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Mashreqbank
Investor Presentation
September 2016
Mashreqbank Investor Presentation
> UAE economy
> Mashreqbank heritage
> Structure and Leadership
> Strategy
> Financial track record
> Trading history, rating and dividends
> Corporate governance
> Accolades
2
UAE economy – Microeconomic outlook
UAE is the 2nd largest economy in the GCC, with promising
economic growth prospects
Average Real GDP Growth Rate – 2016E-21F [%]
UAE - The second largest economy in the GCC

Second largest economy in the GCC with GDP of USD 345
billion in 2015

Well diversified economy with oil & gas contributing only
~23% of the total GDP

Despite fall in oil prices, UAE economy remains strong
with current account deficit at ~1.0% of GDP in 2016E

Holds 8.1% of the proven OPEC crude oil reserves,
primarily concentrated in Abu Dhabi

Young population with ~61.4% aged between 25-54
years and a literacy rate of ~94%
Nominal GDP per Capita – 2015 [USD thousand]
58
653
30
121
345
Baa1
A1
1.6%
Oman
Ba2
Aa2
2.0%
2.1%
KSA
Bahrain
Aa2
2.7%
2.7%
Kuwait
Qatar
Aa2
3.1%
UAE
Sovereign Rating by Moody’s
GDP Breakdown by Sector – 2015 [%]
185
6%
76.6
2% 1%
Agriculture
23%
10%
Crude Oil and Natural Gas
Manufacturing
15.2
20.8
23.5
29.4
Construction
36.1
Wholesale Retail Trade
13%
Transport, Storage & Communication
Real Estate
10%
Oman
KSA
Nominal GDP 2015 (USD billion)
Bahrain
Kuwait
UAE
Qatar
Financial Corporations
Government Services
10%
11%
Other
13%
Source: IMF WEO April 2016,CIA & OPEC, Moody‘s Ratings, National Bureau of Statistics 2016
3
One of the best ranked economies on global competitive
index among the GCC nations
Govt. Net Lending/Borrowing to GDP – 2016E [%]
Current Account Balance to GDP – 2016E [%]
(1.0%)
(6.7%)
(1.0%)
(2.7%)
(5.0%)
(10.2%)
(10.8%)
(25.1%)
Oman
(19.7%)
KSA
Bahrain
Qatar
Kuwait
UAE
Global Competitiveness Index – 2015-16 Ranking
Oman
1)
(13.5%)
(13.4%)
KSA
Kuwait
(17.9%)
Bahrain
UAE
Qatar
Inflation to Remain Stable Over the Medium Term [%]
62
34
39
4.1%
25
14
17
Qatar
UAE
3.2%
KSA
Kuwait
Bahrain
Oman
2015E
1) Rank out of 140 economies
Source: IMF WEO April 2016, World Economics Forum-Global Competitiveness Index 2015
2016F
3.0%
3.2%
3.4%
2.7%
2017F
2018F
2019F
2020F
4
Solid institutional and policy framework as reflected by
relatively higher scores among the GCC nations
Scores Highest Among GCC on Govt. Effectiveness
Index 1)
Among the Best Ranked in GCC on Rule of Law Index
1.5
1)
1.0
1.0
0.7
0.6
0.6
0.3
0.4
0.2
0.3
0.0
-0.1
UAE
Qatar
Bahrain
Oman
KSA
Kuwait
Highest Ranking in GCC on Control of Corruption Index
1.2
Qatar
1)
UAE
Oman
Bahrain
KSA
Kuwait
Enforcement of Contracts - Ranked Best in GCC
1.1
101
112
86
70
0.3
58
0.3
0.1
18
-0.3
UAE
Qatar
Bahrain
Oman
KSA
Kuwait
1) Score ranges from -2.5 (weak) to 2.5 (strong)
Source: World Bank – Worldwide Governance Indicators, World Bank- Doing Business
UAE
Kuwait
Oman
Saudi Arabia
Bahrain
Qatar
5
Non-oil growth continues to be steady with PMI
remaining above 50
Non-oil direct trade flows have witnessed steady
growth over the last few years
Emirates NBD UAE PMI index
UAE non-oil direct trade flows [AED billion]
Increasing rate of growth
65
60
57
56 58
55
56
55
56
58
5658 57
56 56
54 5655
59
53
53
53
1,065
1,072
1,056
219
232
244
221
Re-exports
1.2%
170
148
132
163
Exports
9.3%
603
668
685
696
673
Imports
2.8%
2011
2012
2013
2014
928
58
53
55
53
54
53
211
114
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
50
45
CAGR
’11-’15
1,057
Increasing rate of contraction
40
50 – no change on previous month
2015 1)
The hospitality sector, especially in Dubai, is one of
the major growth drivers …
… along with the logistic sector, which has been
growing continuously over the last three years.
