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A GENDA T IME S ESSION S PEAKER Andr Sayegh 09:00am 09:15am Opening Remarks Chief Executive Officer Hana Al Rostamani 09:15am 9:45am Session 1 Head of Strategy & Planning Amit Wanchoo 09:45am 10:15am Session 2 Head of
AGENDA
TIME SESSION SPEAKER 09:00am – 09:15am Opening Remarks André Sayegh Chief Executive Officer 09:15am – 9:45am Session 1 Hana Al Rostamani Head of Strategy & Planning 09:45am – 10:15am Session 2 Amit Wanchoo Head of Consumer Banking 10:15am – 10:30am Break Simon Penney
ANALYST & INVESTOR DAY 2013
10:30am – 11:00am Session 3 Simon Penney Head of Wholesale & International Banking 11:00am – 11:30pm Session 4 Christopher Wilmot Head of Treasury & Global Markets 11:30pm – 11:45pm Break 11:45pm – 12:15pm Session 5 Arif Shaikh Chief Risk Officer 12:15pm – 12:30pm Closing Remarks Karim Karoui Chief Financial Officer 12:30pm – 14:00pm Lunch Break 1/3
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ANALYST & INVESTOR DAY 2013
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This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. No presentation ,express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, synergies, returns, benefits or statements in relation to future matters contained in the presentation. The forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on numbers or estimates or assumptions that are subject to change (and in many cases are
- utside the control of FGB and its directors) which may cause the actual results or performance of FGB to be
materially different from any future results or performance expressed or implied by such forward looking statements.
DISCLAIMER
ANALYST & INVESTOR DAY 2013
statements. To the maximum extent permitted by law, FGB disclaims any responsibility for the accuracy or completeness
- f any information contained in this presentation including any forward-looking statements and disclaims any
responsibility to update or revise any information or forward-looking statement to reflect any change in FGB’s financial condition, status or affairs or any change in the events, conditions or circumstances on which a statement is based. To the maximum extent permitted by law, neither FGB nor its related bodies corporate, directors, employees
- r agents, nor any other person, accepts any liability, including, without limitation, any liability arising from
fault or negligence, for any direct, indirect or consequential loss arising from the use of this presentation or its contents or otherwise arising in connection with it. This presentation should be read in conjunction with other publicity available material. Further information including historical results and a description of the activities of FGB is available on our website, www.fgb.ae 3/3
OPENING REMARKS
ANDRÉ SAYEGH – CHIEF EXECUTIVE OFFICER
FGB’S JOURNEY IS ABOUT VALUE CREATION
- Customer Centricity
- Product Diversification
- Customer Centricity
- Product Diversification
RESILIENT B SUSTAINABLE AND DISCIPLINED GROWTH
REATION
SINCE YEAR 2000, FGB MARKET CAP EXPANDED FROM AED 560MN TO AED 50BN
ANALYST & INVESTOR DAY 2013
2000-2007 2008 - 2013 2013 onwards
- Volumes
- Volumes
- Risk Management
- Liquidity
- Capital Adequacy
- Efficiency
- Risk Management
- Liquidity
- Capital Adequacy
- Efficiency
- Product Diversification
- Geographic Diversification
- Product Diversification
- Geographic Diversification
STRONG GROWTH BUSINESS
MODEL
VALUE CR
1/2
1979…
Date of Establishment Date of Establishment
FGB’s Position of Strength FGB’s Position of Strength
- Disciplined growth
- Efficient balance sheet
management
- Disciplined growth
- Efficient balance sheet
management
- Enhanced Profitability
- Enhanced Profitability
A STRONG BUSINESS… …DESIGNED TO DELIVER SUPERIOR PERFORMANCE… …AND DRIVE LONG TERM SHAREHOLDER VALUE
HOW WE ARE CREATING MORE VALUE
ANALYST & INVESTOR DAY 2013
Clear Strategy and Execution Plan across Streamlined Businesses Clear Strategy and Execution Plan across Streamlined Businesses management
- Revenue growth and
diversification
- Cost Efficiency
- Strong portfolio quality
management
- Revenue growth and
diversification
- Cost Efficiency
- Strong portfolio quality
- Enhanced Profitability
- Efficient and Prudent
Capital Deployment
- Dividend Capacity
- Enhanced Profitability
- Efficient and Prudent
Capital Deployment
- Dividend Capacity
2/2
SESSION 1
HANA AL ROSTAMANI – HEAD OF STRATEGY & PLANNING
TO BE RECOGNIZED AS A WORLD CLASS
ORGANIZATION MAXIMIZING VALUE FOR ALL STAKEHOLDERS OUR VISION
DEFINING STATEMENTS
ANALYST & INVESTOR DAY 2013
OUR MISSION
TO BE THE ‘FIRST’ CHOICE OF CUSTOMERS
1/11
PEOPLE FOCUSED PASSION TO EXCEL
OUR CORE VALUES
