Investor Presentation December 2014
Contents I. UNB Introduction 1 II. UAE Economy and Banking Industry 3 III. UNB Business Overview 5 IV. Financial Highlights and Performance 11 V. Awards and Certifications 16
I. UNB Introduction
UNB Key Highlights Majority ownership (50%) and strong support from the Government of Abu Dhabi Stable and conservative management Demonstrated consistent performance of a time tested strategy, even in a challenging environment Reaffirmed strong ratings with stable outlook Diversified loan book and adequate provisioning High capitalization Strong CAR and Tier I ratio of 19.9% and 18.7% respectively Strong fundamentals, consistent strategy and management track record supporting sustainable growth 1
Overview of UNB Overview Ownership Structure Established in 1982 and headquartered in Abu Dhabi Joint Abu Dhabi and Dubai Government ownership Listed on the Abu Dhabi Securities Exchange (ADX) Provides a full array of wholesale and retail banking services through a network of 72 branches in UAE 5 th largest local commercial bank (excluding Islamic Financial Institutions) in UAE in terms of loans and advances. International footprint in China,Egypt, Kuwait and Qatar Over 2,400 employees as at 31 December 2014 Market capitalization of AED 16.0 Billion (USD 4.3 Billion) as at 31 December 2014 Government of Dubai (through ICD) 10% (1) Public Stockholders 40% Government of Abu Dhabi (through ADIC) 50% (1) Strong Ratings Constantly Maintained Group Operating Structure A1 99.0% 85.0% 96.6% A+ 2002 2006 2006 Rep office in China Branch in Qatar Financial Center Branch in Kuwait 2008 2009 2012 Note: (1) ADIC: Abu Dhabi Investment Council. ICD: Investment Corporation of Dubai. 2
II. UAE Economy and Banking Industry
UAE Economy Key Facts - UAE Gross Domestic Product By sector A Federation of seven emirates established in 1971 Second largest economy in the GCC Estimated Population 8.4 million in 2014 Country Rating: Moody s (Aa2 stable) 2 Seventh Largest oil reserves (8% of global share) 2 Nominal GDP (FY 2014) at USD 420 billion; Real GDP growth for 2014 1 was 4.6% and 2015f is estimated at 3.3%. Key Facts Abu Dhabi 1 Tourism & Hospitality, 7% Others, 3% Manufacturing, 10% Trade, 13% Source: UAE Central Bank as at 31 Dec 2014 Oil and Gas, 29% Construction, 12% Financial Sector, 8% Government Services, 7% Real Estate, 11% Largest Emirate in UAE accounting for more than 80% of country s total land area Holds most of the country s oil reserves Credit Rating: Aa2 (Moody s)/aa (Fitch)/ AA (S&P) 1 Estimated Population 3.3 million in 2014 Nominal GDP: US$ 280 billion in 2014, Real GDP growth 5.6% 4 3 100% 80% 60% 40% 20% 0% 40% 39% 29% 28% 4.7% 5.2% 4.6% 3.3% 60% 61% 71% 72% 2015 f Non Oil Oil Real GDP Growth Rate 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Source: 1 Economic Intelligence Unit (EIU), 2 Energy Information Administration, 3 Standard and Poor and 4 Moody s Source: Economic Intelligence Unit 3
UAE Banking Sector Snapshot Capital Adequacy Ratio AED billion Loans and Deposits Growth 21.0% 19.3% 18.1% 1,099 CAGR 1,168 1,179 1,279 1,284 1,421 Loans & Advances Deposits NPL to Gross Loan Ratio Loan to Deposit Ratio 10.3% 94.1% 9.2% 8.7% 92.2% 90.4% Source: UAE Central Bank and Moody s Banking system outlook UAE 2014 4
III. UNB Business Overview
Business Lines AED million, as at 31 Dec 2014, unless otherwise stated Corporate Banking Consumer Banking International & Investment Banking Islamic Banking UNB-E and unallocated items Assets (AED billion) Share of total (%) 33.4 36% (1) 15.0 16% (1) 33.3 36% (1) 6.2 7% (1) 5.5 5% (1) Operating Income 1,078 1,340 515 324 244 Share of total (%) 31% (1) 38% (1) 15% (1) 9% (1) 7% (1) Net Profit 754 563 386 221 97 Share of total (%) 37% (1) 28% (1) 19% (1) 11% (1) 5% (1) Source: Financial Statements as at 31 December 2014. Note: (1) As at 31 December 2014, % of total including UNB-Egypt and unallocated items. 6
Business Lines Corporate Banking Comments Source of large and stable deposits. Long term relationships with GRE s. Sector wise specialist teams. Stable margins with increasing focus to grow un-funded business and related revenues. 32.5 Customer Assets (AED Billion) CAGR +1% 34.0 33.4 Operating Income (AED Million) CAGR -2% 1,129 1,113 1,078 19% 21% 23% 81% 79% 77% Net Interest Income Non Interest Income Operating Income Source: Financial Statements as at 31 December 2012, 2013 and 2014. 7
Business Lines Consumer Banking Comments 3rd largest local commercial bank(excluding Islamic financial institutions) in UAE in terms of branch Network with 72 branches. Improved risk parameters for the retail loan book. Customer Assets (AED Billion) CAGR +10% 15.0 Strong growth in SME lending and revenues. Top awards at the 2014 Banker Middle East Product Awards for Best Car Loan and Best Personal Loan. 12.5 13.3 Gross Loans- Product wise % Operating Income (AED million) Other Retail Loans 10% Home Mortgage Loans 1% Personal Loan 72% CAGR +10% 1,116 1,167 15% 18% 1,340 21% Credit Card 5% 85% 82% 79% Commercial SME Loan 11% Auto Loans 1% Net Interest Income Non Interest Income Operating Income Source: Financial Statements as at 31 December 2012, 2013 and 2014. 8