Hotel guests [million]
UAE container volumes [TEU million]
Dubai
9.1
10.0
2.1
Air passengers [million]
Abu Dhabi
14.2
13.2
2.4
58
51
2.8
3.5
13.6
15.2
15.6
2011
2012
2013
2014
2015
3.1
3.2
3.3
2.5
UAE air freight [million tonnes]
4.1
2011 2012 2013 2014 2015
13.3
78
70
66
11.0
13.0
12
15
17
20
23
2011 2012 2013 2014 2015
Dubai
2.7
Abu Dhabi
2.9
2.2
0.5
2.3
0.6
2.4
0.7
2.4
0.8
0.8
2011
2012
2013
2014
2015
1) Annualised – based on 9M (Jan – Sept) data
Source: Emirates NBD, Federal Customs Authority, Hotel and Airport authorities of UAE, DP World, Khaleej Times, National
6
Rents in Dubai and Abu Dhabi continue to be falling
…
… as can also be seen in the fall in Dubai property
prices over the year
Dubai 2Q ‘16
Mashreq Property Price Index [%]
Avg MPPI inc (%)
18.7
18.1 17.9 17.5
17.3 17.1
Hotel
Jul-16
Jun-16
Apr-16
Jan-16
Feb-16
-0.5 -0.5 -0.5 -0.7 -0.3 -0.1 -0.5 -0.4 -0.2 -0.2 -0.4 -0.2 -0.2
0
-2
May-16
Retail
19.3
Dec-15
Office
Rent
bottoming
out
18
16
20.4
Nov-15
Residential
Rent
growth
accelerating
21.4
22
20
Oct-15
Rent
bottoming
out
Rent
falling
Sep-15
Rent
growth
accelerating
Rent
growth
slowing
Aug-15
Rent
falling
Jul-15
Rent
growth
slowing
Cum MPPI inc (%)
Mar-16
Abu Dhabi 2Q ‘16
Consumer borrowing has been rising…
… supported by continuous increase in employment
levels
Personal loans to residents [AED ]
Emirates NBD Employment index [#]
60
+4%
+7%
252
261
280
300
331
56
344
55
56
5353 53
58
56 56
52
58
51
57 56
52
58
53
59
58
52
Increasing rate of growth
51
52
52
53
54
54
50
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
45
40
2011
2012
2013
2014
Source: JLL, UAE Central Bank, Emirates NBD
2015
Jul-16
Increasing rate of contraction
50 – no change on previous month
7
UAE economy – Banking Sector Overview
Diversified and Highly Regulated Banking Sector

GCC Banking Assets – 2015 (AED billion)
As of June 2016, UAE banking sector comprised 49 banks
–
23 National Banks with 862 branches and
–
26 Foreign Banks with 86 branches
87%
149%
196%
1,012
870
110%
162%
236
181
Oman
Bahrain
2,474
2,083

Diversified loan portfolio - Real Estate and Construction
sector accounted for only ~17% of loan book in 1H 2016

Highly regulated banking system,
internationally followed best practices

UAE Banking sector has a long-standing track record of
Government support during crisis situations
in
195%
line
with
UAE
KSA
Qatar
Kuwait
Total Banking Assets to GDP Ratio
UAE - Loans & Deposits (AED billion)
Loans by Sector – 1H 2016 (%)
CAGR 2011- 1H 2016: 8.4%
1%
CAGR 2011- 1H 2016: 7.7%
1,279
1,168
1,070
1,278
8%
1,493
1,472
1,421
1,426
1,381
1%
5%
10%
17%
1,203
21%
1,109
11%
993
4%
11% 10%
2011
2012
Loans
2013
2014
2015
1H 2016
Mining and Quarrying
Manufacturing
Electricity, Gas and Water
Construction and Real Estate
Trade
Transport, Storage & Comm
Financial Institutions (Ex. Banks)
Government
Personal Loans for Business
Personal Loans for Consumption
Others 1)
Deposits
1) Others include loans made to service sector & Non profit Institutions
Source: UAE Central Bank, IMF WEO April 2016
8
> UAE economy
> Strategy
> Accolades
9
Mashreqbank heritage
Mashreqbank is one of UAE's leading financial institutions
Heritage
> Established in 1967 by the Al-Ghurair Group
> 49 years in UAE banking and financial services market
Private sector
ownership
> Oldest regional bank based out of UAE
> Combines the entrepreneurial spirit of Dubai with enduring trade banking
relationships across the region
> Publicly traded since inception; Listed on the DFM on creation of local
stock exchange
Strong regional
presence
