Emirates NBD Investor Presentation August / September 2014 1 - PowerPoint PPT Presentation

Emirates NBD Investor Presentation August / September 2014 1

Important Information Disclaimer The material in this presentation is general background information about Emirates NBD's activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take in to account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. The information contained here in has been prepared by Emirates NBD. Some of the information relied on by Emirates NBD is obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. Forward Looking Statements It is possible that this presentation could or may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could or other words of similar meaning. Undue reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group’s plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or implied in forward looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions. Emirates NBD undertakes no obligation to revise or update any forward looking statement contained within this presentation, regardless of whether those statements are affected as a result of new information, future events or otherwise. 2

Contents Operating Environment Emirates NBD Profile Financial and Operating Performance Strategy Outlook Appendix 3

UAE Economic Update Highlights Real GDP Growth Forecasts • 2014 growth estimates revised upwards to 5% . Oil production has Country 2008 2009 2010 2011 2012 2013 2014F 2015F been broadly stable in Q2 2014. Hydrocarbons is not expected to UAE 3.2% -4.8% 1.6% 4.9% 4.7% 5.2% 5.0% 4.8% contribute significantly to overall growth in 2014. China 9.6% 9.2% 10.4% 9.3% 7.7% 7.7% 7.0% 7.3% • Non-oil sector expected to be main driver of UAE growth in 2014. Eurozone 0.4% -4.4% 2.0% 1.6% -0.3% 0.1% 0.5% 1.5% PMI data reached a record high in June, on the back of strong output Hong Kong 2.1% -2.5% 6.8% 4.8% 1.5% 2.9% 3.2% 3.5% and new order growth, reflecting improved domestic and external demand. India 8.2% 6.6% 9.4% 7.7% 4.8% 4.7% 4.8% 5.5% Japan -1.0% -5.5% 4.7% -0.5% 1.5% 1.5% 2.0% 1.5% • Inflation expected to accelerate to an average 3.0% in 2014 from an Singapore 1.9% -0.6% 15.4% 5.3% 2.5% 3.9% 3.8% 3.9% average of 1.1% in 2013, on higher housing costs and rising input prices. UK -0.8% -5.2% 1.7% 1.1% 0.3% 1.7% 2.5% 2.0% US -0.3% -2.8% 2.5% 1.8% 2.8% 1.9% 3.0% 3.5% Saudi 8.4% 1.8% 7.4% 8.6% 5.8% 3.8% 4.7% 4.0% Source: Bloomberg, Emirates NBD Research UAE PMI – Non Oil Private Sector Activity UAE Oil production 3.5 140 59 58 3.0 120 57 USD per barrel 2.5 100 56 M bpd 2.0 80 55 1.5 60 54 1.0 40 53 52 0.5 20 51 0.0 0 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 50 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 OPEC oil price (rhs) UAE Oil Production (lhs) 4 Source: Bloomberg, Emirates NBD Research Source: Markit/HSBC

UAE Economic Update (cont) Highlights UAE CDS spreads • Total bank loan growth reached 8.3% y-o-y in April . The growth rates Dubai (lhs) Abu Dhabi (rhs) 730 280 for loan and deposit growth have been broadly stable in the first four months of the year 630 230 • Money supply grew at the fastest rate since November 2008 , reaching 530 180 23.6% y-o-y in April. This reflects strong growth in both demand deposits 430 bps bps and quasi money (FX and longer term dirham deposits) 330 130 • 3M EIBOR rate continued to ease as liquidity in the banking system 230 improved. The spread between 3M EIBOR and 3M LIBOR is now at the 80 130 lowest level since October 2008 30 30 • Dubai CDS tightened to a post crisis low of 135 bps mid-June, before Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 widening slightly to current levels around 156bp, reflecting confidence in the economic recovery and prospects for growth going forward. Source: Bloomberg, Emirates NBD Research EIBOR – LIBOR spreads Bank deposit and loan growth* EIBOR LIBOR Spread 6% 18% Bank deposits (% y/y) Bank Loans (% y/y) 5% 16% 14% 4% 12% 3% 10% 2% 8% 6% 1% 4% 0% 2% -1% 0% -2% -2% Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 -4% Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 5 Source : Bloomberg, Emirates NBD Research Source : UAE Central Bank, *loan growth gross of provisions

Dubai Economic Update Highlights Dubai: Real GDP growth • Dubai’s economy expanded 4.6% in 2013 as manufacturing, 6% 5.0% 5.0% 4.6% hospitality and transport and logistics expanded robustly. The 4.1% 3.5% 3.5% construction sector also contributed positively to growth for the first 4% 3.0% time since 2008, albeit marginally at 1.3% y-o-y 2% • GDP growth expected to accelerate to 5% in 2014 on the back of % y/y continued growth in tourism and hospitality, boosting trade, transport 0% and associated services as well as a faster recovery in the construction sector. -2% • Infrastructure spending ahead of Expo 2020 will remain the main driver -4% of growth in the construction sector, although the delivery of recently -4.3% launched residential developments will also contribute over the next -6% few years 2008 2009 2010 2011 2012 2013 2014f 2015f Source: Dubai Statistics Centre, Emirates NBD Research Dubai’s fastest growing sectors Composition of Dubai GDP Other Manuf Trans. & Comm. Trade Dubai GDP by Sector (%) - 2013 5% Fin. Serv. Hospitality Constr. & RE Hosp. 20 5% 15 Financial Trade 10 servcs. 29% 11% 5 % y/y 0 Transport, -5 comm. 15% -10 Manuf. 14% -15 Constr. & RE -20 21% 2010 2011 2012 2013 6 Source : Dubai Statistics Centre, Emirates NBD Research Source: Dubai Statistics Centre, Emirates NBD Research

Dubai Economic Update (cont) Highlights Dubai Airports passenger traffic • Tourism continues to be a key driver of Dubai’s growth with Dubai 7 30% International, the world’s second busiest international hub enjoying 25% 6 strong passenger growth of 9.2% in Jan-May 2014 over the same 20% 5 period last year, , despite major runway refurbishment in May/June. 15% 4 10% Mn • Growth has been driven by new partnerships (for example with 5% 3 Qantas), network expansion and the opening of new routes to Eastern 0% 2 -5% Europe, North & South America, Australia and Asia. 1 -10% • 0 -15% Hotel occupancy averaged 85% in Jan-May 2014 , broadly Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 unchanged from the same period last year. Hotels were able to increase rates by more than 7% on average year-to-date, despite a 7.4% increase in the supply of hotel rooms in Dubai. • Dubai’s non-oil foreign trade value increased 5.9% y-o-y in Q1 2014. Passenger traffic (Mn people) (lhs) Passenger traffic (% y/y) (rhs) Source: Dubai Airports, Emirates NBD Research Dubai: External trade growth trends Hotel occupancy and RevPAR 1,000 60% 100% 80% 800 40% 60% 40% AED Bn 600 20% 20% 0% 400 0% -20% -40% 200 -20% -60% Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 0 -40% 2006 2007 2008 2009 2010 2011 2012 2013 Imports (lhs) Exports & Re-Exports (lhs) RevPAR (% y/y) Hotel Occupancy (%) Imports (% y/y) (rhs) Exports & Re-exports (% y/y) (rhs) 7 Source: STR Global, Emirates NBD Research Source: Dubai Statistics Centre