First Abu Dhabi Bank: Financial Results IR Deck - Q4 2017

Transcription

1. Q4 /FY’17 FINANCIAL RESULTS IR DECK • Management Discussion & Analysis • Pro forma Financial Statements • Audited Financial Statements
2. Management Discussion & Analysis Report for the full-year ended 31 December 2017 (subject to approval of the financials by the Central Bank of the UAE) Please note that FAB pro forma consolidated financials at 31 December 2017 serve as the main basis of reference for our Management Discussion & Analysis Report (MDA) and Investor Relations presentation. FAB’s audited consolidated financial statements at 31 December 2017 are prepared on the basis that the FGB/NBAD merger was declared effective on 1st April 2017 with FGB being the accounting acquirer as per IFRS 3. Therefore, these financials reflect the consolidation of NBAD since 1st April 2017 only, while prior period comparative financial information relates to FGB.
3. th Abu Dhabi , 29 January 2018 Management Discussion and Analysis Report FAB proposes outstanding cash dividend of AED 0.70 per share Full year 2017 Group Net Profit at AED 10.92 Billion First Abu Dhabi Bank (FAB), the UAE’s largest bank and one of the world’s largest and safest financial institutions, reported its financial results for the full year ended 31 December 2017 today. Resilient performance in transitional year • • • • • • Full year 2017 Group Net Profit at AED 10.92 Billion, compared to AED 11.32 Billion in 2016 Adjusted Group Net Profit (excluding integration costs and merger-related amortisation of intangibles, totaling AED 601 Million in 2017) at AED 11.52 Billion, broadly in line with 2016 Adjusted Group Net Profit for the fourth quarter (excluding integration costs and merger-related amortisation of intangibles, totaling AED 336 Million) up 18% sequentially and 6% year-on-year 1 Earnings per Share (EPS ) at AED 0.96, compared to AED 1.0 in 2016 Group Revenue in the fourth quarter up 10% on the back of strong business momentum Full Year Group Revenue at AED 19.53 Billion, down 4% year-on-year amid softer market conditions and portfolio optimisation Cash dividend of AED 0.70 per share proposed in the first year • Board of Directors recommends the distribution of a cash dividend of AED 0.70 per share, implying total cash dividends of AED 7.6 Billion for 2017 – the highest combined dividend amount distributed by FGB and NBAD – up 11% compared to 2016 Integration exceeds expectations • • • • All planned milestones fully delivered as per integration agenda Around AED 500 Million of cost synergies already realised in integration year 1 Integration costs tightly controlled “Purchase Price Allocation” exercise is substantially complete Strong balance sheet and healthy ratios • • • • • • • Loans and advances at AED 330.5 Billion, up 1% quarter-on-quarter and 1% lower year-on-year Customer deposits at AED 395.8 Billion, up 4% both sequentially and year-on-year Highly comfortable liquidity position with loans-to-deposit ratio improving to 83.5% Cost-to-income ratio (excluding integration costs) at 27.7%, improving from 28.3% the previous year Healthy asset quality metrics with Non-Performing Loan ratio at 3.1% and provision coverage at 120% Solid profitability with Return on Tangible Equity at 14.8%, or 15.5% excluding integration costs Common Equity Tier-1 (CET1) ratio at 14.5%, comfortably in excess of regulatory requirements FY’17 Group Revenue AED 19.53 Billion 1 FY’17 Adjusted Group Net Profit AED Cost-to-Income Ratio 11.52 Billion (ex-integration costs) 27.7% EPS RoTE CET1 AED 0.96 14.8% 14.5% 1 Basic EPS based on attributable profit to equity shareholders’ excluding Tier-1 notes coupon and outstanding shares Page 2 of 11
4. FAB delivered a resilient performance in a transitional year with an Adjusted Group Net Profit at AED 11 .52 Billion in 2017, broadly in line with 2016. Group Revenues were 4% lower year-on-year mainly reflecting softer market conditions, and the Bank’s focus on portfolio optimisation to enhance risk-adjusted returns. This was offset by lower impairment charges compared to 2016, as well as disciplined cost control and the realisation of substantial synergies related to the merger. Commenting on the results, His Highness Sheikh Tahnoon Bin Zayed Al Nahyan, Chairman of FAB, said: “FAB’s 2017 financial results are a clear testament to the sound rationale behind the merger and clearly demonstrate that it was a well-planned and strategic decision, based on solid forward-looking, market perspective and insights. Our merger, which was officially inaugurated in early 2017, created the UAE’s largest bank, with the aim of actively supporting the UAE’s economy, through combining the solid expertise and strengths of both legacy banks’.” His Highness added: “At the end of our first year, we have created significant value for our shareholders, customers and employees despite challenging market conditions. Reflecting FAB’s continued focus on delivering top shareholder returns, the bank’s Board of Directors has recommended the distribution of a cash dividend of AED 0.70 per share for the financial year ended 31 December 2017. This implies total cash dividends of AED 7.6 Billion for FAB’s first year, up 11% compared to 2016. This is the highest combined dividend amount distributed by the legacy banks and further underscores the strategic rationale of the merger. The recommended dividend proposal is subject to shareholders approval at the Ordinary General Assembly Meeting which is proposed to be held in Abu Dhabi on Sunday, February 25th, 2018.” His Highness concluded: “As we continue to build on our success moving forward, our board and senior