> Well positioned to finance regional trade flows
> Regional bank with 39 branch network in the UAE and 24 branches / repoffices in MENA, Asia, Europe and United States
Diversified business
case
> Universal bank offering a comprehensive suite of products and services to
individuals and corporates across all lines of business
> Most diversified revenue streams with fee and other income contributing
around 45% of total income
Strong management
team
> Combination of long serving senior executives with international
management expertise delivering a robust growth model
> Led by Abdul Aziz Abdulla Al-Ghurair, Chief Executive Officer for 25 years
Strong and
supportive
ownership structure
> Al-Ghurair Group, the main shareholders of the bank, are a leading
conglomerate in the UAE with numerous business interests
> Featured in the Forbes billionaire list for the past 10 years
> Mashreqbank is the flagship business for the family for nearly 50 years
10
Stable and supportive ownership structure
Ownership – Al-Ghurair flagship brand
Mashreqbank’s Leadership
Mr. Abdulla Bin Ahmad Al-Ghurair
Chairman & President
> One of the most prominent businessmen and
industrialists in the UAE
> Former Chairman of the UAE Banks Association
H.E. Abdul Aziz Abdulla Al-Ghurair
Chief Executive Officer & Director
>
>
>
>
>
Chairman of UAE Banks Federation
Vice Chairman of the higher board of DIFC
Chairman of Masafi, Oman Insurance
Board Member of Emirates Foundation
Former Speaker of the Federal National Council
Key shareholders
10.3%
Saif Al Ghurair Investment LLC
Abdulla Ahmed Al Ghurair Inv. Co.
Masar Investments
Majid Capital
National Cement Company
3.6%
3.5%
12.0%
39.5%
> Al-Ghurair families holds the majority stake in
Mashreqbank (approximately 87%) and are
the founders of the Bank
> Al-Ghurair family has a strong commitment to
the continued growth and financial solidity of
Mashreqbank
> Al-Ghurair family is one of the oldest and
wealthiest families in the UAE
● Featured in Forbes billionaire list for the
past 10 years
● Business interests include shopping malls,
real estate, cement manufacturing, food
industries, Masafi (mineral) water,
contracting, trading, retailing, shipping,
printing & packaging, aluminium extrusion,
building materials, oil refinery,
manufacturing, steel and canning
> Mashreqbank’s shares are listed and traded
on the Dubai Financial Market
Other shareholders
31.1%
11
Strong distribution network in the UAE with 20 branches in
Dubai
Alternate Channels
Umm Al Quwain
Ajman
 1 branch
Ras Al Khaimah
 1 branch
 1 branch
> 39 branches (out of which Mashreq Gold has
presence in 29 branches and SME Banking has
presence in 24 branches) and 5 Retail Customer
Service Centers in UAE serving ~500K customers
> ATMs and CCDMs increased coverage to 264 units
in UAE
> 21,000 POS machines spread over 12,200
merchants in the UAE. 2nd Largest Merchant
acquirer in the UAE with over 35% market share
Sharjah
> Internet Banking through Mashreq Online (Retail
incl. Brokerage), Mashreq Business online
(Corporate), Mashreq-FI online (Correspondent
Banking); 252,483 active users are registered
with online banking
 7 branches
Dubai
> Mobile banking services: Snapp registration has
grown up by 48% and financial transactions has
grown by 24% as compared to last year figures.
Snapp has been recently upgraded to a
completely new and modern user interface
equipped with the most secured and convenient
user authentication (Touch ID). Snapp now can
be accessed through Apple watch with multiple
features such as account balances and last ten
transactions.
