trade flows (AED billion)

CAGR

’11-’16

9.8%

11.8%

13.8%

1 Annualised – based on 9M (Jan – Sept) data

SOURCE: Emirates NBD, Federal Customs Authority, Hotel and Airport authorities of UAE, DP World, Khaleej Times, National

40

45

50

55

60

65

5454545353

5553

555553

555353

Dec-

16

NovOctSepAugJulJunMayAprMarFebJanDec-

15

8

40

45

50

55

60

65

Consumer borrowing continues to rise along with an increase in employment

levels

SOURCE: JLL, UAE Central Bank, Emirates NBD


… supported by continuous increase in employment levels

Emirates NBD Employment index (#)

Increasing rate of growth

50 – no change on previous month

348331300

280261

2016

+7%

20132012 2014 2015

525250

525153

51

5453

52525152

Jan AprDec-

15

MarFeb JunMay Nov Dec-

16

OctSepAugJul

Increasing rate of contraction

… as can also be seen in the fall in Dubai property prices over the

year

Mashreq Property Price Index (%)

Personal loans to residents (AED)

Consumer borrowing has been rising…

Rents continue to be falling …

Dubai 4Q ‘16 Abu Dhabi 4Q ‘16

Residential Office Retail Hotel

Rent

falling

Rent

bottoming

out

Rent

growth

slowing

Rent

growth

acceler-

ating

Rent

falling

Rent

bottoming

out

Rent

growth

slowing

Rent

growth

acceler-

ating

-0.2-0.3-0.2-0.2-0.3-0.2-0.2-0.4-0.2-0.2-0.4-0.5-0.1

15.916.216.416.616.817.117.317.417.818.118.318.719.2

-5

0

5

10

15

20

De

c-1

6

No

v-1

6

Se

p-1

6

Oct-

16

Au

g-1

6

Ma

y-1

6

Ju

l-1

6

Ap

r-1

6

Feb-1

6

Mar-

16

Jan-1

6

Ju

n-1

6

Dec-1

5

Avg MPPI inc (%) Cum MPPI inc (%)

9

UAE ECONOMY – BANKING SECTOR OVERVIEW

Diversified and Well Regulated Banking Sector GCC Banking Assets1 – 2016 (AED billion)

UAE – Gross Credit & Deposits (AED billion) Loans by Sector –2016 (%)

Total Banking Assets to GDP Ratio

Regulated & Diversified Banking Environment

190% 94% 223% 179% 117% 174%

203.0257.0724.0

1,281.0

2,611.02,207.0

KuwaitQatarKSAUAE BahrainOman

▪ As of December 2016, UAE banking sector comprised 49

banks

– 23 National Banks with 846 branches and

– 26 Foreign Banks with 85 branches

▪ Diversified loan portfolio - Real Estate and Construction

sector accounted for only ~18% of loan book in 2016

▪ Well regulated banking system, in line with internationally

followed best practices

▪ UAE Banking sector has a long-standing track record of

Government support during crisis situations

1,5741,485

1,378

1,1841,074

1,276

1,5631,4721,421

1,1681,070

1,279

2012 20162011 20142013 2015

Deposit Gross credit

CAGR 2011- 2016: 7.9%

1 Data for Oman relates to Nov 2016 and for Bahrain relates to Oct 2016; 2) Others include loans made to service sector & Non profit Institutions

SOURCE: UAE Central Bank, Central Bank of other respective countries, IMF WEO October 2016

9%

10%

20%

11% 10%

4%

11%

18%

1%

5%

1%

0%

Others2

Personal Loans for Consumption

Personal Loans for Business

Government

Financial Institutions (Ex. Banks)

Agriculture

Transport, Storage & Comm

Trade

Construction and Real Estate

Electricity, Gas and Water

Manufacturing

Mining and Quarrying

10

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage


Strategy




Accolades

11

Mashreq is one of UAE's leading financial institutions

MASHREQ HERITAGE

Heritage ▪ Established in 1967 by the Al-Ghurair Group

▪ ~50 years in UAE banking and financial services market

Private sector

ownership

▪ Oldest regional bank based out of UAE

▪ Combines the entrepreneurial spirit of Dubai with enduring trade banking

relationships across the region

▪ Publicly traded since inception; Listed on the DFM on creation of local

stock exchange

Strong regional

presence

▪ Well positioned to finance regional trade flows

▪ Regional bank with 41 branch network in the UAE and 24 branches / rep-

offices in MENA, Asia, Europe and United States

Diversified business

case

▪ Universal bank offering a comprehensive suite of products and services to

individuals and corporates across all lines of business

▪ Most diversified revenue streams with fee and other income contributing

around 45% of total income

Strong

management team

▪ Combination of long serving senior executives with international

management expertise delivering a robust growth model

▪ Led by Abdul Aziz Abdulla Al-Ghurair, Chief Executive Officer for 26 years

Strong and

supportive

ownership structure

▪ Al-Ghurair Group, the main shareholders of the bank, are a leading

conglomerate in the UAE with numerous business interests

▪ Featured in the Forbes billionaire list for the past 10 years

▪ Mashreq is the flagship business for the family for nearly 50 years

12

Ownership – Al-Ghurair flagship brand

Key shareholders (December 2016)

Stable and supportive ownership structure

MASHREQ HERITAGE

Mashreq’s Leadership

Mr. Abdulla Bin Ahmad Al-Ghurair

Chairman & President

H.E. Abdul Aziz Abdulla Al-Ghurair

Chief Executive Officer & Director

10.3%

3.5%3.6%

12.0%

31.1%

39.5%

Other shareholders

National Cement Company

Majid Capital

Masar Investments

Abdulla Ahmed Al Ghurair Inv. Co.

