Mashreq 2Q 2017 FINANCIAL RESULTS PRESENTATION 16 July 2017 - PowerPoint PPT Presentation

Mashreq 2Q 2017 FINANCIAL RESULTS PRESENTATION 16 July 2017

Disclaimer The material in this presentation is general background information about MashreqBank’s activities current at the date of the presentation. It does not constitute or form part of and should not be construed as, an offer to sale or issue or the solicitation of an offer to buy or acquire securities of MashreqBank in any jurisdiction or an inducement to enter into investment activity. Although MashreqBank UAE has obtained the information provided from sources that should be considered reliable, it cannot guarantee its accuracy or completeness. The information provided is purely of an indicative nature and is subject to change without notice at any time. The person retrieving information is responsible for its selection and all aspects of its use. The information may only be used by the person retrieving it. The person retrieving the information may not transfer, duplicate, process or distribute it. The person retrieving the information is obliged to follow all instructions from MashreqBank concerning its use. No part of the content of this presentation may be copied. 2

2Q 2017 Results Performance Highlights Financial Results Appendix 3

Performance highlights > Stable growth in Net Profit (3.0% Y-o-Y) > Industry leading share of CASA in deposits (63.6%) > Consistently high fee and other income proportion (41.2%) > Steady growth in loans and advances (2.4% YTD) > Risk charge for 1H 2017 has decreased to AED 652 million ( 22.3% decrease Y -o-Y). Coverage ratio is at 150.1%, NPL to advances at 3.3% and General provisions at 1.6% of Credit Risk Weighted Assets > Prudent cost management continued and efficiency stands at 39.3% > Most diversified revenue base. Contribution from international operations is 22.2% 4

Financial highlights – Consolidated Income statement [AED million] Consolidated Income statement Comments > Operating income down by 5.5% 1H 2017 1H 2016 Variance primarily due to a 14.7% decline in fee Operating income 2,994 3,168 (5.5%) and commission income driven by a decline in loan processing fees > Operating expenses decreased by Operating expense 1,175 (2.4%) 1,204 2.4% driven by efficiency initiatives > Impairment charges decreased by Operating profit 1,819 1,964 (7.4%) 22.3% mainly as a result of a lower risk charge from the retail segment > Net profit increased by 3.0% primarily Impairment charges 652 838 (22.3%) on account of a decrease in impairment charges Net profit 1,104 1,071 3.0% 5

Financial highlights – Consolidated Balance sheet [AED million] Consolidated Balance sheet Comments > Total assets increased by 2.4% owing 30 Jun 2017 31 Dec 2016 Variance to increase in loans and advances and stood at AED 126 billion Total Assets 125,794 122,814 2.4% > Customer loans and advances at AED 62 billion, increased by 2.4% primarily Loans & Advances 62,430 2.4% 60,994 due to growth in conventional loans > Customer deposits increased by 1.1% to reach AED 78 billion – the growth in Customers’ deposits 77,855 77,041 1.1% conventional deposits of 1.7% was brought down by a 5.1% decline in Islamic deposits; CASA proportion remains high and constitutes 63.6% of Total Equity 19,822 19,486 1.7% total deposits > Total Equity increased by 1.7% mainly due to increase in retained earnings and Risk weighted assets 118,080 118,874 (0.7%) stands at 19.8 billion > Risk weighted assets decreased by 0.7% to reach AED 118.1 billion driven by a 23% decline in Market Risk 6

Financial track record 30 Jun 2017 31 Dec 2016 30 Jun 2016 Capital adequacy Tier I Capital Ratio 16.3% 16.0% 15.8% Total Capital Ratio 17.2% 16.9% 16.8% Liquidity Liquid Assets to Total Assets 29.7% 30.4% 26.6% 80.2% Advances to Deposits 79.2% 84.2% Asset quality 150.1% 151.1% 134.1% NPL Coverage Ratio 3.3% 3.1% 3.5% NPL to Gross Advances Performance 1.8% 1.6% 1.9% ROA 11.7% 10.6% 12.0% ROE 3.37% 3.52% 3.66% Net Interest Margin 39.3% Efficiency Ratio 39.0% 38.0% Fee and other income to total income 41.2% 42.2% 43.2% 7

