Emirates NBD - H1 2016 Results Presentation

Transcription

1. H1 2016 Results Presentation 18 July 2016
2. 2 Important Information Disclaimer The material in this presentation is general background information about the activities of Emirates NBD Bank PJSC (Emirates NBD), current at the date of this presentation, and believed by Emirates NBD to be accurate and true. It is information given in summary form and does not purport to be complete. Some of the information that is relied upon by Emirates NBD is obtained from sources believed to be reliable, but Emirates NBD (nor any of its directors, officers, employees, agents, affiliates or subsidiaries) does not guarantee the accuracy or completeness of such information, and disclaims all liability or responsibility for any loss or damage caused by any act taken as a result of the information. The information in this presentation is not intended to be relied upon as advice or a recommendation to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. An investor should seek independent professional advice when deciding if an investment is appropriate. Due to rounding, numbers and percentages presented throughout this presentation may not add up precisely to the totals provided. Forward Looking Statements Certain matters discussed in this presentation about the future performance of Emirates NBD or members of its group (the Group), including without limitation, future revenues, earnings, strategies, prospects and all other statements that are not purely historical, constitute “forward-looking statements”. Such forward-looking statements are based on current expectations or beliefs, as well as assumptions about future events, made from information currently available. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “seek”, “believe”, “will”, “may”, “should”, “would”, “could” or other words of similar meaning. Undue reliance should not be placed on any such statements in making an investment decision, as forward-looking statements, by their nature, are subject to known and unknown risks and uncertainties that could cause actual results, as well as 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, such as 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 statement, including 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.
3. 3 Emirates NBD delivered a solid set of results in H1-16 amid a challenging environment H1 2016 at a glance 2016 Macro themes H1 2016 Profitability Credit Quality Capital & Liquidity Assets Net profit • Resilience of UAE economy due to non-oil sectors AED 3.7 Bn +12% y-o-y Net interest margin 2.58% 2.55 – 2.65% range Cost-to-income ratio 32.3% 33% management target NPL ratio 6.6% Coverage ratio 118.5% Tier 1 ratio 17.8% Capital adequacy ratio 20.5% AD ratio 96.1% Loan growth (net) Regional vs. revised 2016 guidance 6% ytd + - 90-100% management target mid-to-high single digit Global • Recovering US economy • Regional stock market movement largely correlated to rebound in oil price. • Rebound in oil price from $30 per barrel in January to around $50 per barrel in June • Strong dollar impact on Dubai tourism counterbalanced by growth in visitors from new routes • Global stock market volatility dampened investor confidence • Tighter banking system liquidity due to government deposits outflows; eased via international deposits & debt issuances • Slowdown in global growth contributed to weaker business and investor sentiment • Focus continues on SME credit quality • UK’s decision to leave the E.U.