Saif Al Ghurair Investment LLC

▪ One of the most prominent businessmen and

industrialists in the UAE

▪ Former Chairman of the UAE Banks Association

▪ Chairman of UAE Banks Federation

▪ Vice Chairman of the higher board of DIFC

▪ Chairman of Masafi

▪ Chairman of Oman Insurance

▪ Board Member of Emirates Foundation

▪ Former Speaker of the Federal National Council

▪ Al-Ghurair families holds the majority stake in

Mashreq (approximately 87%) and are the

founders of the Bank

▪ Al-Ghurair family has a strong commitment to

the continued growth and financial solidity of

Mashreq

▪ Al-Ghurair family is one of the oldest and

wealthiest families in the UAE

– Featured in Forbes billionaire list for the

past 10 years

– Business interests include shopping

malls, real estate, cement manufacturing,

food industries, Masafi (mineral) water,

contracting, trading, retailing, shipping,

printing & packaging, aluminium

extrusion, building materials, oil refinery,

manufacturing, steel and canning

▪ Mashreq’s shares are listed and traded on

the Dubai Financial Market

13

Strong distribution network in the UAE with 22 branches in Dubai

MASHREQ HERITAGE

Umm Al Quwain

1 branch

Abu Dhabi

8 branches

Ajman

1 branch

Ras Al Khaimah

1 branch

Fujairah

1 branch

Sharjah

7 branches

Dubai

22 branches

Alternate Channels

▪ 41 branches (out of which Mashreq Gold has

presence in 29 branches and SME Banking has

presence in 24 branches) and 3 Retail Customer

Service Centers in UAE serving ~500K customers

▪ ATMs and CCDMs increased coverage to 272 units

in UAE

▪ 35,000 POS machines spread 13,000 merchant

location in the UAE. Second Largest Merchant

acquirer in the UAE with over 35% market share

▪ Internet Banking through Mashreq Online (Retail incl.

Brokerage), Mashreq Business online (Corporate),

Mashreq-FI online (Correspondent Banking);

263,999 active users are registered with online

banking

▪ Mobile banking services: Snapp registration has

grown up by 38% year on year and financial

transactions has grown by 28% as compared to last

year figures. Snapp has been recently upgraded with

unique new features such as card control, ChatBot

and voice banking.

▪ Fully integrated electronic platform for transaction

banking (GTS)

▪ State of the art Polaris System (mashreqMATRIX) to

provide online services to corporate customers

▪ 24 x 7 Direct Banking Call Centre

14

Regional and international banking presence with 24% of revenues from

outside of UAE

International

branches

Financial Institution

branches

New York

London

Representative

Offices

Hong KongIndia

Bangladesh

NepalPakistan

EgyptKuwait

Bahrain

Qatar

MASHREQ HERITAGE

15

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage


Strategy




Accolades

16

Mashreq organization chart

STRUCTURE AND LEADERSHIP

Note: Financials as of 31 December 2016

Board of Directors

Chief Executive Officer

Corporate Banking

Group (CBG)(21% of revenue)

Treasury & Capital

Markets (TCM)(9% of revenue)

Retail Banking

Group (RBG) (27% of revenue)

International Banking

Group (IBG)(24% of revenue)

Corporate Affairs

(CA)

Audit , Fraud &

Compliance Group

(AFCG)

Risk

Management (RM)

Operations &

Technology (O&T)

17

Mashreq is a universal bank that covers significant lines of business with a

full product and channel suite


Offers personal banking

Offers banking services outside UAE

Retail Banking Group

(RBG)

International Banking Group

(IBG)

▪ Personal Banking

▪ SME

▪ Mashreq Gold

▪ Private Banking

▪ Payments

▪ Islamic banking products

▪ Distribution

▪ Alternate Channels

▪ Direct Sales

▪ Direct Banking Centre

▪ Marketing & Customer

Experience

▪ Wholesale and investment banking

▪ Treasury and investment products

▪ Personal banking

▪ Financial Institutions globally


Offers wholesale banking

Offers treasury and investment products

Corporate Banking Group (CBG)

Treasury & Capital Markets

(TCM)