leadership are optimistic about our strategic direction for the future of FAB, and we are confident that we will continue to demonstrate sustained growth and meet our goals.” Abdulhamid Saeed, Group Chief Executive Officer of FAB, added: “We are proud to announce that FAB has achieved a resilient set of results in its first year, as the largest bank in the UAE. Our adjusted net profit for 2017, excluding integration costs and merger-related amortisation of intangibles (totaling AED 601 Million in 2017), amounted to AED 11.52 Billion, in line with the combined profit of both legacy banks in 2016, despite a challenging global operating environment.” “FAB has moved significantly ahead in its integration journey and in a short period of time we have successfully delivered against many of the milestones that were set, ahead of schedule and realised around AED 500 Million in cost synergies in our first year alone. Last year, we also launched and rolled out our new brand which has been implemented across a number of our key customer touch points, regionally and internationally, with the target of completing our rebranding activities by the end of 2018. We have also finalised our organisational structure and operating model, and integrated our policies and risk framework. As part of the overall integration, we are also evaluating our local activities and branch network, to enhance efficiency and productivity across the group. Regionally, we are working on expanding our presence to Saudi Arabia which forms part of FAB’s long-term strategy.” He concluded: “The success of our integration journey so far comes as a result of the strong commitment to our plans across the Bank. 2017 was a year of transition for us and we are confident that 2018 will be a year of consolidation and growth, and being the Year of Zayed - inspire and motivate us to achieve further Page 3 of 11
5. success and reach the vision of our founding father , the late Sheikh Zayed bin Sultan Al Nahyan, and that of our leaders, to support the growth and prosperity of the UAE.” A successful integration journey FAB continued to make excellent progress against the targets set in the integration agenda. Reflecting a strong focus on execution, all planned milestones for 2017 were successfully delivered, including the network and channel rebrand across customer and digital touch-points completed in the last quarter. While the Group is carrying out a comprehensive strategic review of its international value proposition, rebranding across FAB’s international network is also underway. As the next key milestone in the integration journey, FAB’s IT systems integration is progressing well and on track to be completed around the end of 2018. This will enable the bank to unlock further merger benefits both on the cost and revenue side. Moreover, cost synergies are continuing to materialise quickly with around AED 500 Million realised in 2017, exceeding expectations for the year. In parallel, one-time integration costs remain under tight control and were up in the last quarter reflecting accelerated integration momentum. As of 31 December 2017, the “Purchase Price Allocation” (PPA) exercise as per IFRS 3 (Business Combinations) is substantially complete and no significant changes to NBAD’s net asset value are expected by 31 March 2018. The exercise determined a goodwill amount of AED 19.9 Billion arising from the merger. This includes intangible assets of AED 2.6 Billion to be amortised over a period of 12 years, with a charge of AED 138 Million recognised in the fourth quarter related to the nine month-period post-merger. Page 4 of 11
6. FAB Q4 /FY’17 Pro forma Summary Financials Full Year Income Statement - Summary (AED Mn) Note Net interest Income a Fees & commissions, net FX and investment income, net a FY'17 FY'16 Quarterly YoY % Q4'17 Q3'17 QoQ % Q4'16 YoY % 13,106 13,550 -3 3,363 3,244 4 3,392 -1 3,362 3,886 -13 932 788 18 968 -4 2,586 2,023 28 464 491 -5 652 -29 Other non-interest income 479 844 -43 289 89 226 90 220 Total Operating Income 19,533 20,302 -4 5,049 4,611 10 5,102 -1 Operating expenses (5,875) (5,922) -1 (1,616) (1,344) 20 (1,553) 4 (463) (178) 161 (198) (70) 183 (118) 68 Incl: Integration costs b Amortisation of intangibles (merger-related) Impairment charges, net Non Controlling Interests and Taxes (138) - - (138) (2,384) (2,664) -10 (562) (394) -9 (358) Net Profit (48) - - (562) 0 (100) -52 - - (590) -5 (105) -55 10,915 11,322 -4 2,822 2,605 8 2,854 -1 Adjusted Net Profit c 11,517 11,500 0 3,159 2,675 18 2,972 6 Basic Earning per Share (AED) d 0.96 1.00 -4 1.00 0.92 9 1.01 -1 a) Negative interest income booked on some placements has been reclassified to net FX income; NIM has been restated accordingly b) Integration costs prior to 2017 are merger transaction-related costs c) Adjusted Group Net Profit is stated before amortisation of intangibles (merger-related) identified as a result of the “purchase price allocation”, and excluding one-off integration costs d) Basic EPS based on attributable profits to equity shareholders' excluding Tier-1 notes coupon and outstanding shares Balance Sheet - Summary (AED Bn) Note Dec'17 Loans and advances e Customer deposits e CASA (deposits) Total Assets e Equity (incl Tier-1 capital notes) Tangible Equity f Dec'16 YoY % Sep'17 QoQ % Sep'16 330.5 334.4 -1 328.3 1 #DIV/0! 395.8 379.2 4 378.9 4 #DIV/0! 116.0 108.5 7 112.4 3 #DIV/0! 669.0 649.1 3 644.1 4 #DIV/0! 101.7 97.0 5 99.1 3 #DIV/0! 