4. 4 H1-16 Financial Results Highlights • Net profit of AED 3,718 million for H1-16 improved 12% y-o-y • Net interest income improved 2% y-o-y as loan growth more than offset NIM contraction • Non-interest income remained flat y-o-y as higher core fee income, particularly from foreign exchange, helped offset lower income from the sale of properties • Costs grew 11% y-o-y on the back of late 2015 growth in anticipation of increased business volumes, which has since been contained in light of the new economic reality. Staff costs now falling as cost control measures implemented in Q1-16 take effect. Cost trends within guidance and continue to be tightly managed • Provisions of AED 1,456 million improved 27% y-o-y as cost of risk continues to normalize on the back of improving asset quality metrics • NPL ratio improved to 6.6% and coverage ratio strengthened to 118.5% • AD ratio of 96.1% within management range • NIMs declined to 2.58% as loan spreads did not keep pace with the higher cost of deposits Key Performance Indicators Better / Better / H2-15 (Worse) (Worse) AED Mn H1-16 H1-15 Net interest income Non-interest income Total income Operating expenses 5,099 2,572 7,671 (2,476) 4,982 2,573 7,555 (2,236) 2% (0%) 2% (11%) 5,260 2,414 7,674 (2,484) (3%) 7% (0%) (0%) 5,195 5,319 (2%) 5,190 0% (1,456) 3,739 (1,986) 3,333 27% 12% (1,420) 3,770 (2%) (1%) 61 75 (18%) 92 (33%) (82) (90) 9% (54) (52%) Net profit 3,718 3,317 12% 3,807 (2%) Cost: income ratio (%) Net interest margin (%) 32.3% 2.58% 29.6% 2.83% (2.7%) (0.25%) 32.4% 2.81% (0.1%) (0.23%) % 31-Dec-15 % Pre-impairment operating profit Impairment allowances Operating profit Share of profits from associates Taxation charge AED Bn 30-Jun-16 30-Jun-15 Total assets 425.8 388.1 10% 406.6 5% Loans 286.0 256.2 12% 270.6 6% Deposits 297.6 274.4 8% 287.2 4% AD ratio (%) 96.1% 93.3% (2.8%) 94.2% (1.9%) NPL ratio (%) 6.6% 7.4% 0.8% 7.1% 0.5%
5. 5 Q2-16 Financial Results Highlights Highlights • Net profit of AED 1,910 million for Q2-16 improved 16% y-o-y and 6% q-o-q • Net interest income improved 2% y-o-y due to loan growth and higher EIBOR, and remained flat q-o-q as loan growth was offset by NIM contraction • Non-interest income improved 1% y-o-y due to higher core fee income and declined 10% q-o-q due to lower one-off gains from the sale of investment securities • • Costs increased 6% y-o-y on the back of late 2015 growth in anticipation of increased business volumes, which has since been contained in light of the new economic reality. Costs improved 2% q-o-q as cost control measures implemented in Q1-16 take effect Provisions of AED 626 million improved 30% y-o-y and 25% q-o-q as cost of risk continues to normalize helped by higher writebacks and recoveries Key Performance Indicators AED Mn Q2-16 Q2-15 Better / (Worse) Q1-16 Better / (Worse) Net interest income Non-interest income Total income Operating expenses 2,544 1,221 3,766 (1,226) 2,497 1,213 3,710 (1,157) 2% 1% 2% (6%) 2,555 1,350 3,905 (1,250) (0%) (10%) (4%) 2% Pre-impairment operating profit 2,540 2,553 (1%) 2,655 (4%) Impairment allowances Operating profit (626) 1,914 (901) 1,652 30% 16% (829) 1,826 25% 5% 34 39 (11%) 27 28% (38) (45) 16% (45) 16% Net profit 1,910 1,646 16% 1,808 6% Cost: income ratio (%) Net interest margin (%) 32.6% 2.55% 31.2% 2.76% (1.4%) (0.21%) 32.0% 2.62% 0.6% (0.07%) % 31-Mar-16 % Share of profits from associates Taxation charge AED Bn 30-Jun-16 31-Dec-15 • NPL ratio improved to 6.6% and coverage ratio strengthened to 118.5% Total assets 425.8 406.6 5% 414.5 3% • AD ratio of 96.1% within management range Loans 286.0 270.6 6% 279.1 2% • NIMs declined marginally to 2.55% in Q2-16 as loan spreads for retail and Islamic products did not keep pace with the higher cost of deposits Deposits 297.6 287.2 4% 290.9 2% AD ratio (%) 96.1% 94.2% (1.9%) 95.9% (0.2%) NPL ratio (%) 6.6% 7.1% 0.5% 6.9% 0.3%