 20 branches
> Fully integrated electronic platform for
transaction banking (GTS)
Abu Dhabi
 8 branches
Fujairah
 1 branch
> State of the art Polaris System (mashreqMATRIX)
to provide online services to corporate customers
> 24 x 7 Direct Banking Call Centre
12
Regional and international banking presence with 23% of
revenues from outside of UAE
London
New York
Nepal
Pakistan
Bangladesh
Kuwait
International
branches
Egypt
Bahrain
India
Hong Kong
Qatar
Financial Institution
branches
Representative
Offices
13
> UAE economy
> Strategy
> Accolades
14
Structure and Leadership
Mashreqbank organization chart
Board of Directors
Chief Executive Officer
Corporate Banking
Group (CBG)
[21% of revenue]
Retail Banking
Group (RBG)
[28% of revenue]
International
Banking Group (IBG)
[23% of revenue]
Treasury & Capital
Markets (TCM)
[10% of revenue]
Corporate Affairs
(CA)
Audit , Fraud &
Compliance Group
(AFCG)
Risk
Management (RM)
Operations &
Technology (O&T)
Note: Financials as of 30 June 2016
15
Mashreqbank is a universal bank that covers significant lines
of business with a full product and channel suite
Retail Banking Group
(RBG)
Corporate Banking Group (CBG)
Offers wholesale banking
> Energy, Services &
Manufacturing
> Trading
> Contracting Finance
> Abu Dhabi Division
> Real Estate
Offers personal banking
> NBFI
> Emerging Corporates
Division
> Global Transaction
Services
> Corporate Finance
> Islamic Banking products
Treasury & Capital Markets
(TCM)
>
>
>
>
>
>
Personal Banking
SME
Mashreq Gold
Private Banking
Payments
Islamic banking products
>
>
>
>
>
Distribution
Alternate Channels
Direct Sales
Direct Banking Centre
Marketing & Customer
Experience
International Banking Group
(IBG)
Offers treasury and investment products
Offers banking services outside UAE
> FX and Investments
> Equity Derivatives &
Institutional Sales
> Wholesale and investment banking
> Mashreq Securities
> Personal banking
> Islamic Banking –
Product House
> Financial Institutions globally
> Rates & Structured
Solutions
> Mashreq Capital
> Islamic banking products
> Treasury and investment products
> Islamic banking products
16
Mashreqbank - Key subsidiaries
Mashreqbank Psc
Oman Insurance Company (63.94%)
Mashreq Al Islami Finance (99.8%)
> Largest insurance company in the UAE
> Islamic Finance Company
> Provides full range of Insurance Products & Services
> Provides full range of Islamic Products & Services
> Equity: AED 1,915 mn
> Equity: AED 725 mn
> 2015 profit: AED 81 mn
Mashreq Capital (100%)
Mashreq Securities (99.98%)
> Registered in DIFC for Brokerage, Asset Management
and Fund Management services
> One of the largest asset management in UAE with
USD 800 mn in asset under management
> Funds rated highest in the market
> Equity: AED 43 mn
> Securities brokerage Company registered at Dubai
Financial Market
> One of the leading brokerage in the UAE
> Equity: AED 175 mn
> 2015 Profit: AED 13 mn
Note: Oman Insurance and Mashreq securities are audited figures
17
Corporate Banking (CIBG) business
Business highlights
> Corporate Banking Group provides financing solutions
to corporate and commercial customers in the UAE
> Major products offered include trade finance,
contracting finance, project finance, corporate finance
advisory and cash management
> Corporate Banking has moved to a best-in-class,
expertise-led coverage model for clients. The
relationship teams have been realigned into industry
verticals that best serve the corporate financial needs.
Our diverse industry coverage includes among others:
Contracting Finance, Education, Emerging Corporates,
Government, Manufacturing, Multinational Corporates,
Non-Banking Financial Institutions, Real Estate,
Services and Trading Companies
> Successfully closed number of multibank deals
establishing the best DCM platform amongst local /
regional banks
> Global Transaction Services (GTS) received many
important accolades in 2015 “Best Cash Management
Services in Middle East in 2015”, “Best Factoring
Services in Middle East in 2015”, “Best Product Launch
in Middle East in 2015” - EMEA Finance, “World’s Best
Corporate/Institutional Digital Bank Award in UAE in
2015” - Global Finance, “Trade Bank of the Year - UAE”
- Finance Monthly M&A Awards 2015.
CIBG Revenues [AED million]
-7%
1,429
1,324
-3%
2014
2015
691
667
1H 2015
1H 2016
CIBG Assets [AED million]
0%
0%
29,617
29,501
29,523
Dec-14
Dec-15
Jun-16
> Mashreq won the best trade finance award in 2Q of
2016 by M&A awards
18
Retail Banking (RBG) business
Business highlights
> Retail Banking Group includes products and services
offered to individuals and small businesses in the UAE
> Products offered include current / savings / fixed
deposits, investment products, personal loans, auto
loans, mortgages, small business loans, credit cards
with unique loyalty programs, bank assurance, private
banking and wealth management
RBG Revenues [AED million]
+13%
1,626
1,838
0%
884
888
1H 2015
1H 2016
> 7th largest Merchant acquirer in Middle East & Africa
with 21,000 POS machines spread over 12,200
merchants in the UAE
> Key innovations include EmiratesID integration with
customer bank accounts , imashreq – a fully
automated branch and Portraits – UAE’s first selfie
card and UAE’s first concept E-Account, a 100%
online current account for UAE Nationals
> Mashreq is the first Bank to go live with the Al Etihad
Credit Bureau advanced Application-to-Application
(A2A) feature
> The all-new award-winning mobile banking application
‘Mashreq Snapp’ was launched with user friendly
features
2014
2015
RBG Assets [AED million]
+3%
-2%
14,061
14,431
14,154
Dec-14
Dec-15
Jun-16
> Key awards for 2015 include Best Regional Retail Bank
by Global Banking & Finance Review Awards
> Reflecting its ongoing commitment to introducing
customer centric financial solutions Mashreq launched
UAE’s first Happiness account
19
Treasury and Capital Markets (TCM) business
Business highlights
> Treasury and Capital Markets business consists of
customer flow business and proprietary business.