71.1 71.9 -1 73.3 -3 #DIV/0! FY'17 FY'16 YoY (bps) 2.49 2.55 -6 27.7 28.3 -59 YoY % e) Restated net of National Housing Program loans and deposits f) Tangible equity is shareholders' equity net of Tier-1 capital notes, goodwill & intangibles Key Ratios (%) Net Interest Margin Note a Cost-Income ratio (ex-integration costs) Cost of Risk (bps) i 69 76 -7 Non-performing loans ratio j 3.1 2.7 41 Provision coverage j 120.1 124.6 -451 Loans-to-deposits ratio e 83.5 88.2 -472 Return on Tangible Equity (RoTE) g 14.8 15.7 -83 2.3 2.3 0 Return on Risk-weighted Assets (RoRWA) CET1 ratio h 14.5 14.8 -32 Capital Adequacy ratio h 17.8 18.2 -34 g) Return on Average Tangible Equity, annualised; based on attributable profit to equity shareholders' excl coupon on Tier-1 capital notes (AED 465Mn - FY'17) and amortisation of intangibles (AED 159 Million - FY'17) h) As per UAE Central Bank's Basel III framework; figures prior to Dec 2017 are based on UAE CB's Basel II framework; CET1 ratio is based on Tier-1 capital net of perpetual notes as a percentage of risk weighted assets i) Loan-related impairment charges (net) as a percentge of average gross loans and advances (net of interest in suspense) j) Gross loans and advances net of interest in suspense Rounding differences may appear in above table Page 5 of 11
7. Financial Review Group Revenue for the 12-month period ended 31 December 2017 was achieved at AED 19 .53 Billion, down 4% year-on-year. This decrease mainly reflects relatively softer market conditions compared to 2016, and portfolio optimisation initiatives implemented throughout the year in order to enhance risk-adjusted returns. In the fourth quarter, Group Revenues grew 10% primarily as a result of a double-digit growth in fees and commissions. Reflecting margin compression as a result of portfolio optimisation and lower interest in suspense (IIS), Net Interest Income (including Islamic Financing Income) for the full year was down 3% to AED 13.11 Billion. Sequentially, net interest income grew 4% primarily on the back of asset growth. Group Net Interest Margin (NIM) stood at 2.49%, slightly lower than 2.55% for 2016 as margin compression and deployment of excess liquidity partially outweighed the positive impact of rate hikes. In the fourth quarter, Group NIM reduced by 13 basis points, mainly due to the increase in short-term excess liquidity placements into lower-yielding assets. Fees and commissions (net) were up 18% in the last quarter driven by a double-digit growth in loanrelated fee income. This was mainly due to a strong pipeline execution across CIB products, as well as higher credit card and insurance-related fees in Personal Banking. For the full year, fees and commissions show a reduction of 13% indicating a subdued loan market and lower trade activity relatively to 2016. Despite challenging market conditions, FX and investment income grew 28% year-on-year reflecting opportunistic Available For Sale (AFS) investment gains realised in 2017, mostly in the first quarter. “Other non-interest income” of AED 289 Million in the fourth quarter, comprises investment property gains of AED 181 Million. Overall, “Other non-interest income” for the full year shows a 43% drop mainly due to higher property-related revenues in 2016. G&A expenses in 2017 were down 8% year-on-year on a like-for-like basis, excluding integration and amortisation of intangibles as a result of merger-related PPA. One-off integration costs in 2017 amounted to AED 463 Million, and remain under tight control. Reflecting an accelerated pace of integration, integration costs totaled AED 198 Million in the last quarter, up from AED 70 Million in Q3. Cost synergies realised in the first year of integration were substantial at around AED 500 Million on the back of a strong focus on implementing the integration agenda. Providing further evidence of improved efficiencies across the Group, cost-to-income ratio (ex- integration costs) improved to 27.7% from 28.3% in 2016, an industry-leading level amongst regional and global banks. Impairment charges (net) for Q4’2017 were 10% lower year-on-year driven by write-backs and collective provision reversals resulting from balance sheet optimisation. Impairment charges were flat sequentially as collective provision reversals were offset by an increase in specific impairments reflecting prudent provisioning. Cost of risk on loans and advances for the full year reduced by 7bps to 69bps. While reported Group Net Profit amounted to AED 10.92 Billion, Adjusted Group Net Profit for the full year stood at AED 11.52 Billion, broadly in line with 2016, reflecting a resilient performance in a transitional year. In the fourth quarter, Adjusted Group Net Profit grew 18% sequentially and 6% year-on-year. (AED Mn) Group Net Profit FY'17 FY'16 10,915 11,322 Add: One-off integration / Pre-merger transaction costs 463 Add: Amortisation of intangibles (merger related) 138 Adjusted Net Profit 11,517 YoY % Q4'17 Q3'17 QoQ % 2,822 2,605 178 198 70 - 138 - 11,500 -4 0 3,159 2,675 8 Q4'16 2,854 YoY % -1 118 - 18 2,972 6 Page 6 of 11