ANALYST & INVESTOR DAY 2013
PARTNERSHIP WITH TRUST AND INTEGRITY PURSUIT OF INNOVATION
2/11
2000 SEP’13 Deposits (AED Bn) 1.8 x74 132.6 Loans & Advances (AED Bn) 1.4 x90 126.9 Shareholders’ Equity (AED Bn) 0.5 x60 29.8 Market Capitalization (AED Bn) 0.56 x90 50.3 (1) Staff 174 1,159 Moody’s: A2
MEASURING OUR SUCCESS
ANALYST & INVESTOR DAY 2013
(1) Market cap at AED 50.3Bn by 20th of November 2013 (share price AED 16.75)
Rating BB + Moody’s: A2 Fitch: A+ (since 2007) International Presence UAE Only UAE, Libya, India, Qatar, Hong-Kong, Singapore
FGB TOOK OPPORTUNITIES OF MARKET GROWTH AND WEATHERED THE CYCLES OF
THE ECONOMY TO EMERGE AS ONE OF THE STRONGEST BANKS IN THE REGION
FGB TOOK OPPORTUNITIES OF MARKET GROWTH AND WEATHERED THE CYCLES OF
THE ECONOMY TO EMERGE AS ONE OF THE STRONGEST BANKS IN THE REGION
3/11
2nd by Earning per Share 2nd by Market Capitalisation 2nd by Net Profit 3rd by Equity
MARKET POSITIONING
ANALYST & INVESTOR DAY 2013
3 by Equity 3rd by Customers’ Deposits 3rd by Assets 3rd by Loans and Advances
Data as of end of September 2013
4/11
OUR CORE AND EMERGING BUSINESSES
ANALYST & INVESTOR DAY 2013
5/11
EXPANDING GLOBAL PRESENCE
Qatar Singapore India Hong-Kong FGB-Libya
ANALYST & INVESTOR DAY 2013
Singapore 1 Subsidiary 2 Rep Offices 2 Branches Future rep offices 6/11
DIVERSIFIED BUSINESS CONTRIBUTIONS
SEP’13 ASSETS BREAKDOWN SEP’13 REVENUE BREAKDOWN
T&GM 25% Real Estate activities 5% Other 2% T&GM 13% Real Estate 5% Other 1%
ANALYST & INVESTOR DAY 2013
Wholesale Banking 44% Consumer Banking 24% 25% Wholesale Banking 41% Consumer Banking 42% Data as of end of September 2013
7/11
OUR STRATEGIC IMPERATIVES
- Strengthen customer segmentation and intelligence
- Expanding into new customer segments
- Stronger competitive advantage
- Strengthen customer segmentation and intelligence
- Expanding into new customer segments
- Stronger competitive advantage
BUILD A CUSTOMER
DRIVEN INSTITUTION
BUILD A CUSTOMER
DRIVEN INSTITUTION
DELIVER FULL-SERVICE DELIVER FULL-SERVICE
- Further develop Wholesale Banking proposition
- Further develop Wholesale Banking proposition
ANALYST & INVESTOR DAY 2013
PROPOSITION IN OUR CORE BUSINESSES PROPOSITION IN OUR CORE BUSINESSES
- Further develop Wholesale Banking proposition
- Strengthening of Consumer Bank proposition
- Further develop Wholesale Banking proposition
- Strengthening of Consumer Bank proposition
SPECIALIZATION TO
ENHANCE PERFORMANCE IN OUR EMERGING BUSINESSES
SPECIALIZATION TO
ENHANCE PERFORMANCE IN OUR EMERGING BUSINESSES
- Islamic Banking Proposition (Aseel)
- Expansion of Treasury and Global Markets
- Islamic Banking Proposition (Aseel)
- Expansion of Treasury and Global Markets
8/11
OUR STRATEGIC IMPERATIVES
- Strengthen Brand and reputation locally &
internationally
- Strengthen Brand and reputation locally &
internationally
I B I B EXPAND OUR INTERNATIONAL
COVERAGE
EXPAND OUR INTERNATIONAL
COVERAGE
- Grow Asia presence
- Organic “Greenfield” growth
- Grow Asia presence
- Organic “Greenfield” growth
ANALYST & INVESTOR DAY 2013
- Recognition in leading industry awards
- 3rd strongest brand value in UAE (USD 780Mn)
- Recognition in leading industry awards
- 3rd strongest brand value in UAE (USD 780Mn)
INVEST IN OUR BRAND INVEST IN OUR BRAND
- FGB Business School
- Strong Employee Engagement Programme
- Talent development
- FGB Business School
- Strong Employee Engagement Programme
- Talent development
INVEST IN OUR PEOPLE
AND THEIR GROWTH
INVEST IN OUR PEOPLE
AND THEIR GROWTH
9/11
OUR STRATEGIC IMPERATIVES
- Operational efficiencies
- Improved Customer Understanding
- Continuous strategic investment in technology
- Operational efficiencies
- Improved Customer Understanding
- Continuous strategic investment in technology
INVEST
IN OUR TECHNOLOGY
INVEST
IN OUR TECHNOLOGY
- Superior return on risk managed basis
- Continue to have best in class Governance Framework
- Superior return on risk managed basis
- Continue to have best in class Governance Framework
MAINTAIN PRUDENT RISK MANAGEMENT MAINTAIN PRUDENT RISK MANAGEMENT
ANALYST & INVESTOR DAY 2013
- Continue to have best in class Governance Framework
- Continue to strengthen Risk Management Framework
- Continue to have best in class Governance Framework
- Continue to strengthen Risk Management Framework
RISK MANAGEMENT
AND EFFECTIVE
CORPORATE GOVERNANCE RISK MANAGEMENT
AND EFFECTIVE
CORPORATE GOVERNANCE
- Strong Balance Sheet
- Consistent sustainable performance
- Improved Shareholder Value
- Strong Balance Sheet
- Consistent sustainable performance
- Improved Shareholder Value
ACHIEVE SUPERIOR FINANCIAL PERFORMANCE ACHIEVE SUPERIOR FINANCIAL PERFORMANCE
10/11
OUTLOOK
MARKET POSITION
- Maintain a strong UAE market