Customer flow business includes transactions for FX,
derivatives, hedging, investment products, equities and
regional asset management undertaken on behalf of
customers. Proprietary business includes trading and
investing activity undertaken on behalf of the bank
> Mashreq was able to grow its Treasury product suite
across asset classes, supported by an online trading
platform and 24 hour dealing room
> The Rates & Structured Solutions business closed
several large ticket hedging transactions for clients
across the region, including a structured profit rate
swap for a real estate loan
TCM Revenues [AED million]
-8%
599
2014
•
Best Sharia’h Compliant MENA Fund Manager
Award from CFI
•
Best Sharia’h compliant Fixed Income fund of the
year award from MENA Fund Manager magazine
•
Moody’s upgraded Mashreq Capital’s Investment
Manager rating to MQ2
2015
+1%
312
316
1H 2015
1H 2016
TCM Assets [AED million]
> The Makaseb Income Fund received the Liper Fund
Award as the best fund over 3 & 5 years in the Bond
Emerging Markets Global-Hard Currency category
> Our best in class Asset Management business achieved
strong growth: Mashreq’s fixed income funds (both
conventional and Sharia’h compliant) remain amongst
the top performing funds in the market
553
+14%
13,698
Dec-14
-2%
15,657
15,354
Dec-15
Jun-16
20
International Banking (IBG) business
Business highlights
> International banking business consists of retail and
corporate business in Qatar, Egypt, Bahrain and Kuwait
and Financial Institutions business in other locations
including trade services, reimbursements – arranging
debt capital market transactions, undertaking and
financing, export bill collections and risk participations
IBG Revenues [AED million]
+23%
1,059
1,301
+13%
638
724
1H 2015
1H 2016
> Mandated lead arrangers in important loan syndications
in overseas markets and also consolidated our position
in some of our markets as leading bank for strategic
project finance
> Introduced the upgraded SNAPP (mobile banking app) in
Qatar simultaneously with UAE and now offer our
customers the convenience of cardless cash withdrawals,
mobile to mobile cash transfers and the Money Manager
feature
2014
IBG Assets [AED million]
+15%
> Mashreq has received UAE Central Bank’s approval for
opening a Rep Office in Kenya
> The second quarter of 2016 witnessed success in the
efforts to increase the exposure to the NBFI (NonBanking Financial Institutions) segment.
2015
28,548
-7%
32,831
30,616
Dec-15
Jun-16
> Electronic Fund Transfer System (EFTS) was launched
for Corporate Houses through the Mashreq Matrix portal
> Key awards- Global Banking & Finance Review Awards
2015
Dec-14
> Best Corporate Bank Qatar (3rd consecutive year)
> Best Retail Bank Qatar
> Best Customer Service Bank Qatar
21
Islamic Banking (ISB) business
Business highlights
> Mashreq Al Islami is the Islamic Banking arm of
Mashreq (Mashreq Al Islami Finance Company PJSC
and Islamic Banking Division, Mashreqbank PSC) and
offers a wide range of Shari’ah compliant products and
services
ISB Revenues [AED million]
-1%
311
308
+81%
208
> Amongst the top ten Islamic institutions in the UAE
based on market share as per MEED
> Products offered include Ijara home finance,
Mudarabah deposit and savings, Musharaka finance,
Murabaha commodity finance, Ijara equipment finance,
sukuk underwriting, Musharaka LC, Murabaha LC, TR
Murabaha, Kafala, Wakala deposit, Reserve Murabaha
deposit and sukuk advisory
> Successfully closed a 5 year USD 500 million senior
secured syndicated facility for Ezdan Holding Group
Company, the largest private sector real estate
developer in Qatar - Mashreq Al Islami UAE acted as
Mandated Lead Arranger, Sole Book Runner and Facility
Agent for the facility
115
2014
1H 2015
2015
1H 2016
ISB Assets [AED million]
+21%
+16%
6,574
7,595
9,221
> Key awards:
● “Best Islamic Deal of The Year Awards in Qatar”
by Islamic Finance News Awards 2015