6. 6 Net Interest Income Net Interest Margin (%) Highlights • NIMs declined to 2.58% in H1-16 and to 2.55% in Q2-16 • Loan spreads declined on retail and Islamic products as loan margins did not keep pace with rising EIBOR rates • • • Deposit spreads improved q-o-q as strong CASA balances helped offset higher EIBOR rates and declined marginally y-o-y due to higher fixed deposit balances Treasury spreads improved y-o-y due to more profitable deployment of excess liquidity NIM guidance revised down to 2.55-2.65% as loan spreads did not keep pace with the higher cost of deposits 2.95 2.91 2.90 2.83 2.83 2.76 2.75 2.78 2.85 2.80 2.85 2.76 2.77 2.82 2.75 2.62 2.58 2.63 2.55 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Qtrly NIM YTD NIM Net Interest Margin Drivers (%) Q2-16 vs. Q1-16 2.62 (0.05) (0.29) 0.01 (0.04) 0.08 0.00 2.58 2.55 (0.01) Q1 16 H1-16 vs. H1-15 2.83 Deposit Treasury Loan Spreads Spreads Spreads (0.01) Other Q2 16 Q1 15 Loan Deposit Treasury Spreads Spreads Spreads Other Q1 16
7. 7 Funding and Liquidity Highlights Advances to Deposit (AD) Ratio (%) • AD ratio of 96.1% within 90-100% management target range • Liquid assets* of AED 51.3 Bn as at H1-16 (13.7% of total liabilities) 99.2 • Debt & Sukuk term funding represent 12% of total liabilities • In H1 2016, AED 3.6 Bn debt matured and a AED 2.9 Bn club loan was repaid. This was replaced with AED 14.4 Bn raised via AED 5.4 Bn of private placements issued in 5 currencies, a AED 2.8 Bn sukuk issue and a AED 6.2 Bn club loan 97.2 95.3 95.6 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 95.9 96.1 Q1 16 Q2 16 94.2 93.3 • Maturity profile affords Emirates NBD ability to consider public and private debt issues opportunistically Composition of Liabilities/Debt Issued (%) 95.6 95.2 Q2 15 Q3 15 Target range Q4 15 AD Ratio Maturity Profile of Debt Issued (AED Bn) Liabilities (AED 374.2 Bn) Debt/Sukuk (AED 43.1 Bn) Banks 4% Others 5% Customer deposits 79% Debt/Sukuk 12% Maturity Profile of Debt/Sukuk Issued Syn bank borrow. 2% Loan secur. 1% 100% = AED 43.1 Bn 12.7 9.7 Sukuk 2% EMTNs 7% 2016 4.0 3.3 2.7 4.6 3.6 1.6 2017 2018 2019 *Including cash and deposits with Central Banks but excluding interbank balances and liquid investment securities 2020 2021 2022 2023 0.6 0.1 0.1 2024 2025 2026
8. 8 Loan and Deposit Trends Highlights Trend in Gross Loans by Type (AED Bn) +6% • Gross loans grew 6% since end 2015 with good growth in Corporate and Islamic lending • Islamic financing grew 12% since end 2015 due to growth in trade and services sectors and retail • Corporate lending grew 5% since end 2015 due to growth in trade and manufacturing sectors 262 265 272 196 197 29 • Deposits increased 2% q-o-q and 8% y-o-y 285 207 209 215 221 225 28 29 30 30 31 40 1 43 1 46 1 48 51 54 0 0 0 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 271 201 29 200 33 27 202 27 36 1 38 1 39 1 38 1 Q1 14 Q2 14 Q3 14 Q4 14 Corporate 310 279 267 • Consumer lending grew 3% since end 2015 across a range of products 303 294 1 Consumer Islamic* Treasury/Other Trend in Deposits by Type (AED Bn) • CASA deposits grew 6% since end 2015 and represent 57% of total deposits, up from 43% at end 2012 +8% 252 4 253 4 250 107 105 97 5 258 5 260 5 103 99 287 7 291 6 298 7 99 121 113 122 274 6 269 6 110 1 141 144 148 151 157 159 164 160 172 169 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Other * Gross Islamic Financing Net of Deferred Income +2% Time CASA +2%