8. Credit quality Non-performing loans (NPLs) stood at AED 10.6 Billion, up 4% sequentially, translating to a healthy NPL ratio at 3.1% against 3.0% the previous quarter. The increase in NPLs, both sequentially and year-on-year, is driven primarily by the Personal Banking segment reflecting the slowdown in the retail market as well as ongoing consolidation activities across Abu Dhabi. Total provisions increased by 14% in the fourth quarter to AED 12.7 Billion primarily due to higher provisions taken as a result of the PPA exercise. Consequently, provision coverage strengthened to 120% from 109% at the end of previous quarter. At 1.9% of Credit Risk Weighed Assets (CRWAs), FAB’s collective provision buffer is well above the required regulatory minimum of 1.5%. Balance sheet trends Reflecting asset optimisation in a challenging environment, December-end 2017 loans and advances (net) stood at AED 330.5 Billion, down 1% compared to 2016. Sequentially, loan portfolio was up 1% as strong corporate loan origination in the fourth quarter was partially offset by continued balance sheet optimisation, and fair value adjustments linked to PPA. Customer deposits grew 4% to AED 395.8 Billion, on the back of significant inflows of government deposits in the fourth quarter. Current Account and Saving Account (CASA) deposits grew at a faster pace of 7% year-on-year, contributing 29% to overall customer deposits as of December-end 2017. Providing further evidence to the Bank’s solid deposit franchise, deposits from international locations grew by 15% year-on-year, and remain a major contributor to Group deposits with a share of 27%. FAB’s liquidity position further strengthened in the last quarter with loans-to-deposit ratio improving to 83.5% compared to 88.2% the previous year. In addition, Liquidity Coverage Ratio (LCR) remained well above the glide path as defined by Basel III norms at 112%. One of the Bank’s primary focuses in 2017 was to maximise funding cost benefits in the context of the merger. This led to several strategic initiatives including the repayment of legacy FGB’s AED 1 Billion Syndicated loan and USD 300 Million bilateral loan, as well as the re-pricing of legacy deposits to FAB’s wholesale funding curve. 2017 also marked the completion of several landmark transactions on the wholesale funding side. In March, the Bank issued the first ever Green Bond in the Middle East, demonstrating its commitment to sustainable business, and to pursue innovative financing solutions. The Bank also completed the first Formosa issuance out of the GCC in January 2017, achieving significant arbitrage funding. As the highest rated bank in the Middle East and one of the safest banks worldwide (with credit ratings of AA- or equivalent), FAB has access to various sources of funds from multiple geographies, at a competitive pricing. Shareholders’ equity, capital and returns Shareholders’ equity grew by 5% year-on-year to AED 101.7 Billion, driven by profits generated during the year, with tangible equity standing at AED 71.1 Billion. Capital position as of December-end 2017 is robust and remains comfortably in excess of regulatory requirements as per Basel III capital guidelines, with CET1 ratio standing at 14.5%., December-end 2017 Tier-1 capital ratio and total Capital Adequacy Ratio under Basel III stand at 16.7% and 17.8% respectively. Page 7 of 11
9. The Bank ’s strong internal capital generation capacity combined with continued RWA discipline, position it well to continue to display robust capital levels and comfortably meet regulatory requirements under the Basel III framework as a Domestic Systemically Important Bank (D-SIB). Return on average Tangible equity (RoTE) for 2017 stood at 14.8%, compared to 15.7% the previous year, exceeding management guidance. Excluding one-off integration costs, RoTE stands at 15.5% against 15.9% in 2016. Business performance As of December-end 2017, the Corporate & Investment Banking (CIB) Group generated 48% of FAB Group revenue, followed by the Personal Banking Group (PBG) with 35%. Head Office (HO) and Subsidiaries contributed 10% and 7% to total operating income respectively. Revenues by Segment PBG 35% CIB 48% HO 10% Subsidiaries 7% Revenues by Geography Middle East & Africa 5% UAE 88% Europe & Americas 5% Asia Pacific 2% Corporate & Investment Banking (CIB) Group In 2017, FAB’s industry-leading CIB franchise delivered a solid performance in a challenging operating backdrop marked by a subdued loan market and lower trade activity. Despite revenues reducing 4.5% yearon-year, strong business momentum in the fourth quarter translated to 6% sequential growth in operating income. This was led by a strong performance across the loan capital markets, debt capital markets and corporate advisory businesses, capitalising on a very active pipeline in the second half of 2017. The UAE business overall delivered solid results year on year with higher risk adjusted returns. Liquidity position improved with customer deposits rising 7% while loans added 2% sequentially. Disciplined cost management and the realisation of synergies following the merger resulted in a 11% reduction in operating expenses compared to the previous year. Impairment charges were up year-on-year on the back of specific impairments in the fourth quarter due to prudent provisioning. In 2017, CIB’s Cash Management business recorded a stellar performance with revenues growing 34% year-on-year, supported by a significant number of new mandates and the launch of innovative products and customised solutions for core clients. Despite a subdued activity in the last quarter due to low market volatility, Global Markets (GM) delivered a solid performance in 2017 with the investment portfolio producing healthy returns across asset classes. This was partly offset by lower FX & rates income due to difficult market conditions impacted by the global interest rate environment. GM sales continued to play a pivotal role in enhancing cross-sell opportunities across the Group, while further strengthening its franchise through a consolidated expansion into new markets. Page 8 of 11