▪ FX and Investments

▪ Rates & Structured

Solutions

▪ Mashreq Capital


▪ Equity Derivatives &

Institutional Sales

▪ Mashreq Securities

▪ Islamic Banking –

Product House

▪ NBFI

▪ Emerging Corporates

Division

▪ Global Transaction

Services

▪ Corporate Finance

▪ Islamic Banking

products

▪ Energy, Services &

Manufacturing

▪ Trading

▪ Contracting Finance

▪ Abu Dhabi Division

▪ Real Estate

18

Oman Insurance is the largest subsidiary of Mashreq

MASHREQ - KEY SUBSIDIARIES

Mashreqbank Psc

Note: Figures are based on draft audited statements

Mashreq Al Islami Finance (99.8%)

▪ Islamic Finance Company

▪ Provides full range of Islamic Products & Services

▪ Dec ’16 Equity: AED 795 mn

▪ 2016 profit: AED 70 mn

Mashreq Securities (99.98%)

▪ Securities brokerage Company registered at Dubai

Financial Market

▪ One of the leading brokerage in the UAE


▪ 2016 Profit: AED 7 mn

Oman Insurance Company (63.94%)

▪ Largest insurance company in the UAE

▪ Provides full range of Insurance Products &

Services

▪ Dec ’16 Equity: AED 1,934 mn


Mashreq Capital (100%)

▪ Registered in DIFC for Brokerage, Asset

Management and Fund Management services

▪ One of the largest asset management in UAE with

USD 800 mn in asset under management

▪ Funds rated highest in the market



19

Corporate Banking (CIBG) business

30,91129,50129,617

Dec-14 Dec-16Dec-15

0% +5%


1,3191,3241,429

0%-7%

20152014 2016

CIBG Revenues (AED million)Business highlights

CIBG Assets (AED million)

▪ Corporate Banking Group provides financing solutions to

corporate and commercial customers in the UAE

▪ Major products offered include trade finance, contracting

finance, project finance, corporate finance advisory and

cash management

▪ Corporate Banking has moved to a best-in-class, expertise-

led coverage model for clients. The relationship teams have

been realigned into industry verticals that best serve the

corporate financial needs. Our diverse industry coverage

includes among others: Contracting Finance, Services &

Manufacturing, Government, Multinational Corporates, Real

Estate, Trading Companies, Non-Banking financial

Institutions and Emerging Corporates – including DXB NE &

Abu Dhabi.

▪ Successfully closed number of multibank deals establishing

the best DCM platform amongst local / regional banks

▪ Mashreq’s Global Transaction Services team maintained its

regional dominance in the transaction banking space by

winning the Global Finance - World’s Best

Corporate/Institutional Digital Bank Award in UAE in 2016

for the second consecutive year.

▪ Mashreq won the best trade finance award in 2Q of 2016 by

M&A awards

20

Retail Banking (RBG) business

13,57914,43114,061

+3%-6%

Dec-16Dec-15Dec-14


1,6841,838

1,626

+13%-8%

20152014 2016

Business highlights

▪ With 28% market share & 35,000 POS machines across the

UAE, we are now the second largest acquirer in the country

▪ Achieving 36% growth in 2016, we are the fastest growing

ecommerce acquirer in the country.

▪ Products offered include current / savings / fixed deposits,

investment products, personal loans, auto loans,

mortgages, small business loans, credit cards with unique

loyalty programs, bank assurance, private banking and

wealth management.

▪ Key innovations include; first bank in the Region to have

early access of Samsung Pay, a best in class and secure

mobile payment service that works as a contactless credit or

debit card, POS Plus - UAE’s first ever handheld payment

acceptance device with built in digital product catalogue

(customers can see a merchant’s entire product line and

variants on a digital tablet);1-click payments; a unique

service that lets merchants collect payments from

customers by sending them an SMS or email; first bank to

integrate Apple’s Siri for voice-powered payments;

introducing UAE’s First Chat Bot; an AI agent to interact with

customers

▪ The Award-winning mobile banking application ‘Mashreq

Snapp’ has added recent user friendly features

▪ Key awards for 2016 include Best Regional Retail Bank by

Banker ME Industry Awards, Best Digital Bank by Global

Banking & Finance Review Awards, Best Private Bank for

Super Affluent Clients in UAE by Euromoney’s 13th Annual

Private Banking Survey.

RBG Revenues (AED million)

RBG Assets (AED million)

21

Treasury and Capital Markets (TCM) business

15,65713,698

17,004+14%

+9%

Dec-16Dec-15Dec-14


553599

564

+2%-8%

201620152014

Business highlights

▪ Treasury and Capital Markets business consists of

customer flow business and proprietary business. Customer

flow business includes transactions for FX, derivatives,

hedging, investment products, equities and regional asset

management undertaken on behalf of customers.