● “Most Innovative Islamic Banking Solution
Provider” by Global Banking & Finance Review
Dec-14
Dec-15
Jun-16
22
Insurance business (Oman Insurance Company)
Business highlights
> Mashreqbank owns 63.94% of Oman Insurance
Company
> Oman Insurance Company (OIC) is the largest
insurance company in the UAE and the fourth largest in
the Middle East & North Africa
Gross written premium [AED million]
-2%
3,249
3,190
+12%
1,809
2,026
1H 2015
1H 2016
> Products offered include life, medical, motor, marine
cargo and hull, aviation, property, fire and general
accidents, engineering, energy, liabilities and personal
lines insurance
> Largest distribution network in the UAE; OIC has 11
branches, with operations across all Emirates in the
UAE, the Sultanate of Oman, Qatar and Turkey. In
addition, OIC owns a medical third-party administration
company in Iraq and has over 30 bank partners in the
region
> The company is rated ‘A-’ Positive Outlook by Standard
& Poor’s and ‘A Excellent’ Stable Outlook by AM Best,
supported by leading multinational reinsurers such as
Swiss Re, XL Re and ACE Tempest Re
2014
Net profit [AED million]
-65%
229
> Oman Insurance launched its exclusive Healthcare
Wellness Program ‘LivFit’ in May 2016
> Oman Insurance in collaboration with Commerzbank
and Blackrock introduced a Invest Protect Plan for its
clients further enhancing the menu of products
2015
+58%
81
2014
2015
28
44
1H 2015
1H 2016
23
Profile of Senior Management
Abdul-Aziz Abdullah Al-Ghurair
Chief Executive Officer
• A Graduate of California Polytechnic State University, Mr.
Abdul-Aziz Al-Ghurair joined Mashreqbank, then Bank of
Oman, in 1977
• He worked in different Divisions and through rigorous
training in various assignments, Mr. Al-Ghurair climbed to
his current position as of March 1991
Ali Raza Khan
Head of Corporate Affairs
• Mr. Ali Raza Khan is a Member of the Institute of
Chartered Accountants of India (1978)
• Joined Mashreqbank in 1980; as Head of Corporate Affairs,
he is responsible for Finance, HR and Administrative
functions in the bank
John Iossifidis
Head of Corporate Banking Group
• Mr. John Iossifidis is an MBA and B.Ec (Acctg.) from
Monash University
• Joined Mashreqbank in 2009 after a successful career at
Standard Chartered Bank and ANZ
Subroto Som
Head of Retail Banking Group
• Mr. Som is a graduate of IIT Delhi and has an MBA from
IIM Ahmedabad
• Joined Mashreqbank in 2015 from the Boston Consulting
Group
• Prior to this, he has experience at senior positions at
Citibank, Standard Chartered & Seoul First Bank
Jan-Willem Sudmann
Head of International Banking
• Mr. Jan has a Masters in Economics from the University of
Hamburg, Germany.
• Prior to joining Mashreq, Jan was a Managing Director at
Commerzbank Shanghai
• Before joining Commerzbank, Jan worked for close to two
decades at Dresdner Bank across various geographies such
as Germany, UK and Egypt
Nabeel Waheed Shaikh
Head of Treasury & Capital Markets
Jose K Joseph
Head of Risk Management
• Mr. Jose Joseph is a Commerce Graduate and an MBA in
Finance from XLRI, India
• He joined Mashreqbank in October 2013
• Prior to joining Mashreqbank he spent over 28 years
with Citibank
Sandeep Chouhan
Head of Operations & Technology
• Mr. Chouhan has a Masters in Technology, Management &
Systems from IIT, Delhi, India
• Joined Mashreqbank in March 2015 from CBQ, Qatar
• Prior to this, he was CIO with Barclays and Morgan Stanley
Nasser A. Paracha
Head of Audit, Fraud & Compliance Group
• Mr. Paracha has a BSc from the University of Leeds. He
completed a General Management Program from HBS
• Joined Mashreqbank in 1995 from Deutsche Bank AG in
Pakistan
• Overall banking experience of approximately 20 years,
covering corporate banking, internal audit and compliance
• Mr. Nabeel Waheed Shaikh has a BSc from Syracuse
University, New York
• Joined Mashreqbank in 1996, from Bank of America,
Pakistan where he spent over 15 years and held various
