B URGAN B ANK G ROUP I NVESTOR P RESENTATION 1 ST Q UARTER 2017 - PowerPoint PPT Presentation

B URGAN B ANK G ROUP I NVESTOR P RESENTATION 1 ST Q UARTER 2017

Burgan Bank – a journey of success from local bank to a regional powerhouse with more than 180 branches in 7 countries across the MENAT region. Inception Lunch of new identify Entering the UAE Market Entering the Iraqi Entering the Tunisian and announcing through Corporate Office Market through BOB Market through TIB expansion plan in DIFC Entering the Entering the Kuwait Projects Entering the Turkish Market Algerian Market Lebanese Market Company (KIPCO) through BBT through AGB through BOB becomes the branch largest shareholder 2

R ESILIENT BUSINESS MODEL + F OCUSED EXECUTION … KEY PERFORMANCE INDICATORS Q1’17 1 H IGH Q UALITY 5% 6% 0.6% 23% E ARNINGS Core revenue Jaws Cost of Credit True earnings Maintained with operating growth (1)(2) Ratio (1) growth (1)(3) efficiencies focus 2 8% 66% 1.1% 16.5% L EADING I NDICATORS ARE P OSITIVE Customer Time Deposits NPA Ratio Capital And selective growth Loans Contribution net of Adequacy continues Growth (2) collateral Ratio 3 14% 1.0 X 11.2 X M ANAGED BY R ETURNS Lower valuation promising ROTE PBV PE upside potential underlying (1)(3) 3 (1) Excluding one-offs; (2) Adjusting for FX depreciation; (3) After AT1 cost and excluding precautionary provisions;

A MID LOW GLOBAL AND REGIONAL GROWTH AND CURRENCY DEPRECIATION … Past 3 months Next 3 months Trump reforms  New US president Trump reforms are being  Tax reform and infrastructure spending plans in delayed; oil delayed. US Dollar Index (DXY) is down 3.0% year- the US are likely to be passed. Uncertainty about prices not lifted to-date. tightening of the monetary policy.  The Opec oil agreement to cut oil production  The Opec is likely to announce an extension of the by Opec came into force: high compliance within the Opec, agreement: impact on oil prices will depend on agreement but oil prices below year-end levels, due to high compliance outside Opec group and US shale oil inventories and increasing US production. production. Global and regional Next 3 months Past 3 months Challenging  Global: tensions over the possibility of disruption of  Global: Low global growth is hampered by persistent operating trade agreements and security situation in East Asia. structural problems, such as low productivity growth. environment:  Turkey: Domestic and regional tensions, involvement in  GCC: Lower-for-longer oil prices are impacting public low global and Syria and Iraq conflict, and extension of the emergency finances, despite subsidy cuts; regional instability persists. rule will continue to impact investor's sentiment.  Turkey: further political uncertainty ahead of the regional growth  Iraq: Domestic security is expected to improve. constitutional referendum. TRY, TND Turkish Lira – past 12 months Tunisian Dinar – past 12 months Kuwaiti Dinar – past 12 months strongly (23%) TRY depreciation (14%) TND depreciation (1%) KD depreciation 3.7 depreciated 3.50 2.0 (year-on-year) 2.9 2.3 against the 3.31 2.0 3.28 1.6 USD, KWD Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 mildly USDTRY 10 - year average USDTND 10 - year average KWDUSD 10 - year average 4 Source : Economic Indicators Burgan Bank Economic Research, as of Dec 2016.; Banking Sector latest Figures based from Countries Central Banks, IMF Article IV Consolation Reports and Bloomberg. Currency figures as of 9 April 2017. Note : 1. In 2017, a) CET1 requirements (9.5% Kuwait vs. 5.8% internationally); b) Tier 1 requirements (11% Kuwait vs.7.3% internationally) and c) total capital ratio (13% Kuwait vs. 9.3%).

D ELIVERING S OLID B USINESS P ERFORMANCE Revenue (1) USD million Net Interest Income (1) USD million - 1 Offs (0.8) 1 1 Offs (3) (3) 15% 2.3% 18% 2.4% 3% 5% 197 138 134 188 11 9 134 188 186 129 Q1'16 Q1'17 Q1'16 Q1'17 (3) (3) Foreign Exchange Impact NIM's Foreign Exchange Impact F&C Income to Revenues Q1’17: YoY Growth 3% 2% 5% 4% Net Profit (2) USD million Cost of Credit USD million 1 1 Offs (8) 1.3% 0.6% Cost of Credit 328% Coverage net of Collateral 378% 23% 67 54 46 17 67 21 54 13 10 17 10 1 Q1'16 Q1'17 Q1'16 Q1'17 Kuwait International Additional Precautionary Underlying Q1’17: YoY Growth as reported Q1’17: Cost of Credit 23% 7% 0.6% 1.8% After perpetual cost BBG Local Peers Avg. 5 (1) Adjusted for non recurring items; (2) Returns computed on reported net profit after AT1 Cost. (3) Q1’17 lost income from foreign exchange devaluation in subsidiaries after rebasing Q1’17 with Q1’16 rates; Note 1: Local peers Includes NBK, GBK and ABK.

A IMING TO DELIVER DOUBLE DIGIT RETURNS … Q1’16 Q1’17 Earnings Evolution | USDm 1.1 0.5 12.8 24.2 (7.6) 67 64 60 54 10 52 17 17 29 17 57 47 38 35 31 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Net Income excl. 1 offs after AT1 cost 1 Off’s Additional Precautionary Provisions Returns (1) % ROE ROTE RRWA 16.1% 15.0% 1.7% 2.2% 2.0% 0.2% 1.5% 13.0% 13.9% 13.2% 14.1% 1.5% (0.2%) (1.8%) (2.0%) AT1 Cost Additional Precautionary Q1'17 Q1'17 Q1'17 As reported adjusted Provisions for. 1 offs 6 (1) ROE & ROTE computed on Opening Equity.