Proprietary business includes trading and investing activity

undertaken on behalf of the bank

▪ Mashreq was able to grow its Treasury product suite across

asset classes, supported by an online trading platform and

24 hour dealing room

▪ The Rates & Structured Solutions business closed several

large ticket hedging transactions for clients across the

region, including a structured profit rate swap for a real

estate loan

▪ The Makaseb Income Fund received the Liper Fund Award

as the best fund over 3 & 5 years in the Bond Emerging

Markets Global-Hard Currency category

▪ Our best in class Asset Management business achieved

strong growth: Mashreq’s fixed income funds (both

conventional and Sharia’h compliant) remain amongst the

top performing funds in the market

– Best Sharia’h Compliant MENA Fund Manager Award

from CFI

– Best Sharia’h compliant Fixed Income fund of the year

award from MENA Fund Manager magazine

– Moody’s upgraded Mashreq Capital’s Investment

Manager rating to MQ2

TCM Revenues (AED million)

TCM Assets (AED million)

22

1,4631,301

1,059

+13%+23%

201620152014

International Banking (IBG) business

32,50532,831

28,548

Dec-15Dec-14

+15% -1%

Dec-16


Business highlights

▪ International banking business consists of retail and

corporate business in Qatar, Egypt, Bahrain and Kuwait and

Financial Institutions business in other locations including

trade services, reimbursements – arranging debt capital

market transactions, undertaking and financing, export bill

collections and risk participations

▪ Mandated lead arrangers in important loan syndications in

overseas markets and also consolidated our position in

some of our markets as leading bank for strategic project

finance

▪ Introduced the upgraded SNAPP (mobile banking app) in

Qatar simultaneously with UAE and now offer our

customers the convenience of cardless cash withdrawals,

mobile to mobile cash transfers and the Money Manager

feature

▪ Electronic Fund Transfer System (EFTS) was launched for

Corporate Houses through the Mashreq Matrix portal

▪ In key African countries we expanded our offerings from

transactional banking to raising funds for the top Banks and

Development Financial Institutions in Africa and continue to

be the leading Middle Eastern Bank in the FI business in

Africa

▪ 2016 also witnessed success in the efforts to increase the

exposure to the NBFI (Non-Banking Financial Institutions)

segment.

▪ Key awards- Global Finance Digital Bank Conference: Best

consumer digital bank in Qatar

IBG Revenues (AED million)

IBG Assets (AED million)

23

Islamic Banking (ISB) business

8,797

7,5956,574

+16%

+16%

Dec-16Dec-15Dec-14


321308311

+5%-1%

201620152014

Business highlights

▪ Mashreq Al Islami is the Islamic Banking arm of Mashreq

(Mashreq Al Islami Finance Company PJSC and Islamic

Banking Division, Mashreqbank PSC) and offers a wide

range of Shari’ah compliant products and services

▪ Amongst the top ten Islamic institutions in the UAE based

on market share as per MEED

▪ Products offered include Ijara home finance, Mudarabah

deposit and savings, Musharaka finance, Murabaha

commodity finance, Ijara equipment finance, sukuk

underwriting, Musharaka LC, Murabaha LC, TR Murabaha,

Kafala, Wakala deposit, Reserve Murabaha deposit and

sukuk advisory

▪ Successfully closed a 5 year USD 500 million senior

secured syndicated facility for Ezdan Holding Group

Company, the largest private sector real estate developer in

Qatar - Mashreq Al Islami UAE acted as Mandated Lead

Arranger, Sole Book Runner and Facility Agent for the

facility

▪ “Most Innovative Islamic Banking Solution Provider” by

Global Banking & Finance Review

ISB Revenues (AED million)

ISB Assets (AED million)

24

Insurance business (Oman Insurance Company)


3,5553,1903,249

+11%-2%

201620152014

7981

229

106

30

101

+253%-70%

Dec-15Dec-14 Dec-16

Underwriting ProfitNet Profit

Business highlights

▪ Mashreq owns 63.94% of Oman Insurance Company

▪ Oman Insurance Company (OIC) is the largest insurance

company in the UAE Products offered include life, medical,

motor, marine cargo and hull, aviation, property, fire and

general accidents, engineering, energy, liabilities and

personal lines insurance

▪ Largest distribution network in the UAE; OIC has 12

branches, with operations across all Emirates in the UAE,

the Sultanate of Oman, Qatar and Turkey. In addition, OIC

has over 20 bank partners in the region

▪ The company is rated ‘A-’ Stable Outlook by Standard &

Poor’s and ‘A Excellent’ Stable Outlook by AM Best,

supported by leading multinational reinsurers such as

Everest Re, XL Re and Munich Re

▪ Oman Insurance launched its exclusive Healthcare

Wellness Program ‘LivFit’ in May 2016

▪ Oman Insurance in collaboration with Commerzbank and

Blackrock introduced a Invest Protect Plan for its clients

further enhancing the menu of products

Gross written premium (AED million)

Profit (AED million)

25

Profile of Senior Management


Abdul-Aziz Abdullah Al-GhurairChief Executive Officer

• A Graduate of California Polytechnic State University, H.E. Abdul-Aziz Al-

Ghurair joined Mashreq, then Bank of Oman, in 1977

• He worked in different Divisions and through rigorous training in various

assignments climbed to his current position as of March 1991

Ali Raza KhanHead of Corporate Affairs

• Ali Raza Khan is a Member of the Institute of Chartered Accountants of

India (1978)