10. Following the successful execution of landmark transactions across the region , , FAB dominated both GCC and MENA league tables in 2017 with market shares of 12.5% and 11.5% respectively and deal volumes exceeding USD 5 Billion. The Debt Capital Markets (DCM) franchise continued to grow stronger, placing the Bank among the top 5 bookrunners in the MENA Bonds and Sukuk League Tables for full year 2017, with around USD 35 Billion of financing raised for clients from over 40 capital market transactions. In 2017, CIB is proud to have won numerous awards in recognition of its achievements and the franchise’s market leading position: • • • • “Best Trade Finance Bank in MENA” at the GTR Leaders in Trade 2016 awards highlighting excellence in trade, commodity, supply chain and export finance markets “Best Bank for Financing in the Middle East” and “Best Investment Bank in the United Arab Emirates” at the 2017 Euromoney Middle East Awards “Best FX Provider in UAE”, “Best Overall Bank for Cash Management” and “Best Bank for Liquidity Management in MENA” at Global Finance magazine’s 2017 Transaction Processing Awards “Most Innovative Investment Bank” for the MENA region at The Banker’s prestigious 2017 Investment Banking Awards. Personal Banking Group (PBG) FAB’s Personal Banking franchise delivered a resilient performance in 2017 amidst a slowdown in retail spending and continued asset mix optimisation. Revenues were down 8% year-on-year primarily as a result of lower interest income due to tighter risk appetite leading to margin compression. Higher credit card and insurance-related fees in the fourth quarter supported a 2% sequential growth in operating income. Net loans and advances were 3% lower year-on-year reflecting disciplined lending and portfolio optimisation. At the same time, mortgage lending recorded a solid growth (of 7%) in line with the Bank’s strategy to channel liquidity towards higher risk adjusted assets. Operating expenses reduced by 13% indicating tight cost control and the realisation of substantial synergies post-merger. Provisions were also 8% lower year-on-year with sufficient coverage of impaired loans. During the period, PBG continued to implement strategic initiatives designed to enhance customer value proposition through cross-sell, innovation and technology, leading to increased efficiency and productivity across the business. On the product side, the FAB Visa Infinite Credit Card was launched in October 2017, to address a key affluent segment. This is the first FAB branded credit card launched post-merger offering exclusive concierge, travel, dining and lifestyle benefits. With active mobile banking customers increasing by almost 25% in 2017 and mobile banking transactions rising by 40%, PBG’s ‘smart’ distribution model continues to leverage on digital solutions to drive further sales and operating efficiencies. Furthermore, the Private Banking and Wealth Management business was re-organised into three distinct segments to offer a superior customer value proposition in the long-term. A new client coverage model has been adopted for Elite, Wealth and Private Banking segments, which has been segregated by geography, ensuring a coverage model that’s better suited to customer needs. Page 9 of 11
11. Throughout the second half , the Business Banking team continued to focus on enhancing the customer value proposition and designed a comprehensive product suite for SME clients. New products launched include Mortgage-backed Business Finance (MBBF) and Bancassurance while the Keyman Insurance proposition was redefined. A prudent risk framework was also adopted and key policies were redesigned. FAB’s leading PBG franchise was recognised at the 2017 Seamless Awards, winning the ‘Best Seamless Government Experience’ award, and won the ‘Digital Leader Award’ - Government at the Digital Leader Awards 2017. The Asset Management division also won prestigious awards including ‘Best Fixed Income of the Year’ and ‘UAE Asset Manager of the Year’ at the MENA Fund Manager Performance Awards 2017 and ‘UAE Asset Manager of the Year’ at the Global Investor Group and ISF’s MENA Asset Management and Trading Summit 2017. Subsidiaries FAB enjoys a highly diversified business model supported by complementary offerings provided across real estate management, Islamic banking, brokerage, and credit cards through its subsidiaries. Revenues for Subsidiaries in 2017 stood at AED 1.3 Billion, down 21% from 2016, as lower property-related income offset higher net interest income. Both, operating expenses and impairment charges were higher year-on-year, reflecting challenging operating conditions. 2017 was marked by the integration of the real estate and property management businesses and the rebranding of the brokerage business into FAB Securities. Integration of the Islamic Finance subsidiaries is underway. In recognition of leading franchises in brokerage and consumer finance, the Banker Middle East named FAB (formerly NBAD) Securities “Best Brokerage Company” for the second year in a row, and Dubai First “Best Consumer Finance Company” for the third consecutive year at their 2017 Industry Awards ceremony. International While the Group is carrying out a comprehensive strategic review of its international value proposition to align with long-term strategic targets, FAB’s international business remains a key competitive advantage and differentiator for the Bank as a significant contributor to liquidity and risk diversification. Full year 2017 revenues stood at AED 2.43 Billion, down 5% year-on-year, primarily impacted by FX devaluation. International revenues contributed 12% to Group revenues as of December-end 2017. While loans increased by 3%, FAB’s solid core deposit franchise led to a 15% growth in international deposits in 2017. As of December-end 2017, international loans and deposits represent 20% and 27% respectively of total Group loans and deposits. Page 10 of 11