share
- Comprehensive product and
service offering through Wholesale Banking, Consumer Banking, Treasury & Global Markets and Islamic Banking
MARKET POSITION
- Maintain a strong UAE market
share
- Comprehensive product and
service offering through Wholesale Banking, Consumer Banking, Treasury & Global Markets and Islamic Banking
FINANCIAL POSITION
- Balanced & sustainable
financial model; focus on diversified income and funding
- Financial Performance is among
the top three peer group
- Superior balance sheet ratios &
profitability ratios
ANALYST & INVESTOR DAY 2013
QUALITATIVE INDICATORS
- Pool of talent with diverse specialization
- Strong customer centric corporate
culture
- Top three position as a Leading Brand
in the ME
- Best in class operational excellence
INTERNATIONAL MARKETS
- Strong operational presence in Asia
and MENA through organic growth
- Increase international contribution
to the overall business revenue 11/11
Q&A
HANA AL ROSTAMANI – HEAD OF STRATEGY & PLANNING
SESSION 2
AMIT WANCHOO – HEAD OF CONSUMER BANKING
FGB CONSUMER BANK: A GROWTH STORY…
Profit CAGR: 12%
- Op. Inc CAGR: 13%
1,866 2,405 2,850 2,914 2,968 2,498
1,522 1,626 1,767 ANALYST & INVESTOR DAY 2013
11 44 91 159 337 721
14 32 42 69 130 247 536 496 521 607 692 635 7 14 61 172 354 1,045 1,295 1,522 1,332
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 9M'13
Operating Income Expenses Net Profit Amounts in AED Mn
1/11
…AND A STRONG FRANCHISE
ANALYST & INVESTOR DAY 2013
Source: Published Financial Results
2/11
DIVERSIFIED PORTFOLIO
Cards SBS 2,308 7% PIL 302 1% Mortgages 3,020 9% Wealth 2,066 7% Others 66 0%
TOTAL PORTFOLIO AED 32.10BN(1)
2,308 1,601 2,405
INCREMENTAL PORTFOLIO SINCE MAY 2011 (AED MN)
ABU DHABI GOVT. NATIONAL HOUSING LOANS AED 14.35BN ABU DHABI GOVT. NATIONAL HOUSING LOANS AED 14.35BN
ANALYST & INVESTOR DAY 2013 National Loans 20,245 63% Cards 4,095 13%
- Portfolio increase in last 2 years primarily in Cards & SBS
- Wealth portfolio increased by AED 1.6Bn
- Portfolio increase in last 2 years primarily in Cards & SBS
- Wealth portfolio increased by AED 1.6Bn
141
- 576
- 117
(1) As of Sept’13
3/11
PRUDENT CREDIT WITH ADEQUATE PROVISIONS
- Stable Loss rates
- Safe industries and segments
- Chase the Good & Avoid the
Bad
- Stable Loss rates
- Safe industries and segments
- Chase the Good & Avoid the
Bad
ANALYST & INVESTOR DAY 2013
Bad
- Credit Scoring framework
- Close portfolio monitoring
Bad
- Credit Scoring framework
- Close portfolio monitoring
100% 100% 101% 101% 101% 101% 100% 100%
PROVISION COVERAGE 4/11
POSITIVE UAE OUTLOOK
- Economic activity and trade improving. Business confidence in the region will
- strengthen. UAE considered safe haven.
- Higher revenue from oil production, large increases in public spending will encourage
business momentum in UAE.
- Abu Dhabi: Economic Vision 2030 – Roadmap for economic progress.
- Tourism, Trade, Infrastructure, Healthcare, Construction, Private Sector showing robust
growth.
- Economic activity and trade improving. Business confidence in the region will
- strengthen. UAE considered safe haven.
- Higher revenue from oil production, large increases in public spending will encourage
business momentum in UAE.
- Abu Dhabi: Economic Vision 2030 – Roadmap for economic progress.
- Tourism, Trade, Infrastructure, Healthcare, Construction, Private Sector showing robust
growth.
ANALYST & INVESTOR DAY 2013
- Business environment, government support in SME Sector and confidence in real
estate, will benefit SME and Wealth Segments CONCERNS
- Flight of capital
- Real Estate bubble
- Impact of Credit Bureau
- Business environment, government support in SME Sector and confidence in real
estate, will benefit SME and Wealth Segments CONCERNS
- Flight of capital
- Real Estate bubble
- Impact of Credit Bureau
5/11
CONSUMER STRATEGY
ECONOMIC MODEL BUSINESS MODEL CULTURAL MODEL
- Focus on customer
segments
- Build customer driven
institution
- Build a customer driven
culture
- Create differentiation
through marketing
- Leverage Technology
innovation to enhance customer experience
- Build people capability.
- Reengineer key processes
ANALYST & INVESTOR DAY 2013
- Build additional customer
deposits to cover Asset/Liability gap
- Reengineer key processes
- Branches as showrooms
focusing on sales and advice
- Diversity and fresh thinking.
- Controlled growth driven by
risk analytics, pragmatic credit policy, responsible collections
- Investing for the future
while relentlessly focusing
- n cost
6/11
SEGMENTED CUSTOMER VALUE PROPOSITION
Lifestyle experiences Research based advice through dedicated RM Offshore Linkage Value for money experiences Virtual Relationship Manager
Affluent AED 40K+ P.M.