• Joined Mashreq in 1980; as Head of Corporate Affairs, he is

responsible for Finance, HR and Administrative functions in the bank

Hammad NaqviActing Head of Treasury & Capital Markets

• Mr. Hammad Naqvi has an MBA from the IBA, University of Karachi

• Prior to joining Mashreq in 1996, he was Head of Treasury with Bank of

America, Pakistan and he was also posted as Treasurer of Bank of

America, Poland

• He has also spent 2 years in the merchant banking division of ANZ

Grindlays in Pakistan

• Jan-Willem Sudmann has a Masters in Economics from the University of

Hamburg, Germany

• Prior to joining Mashreq he was a Managing Director at Commerzbank

Shanghai

• Before joining Commerzbank he worked for close to two decades at

Dresdner Bank across various geographies such as Germany, UK and Egypt

Jan-Willem Sudmann Head of International Banking

Jose K JosephHead of Risk Management

• Jose K. Joseph is a Commerce Graduate and an MBA in Finance from XLRI,

India

• He joined Mashreq in October 2013

• Prior to joining Mashreq he spent over 28 years with Citibank

Sandeep ChouhanHead of Operations & Technology

• Sandeep Chouhan has a Masters in Technology, Management &

Systems from IIT, Delhi, India

• Joined Mashreq in March 2015 from CBQ, Qatar

• Prior to this, he was CIO with Barclays and Morgan Stanley

• Nasser A. Paracha has a BSc from the University of Leeds. He completed a

General Management Program from HBS

• Joined Mashreq in 1995 from Deutsche Bank AG in Pakistan

• Overall banking experience of approximately 25 years, covering corporate

banking, internal audit and compliance

Nasser A. Paracha Head of Audit, Fraud & Compliance Group

Nabeel Waheed ShaikhHead of Corporate Banking Group

• Nabeel Waheed Shaikh has a BSc from Syracuse University, New York

• Joined Mashreq in 1996, from Bank of America, Pakistan where he spent

over 15 years and held various positions including Head of Corporate

Banking

Subroto SomHead of Retail Banking Group

• Subroto Som is a graduate of IIT Delhi and has an MBA from IIM

Ahmedabad

• Joined Mashreq in 2015 from the Boston Consulting Group

• Prior to this, he has experience at senior positions at Citibank,

Standard Chartered & Seoul First Bank

26

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage


Strategy




Accolades

27

Well Defined Strategic Objectives…

“To be the

region’s most progressive

bank enabling innovative

possibilities for our clients,

colleagues and

communities”

VISION

Strategic Objectives

Become primary bank & grow

‘New to Bank’

Enhance brand

Foster innovation & drive digital

transformation

Strategic cost management & middle

office rationalization

Enhance human capital

Leader in service excellence/ customer

experience

Ethical, regulatory, internal policy

compliance – zero tolerance

Additional risk taken into

consideration

Delivering superior service to clients

Actively contributing to the community

through responsible banking

Leading with innovation

Treating colleagues with dignity

and fairness

Pursuing opportunities that grow

shareholders’ value

Mission

Build longterm relationships by:

Recalibrate margins vis-à-vis

market benchmarks

28

Business Objectives

STRATEGY

Drive operational

efficiencies

▪ Leverage existing infrastructure to drive growth and returns

▪ Significantly improve efficiencies across the bank to bring cost/income ratio in

line with market

Strengthen risk

management and

asset quality

▪ Reduce charge-to-loans ratio in line with pre-crisis levels, through continued

focus on portfolio and asset quality

▪ Selective portfolio / asset sales as part of an ongoing portfolio balancing

strategy

Grow

international

contribution

▪ Support franchise client needs internationally and international client needs in

our franchise by providing solutions to corporate clients across network

▪ Provide cross border accessibility to clients, such as offshore booking location

for private and gold customers and non-resident proposition across the network

▪ Maintain momentum in our core South Asia FI market and build scale in Qatar,

Egypt and Africa

Accelerate

domestic growth

▪ Win new customers and increase customer penetration through a differentiated

customer centric, service oriented approach and focus on continued product

innovation

▪ Leverage balance sheet strength and liquidity position to grow market share

▪ Capitalize on leadership position in fee-generating businesses

Optimize balance

sheet

▪ Optimize liability mix to lower cost of funds and enhance margins

▪ Increase leverage and deploy liquid assets into higher yielding opportunities

29

Business segments outlook

Diversified earnings base with strong growth potential

Gross Loans portfolio split as of Dec 2016

28.5%

16.3%3.3%

11.7%

15.2%

0.6%

0.0%

6.5% 6.9%

11.6%

Govt / GRE

Personal

Financial institutions

Transport & Comm.