12. About First Abu Dhabi Bank (FAB) FAB, the UAE’s largest bank and one of the world’s largest and safest institutions, offers an extensive range of tailor-made solutions, and products and services, to provide a customised experience. Through its strategic offerings, it looks to meet the banking needs of customers across the world via its market-leading Corporate and Investment Banking and Personal Banking franchises. Headquartered in Abu Dhabi in Khalifa Business Park, the bank’s international network spans over 19 countries outside the UAE, providing the global relationships, expertise and financial strength to support local, regional and international businesses seeking to do business at home and abroad. In line with its commitment to put customers first, to Grow Stronger, FAB will continually invest in people and technology to create the most customer-friendly banking experience, and will support the growth ambitions of its stakeholders across countries in which the bank operates. To empower its customers and clients to Grow Stronger, FAB initiated a powerful movement, which goes beyond banking. The Grow Stronger movement represents the bank’s promise to support its stakeholders’ goals and growth ambitions, providing ideas, tools and expertise to help them become stronger, today and in the future. Based on audited financial information as at December-end 2017, FAB had total assets of AED 669 Billion (USD 182 Billion). FAB is rated Aa3/AA-/AA- by Moody’s, S&P and Fitch respectively, the strongest combined ratings of any bank in the MENA region. The Bank has been ranked by Global Finance as the safest bank in the UAE and the Middle East, 4th in emerging markets, 17th amongst commercial banks worldwide, and 31st in the world.Through a strong, diversified balance sheet, leading efficiency and a solid corporate governance structure in place, FAB is set to drive growth forward. For further information, visit: www.bankfortheuae.com For investor-related queries, please contact FAB Investor Relations team on ir@bankfab.com or download FAB Investor Relations app on iOS or Android Disclaimer The information contained herein has been prepared by First Abu Dhabi Bank P.J.S.C (“FAB”). FAB relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. This document has been prepared for information purposes only and is not and does not form part of any offer for sale or solicitation of any offer to subscribe for or purchase or sell any securities nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. Some of the information in this document may contain projections or other forward-looking statements regarding future events or the future financial performance of FAB. These forward-looking statements include all matters that are not historical facts. The inclusion of such forward-looking information shall not be regarded as a representation of FAB or any other person involved in the objectives or plans of FAB will be achieved. FAB undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. Page 11 of 11
13. Pro forma Condensed Consolidated Financial Statements December 31 , 2017
14. PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following pro forma condensed consolidated financial statements (“Pro forma financial statements”) illustrates the effects on the statement of financial position and financial performance of the combination (Merger) between National Bank of Abu Dhabi and its subsidiaries (together referred to as “NBAD”) and First Gulf Bank and its subsidiaries (together referred to as “FGB”). The Pro forma financial statements consists of the audited Pro Forma Condensed Consolidated Statement of Financial Position of NBAD and FGB (together referred to as “the Group”) as at 31 December 2017, and its audited Pro forma Condensed Consolidated statement of Profit or Loss for the year then ended. These statements are prepared as if the Merger has taken place as at 1 Jan 2016. The purpose of the Pro forma financial statements is to show the material effects that the Merger of NBAD and FGB would have had on the historical consolidated statement of financial position if the Group had already existed in the structure created by the Merger as at 31 December 2017 and on the historical consolidated statement of profit or loss for the financial year ended 31 December 2017. They are not representative of the financial situation and performance that could have been observed if the indicated business combination had been undertaken at an earlier date. The presentation of the Pro forma financial statements of the Group is based on certain pro forma assumptions and has been prepared for illustrative purposes only and, because of its nature, the pro forma consolidated statement of financial position and financial performance addresses a hypothetical situation and, therefore, does not represent and may not give a true picture of the financial position and financial performance of the Group. Furthermore, the Pro forma financial statements are only meaningful in conjunction with the historical consolidated financial statements of NBAD and FGB as at and for the financial year ended 31 December 2016. The Pro forma financial statements have been compiled based on the accounting policies adopted by the Group for the preparation of 31 December 2017 financial statements. Any impact due to change in the accounting policy and adjustment have been reflected in prior comparative periods. The Pro forma financial statements does not take into consideration the effects of expected synergies or costs incurred to achieve these synergies as a result of the Merger. The Pro forma financial statements gives no indication of the results and future financial situation of the activities of the Group.