- r AUM AED 350K+
Market Share 5%
AED 20K <40K SALARY
Affluent Value Proposition Wealth Management Solutions – Insurance and Investments SME & Mortgage Bundle World Elite Debit/Infinite Credit Card Mass Value Proposition Employee Banking Personal Loans
PROPOSITION AND BUNDLES CUSTOMER EXPERIENCE SBS
Market share 5%
SBS Bundle with enhanced CX through technology
1 4 2 3
ANALYST & INVESTOR DAY 2013 Virtual Relationship Manager Privileged experiences Streamlined product fulfillment Tiered benefits to encourage relationship expansion Mobile Banking Alternate channels Facebook Banking
SALARY Market share 10% AED 5K <20K SALARY Market share 7.3% <AED 5K SALARY NON-BANKABLE
Personal Loans Credit Cards Insurance
WPS
Lower Mass Value Proposition Employee Banking Endowment Plans Personal Loan Mass Credit Card Low value Insurance
7/11
CONSUMER BANKING TRANSFORMATION
CUSTOMER EXPERIENCE MARKETING TECHNOLOGY
3 KEY ELEMENTS
ANALYST & INVESTOR DAY 2013
Leverage Technology innovation to gain product & pricing efficiencies and raise customer experience. Create differentiation through Segment, Analytics, Cross Sell, Partnership /Alliances, Digital, Corp
- rate Payroll.
Build customer driven institution. Enhance overall service across segments and channels.
TO PROVIDE A CLEAR FRAMEWORK TO FIND EFFICIENCIES IN OUR PORTFOLIOS,
CLIENT SEGMENTS AND ACHIEVE A HIGHER DISCIPLINE IN CAPITAL
& RESOURCE ALLOCATION
8/11
DIGITALIZATION AND MOBILE TECHNOLOGY
User Interfaces Change Enhanced Feature Personal Financial Enhanced Banking Features Mobile Wallet Personal Financial User Interface Re- Design & Branding Social Banking Content Management
INTERNET BANKING MOBILE PLATFORM ECOSYSTEM WEBSITE/ MICRO SITES
ANALYST & INVESTOR DAY 2013
Personal Financial Management & 360 View Live Assistance Personal Financial Management Value Added Services Content Management CHANGING CUSTOMER BEHAVIOUR CHANGING CUSTOMER BEHAVIOUR RAPID CHANGES IN TECHNOLOGY RAPID CHANGES IN TECHNOLOGY
9/11
CREATING DIFFERENTIATION
WHOLESALE/ EMPLOYEE BANKING PARTNERSHIPS
AND
ALLIANCES One bank value proposition Ferrari, MASDAR, Manchester City
ANALYST & INVESTOR DAY 2013
ANALYTICS & RESEARCH DIGITAL MARKETING Predictive modeling, Pricing Campaign Management Drive digital sales & Channel partnerships
10/11
IN SUMMARY…
BUILD ON STRONG CUSTOMER FRANCHISE CONTINUE TO DIVERSIFY PORTFOLIO / REVENUE BASE
ANALYST & INVESTOR DAY 2013
MAINTAIN TIGHT COST & RISK DISCIPLINE INVEST FOR THE FUTURE – TECHNOLOGY, MARKETING, CUSTOMER EXPERIENCE
11/11
Q&A
AMIT WANCHOO – HEAD OF CONSUMER BANKING
SESSION 3
SIMON PENNEY – HEAD OF WHOLESALE AND INTERNATIONAL BANKING
Formation of Wholesale Banking Group Focus on differentiating and diversifying the client base Solid foundation anchored in the UAE with evolving international presence
WBG KEY THEMES
ANALYST & INVESTOR DAY 2013
Increase contribution from International Banking Align control and support functions to ensure consistently high service levels Invest in core products to diversify revenue streams
1/11
AED 3,051Mn AED 2,458Mn
ROBUST AND CONTINUOUS REVENUES GROWTH
ANALYST & INVESTOR DAY 2013
AED 1,424Mn 2008 2009 2010 2011 2012 9M'13 2/11
AN AWARD-WINNING FRANCHISE
2013 Emal Phase II MLA USD 2,925Mn Project Finance 2013 Aldar Etihad JV Sole Bookrunner 2013 Etihad USD 350Mn Aircraft Financing 2013 Giti Global Singapore 2013 Gunvor 2013 Octal Petrochemicals 2013 Aldar USD Reg S Sukuk JLM & Bookrunner Current Tata Motors MLAB USD 500Mn Term Loan
ANALYST & INVESTOR DAY 2013
MLA 2013 Fujairah Oil Terminal MLA USD 250Mn Project Finance MLA USD 420Mn Structured Finance 2013 Gulf Marine Services USD 340Mn Structured Finance 2013 Taqa MLA USD 2,500Mn Revolving Facility MLA & Bookrunner USD 120Mn Trade Facilities MLA & Bookrunner USD 950Mn Revolving Facility MLA USD 565Mn Term Facility Sole Bank 2013 Major Korean EPC USD 285Mn Project Guarantee
3/11
DIVERSIFICATION IS KEY
PRODUCT DIVERSIFICATION
- Establish core product capabilities
- Treasury & Global Markets
- Global product teams
- Maximize cross sell across FGB Group
CLIENT DIVERSIFICATION
- Focused resource allocation
- Increase share of wallet
- Acquire new clients
- Account planning and wallet sizing
- Introduce Global Relationship Managers
ANALYST & INVESTOR DAY 2013
INTERNATIONAL DIVERSIFICATION
- Establish one operating model globally
- Centered on clients' cross border trade and
finance needs
- Selectively enter new markets
- Disciplined strategy for non-presence countries
4/11
SIGNIFICANT OPPORTUNITY IN THE UAE
Very Large Large TURNOVER RANGE (AED MN)
500
8.5 5.4 REVENUE POOL (AED BN)
TARGET MARKET ESTIMATED AT AED 18BN IN REVENUES IN THE UAE
> 500 ANALYST & INVESTOR DAY 2013
Medium Small