Services

Trade

Other

Other

Construction

Manufacturing

STRATEGY

Revenue split as of YE 2016 Asset split as of Dec 2016

27.3%

21.4%

9.1%

6.2%7.1%

5.2%

23.7%53.9%13.6%

13.0%

7.1%

12.5%

Cash and balances with CB

Loans & Advances

Interbank deposits & balances

Other assets

Financial Investments

Retail

International

Corporate

Treasury &

Capital markets

Insurance

Others

Islamic

(AED 64.3 bn)

(AED 6.2 bn) (AED 122.8 bn)

▪ UAE Retail: Pick up in mortgage business; strong growth in

cards and payment business and wealth management

▪ UAE Corporate: Strong growth from trade, manufacturing,

tourism and logistics driving overall UAE GDP in the coming

years leading to increased demand for credit & trade services

▪ International Banking: Robust regional trade flows and

lending opportunities in higher growth countries such as Qatar

and Egypt

▪ Insurance: As the largest insurance company in the UAE,

Mashreq’s Oman Insurance Company (OIC) subsidiary is

expected to grow in line with the market

30

Strategic advantage through innovation

STRATEGY

Innovation

Mashreq was the first bank in the UAE to:

▪ Introduce consumer loans

▪ Install ATM cash dispensers

▪ Issue debit/credit cards

▪ Introduce Point-of-Sale terminals

▪ Offer Visa Connectivity across the world

▪ Centralize foreign trade services

▪ Offer a direct banking centre

▪ Introduce a comprehensive corporate cash management solution offering (GTS)

▪ Introduce “Tap & Go”, mobile NFC sticker payment method

▪ Introduce “E cube retail branch” concept in distribution

▪ Launch UAE’s first fully EMV Chip & PIN compliant mobile POS solution

▪ Launch i-mashreq - the first fully automated branch in the region

▪ Integrate Emirates ID with bank account and allow its usage as a Debit Card

31

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage


Strategy




Accolades

32

Solid performance over the past decade

FINANCIAL TRACK RECORD

Net loans and advances (AED billion)

Net profit (AED million)

Growth & Expansion Crisis & Risk Management Accelerated Growth & Profitability

1,9261,806

1,312

8208031,000

1,6431,901

1,571

2,4022,401

2006 2007 2008 20112010 201420122009 2013 20162015

+2%

61605850

41384148

55

3529

2012 201320102009 2011 2014

+8%

2016201520082006 2007

▪ Growth-led strategy with a focus on

portfolio quality, balance sheet structure

optimization, improved cost efficiencies and

higher infrastructure utilization

▪ Prudent management focused on strengthening the bank,

de-risking and conserving capital

– Balance sheet de-risking and de-leveraging

– Strengthening capital and liquidity position

– Enhancing risk management functions

▪ Significant expansion on the back of

buoyant macroeconomic conditions

33

Rapid improvement in performance over the last four years


Loans & Advances (AED billion) Customer deposits (AED billion)

Total Revenue (AED billion)

61.060.258.050.4

7%

2016201520142013

77.073.668.558.6

10%

2016201520142013

Net profit (AED billion)

2,445 3,125 3,423 3,567

2,3932,720 2,555 2,602

8%

2016

6,169

2015

5,978

2014

5,845

2013

4,837

Net interest income1)Fee and other income

13.1% 15.7%ROE

1,9262,4022,401

1,806

2%

2016201520142013

1 NII component booked under net investment income as per IFRS, reclassified under NII

14.2% 10.6%

34

Key financial ratios


Tier I Capital Ratio

Total Capital Ratio

Efficiency Ratio

Liquid Assets to Total Assets

Advances to Deposits

NPL Coverage Ratio

NPL to Gross Advances

ROA

Net Interest Margin

ROE

Capital adequacy

Liquidity

Asset quality

Performance

15.9%

16.9%

41.4%

29.9%

81.7%

31 Dec 2015

145.0%

2.8%

2.2%

3.60%

14.2%

42.8%

16.0%

16.9%

39.0%

30.4%

79.2%

31 Dec 2016

151.1%

3.1%

1.6%

3.52%

10.6%

42.2%Fee and other income to total income

15.7%

16.7%

38.3%

26.8%

82.8%

30 Sep 2016

136.0%

3.6%

1.7%

3.59%

10.9%

42.6%

35

Well-funded balance sheet …


Operating leverage

Liquidity

30.4%

2015 2016

29.9%

2014

27.7%

2013

26.5%

86.1%81.7%

2016

79.2%

20152014

84.8%

2013

Loan to Deposits

Funding as of 31 December 2016

74.6%

9.9%

8.6%

4.8%

0.6%

1.5%

Liquid Assets to Total Assets

Customer deposits

Due to banks

Insurance Funds

Medium term loans

Other liabilities

Repo

7.6%

23.4%7.2%

28.7%

2.5%

22.4%

8.2%

Others

Retail

Insurance

Islamic

Treasury &

Capital markets

Corporate

International

(AED 103.3 bn)

36

Capital adequacy (%)