9. 9 Non-Interest Income Highlights Composition of Non Interest Income (AED Mn) • Non-interest income held steady y-o-y and improved 7% compared to the previous half year AED Mn H1-16 H1-15 Better / (Worse) H2-15 Better / (Worse) • Core fee income improved 5% y-o-y and 6% compared to the previous half year driven by growth in credit card and foreign exchange volumes Core gross fee income Fees & commission expense Core fee income 2,599 2,457 6% 2,440 7% (416) (369) (13%) (371) (12%) 2,183 2,088 5% 2,069 6% • Property income declined on lower demand for bulk and individual property sales compared to 2015 Property income / (loss) Investment securities & other income 65 234 (72%) 87 (25%) 324 251 29% 259 25% • Income from Investment Securities improved y-o-y due to gains from the sale of investments Total Non Interest Income 2,572 2,573 (0%) 2,415 7% Trend in Core Gross Fee Income (AED Mn) +11% 1,268 1,287 1,313 291 58 372 49 366 49 364 55 625 647 1 666 696 726 179 176 181 176 168 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1,187 1,172 312 72 Forex, Rates & Other Fee Income Brokerage & AM fees Trade finance +2%
10. 10 Operating Costs and Efficiency Highlights Cost to Income Ratio (%) 33.3 • In Q2-16, costs improved by 2% q-o-q following cost control measures implemented in Q1-16 and increased by 6% y-o-y on the back of late 2015 growth in anticipation of increased business volumes, which has since been contained in light of the new economic reality • Cost-to-Income Ratio rose by 0.6% q-o-q to 32.6% as lower exceptional income compared to the preceding quarter more than offset cost reductions • Adjusted for one-offs, the Cost-to-Income Ratio for H1-16 was 33.0% 32.0 31.2 31.3 32.6 31.0 32.3 30.1 29.6 1 Q2 15 Q3 15 Q4 15 Target CI Ratio (YTD) Q1 16 Q2 16 CI Ratio Cost Composition (AED Mn) • Cost-to-Income Ratio expected to remain within 33% management target as recent cost reduction measures continue to take effect +6% 1,357 1,157 759 223 89 1,250 1,226 859 848 819 97 116 1 286 88 99 215 98 97 212 Q4 15 Q1 16 Q2 16 1,126 755 85 188 93 90 Q2 15 Q3 15 Staff Cost Occupancy Cost Depr & Amort Other Cost -2%
11. 11 Credit Quality Highlights Impaired Loan & Coverage Ratios (%) • NPL ratio improved to 6.6% • Impaired loans improved to AED 20.4 Bn helped by AED 960 Mn of write backs & recoveries in H1-16 85.4 64.7 • 1H-16 cost of risk at 94 bps (annualized) continued to normalize in Q2-16 as net impairment charge of AED 1,456 million in H1-16 improved 27% y-o-y 12.6 3.5 3.1 10.0 Q2 14 99.6 103.2 7.9 7.8 114.5 111.5 113.5 7.4 7.1 7.1 6.9 118.5 70.3 13.5 • Coverage ratio increased to 118.5% • Total portfolio impairment allowances amount to AED 7.1 Bn or 3.16% of credit RWAs 92.0 109.0 6.6 9.5 Q3 14 Q4 14 Q1 15 Impact of DW % Q2 15 Q3 15 Q4 15 Q1 16 Coverage ratio, excl. DW % NPL ratio Q2 16 Coverage ratio Impaired Loans and Impairment Allowances (AED Bn) Impaired Loans Impairment Allowances 34.4 8.5 21.1 21.2 20.6 20.3 20.8 21.0 20.4 15.3 15.4 15.2 14.4 14.4 14.3 14.1 -3% 15.8 3.8 6.1 0.2 0.4 0.1 5.3 0.5 0.1 5.2 4.9 Q3 14 Q4 14 Q1 15 Q2 15 0.4 0.1 0.6 0.5 0.1 5.3 5.8 Q3 15 Q4 15 0.1 5.9 DW 24.2 0.4 15.2 0.7 Q1 16 0.1 21.0 16.2 0.6 0.1 5.5 3.9 4.5 0.1 4.2 Q2 16 Q3 14 Q4 14 Core Corporate Retail 0.5 0.1 Islamic 21.9 22.5 16.9 17.6 4.3 0.5 0.1 Q1 15 4.3 Q2 15 0.6 0.1 23.3 23.2 17.8 17.8 0.7 4.7 0.1 4.6 Q3 15 Q4 15 Other Debt Securities 0.7 0.1 23.9 24.1 18.0 18.5 0.8 5.0 0.1 4.8 Q1 16 Q2 16 +1% 0.8 0.1