100 10 <10
27 7.1 6.8
Source: Dubai Chamber of Commerce, BCG
5/11
INTRODUCE CORPORATE CLIENT SEGMENTATION
Corporate & Investment Banking
- Revenue potential
- Multi-product
- Cross-border
- Solutions need
CRITERIA NEW BUSINESS UNIT
20%
ANALYST & INVESTOR DAY 2013
80% Corporate Banking
- Core client portfolio
- Working capital led
- Transaction banking
- Domestic focus
6/11
EXPAND PRODUCT CAPABILITIES
EXISTING CAPABILITY NEW CAPABILITY
DEBT MARKETS
- Limited primary origination
- Limited structured finance
- Limited loan distribution
capability
- Establish Debt Markets unit
- Primary origination
- DCM
- Structured finance
- Distribution focus
GLOBAL TRANSACTION SERVICES
- Vanilla cash & trade
- Limited online capability
- Limited in-house expertise
- Establish Global Transaction Services
- Advisory & solutions trade focus
- Investment in channels
- Combine with financial institutions
ANALYST & INVESTOR DAY 2013
- Combine with financial institutions
ISLAMIC FINANCE
- Limited distribution reach
- Limited product offer
- Limited in-house expertise
- Establish Islamic platform
- Full range of Islamic products
- Standardized Islamic proposition
CORPORATE FINANCE
- Limited
capability
- Establish Corporate Finance unit
- Corporate advisory
- Complimentary with Debt Markets
TREASURY & GLOBAL MARKETS To be covered in subsequent presentation
7/11
INTERNATIONAL TRADE OPPORTUNITY
RANK 2010 2030 Japan India
TRADE CORRIDORS (% OF GLOBAL TRADE IN 2030 AND 2050) UAE EXPORT (TOP 5 EXPORT DESTINATIONS)
- MID. EAST – EM. ASIA
INTRA-ASIA 23.8% / 27.4%
1 2
ANALYST & INVESTOR DAY 2013
India Turkey Korea China Singapore Japan China Korea
- MID. EAST – EM. ASIA
4.2% / 5.8% 23.8% / 27.4% AFRICA – EM. ASIA 3.3% / 6.0%
2 3 4 5 8/11
INTEGRATED GLOBAL OPERATING MODEL
DUBAI & NE I F I F DEBT MARKETS DEBT MARKETS GLOBAL TRANSACTION SERVICES GLOBAL TRANSACTION SERVICES INTERNATIONAL NETWORK FIG FIG ABU DHABI Corporate Bank Corporate Bank
- rate Investment Bank
- rate Investment Bank
Corporate Bank Corporate Bank
- rate Investment Bank
- rate Investment Bank
Singapore Hub Singapore Hub India India Libya Libya Qatar Qatar New Countries New Countries
- n-Presence Countries
- n-Presence Countries
ANALYST & INVESTOR DAY 2013
ISLAMIC FINANCE ISLAMIC FINANCE TREASURY & GLOBAL MARKETS TREASURY & GLOBAL MARKETS CORPORATE FINANCE CORPORATE FINANCE Corpor Corpor Corpor Corpor
CONTINUED FOCUS ON:
- ALIGNING CONTROL AND SUPPORT FUNCTIONS
- AND RISK MANAGEMENT
CONTINUED FOCUS ON:
- ALIGNING CONTROL AND SUPPORT FUNCTIONS
- AND RISK MANAGEMENT
Non Non
9/11
ALIGNING CREDIT RISK AND STRATEGY
- Strong focus on target markets
- One credit risk model across WBG
- Focus on industry and obligor caps to manage concentration risk
globally
- Strong focus on target markets
- One credit risk model across WBG
- Focus on industry and obligor caps to manage concentration risk
globally
ANALYST & INVESTOR DAY 2013
- Risk adjusted return criteria rolled out to aid decision making
- Credit risk resources aligned with WBG strategy
- Risk adjusted return criteria rolled out to aid decision making
- Credit risk resources aligned with WBG strategy
10/11
WBG KEY THEMES
Formation of Wholesale Banking Group Focus on differentiating and diversifying the client base Solid foundation anchored in the UAE with evolving international presence
ANALYST & INVESTOR DAY 2013
Increase contribution from International Banking Align control and support functions to ensure consistently high service levels Invest in core products to diversify revenue streams
11/11
Q&A
SIMON PENNEY – HEAD OF WHOLESALE AND INTERNATIONAL BANKING
SESSION 4
CHRISTOPHER WILMOT – HEAD OF TREASURY & GLOBAL MARKETS
T&GM KEY THEMES
Strengthened and Diversified Funding Profile Transform our Treasury function into a Global Markets Business Capitalise on Opportunities presented by the retrenchment of International players
ANALYST & INVESTOR DAY 2013
Expand Synergies with Wholesale Banking and Consumer Banking Groups Invest in Technology to support the expansion of our product offering Solutions based approach to client coverage
1/6
UPWARD REVENUE TREND SINCE 2010
AED 810Mn AED 771Mn
ANALYST & INVESTOR DAY 2013
AED 437Mn 2008 2009 2010 2011 2012 9M'13 2/6
FUNDING PROFILE
- Comfortable LD ratios at WBG and CBG level
- Comfortable LD ratios at WBG and CBG level
Strengthened funding position Strengthened funding position
77% 80% 79% 83% 195% 191% 154% 134%
ANALYST & INVESTOR DAY 2013
- Reduced reliance on Short Term funding
- 35% of funding target of Medium Term
assets through Medium Term liabilities
- Diversification of Medium Term funding base
- Reduced reliance on Short Term funding
- 35% of funding target of Medium Term