2Q 2017 Results Performance Highlights Financial Results Appendix 8

Operating income, expense and net profit [AED million] Operating income and expenses Net profit Operating Profit Net Profit Operating income Operating expenses 1,964 1,641 3,168 1,535 1,819 2,994 1,460 1,041 1,104 1,071 929 601 606 891 569 1,204 1,175 546 557 539 2Q 2016 1Q 2017 2Q 2017 1H 2016 1H 2017 Cost 37% 39% 39% 38% 39% 1H 2016 1H 2017 2Q 2016 1Q 2017 2Q 2017 efficiency Operating income split by segments Key Points > 1H 2017 Operating Income decreased by 5.5% Y-o-Y and stands at AED 3.0 billion. The decline was as a result of a 14.7% fall in fee 3.17 (100%) 2.99 (100%) income and a 2.1% fall in Net Interest Income and Income from 5% 7% Islamic Financing 7% 7% 7% 7% Others > On a Q-o-Q basis 2Q 2017 operating income increased by 5.1% 23% Insurance 22% > Efficiency ratio for the quarter remained stable at 39% Islamic 10% > Operating profit for the quarter decreased by 10.8% Y-o-Y but 10% International increased by 4.3% Q-o-Q Treasury & 28% 25% > Net profit for the quarter increased by 3.4% Y-o-Y however Capital markets increased by 2.1% Q-o-Q Retail 21% 21% > Retail banking accounted for the largest portion of 1H 2017 Corporate Operating Income with 25% contribution, followed by International Banking at 22% 1H 2016 1H 2017 9

Operating income mix [AED million] Net interest income 1) Non-interest income 1) -2.1% Other Income Fee & Comm. -0.7% Inv. Income 1,368 +6.7% 1,800 1,762 1,233 426 397 916 909 725 48 852 625 607 74 248 200 196 30 39 35 894 763 447 376 387 1H 2016 1H 2017 2Q 2016 1Q 2016 2Q 2017 1H 2016 1H 2017 2Q 2016 1Q 2017 2Q 2017 % of % of 41% 57% 59% 41% 43% 56% 58% 59% 42% 44% operating operating income income Net interest margin 2) [%] Key Points > 2Q 2017 Net Interest Income increased by 6.7% Q-o-Q due to 3.76% better asset yields; on a Y-o-Y basis 1H 2017 Net Interest Income 3.66% 3.53% 3.37% 3.34% decreased by 2.1% NIM’s have increased 19 basis points Q-o-Q on the back of higher > asset yields > Non-interest income increased by 3.0% Q-o-Q driven by an increase in Fee & Commission income > Non interest income as % of total income remained high at 41% for 2Q 2017 2Q 2016 1Q 2017 2Q 2017 1H 2016 1H 2017 1) NII component booked under Inv estment income as per IFRS, has been reclassif ied under NII in the abov e representation 10 2) Based on annualized quarterly NII

Asset mix [AED billion] Total Assets and Loans & Advances Gross Loans portfolio split as of June 2017 Loans & Advances Total Assets Manufacturing 7.2% 15.7% 0.1% Construction 11.6% 125.8 122.8 120.7 Trade 119.6 114.7 Transport & Comm. Services 61.8 62.3 61.0 61.5 62.4 Financial institutions 15.3% Personal 27.6% Govt/GRE Jun-17 5.2% Jun-16 Sep-16 Dec-16 Mar-17 Other 2.8% 14.6% Loans to 54% 52% 50% 51% 50% total assets Asset split by segments Key Points > Total assets increased by 2.4% to reach AED 125.8 billion, as compared to AED 122.8 billion in December 2016 122.8 (100%) 125.8 (100%) > Net Loans & advances increased by 2.4% in the first half of the 12% 13% year to reach AED 62.4 billion led by Services 4% 4% > Personal segment contributes 27.6% of the Gross Loans 7% Others 7% Insurance > Diversified loans portfolio with no individual sector accounting for 26% 25% >20% of the total corporate loan portfolio Islamic > Assets mix fairly balanced between domestic and international International 15% 14% locations with International business accounting for 25% of the Treasury & 11% 11% assets as of June 2017 Capital markets Retail 25% 26% Corporate Dec-16 Jun-17 11

Liability mix [AED billion] Customer deposits Liability mix 103.3 (100%) 106.0 (100%) 77.0 76.4 77.9 75.3 73.3 10% 11% 5% 1% 8% 2% 9% Other Liabilities 6% Med. Term FRN Jun-17 Jun-16 Sep-16 Dec-16 Mar-17 Insurance Funds Due to Banks 75% 73% Customer deposits Customer deposits split comparison (June 2017) Mashreq Group 1 UAE banking sector 2 Dec-16 Jun-17 36% Time deposits 44% 59% Current A/c 44% Liabilities split by segments 5% Savings A/c 12% 103.3 (100%) 106.0 (100%) 8% 8% 2% 2% 8% 7% Key Points 20% Others 22% > Customer deposits accounted for 73% of total liabilities, Insurance 9% > CASA formed a majority portion of customer deposits at 64% as 7% Islamic compared to overall market at 56%; Time deposits contributed 36% of total deposits vs 44% for the market 24% International 23% Treasury & > Corporate Banking accounts for the largest portion of liabilities at Capital markets 30% 30% Retail 29% Corporate Dec-16 Jun-17 1) Represents data of Mashreq Group including ov erseas deposits 12 2) Represents data of UAE banking sector as of May 2017 sourced f rom Central Bank Statistical Bulletin