12. 12 Capital Adequacy Highlights Capitalisation 21 .0 • In Q2-16, Tier 1 ratio and CAR increased by 0.2% to 17.8% and 20.5% respectively • Increase in Tier 1 capital from retained earnings more than offset modest increase in risk weighted assets 18.0 20.9 18.0 AED Bn Capital as at 31-Dec-2015 Tier 1 Tier 2 50.9 3.7 - 3.7 (2.2) - (2.2) Tier 1 Issuance/Repayment - - - Tier 2 Issuance/Repayment - - - Amortisation of Tier 2 - - - Interest on T1 securities (0.3) - (0.3) Goodwill 0.1 - 0.1 Other Capital as at 30-Jun-2016 17.6 47.5 6.8 49.1 6.8 50.9 6.7 50.2 6.6 40.8 42.3 44.2 43.6 45.2 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 T1 Total 6.7 FY 2015 dividend paid 18.0 T1 % CAR % Risk Weighted Assets – Basel II (AED Bn) 44.2 Net profits generated 20.5 20.3 17.8 51.8 6.7 T2 Capital Movements 20.7 (0.4) (0.0) (0.4) 45.2 51.8 6.7 +12% 226.7 21.3 3.9 235.3 21.3 4.5 245.5 24.1 4.2 247.7 24.1 3.9 253.5 24.1 5.1 201.5 209.5 217.2 219.6 224.3 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Operational Risk Market Risk Credit Risk
13. 13 Divisional Performance Balance Sheet Trends +7% • In H1-16, fee income accounted for 39% of total RBWM AED Bn Revenue Trends AED Mn • RBWM revenues grew 1% q-o-q Retail Banking & Wealth Management revenue • Retail loans grew by 5% and deposits by 7% from end 2015 +1% +5% 113.6 121.1 • The bank has improved its distribution capabilities as part of its channel optimization strategy and had 556 ATMs and 97 branches as at 30-Jun-16 • RBWM offers an award winning ‘best-in-class’ digital banking solution with innovative services such as DirectRemit, Mobile Cheque Deposit and FlexiLoan; and plans to launch UAE’s first digital bank for millenials 35.9 34.0 Q4 15 Loans Q2 16 Deposits Balance Sheet Trends • Financing receivables grew 13% from end 2015 across AED Bn +7% • Islamic Banking revenue grew 2% q-o-q 1,420 1,513 1,522 547 595 583 873 918 940 Q2 15 Q1 16 Q2 16 NFI NII Revenue Trends AED Mn +2% Islamic Banking a range of products +13% • Customer accounts increased by 7% from end 2015 • As at 30-Jun-16, EI had 61 branches and an ATM & CDM network of 190 34.9 39.3 • Emirates Islamic successfully issued $750m sukuk. This stand-alone issue generated USD 2.25 Bn of demand which allowed EI to upsize the deal whilst tightening pricing Q4 15 Financing receivables 39.6 41.9 552 144 409 Q2 16 Q2 15 Customer accounts 602 613 154 171 448 442 Q1 16 NFI Q2 16 NII
14. 14 Divisional Performance (cont’d) • Wholesale Banking revenues improved 5% q-o-q Wholesale Banking • Loans grew 4% from end 2015 • Deposits declined 4% from end 2015, reflecting continued efforts to reduce the average cost of funding while maintaining liquidity at optimum levels • Focus in 2016 continues to be on enhancing customer service quality in key sectors, share of wallet, increased cross-sell of Treasury and Investment Banking products and larger Cash Management and Trade Finance penetration Balance Sheet Trends AED Bn -4% +4% 200.8 Global Markets & Treasury • Sales revenues saw strong growth due to higher volumes in Interest Rate hedging products, Foreign Exchange & Fixed Income sales • Trading and Investment revenues improved as both Credit Trading and FX Trading delivered a strong performance despite challenging market conditions • Global Funding raised AED 14.4 Bn of term debt via AED 5.4 Bn of private placements, a AED 2.8 Bn of sukuk issuance and an AED 6.2 Bn club deal +5% 208.1 1,240 358 106.7 1,095 1,146 317 352 778 794 102.5 883 Q4 15 Loans • GM&T revenues declined 26% q-o-q Revenue Trends AED Mn Q2 16 Deposits Q2 15 Q1 16 Q2 16 NFI NII Revenue Trends AED Mn -26% 59 142 159 118 137 126 22 -7 -84 Q2 15 Q1 16 Q2 16 NFI NII
15. Investor Relations PO Box 777 Emirates NBD Head Office , 4th Floor Dubai, UAE Tel: +971 4 201 2606 Email: IR@emiratesnbd.com