assets through Medium Term liabilities
- Diversification of Medium Term funding base
Improved maturity profile Improved maturity profile
Dec'10 Dec'11 Dec'12 Sep'13 LDR - Wholesale Bank LDR - Consumer Bank
3/6
OUR VISION OF A SOLID T&GM BUSINESS
SALES
PRODUCT DEVELOPMENT AND STRUCTURING MONEY MARKET/ ALM PROPRIETARY INVESTMENT ASSET MANAGEMENT
ANALYST & INVESTOR DAY 2013
TRADING ISLAMIC RESEARCH
“FULL SERVICE”
4/6
THREE-YEAR ACTION PLAN
Service Centre Approach Service Centre Approach Limited Product Breadth Limited Product Breadth UAE centric, middle market client focus with high business concentration UAE centric, middle market client focus with high business concentration Client-centric, Solution-driven sales approach Client-centric, Solution-driven sales approach Cross-asset product suite, including Islamic & eCommerce solutions Cross-asset product suite, including Islamic & eCommerce solutions Diversified client base across GCC & Asia, with high growth rates in new and multi- product relationships Diversified client base across GCC & Asia, with high growth rates in new and multi- product relationships
PRE-2012 BY 2015
ANALYST & INVESTOR DAY 2013
Intermediary model, limited warehousing
- f risk
Intermediary model, limited warehousing
- f risk
No research capability No research capability Internally Managed investment portfolio Internally Managed investment portfolio product relationships product relationships Structuring & Trading capability with global cross asset market coverage 24/6 Structuring & Trading capability with global cross asset market coverage 24/6 Publication of FGB ‘House View’ Publication of FGB ‘House View’ Establish Asset Management Business Establish Asset Management Business
5/6
2014 INITIATIVES
- Expand Synergies with WBG and CBG
- Strengthen and Diversify Client Relationships
- Expand Synergies with WBG and CBG
- Strengthen and Diversify Client Relationships
AMBITIOUS SET OF ACTIONS… …DESIGNED TO MEET OUR MAIN OBJECTIVES
Enhanced Global Markets Experience Enhanced Global Markets Experience
ANALYST & INVESTOR DAY 2013
- Upgrade Infrastructure
- Expand Product Offering to include eCommerce
solutions
- Launch Research Platform
- Initiate Asset Management Implementation
- Upgrade Infrastructure
- Expand Product Offering to include eCommerce
solutions
- Launch Research Platform
- Initiate Asset Management Implementation
Diversification of Revenue Streams Diversification of Revenue Streams Sustainable Growth Sustainable Growth
6/6
Q&A
CHRISTOPHER WILMOT – HEAD OF TREASURY & GLOBAL MARKETS
SESSION 5
ARIF SHAIKH – CHIEF RISK OFFICER
We operate in the right geographies that have robust growth outlook and strong underlying fundamentals While we scale new heights; we remain focused on the basics – strong capital and liquidity, robust portfolio quality, diligent risk
KEY THEMES
ANALYST & INVESTOR DAY 2013
management and pro-active approach towards regulatory requirements At the core is a robust governance and enterprise risk management framework to manage diverse risks in an integrated manner across the Group & partner business in achievement of Group objectives
1/13
- Real GDP growth expected to be c. 3.5%; Non oil GDP growth to stay robust
at c. 4%+
- Strong outlook for traditional non oil sectors in the backdrop of strong links
with Asia and UAE’s safe heaven status in MENA
- Improved sentiment on Dubai debt critical for refinancing needs
- Abu Dhabi infrastructure spending to continue
UAE ECONOMIC OUTLOOK
ANALYST & INVESTOR DAY 2013
- High returns in equity markets; Improved Real estate sentiment (to be kept
under watch)
- Significant improvement in capital market access and liquidity
- Steady
improvement in credit growth; however, restructuring & debt repayment burdens to persist
- New measures towards strengthening of regulatory environment in the
pipeline
2/13
WHILE WE HAVE DEMONSTRATED ROBUST GROWTH, WE’VE ALWAYS FOCUSED ON
RISK FUNDAMENTALS AS WELL
CBUAE Threshold BII / BIII Threshold 2010 2011 2012 H1’ 13 Q3 ’13 Capital CAR > 12% > 8% 23.0% 21.1% 21.1% 19.2% 19.5% CE - T1 Ratio
- > 4.5%
16.2% 17.3% 15.0% 15.7% 15.7% Tier I Ratio > 8% > 6% 19.3% 17.3% 17.7% 18.4% 18.5%
FGB’S KEY RISK INDICATORS
ANALYST & INVESTOR DAY 2013
Tier I Ratio > 8% > 6% 19.3% 17.3% 17.7% 18.4% 18.5% Leverage Ratio
- > 3%
11.6% 10.9% 10.6% 10.7% 10.7% Liquidity Regulatory LD Ratio < 100%
- 80.2%
84.5% 79.1% 84.6% 81.3% LCR
- > 60%
- 58.9%
76.3% 77.3% 113.2% USRR < 100%
- 91.3%
95.1% 98.8% 94.5% Quality NPL Ratio
- 3.7%
3.4% 3.3% 3.6% 3.9% Provision Coverage
- 98.4%
98.4% 96.1% 80.1% 75.1%
3/13
TO ESTABLISH BEST IN CLASS ENTERPRISE RISK MANAGEMENT (ERM) FRAMEWORK
ALIGNED WITH GROUP’S VISION TO DRIVE CONSISTENT SHAREHOLDER VALUE.