Business Lines International and Investment Banking Comments Assets (AED Billion) Active player in Syndicated loan space. Strong growth in Syndicated loan book in 2014. Actively manage liquidity to optimize returns. Investment portfolio increased in 2014 by 47% to AED 11.6 billion, comprising mainly of high quality fixed income issuances by regional and local issuers. CAGR +13% 26.3 25.4 33.3 Asset Breakup Operating Income (AED million) Investments 28% Loans 32% 425 42% CAGR +10% 463 515 25% 30% 58% 70% 75% Liquid assets 40% Net Interest Income Non Interest Income Operating Income Source: Financial Statements as at 31 December 2012, 2013 and 2014 9
Business Lines Islamic Banking Comments Islamic Financing (AED Billion) Growing product offering. Five new Islamic banking windows opened during 2014 to compliment 4 branches of Al Wifaq Finance Company. CAGR -4% 4.7 4.6 4.3 209 Operating Income (AED million) CAGR +25% 253 324 125 271 287 * (62) (34) * 199 * Due to Net fair value loss on investment properties of AED 53 million in 2013 (2012: AED 69 million) Source: Financial Statements as at 31 December 2012, 2013 and 2014 Income from Islamic Financing Non Financing Income Operating Income 10
IV. Financial Highlights and Performance
Financial Highlights AED in Million FY 13 FY 14 YoY% Operating Income 3,212 3,501 9% Net interest income and income from Islamic financing 2,603 2,670 3% Non interest income 609 831 36% Operating expenses (854) (955) (12%) Operating profit 2,358 2,546 8% Impairment loss on financial assets (net) (586) (492) 16% Income tax expenses (24) (33) (38%) Profit for the year 1,748 2,021 16% Source: Financial Statements as at 31 December 2012, 2013 and 2014 11
Balance Sheet Customer Loans Well diversified by product and industry Sustainable loan growth Highlights Customer Loans (AED Billion) CAGR:+6% 64.1 Selective lending with focus on long-term relationships Selective real estate corporate financing 57.3 60.0 4.7% Impaired Assets and Provisioning (%) 4.3% 3.8% As at 31 December 2014 Diversified Loan Book 78.6% 90.7% 97.2% Impairement Provisions / Non Performing Loans (%) Non Performing Loans / Gross Loans (%) Source: Financial Statements as at 31 December 2012, 2013 and 2014 12
Funding Structure Comments Funding Mix (AED Billion) Diversified funding mix, with Customers deposits constituting nearly three fourth of the funding. Improving deposit mix with higher share of CASA deposits. 87.1 87.5 93.5 2% 2% 2% 16% 18% 18% 9% 6% 7% 73% 74% 73% Deposits Borrowings Equity Others Total Funding Product-wise Deposit break-down (AED Billion) Sector-wise Deposit Break-down as at 31 Dec 2014 70 65.1 67.4 63.4 2% 1% 3% 15% 19% 20% Public Sector, 19% Retail, 14% Corporate, 30% 40 83% 80% 77% 10 Sovereign, 37% Time CASA Islamic Source: Financial Statements as at 31 December 2012, 2013 and 2014 13
Comfortable Liquidity Position Liquidity Position 100% 90% 92% 95% 80% 60% 40% 30% 27% 27% 20% *Liquid assets includes cash, Due from Banks and Investments As at 31 December 2014 By Rating Unrated 19% AAA to AA- 11% Loans to Deposit Ratio Investment Portfolio Liquid Assets to Total Assets* TOTAL : AED 11.6 Bn By Security Type Treasury Bills 16% Equity 2% B+ and below 21% A+ to A- 23% B+ to B- 0% BB+ to BB- 3% Source: Financial Statements as at 31 December 2012, 2013 and 2014 BBB+ to BBB- 23% Debt 82% 14
Shareholder Returns RoAE * RoAA 14.0% 13.9% 14.3% 2.2% 2.0% 1.9% * Excluding Tier I Capital Notes Net Profit (AED million) CAGR:+12% 23.2% Capital Adequacy Ratio 1,602 1,748 2,021 19.9% 19.9% 18.5% 18.7% 18.7% Dec 2012 Dec 2013 Dec 2014 Source: Financial Statements as at 31 December 2012, 2013 and 2014 Capital Adequacy Ratio Tier 1 Ratio 15
V. Awards and Certifications
Awards and Certifications - 2014 UNB was recognized as a Superbrand for 2014 for the 4 th consecutive year by the UAE Superbrand Council. UNB was awarded with the Asset Manager of the Year- UAE award by Global Investor/ISF at the 2014 Middle East Capital Market Summit. Dubai Human Development Appreciation Award at the 20th Business Excellence Award Ceremony held in Dubai, UAE. Two awards at the 2014 Banker Middle East Product Awards for Best Car Loan and Best Personal Loan. UNB & UNB Chief Executive Officer, received the Golden Jaguar International Award for exemplary business achievements demonstrating high professionalism from the Europe Business Assembly at an award ceremony held in Italy. UNB won the 2014 GCC Best Employer Brands Award at the Asian Leadership Awards. UNB won the Best Banking Group in UAE award at the World Finance Banking Awards 2014 16