15. Pro forma Condensed consolidated statement of financial position As at 31 December Assets Cash and balances with central banks Investments at fair value through profit or loss Due from banks and financial institutions Reverse repurchase agreements Derivative financial instruments Loans and advances Non-trading investments Investment properties Property and equipment Intangibles Other assets Total assets Liabilities Due to banks and financial institutions Repurchase agreements Commercial paper Derivative financial instruments Customer accounts and other deposits Term borrowings Subordinated notes Other liabilities Total liabilities Equity Share capital Share premium Treasury shares Statutory and special reserves Other reserves Tier 1 capital notes Share option scheme Convertible notes - equity component Retained earnings Total equity attributable to shareholders of the Group Non-controlling interest Total Equity Total liabilities and equity 2017 AED ’000 2016 AED’000 138,111,054 19,320,764 13,829,490 21,346,974 11,399,432 330,465,888 88,457,710 6,927,692 3,535,501 19,901,374 15,672,416 --------------------------------------668,968,295 ================ 123,441,316 11,381,851 17,308,257 14,278,842 13,796,739 334,430,035 92,855,423 6,468,106 4,594,230 14,304,189 16,261,635 -----------------------------------649,120,623 ================ 30,576,336 37,674,016 24,124,097 14,941,331 395,843,664 42,145,718 420,381 21,033,339 ---------------------------------------566,758,882 48,401,950 29,594,535 13,725,897 16,040,059 379,165,290 46,830,945 355,987 17,571,983 -----------------------------------551,686,646 10,897,545 53,026,644 (42,433) 7,081,074 962,736 10,754,750 256,265 108,265 18,677,552 ---------------------------------------- 10,897,545 52,771,684 (48,746) 5,254,545 725,067 10,754,750 228,349 108,265 16,309,736 ----------------------------------- 101,722,398 487,015 ----------------------------------------102,209,413 ----------------------------------------668,968,295 ================= 97,001,195 432,782 -----------------------------------97,433,977 -----------------------------------649,120,623 ================
16. Pro forma Condensed consolidated statement of profit or loss For the year ended 31 December Note Interest income Interest expense 1 2 Net interest income 2017 AED ’000 2016 AED’000 18,846,918 (5,740,867) -----------------------------------13,106,051 18,687,450 (5,137,679) ------------------------------------13,549,771 5,287,914 (1,401,978) ------------------------------------3,885,936 Net fee and commission income 3 4,765,261 (1,403,397) ----------------------------------3,361,864 Net foreign exchange gain Net gain on investments and derivatives Other operating income 4 1,003,284 1,053,368 5 6 1,582,442 479,344 -----------------------------------19,532,985 969,792 843,517 ------------------------------------20,302,384 7 (5,875,349) ------------------------------------ (5,922,299) ------------------------------------- 13,657,636 14,380,085 (2,384,334) -----------------------------------11,273,302 (2,663,691) ------------------------------------11,716,394 (323,538) ---------------------------------10,949,764 =============== (350,552) ----------------------------------11,365,842 =============== 10,915,157 34,607 --------------------------------10,949,764 ============== 11,322,268 43,574 ----------------------------------11,365,842 ============== Fee and commission income Fee and commission expense Operating income General, administration and other operating expenses Profit before net impairment charge and taxation Net impairment charge Profit before taxation Overseas income tax expense Net profit for the period Profit attributable to: Shareholders of the Group Non-controlling interests 8
17. Segmental information Business Segment _________________________________________________________________________ Geographic Segment __________________________________________________________________________________ Corporate and Investment Banking AED ’000 Personal Banking AED’000 Subsidiaries AED’000 Head Office AED’000 Total AED’000 UAE AED’000 Middle East And Africa AED’000 Europe and Americas AED’000 Asia - Pacific AED’000 Total AED’000 Net Interest income Net non-interest income 5,853,942 3,520,781 5,094,817 1,766,935 566,567 742,020 1,590,725 397,198 13,106,051 6,426,934 11,503,407 5,597,194 611,806 345,730 716,768 297,434 274,070 186,576 13,106,051 6,426,934 Operating income 9,374,723 ============= 6,861,752 ============= 1,308,587 ============= 1,987,923 ============= 19,532,985 17,100,601 ============= 957,536 ============= 1,014,202 ============= 460,646 ============= 19,532,985 2,014,741 2,642,111 545,009 673,488 5,875,349 5,022,857 344,768 328,017 179,707 5,875,349 299,678 ============= 7,060,304 ============= 184,647 ============= 6,875,657 ============= 1,770,465 ============= 2,449,176 ============= 114,408 ============= 2,334,768 ============= 521,195 ============= 242,383 ============= 21,973 ============= 220,410 ============= (207,004) ============= 1,521,439 ============= 2,510 ============= 1,518,929 ============= 2,384,334 2,304,790 ============= 9,772,954 ============= 5,263 ============= 9,767,691 ============= 85,185 ============= 527,583 ============= 116,818 ============= 410,765 ============= (4,481) ============= 690,666 ============= 170,452 ============= 520,214 ============= (1,160) ============= 282,099 ============= 31,005 ============= 251,094 ============= 2,384,334 450,430,907 ================ 97,980,652 =============== 21,782,636 =============== 126,431,598 ================ 544,299,763 ================ 21,240,671 =============== 129,441,066 =============== 23,406,626 ================ 438,220,833 ================ 95,001,870 =============== 11,430,776 =============== 49,643,868 =============== 456,642,219 ============== 13,808,673 ============= 126,033,661 ============= 19,694,270 =============== For the year ended 31 December 2017 General administration and other operating expenses Net impairment charge Profit before taxation Overseas taxation Net profit for the period 11,273,302 323,538 10,949,764 11,273,302 323,538 10,949,764 As at 31 December 2017 Segment total assets Inter segment balances Total assets Segment total liabilities Inter segment balances Total liabilities 696,625,793 (27,657,498) ------------------------------------------668,968,295 =============== 594,297,347 (27,538,475) ------------------------------------------566,758,872 ================ 718,388,126 (49,419,831) ------------------------------------------668,968,295 ================ 616,178,823 (49,419,951) ------------------------------------------566,758,872 ================