- Comprehensive Risk Appetite framework aligned with Strategic Objectives of the
Group
- Continuous monitoring of Group’s Risk Profile to ensure it remains within risk
appetite
ERM STRATEGIC IMPERATIVES
OUR RISK MANAGEMENT VISION
ANALYST & INVESTOR DAY 2013
- Implementation of Sound Governance Framework for adequate accountability and
responsibility
- Continuous Review and Enhancement in risk management standards in line with
external environment and expectations of shareholders
- Implementation of Comprehensive Technology & MIS framework for effective risk
management
- Full Compliance with all relevant Regulatory Requirements
- Continuous Benchmarking with International Best Practices
4/13
ERM FRAMEWORK ERM FRAMEWORK
SOUND RISK APPETITE FRAMEWORK SOUND RISK APPETITE FRAMEWORK CLEAR RISK POLICY FRAMEWORK CLEAR RISK POLICY FRAMEWORK COMPLIANCE WITH REGULATORY REQUIREMENTS COMPLIANCE WITH REGULATORY REQUIREMENTS STRONG CORPORATE
AND RISK
GOVERNANCE STRONG CORPORATE
AND RISK
GOVERNANCE
ATERIAL RISKS ATERIAL RISKS
INVESTMENT IN RISK CAPABILITIES & RESOURCES INVESTMENT IN RISK CAPABILITIES & RESOURCES
HOLISTIC ERM FRAMEWORK
ANALYST & INVESTOR DAY 2013
F
REQUIREMENTS REQUIREMENTS ROBUST RISK TECHNOLOGY AND PROCESSES ROBUST RISK TECHNOLOGY AND PROCESSES ENHANCED RISK ANALYTICS ENHANCED RISK ANALYTICS COMPREHENSIVE MIS FOR EFFECTIVE
MONITORING
COMPREHENSIVE MIS FOR EFFECTIVE
MONITORING
ALL BUSINESS AND SUPPORT FUNCTIONS OF FGB GROUP ALL BUSINESS AND SUPPORT FUNCTIONS OF FGB GROUP ALL MAT ALL MAT
5/13
STRONG & INDEPENDENT GOVERNANCE FRAMEWORK COVERING ALL MATERIAL
RISKS ACROSS THE GROUP
Board of Directors Board of Directors Board Committees Board Committees
Executive Committee Risk & Compliance Management Committee Remuneration & Nomination Committee Audit Committee
STRONG CORPORATE RISK GOVERNANCE
ANALYST & INVESTOR DAY 2013
Management Committees Management Committees
Credit Risk Wholesale Banking Credit Committee
Enterprise Risk Management Group Enterprise Risk Management Group
Compliance & Ops Risk Committee dit Consumer Banking Credit Committee HR Steering Committee Asset Liability Committee Real Estate Committee Investment Committee IT Steering Committee Head of Enterprise Risk Management Market Risk ALM Risk Operational Risk Compliance Risk Basel II / III Group CRO ERM
6/13
STRONG CAPITAL BASE TO SUPPORT BUSINESS EXPANSION, FULFILL REGULATORY
REQUIREMENTS AND MAINTAIN STRONG CREDIT RATINGS
- Capital
plans are drawn up annually and are approved by the Board
- The
plan ensures availability
- f
5.3 7.4 8.2 8.9 9.5 9.3 0.7 2.0 0.2 1.8 23.0% 21.1% 21.1% 19.2% 19.5% 18% 20% 22% 24% 10 20 30 40
Basel II Pillar I CAR*
STRONG CAPITAL BASE
ANALYST & INVESTOR DAY 2013
adequate levels and optimum mix
- f various components of capital;
this is to take care of all scenarios
- The
Group maintains sufficient surplus capital even under extreme stress scenarios
15.3 17.4 18.2 18.9 19.5 29.3 30.7 32.0 30.2 31.8 16% 2010 2011 2012 H1' 13 Q3' 13 Pillar 1 Capital Demand Total Capital Capital Adequacy Ratio (Pillar 1)
* Capital adequacy decreased in 2013 due to repayment of Tier II Capital All absolute figures in AED B
Pillar II Surplus Capital 2010 2011 2012 Q3’ 13 Moderate Stress 7.72 8.04 8.34 6.36 Extreme Stress 5.61 6.56 5.51 3.79
(left axis) (left axis) (right axis)
7/13
ROBUST LIQUIDITY MANAGEMENT TO MEET THE TARGETED BALANCE SHEET
GROWTH STRATEGY
- Continuous assessment of
structural liquidity (Liquidity Ratios, Liquidity Gaps)
- Periodic
stress testing based
- n
76.3% 77.3% 113.2% 0% 30% 60% 90% 120%
Liquidity Coverage Ratio (LCR)
(As per revised BASEL III Guideline issued in Jan 2013)
ROBUST LIQUIDITY
ANALYST & INVESTOR DAY 2013
- Periodic
stress testing based
- n
multiple scenarios (Bank specific and market specific scenarios)
- Detailed contingency funding plan
(Maintenance
- f
adequate high quality liquid assets and lines with CBUAE)
0% Q1 13 Q2 13 Q3 13
LCR consistently above the glide path prescribed by Basel LCR consistently above the glide path prescribed by Basel
80.2% 84.5% 79.1% 84.6% 81.3% 96.8% 101.2% 96.1% 99.4% 95.7% 50% 70% 90% 110% 2010 2011 2012 H1' 13 Q3' 13
Advances to Stable Deposit Ratio (Regulatory) Loans to Deposit Ratio (Internal)
LD ratio (Regulatory & Internal)
8/13
ACTIVE PORTFOLIO MANAGEMENT WITH STRONG CONTROLS OVER DELINQUENCIES
AND NPLS ALONG WITH ADEQUATE PROVISION COVERAGE
- Well diversified lending portfolio
across wide range of products, industries & customer segments
3.7% 3.4% 3.3% 3.6% 3.9% 89.4% 105.1% 96.1% 80.1% 75.1% 0% 30% 60% 90% 120% 2010 2011 2012 H1' 13 Q3' 13 0% 4% 8% 12%
Lending Portfolio
HEALTHY PORTFOLIO QUALITY
ANALYST & INVESTOR DAY 2013
- Strong limits framework both at