W ITH PRUDENT BALANCE SHEET PROGRESSION … Customers Deposits Breakdown 14,310 14,118 13,972 14,052 13,836 Customer Loans USDm Q1’16 Q1’17 Other Other 4,623 4,539 4,500 4,547 4,435 Deman 2% Deman 3% d d 26% 27% USD USD Saving Saving 12.9b 12.9b 5% 5% 9,686 9,579 9,552 9,401 9,425 Time Time 66% 66% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Kuwait International YoY growth as reported YoY growth adjusted for FX Devaluation NPA to Gross Facilities 443% 407% 378% 385% Asset Quality USDm 328% 4.1% 3.9% 3.6% 3.5% 3.4% 1.6% 1.5% 1.4% 1.4% 1.4% 130% 125% 124% 2.5% 2.4% 109% 110% 2.2% 2.1% 2.0% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Kuwait International NPA’s net of collateral to Gross Facilities 802 767 682 677 666 1.4% 1.2% 1.1% 1.0% 1.0% 0.6% 0.6% 0.6% 0.5% 0.6% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 0.8% 0.5% 0.6% 0.5% 0.5% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Total NPAs Coverage Ratio Coverage Net of Collateral Kuwait International 7

C APTURING DIVERSIFICATION BENEFITS … Kuwait | KDm Turkey | TRYm Algeria | DZDm Iraq | IQDm Tunisia | USDm 2,911 12,146 13 110,524 172,948 C USTOMER 68% 24% 7% 1% 0.1% L OANS 2,838 9,342 98,158 247,209 21 33 144 2,721 4 25,452 54% 20% 13% 11% 2% R EVENUES (1) 35 115 2,384 14,165 3 1.0% 0.7% 0.0% 0.4% 9.4% C OST OF C REDIT 1.1% 1.4% 1.1% 6.4% 2.0% 60% 14% 26% 5% 41% N ET P ROFIT M ARGIN (2) 50% 20% -65% 28% 7% 16.5% 13.9% 19.7% 56.5% 21.2% CAR (3) 16.4% 17.9% 23.8% 53.8% 19.2% N UMBER OF 29 49 60 42 + 1 3 + 1 B RANCHES Q1’17 Contribution Q1’17 Figures Q1’16 Figures 8 (1) Excludes 1 offs items in Kuwait; (2) Net Profit Margin for Kuwait excl. precautionary provisions; (3) Based on CBK reporting and Kuwait CAR is for the Group. Note: Subsidiaries figures before consolidation adjustments.

B URGAN BANK HAS COMPETITIVE METRICS AMONGST PEERS AND BANKING UNIVERSE … EPS (6) Upside Potential Customer Loans Revenues Q1’17 JAW’s % COC % ROTE % Growth % Growth % Growth % PE(x) (2) PB(x) (2) 30% 8% (1) 5% (1)(3) 6% (4) 0.6% 14% (3)(4) 11.2x 1.0x #1 #2 #1 #2 #1 #2 Rankings Undervalued Undervalued (3%) 3% 7% (5) | 8% 4% 1.0% 15% 11.9x 1.4x 7% 20.0x 1.3x (6%) 0.1% 8% 2.4% 7% - - - - - - - - 10% 14.5x 0.9x (2%) 5% 3% 1.9% 6% MENAT Banks Comparative PB Ratios MENAT Banks Growth Matrix (8) Burgan Bank 25% Turkey 1.4x 1.2x Kuwait Bahrain 20% Net Income YoY Growth 15% 1.1x 1.6x Saudi Arabia Egypt Kuwait UAE Qatar 10% Lebanon 1.2x 1.1x 5% UAE Jordan Oman Saudi Arabia 0% Jordan 1.6x 0.7x Qatar Lebanon -5% Egypt Bahrain -10% 0.9x 1.0x Oman Turkey -30% -20% -10% 0% 10% 20% 30% Loans YoY Growth Note: CBK figures not reported as of 5/8/2017.. (1) Adjusted for foreign exchange devaluation (2) Closing Prices of 31/3/2017; (3) Burgan Bank figures excludes 1 off items; 9 (4) Burgan Bank ROTE Exclude Additional Precautionary Provisions and after AT1 Cost; (5) Revenue growth excluding Boubyan Bank (Islamic Bank); (6) EPS as reported and after AT1 cost; (8) MENAT banks figures based on latest filling by Bloomberg and PB ratios are country banks average. Source: Companies Financials. Note: Additional precautionary provisions for local banks are not disclosed.

I N S UMMARY K EY M ETRICS Q1’17 S TRONG FRANCHISE IN CHALLENGING OPERATING ENVIRONMENT R EVENUE G ROWTH Strength of franchise focused on high quality earnings 5% (1) ► True growth inertia maintained N ET P ROFIT G ROWTH ► Continue carefully to capture diversification benefits despite operating in highly volatile environments 23% (2) P OSITIVE J AWS 6.4% Good operating efficiencies and credit risk management ► Positive jaws achieved NPA R ATIO NET ► Optimized spending and rationalized investments 1.1% ► Asset quality in comfortable levels with healthy coverage ratios CAR ► Aligning risk appetite to strategy and use of capital 16.5% What's coming ahead ROTE ► Continue to strategically innovate 14.1% (2) ► Smart and selective growth/optimization of capital ► And aiming to deliver double digit returns 10 (1) Adjusted for one-offs and Lost income from foreign exchange devaluation; (2) Excluding one-offs, gross precautionary provisions and after AT1 cost.

T HANK Y OU 11