Risk weighted assets Tier 1 and Tier 2 capital

…along with stable adequacy

16.0%16.9% 16.9%

20162015

15.3%16.6%16.4%

2014

15.9%

2013

18.1%

Total Capital ratio

Tier I Capital ratio

118,874113,514106,62888,975

2013 20152014 2016

14,578 16,277 18,001 18,965

1,178

2015

19,179

1,4501,568

17,726

2013

16,146

2014 2016

20,042

1,077

Tier 2 capitalTier 1 capital


37

+6.6%

123

115

+8.2%

DXB AUH

1,880 730 1,150

1,737 655 1,083

61

60

+1.4%+4.9%

DXB AUH

1,144 476 668

1,091 435 656

77

74

+4.6%+7.4%

DXB AUH

1,241 506 734

1,155 466 689

+3.2%

6.2

6.0

+0.6%

DXB AUH

65.7 27.9 37.8

65.3 28.2 37.1

Total assets (AED bn)

Peer group1) Mashreq

Total deposits (AED bn)


Total loans (AED bn)

Total revenue (AED bn)



Dec ‘15

11.4% 6.3% 9.5% 1.7%

8.8% 6.5% -0.8% 1.7%

Dec ‘16

Dec ‘15

Dec ‘16

Dec ‘15

Dec ‘16

FY ’15

FY ’16

Market performance in 2016 – Outperforming the market in Revenue Growth


SOURCE: Banks’ financial statements

1 Peer group includes 9 banks: ENBD, NBAD, ADCB, FGB, CBD, UNB, ADIB, DIB and RAK

38

Market position in UAE

Bank

NBAD

UNB

Total assets

RAK

ADIB

Mashreq

43

64

104

122

123

175

245

258

421

448

Total loans (net) Total deposits

Growth vs

Dec ’16

CBD

10%

11%

2%

3%

7%

17%

13%

3%

8%

5% 29

78

42

74

157

115

61

158

201

290 7%

8%

8%

0%

1%

18%

3%

(3%)

5%

3%

149

77

78

44

311

253

122

99

29

155

8%

8%

4%

4%

5%

11%

8%

8%

5%

6%

Growth vs

Dec ’16

Growth vs

Dec ’16

ENBD

FGB

ADCB

DIB

FINANCIAL TRACK RECORD – DECEMBER’16 (AED BILLION)

http://images.google.com/imgres?imgurl=http://www.topnews.in/files/Union National Bank2.gif&imgrefurl=http://www.topnews.in/tree/Abu+Dhabi/Abu+Dhabi&usg=__JeYF5fVPWB384zayT9-xEWKtLys=&h=100&w=100&sz=5&hl=en&start=40&um=1&itbs=1&tbnid=6cn_dFdCx8GHPM:&tbnh=82&tbnw=82&prev=/images?q=union+national+bank+uae+logo&start=20&um=1&hl=en&sa=N&ndsp=20&tbs=isch:1

39

Market position in UAE

(7%)

(3%)

5%

3%

4%

2%

2%

3%

5% 0.7

1.0

5.3

1.9

3.6

1.6

6.0

4.1

2.0

7.2 2%

Bank Revenue – FY ’16 (AED bn)

YoY growth

Bank Net profit – FY ’16 (AED bn)

YoY growth

(6%)

(15%)

(20%)

1%

1%

1%

0%

(16%)

(53%)

NBAD

UNB

RAK

ADIB

Mashreq

CBD

NBAD

UNB

RAK

ADIB

CBD

ENBD

FGB

ADCB

FGB

ADCB

ENBD

DIB DIB

Mashreq

14.9

6.2

5.4

2.5

8.5

9.6

10.8

6.8

3.5

3.8

FINANCIAL TRACK RECORD – FY ‘16 (AED BILLION)

(3%)



40

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage


Strategy




Accolades

41

Trading performance over the last 1 year

Mashreq’s trading price (1 March 2016 – 1 March 2017)

Mar ‘16 Mar ‘17

7582

3,6213,287

0

20

40

60

80

100

120

140

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

DFMMashreq

Mashreq DFM General Index

Share performance

Mashreq – 12 months (8.5%)

DFM GI – 12 months 10.2%

P/E (1 Mar ’17) 6.9x

P/B (1 Mar ’17) 0.7x

Share details

Currency AED

Par value/ share 10

Number of shares (Mn) 177.5

Market Cap (1 Mar ’17) (Mn) 13,315

TRADING HISTORY

EPS as of YE 2016 and Book value as of December 2016

SOURCE: DFM

42

1,926

2,4022,401

1,806

1,312

710710676676643

0

500

1,000

1,500

2,000

2,500

201420132012 2015 2016

Progressive dividend policy based on solid performance

Net profit and Cash Payout (AED million) and Cash dividend (%)

Cash payoutNet profit

7.76 10.8510.68 13.53 13.53EPS

(AED)

1)

78.28 105.6685.45 91.04 100.09BVPS

(AED)

DIVIDENDS

40%40%40%38%

0

5

10

15

20

25

30

35

40

20%

Cash dividend (%)