positions including Head of Corporate Banking
24
> UAE economy
> Strategy
> Accolades
25
Strategy
Vision
Mission
Strategic Objectives
1
Being the
primary bank
to our
customers
“To provide
our
customers
Being
relationship
based
2
3
4
the most
Become primary bank & Grow new-to-bank
Enhance brand
Foster Innovation
Drive digital transformation
rewarding
banking
relationships”
Delivering
superior
service
Being the
employer
of choice
5
6
7
Strategic cost management
Balance risk and growth
Enhance human capital
26
Strategy
Business Objectives
Accelerate domestic
growth
> Win new customers and increase customer penetration through a
differentiated customer centric, service oriented approach and focus on
continued product innovation
> Leverage balance sheet strength and liquidity position to grow market
share
> Capitalize on leadership position in fee-generating businesses
Grow international
contribution
Optimize balance
sheet
Drive operational
efficiencies
Strengthen risk
management and
asset quality
> Support franchise client needs internationally and international client
needs in our franchise by providing solutions to corporate clients across
network
> Provide cross border accessibility to clients, such as offshore booking
location for private and gold customers and non-resident proposition
across the network
> Maintain momentum in our core South Asia FI market and build scale in
Qatar, Egypt and Africa
> Optimize liability mix to lower cost of funds and enhance margins
> Increase leverage and deploy liquid assets into higher yielding
opportunities
> Leverage existing infrastructure to drive growth and returns
> Significantly improve efficiencies across the bank to bring cost/income
ratio in line with market
> Reduce charge-to-loans ratio in line with pre-crisis levels, through
continued focus on portfolio and asset quality
> Selective portfolio / asset sales as part of an ongoing portfolio balancing
strategy
27
Strategy
Diversified earnings base with strong growth potential
Gross Loans portfolio split as of June 2016
[AED 65.3 bn]
Personal
Trade
Govt / Public sector
7.3%
2.3%
9.2%
0.6%
28.4%
Services
Manufacturing
7.6%
10.8%
16.7%
Financial institutions
Other
> UAE Retail: Pick up in mortgage business; strong growth
in cards and payment business and wealth management
> UAE Corporate: Strong growth from trade,
manufacturing, tourism and logistics driving overall UAE
GDP in the coming years leading to increased demand for
credit & trade services
> International Banking: Robust regional trade flows
and lending opportunities in higher growth countries such
as Qatar and Egypt
Construction
Transport & Comm.
Business segments outlook
17.1%
Revenue split as of June 2016
> Insurance: As the largest insurance company in the
UAE, Mashreqbank’s Oman Insurance Company (OIC)
subsidiary is expected to grow in line with the market
Asset split as of June 2016
[AED 114.7 bn]
[AED 3.2 bn]
Corporate
Retail
Treasury &
Capital markets
Loans & Advances
6.7%
4.9%
6.6%
21.0%
Interbank deposits & balances
Financial Investments
International
Islamic
Insurance
7.1%
Cash and balances with CB
12.5%
Other assets
13.6%
22.9%
53.9%
28.0%
Others
10.0%
13.0%
28
Strategy
Strategic advantage through innovation
Innovation
Mashreqbank was the first bank in the UAE to:
> Introduce consumer loans
> Install ATM cash dispensers
> Issue debit/credit cards
> Introduce Point-of-Sale terminals
> Offer Visa Connectivity across the world
> Centralize foreign trade services
> Offer a direct banking centre
> Introduce a comprehensive corporate cash management solution offering (GTS)
> Introduce “Tap & Go”, mobile NFC sticker payment method
> Introduce “E cube retail branch” concept in distribution
> Launch UAE’s first fully EMV Chip & PIN compliant mobile POS solution
> Launch i-mashreq - the first fully automated branch in the region
> Integrate Emirates ID with bank account and allow its usage as a Debit Card