18. Segmental information (continued) Business Segment ____________________________________________________________________________________ Geographic Segment __________________________________________________________________________________ Corporate and Investment Banking AED’000 Personal Banking AED’000 Subsidiaries AED’000 Head Office AED’000 Total AED’000 UAE AED’000 Middle East And Africa AED’000 Europe and Americas AED’000 Asia - Pacific AED’000 Total AED’000 Net Interest income Net non-interest income 6,040,346 3,776,509 5,708,783 1,751,524 514,558 1,147,654 1,286,084 76,926 13,549,771 6,752,613 11,950,828 5,782,985 803,449 316,146 551,345 436,768 244,149 216,714 13,549,771 6,752,613 Operating income 9,816,855 ============= 7,460,307 ============= 1,662,212 ============= 1,363,010 ============= 20,302,384 17,733,813 ============= 1,119,595 ============= 988,113 ============= 460,863 ============= 20,302,384 2,265,236 3,024,107 452,002 180,954 5,922,299 5,043,529 393,729 300,395 184,646 5,922,299 134,877 ============= 7,416,742 ============= 215,771 ============= 7,200,971 ============= 1,926,936 ============= 2,509,264 ============= 108,057 ============= 2,401,207 ============= 452,546 ============= 757,664 ============= 26,805 ============= 730,859 ============= 149,332 ============= 1,032,724 ============= (81) ============= 1,032,805 ============= 2,663,691 2,911,036 ============= 9,779,248 ============= (1,647) ============= 9,780,895 ============= 15,165 ============= 710,701 ============= 167,218 ============= 543,483 ============= 63,596 ============= 624,122 ============= 173,920 ============= 450,202 ============= (326,106) ============= 602,323 ============= 11,061 ============= 591,262 ============= 2,663,691 422,013,912 ================ 101,349,880 =============== 24,919,474 =============== 158,874,736 ================ 530,916,692 ================ 22,251,895 =============== 111,357,266 =============== 26,808,386 ================ 411,167,120 ================ 98,520,038 =============== 14,310,867 =============== 85,726,000 =============== 446,830,495 ============== 16,160,476 ============= 109,214,755 ============= 21,694,536 =============== For the year ended 31 December 2016 General administration and other operating expenses Net impairment charge Profit before taxation Overseas taxation Net profit for the period 11,716,394 350,552 11,365,842 11,716,394 350,552 11,365,842 As at 31 December 2016 Segment total assets Inter segment balances Total assets Segment total liabilities Inter segment balances Total liabilities 707,158,002 (58,037,379) ------------------------------------------649,120,623 =============== 609,724,025 (58,037,379) ------------------------------------------551,686,646 ================ 691,334,239 (42,213,616) ------------------------------------------649,120,623 ================ 593,900,262 (42,213,616) ------------------------------------------551,686,646 ================
19. Notes to the condensed consolidated Pro-forma financial statements 1 Interest income Interest from : Central banks Banks and financial institutions Reverse repurchase agreements Investments at fair value through profit or loss Non-trading investments Loans and advances 2 Interest expense Interest to: Banks and financial institutions Repurchase agreements Commercial paper Customer accounts and other deposits Term borrowings Subordinated notes 3 Net fees and commission income Fee and commission income Trade finance Collection services Brokerage income Asset management and investment services Investments, derivatives and risk participation Retail and corporate lending Cards and e-services Accounts related services Commission on transfers Others Total fee and commission income Fee and commission expense Brokerage commission Handling charges Credit card charges Retail and corporate lending Others Total fee and commission expense Net fee and commission income 2017 AED’000 2016 AED’000 393,633 534,255 297,671 425,735 2,129,967 15,065,657 --------------------------------18,846,918 ============== 234,600 476,351 165,767 405,099 2,487,719 14,917,914 ------------------------------- 18,687,450 ============= 2017 AED’000 2016 AED’000 698,074 409,014 178,992 3,029,734 1,404,651 20,402 ---------------------------5,740,867 ============ 982,528 316,236 63,617 2,617,693 1,133,762 23,843 ----------------------------5,137,679 ============ 2017 AED’000 2016 AED’000 998,445 43,241 49,245 116,331 8,115 1,171,248 1,896,355 59,397 116,571 306,313 ---------------------------4,765,261 ---------------------------- 1,113,582 54,640 53,718 127,085 17,725 1,580,422 1,866,671 51,038 117,649 305,384 ----------------------------5,287,914 ----------------------------- 35,553 30,618 1,025,697 262,840 48,689 ---------------------------1,403,397 ---------------------------3,361,864 ============ 28,204 29,721 980,369 338,423 25,261 ---------------------1,401,978 -----------------------3,885,936 ============
20. 4 Net foreign exchange gain Trading and retranslation gain on foreign exchange and related derivatives Dealings with customers 5 Net gain on investments and derivatives Net realised and unrealised gain on investments at fair value through profit or loss and derivatives Net gain from sale of non-trading Investments Dividend income 6 7 2017 AED ’000 2016 AED’000 626,664 376,620 ----------------------------1,003,284 ============ 657,146 396,222 -----------------------------1,053,368 ============= 2017 AED’000 2016 AED’000 630,797 913,064 133,678 816,326 38,581 19,788 ----------------------------- ------------------------------ 1,582,442 969,792 ============ ============= Investment property income 2017 AED’000 215,631 2016 AED’000 550,682 Leasing related income 103,590 184,483 Other income 160,123 108,352 Other Operating Income General, administration and other operating expenses Staff costs Other general and administration expenses Depreciation Intangible amortisation Sponsorships and donations ----------------------- ----------------------- 479,344 843,517 ========== ========== 2017 AED’000 2016 AED’000 3,422,654 1,877,303 374,101 159,156 42,135 ---------------------------5,875,349 ============ 3,944,851 1,576,394 341,085 21,118 38,851 ---------------------------5,922,299 ============