counterparty level as well as portfolio level
- Stability in the NPL levels
- Bi-annual review by CBUAE &
external auditor
Investment Book Quality
13.4 18.5 16.9 16.2 16.3 87.0% 85.6% 78.4% 79.5% 77.6% 0% 25% 50% 75% 100% 2010 2011 2012 H1' 13 Q3' 13 5 10 15 20 Total Investment Book Investment Grade 2010 2011 2012 H1' 13 Q3' 13 NPL Ratio Provision Coverage (left axis) (right axis) (left axis) (right axis)
9/13
PRUDENTIAL REGULATIONS AML & SANCTIONS
Proactive Basel II compliance well ahead of timelines Compliance & Proactive Basel II compliance well ahead of timelines Compliance & Customer
- nboarding
Transaction monitoring Customer
- nboarding
Transaction monitoring
COMPREHENSIVE
INTEGRATED COMPLIANCE AND INFORMATION SECURITY FRAMEWORK ACROSS THE GROUP (UAE AND ALL INTERNATIONAL LOCATIONS)
- Secure access
- Email controls (spam, viruses)
CUSTOMERS
- Connect to FGB networks for
VENDORS /
COMPLIANCE & INFORMATION SECURITY
ANALYST & INVESTOR DAY 2013
Extraterritorial Regulations
FATCA UK Bribery Act International
- versight
FATCA UK Bribery Act International
- versight
Compliance & Product reviews Compliance protocols Compliance & Product reviews Compliance protocols monitoring STR reporting Payment screening Policy management monitoring STR reporting Payment screening Policy management
- Connect to FGB networks for
support, no data copying
VENDORS / PARTNERS
- Data leakage prevention
- Prevention from malicious code
STAFF
- Multiple firewalls against
network intrusions
- Active monitoring of hack
attempts
HACKERS / EXTERNAL
THREATS
10/13
- Impact of slowdown in emerging markets
- n oil prices and regional trading sector
- Impact on fiscal spending amid renewed
global recession or oil price shocks Clear strategy for non presence countries and business growth in APAC Diversification into
- ther
high growth sectors
BUSINESS CHALLENGES
LOOKING AHEAD – KEY CHALLENGES
ANALYST & INVESTOR DAY 2013
- Re-creation of asset bubbles (imprudent
risk taking & re-leveraging amidst loose liquidity)
- Impact on GRE debt re-financing with
continued recession in the EU area
- Continued pressure on lending margins
Strict implementation of portfolio limits and policy measures Implementation
- f
risk pricing and capital allocation based on risk adjusted returns Focus towards fee based income & build up of product portfolio to enhance cross- sell
11/13
- Large
Exposure Caps: Limits
- n
exposure to various counterparty types
- Restrictions
in the consumer banking segment (borrowing limits, DBR, LTV etc.) FGB within defined thresholds; continued diversification to ensure compliance Enhanced focus towards SME and Wealth Management segments
LOOKING AHEAD – KEY CHALLENGES
REGULATORY CHALLENGES (LOCAL & GLOBAL)
ANALYST & INVESTOR DAY 2013
etc.)
- Restrictions on mortgage lending
- Basel III: Enhanced capital & liquidity
standards for higher stability & liquidity
- FATCA: Account monitoring & disclosures
for US citizens (to start in 2014) Selective mortgage lending based
- n
market inputs at the most granular level FGB in compliance with Basel III standards; continued efforts for further enhancements FATCA gap analysis completed and system implementation planned for 2014
12/13
We have a robust business model that has delivered continuous shareholder value We have always focused on strong risk fundamentals and have put in place a comprehensive ERM framework to complement the business model
IN SUMMARY…
ANALYST & INVESTOR DAY 2013
We are closely monitoring the dynamic business environment and associated risks and are further enhancing the ERM framework Finally, we stay firmly committed towards ensuring sustained value creation for our shareholders
13/13
Q&A
ARIF SHAIKH – CHIEF RISK OFFICER
CLOSING REMARKS
KARIM KAROUI – CHIEF FINANCIAL OFFICER
LINKING STRATEGY TO PERFORMANCE
STRATEGY MEDIUM-TERM EXPECTATIONS
- Relationship deepening to
drive revenue stream diversification
- Relationship deepening to
drive revenue stream diversification
- Disciplined growth
- Disciplined growth
- Higher fee income contribution
- Higher fee income contribution
- Low double-digit growth
- Liquidity ratios (regulation)
- Low double-digit growth
- Liquidity ratios (regulation)
BALANCE SHEET MANAGEMENT BALANCE SHEET MANAGEMENT REVENUES REVENUES
ANALYST & INVESTOR DAY 2013
- Invest in our people and
infrastructure
- Invest in our people and
infrastructure
- Cost-to-income ratio below 25%
- Cost-to-income ratio below 25%
- Drive higher returns
- Drive higher returns
- RoE @ 18%
- RoE @ 18%
- Monitor capital consumption
- Monitor capital consumption
- Tier 1 ratio @ 15%
- Tier 1 ratio @ 15%
EFFICIENCY EFFICIENCY PROFITABILITY PROFITABILITY CAPITAL CAPITAL
1/1