1 Plus 5% Bonus Shares

43

Rated by four rating agencies

Rating Agency Long term Short term

Baa2 P-2

BBB+ A-2

A F1

A- A1

CREDIT RATING

44

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage


Strategy




Accolades

45

Mashreq is regulated by the UAE Central Bank and follows international

banking standards

Basel II and III Accounting Standard

Bank monitoring - liquidity Credit Limit

CORPORATE GOVERNANCE

Supervisory Authority

▪ Mashreq’s home supervisory authority is the UAE Central Bank which is responsible for

licensing, monitoring and supervising banks, finance companies and exchange companies in

the UAE

▪ Internationally, Mashreq comes under the purview of respective country regulators such as

the Federal Reserve and NY-SBD in the USA and Prudential Regulation Authority & Financial

Conduct Authority in the UK

▪ Lending limits fixed by the Central Bank in relation to capital:

– Lending to large private borrowers: 25% (10% for funded)

– Commercial entities of Federal Govts and UAE Local Govts:

25% (15% for funded), 100% aggregate

– UAE Local Govts and non-Commercial entities: 25%

Individual, 100% aggregate

▪ Cash ratio requirements (1% on Time Deposits and 14% on

Demand Savings and Call deposits)

▪ Maintenance of 1:1 ratio is mandatory, i.e. utilization of funds

should not exceed stable sources

▪ As per Basel III, liquidity coverage ratio (Jan 2016) and net stable

funding ratio (Jan 2018) is under implementation; in the meantime

Central Bank has introduced ‘eligible liquid assets ratio (ELAR)’

▪ Mashreq has applied to Central Bank to be allowed to use Basel III

standards for LCR reporting

▪ Banks are expected to follow the Standardized Approach for both

credit and operational risks. Migration to Foundation Internal

Ratings Based Approach (“IRB”) for Credit Risk is expected

▪ Basel III is under implementation in line with the Basel III schedule

(by 2019)

▪ The Central Bank made it mandatory in 2000 for all Banks to

publish their Annual Financial Statement as per International

Financial Reporting Standards (IFRS)

▪ The CB has also recently initiated impact analysis on IFRS 9

implementation – impact study is underway and we will be ready

for implementation in 2018

46

Board and Management Committees

CORPORATE GOVERNANCE

Chairman, Vice-Chairman and 4 Directors form Mashreq’s Board. Two of the six board members are independent

CEO is the only executive director

The Board of Directors meet at least once every quarter

Management issues are raised at Board level where the bank’s senior management presents details to the Board

Board has delegated certain powers to CEO for effective day-to-day management

Information

Security

Committee

Audit &

Compliance

Committee

Risk

Committee

ALCO

Committee

Investment

Committee

Technology

Steering

Committee

Human

Resources

Committee

Management Supervision

Executive Management Committee

Board Supervision

Executive Management Committee (reporting to the CEO) discusses and debates bank-wide issues, develops

strategic plans for the Board’s approval and takes decisions on pan-bank issues.

Remuneration Committee Audit Committee

47

Mashreq

Investor

Presentation

UAE economy

Mashreq heritage


Strategy




Accolades

48

Key Awards

ACCOLADES

Gallup Great Workplace Award, 2016, 2015, 2014

CSR Label – Dubai Chambers – 2016, 2015,

2014, 2013, 2012 & 2011

Banker ME Product Awards

▪ Best Mobile Banking Service – Snapp

▪ Best Customer Loyalty Programme – Salaam

▪ Best Premium Credit Card – Solitaire

▪ Best Trade Finance Offering – Trade Finance

▪ Best Real Estate Advisory

Global Finance Digital Bank Conference

▪ Best corporate digital bank in the U.A.E

▪ Best consumer digital bank in Qatar

▪ Best consumer digital bank in the U.A.E

Banker ME Industry Awards

▪ Best Regional Retail Bank 2016, 2015, 2014

▪ Best Banking Innovation

▪ Best Real Estate Finance

Euromoney’s 13th annual private banking survey

▪ Best Private Bank for Super Affluent Clients in the

UAE

MEFTECH Innovation Awards

▪ Best Customer Experience Initiative

Annual Islamic Business & Finance Awards

▪ Best Innovation in Islamic Banking Solution

World Finance Awards

▪ Best Digital Bank – UAE

▪ Best Mobile Banking Application – UAE

Daman Corporate Health Awards

▪ Best Corporate Health and Wellness Organization

Award

Gulf Business Awards

▪ Business Leader of the Year – Banking Industry

(H.E. AbdulAziz Al Ghurair)

Retail Banking Conference & Awards: London

▪ Middle East Retail Bank of the Year

Global Banking & Finance Review Awards 2016

▪ Best Retail Bank UAE

▪ Best Customer Experience UAE

▪ Best Digital Bank UAE

▪ Best Corporate Bank Qatar

Cards & Payment Middle East 2016

▪ Best Credit Card

▪ Most Improved Payment Card

Islamic Finance News Awards

▪ Corporate Finance Deal of the Year – ENOC US$

1.5 Billion Syndicated Loan Facility

▪ Syndicated Deal of the Year – Aujan Coca Cola

Beverages AED900 Million Commodity Murabahah

Financing

mashreq...source: emirates nbd, federal customs authority, hotel and airport authorities of uae, dp...

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