29
> UAE economy
> Strategy
> Accolades
30
Financial track record
Solid performance over the past decade
Net profit [AED million]
+3%
1,739
2005
1,571
2006
1,901
2007
1,643
2008
1,000
803
820
2009
2010
2011
1,312
2012
1,806
2,401
2,402
1,071
2013
1H 2016 1)
2014
2015
58
60
62
2014
2015
Jun-16
Net loans and advances [AED billion]
+9%
55
22
29
35
2005
2006
2007
2008
48
41
38
41
2009
2010
2011
2012
50
2013
Growth & Expansion
Crisis & Risk Management
Accelerated Growth & Profitability
> Significant expansion on the back
of buoyant macroeconomic
conditions
>
> Growth-led strategy with a focus on
portfolio quality, balance sheet
structure optimization, improved cost
efficiencies and higher infrastructure
utilization
1) First half (6 months) only
Prudent management focused on strengthening
the bank, de-risking and conserving capital
● Balance sheet de-risking and de-leveraging
● Strengthening capital and liquidity position
● Enhancing risk management functions
31
Rapid improvement in performance over the last three years
Loans & Advances [AED billion]
9%
50.4
2013
58.0
Customer deposits [AED billion]
+2.6%
60.2
2015
Jun-16
Total Revenue [AED billion]
Fee and other income
2013
2,393
2,445
2013
5,978
2,720
2,555
3,125
3,423
2015
73.3
2015
Jun-16
15%
Net interest income1)
5,845
2014
2014
73.6
Net profit [AED billion]
11%
4,837
68.5
58.6
2014
-0.4%
12%
61.8
1,806
2,401
2,402
1,071
3,168
1,368
1,800
1H-2016
ROE
1) NII component booked under net investment income as per IFRS, reclassified under NII
2013
2014
2015
1H-2016
13.1%
15.7%
14.2%
12.0%
32
30 Jun 2016
31 Mar 2016
31 Dec 2015
Tier I Capital Ratio
15.8%
15.8%
15.9%
Total Capital Ratio
16.8%
16.8%
16.9%
Liquid Assets to Total Assets
26.6%
27.7%
29.9%
Advances to Deposits
84.2%
80.8%
81.7%
Capital adequacy
Liquidity
Asset quality
NPL Coverage Ratio
134.1%
135.8%
145.0%
3.5%
3.2%
2.8%
ROA
1.9%
1.9%
2.2%
ROE
12.0%
12.0%
14.2%
3.1%
3.1%
3.1%
Efficiency Ratio
38.0%
39.5%
41.4%
Fee and other income to total income
43.2%
42.1%
42.8%
NPL to Gross Advances
Performance
Net Interest Margin
33
Well-funded balance sheet …
Operating leverage
Funding as of 30 June 2016
[AED 95.8 bn]
Loan to Deposits
86%
85%
82%
7.9%
84%
Customer deposits
4.2%
1.7%
8.7%
1.0%
Due to banks
Medium term loans
Insurance Funds
Repo
2013
2014
2015
Liquidity
2.8%
7.4% 5.1%
Liquid Assets to Total Assets
27%
28%
30%
76.5%
Jun-16
28.3%
27%
Other liabilities
Corporate
Retail
Treasury &
Capital markets
23.2%
International
Islamic
8.0%
2013
2014
2015
Jun-16
25.2%
Insurance
Others
34
…along with stable adequacy
Risk weighted assets
113,514
106,628
88,975
2013
Tier 1 and Tier 2 capital
2014
2015
Tier 1 capital
115,670
Jun-16
Tier 2 capital
16,146
1,568
17,726
1,450
19,179
1,178
19,426
1,107
14,578
16,277
18,001
18,319
2013
2014
2015
Jun-16
Capital adequacy [%]
16.4%
18.1%
15.3%
16.6%
15.9% 16.9%
15.8% 16.8%
Tier I Capital ratio
Total Capital ratio
2013
2014
2015
Jun-16
35
Market performance in 1H 2016 – Outperforming the market
in Revenue Growth
Total assets [AED bn]
Peer group1)
Total loans [AED bn]
Mashreqbank
Peer group1)
DXB AUH
1,737 655 1,083
+4.2%
6.9%
Dec ‘15
115
-0.4%
2.6%
1,811 700 1,111
Jun ‘16
115
Total deposits [AED bn]
Peer group1)
AUH
1,155 466
689
+3.4%
5.6%
1,194 492
AUH
1,091 435
656
+3.1%
6.7%
1,125 464
Dec ‘15
74
-0.4%
Jun ‘16
Dec ‘15
60
+2.6%
0.8%
661
Jun ‘16
Peer group1)
DXB
1.9%
703
DXB
62
Total revenue [AED bn]
Mashreqbank
DXB
Mashreqbank
Mashreqbank
AUH
32.4 13.9 18.5
+0.7%
73
1) Peer group includes 9 banks: ENBD, NBAD, ADCB, FGB, CBD, UNB, ADIB, DIB and RAK
Source: Banks’ financial statements
2.6%
1H ’15
(0.8%)
32.6 14.3 18.4
1H ’16
3.0
+5.1%
3.2
36
Financial track record – June ’16 [AED billion]
Market position in UAE
Bank
Total assets
Total loans (net)
Growth vs
Dec ’15
Dubai based banks
Growth vs
Dec ’15
Mashreq
ADCB
241
5%
155
1%
149
4%
Abu Dhabi based banks
Growth vs
Dec ’15
Total deposits
FGB
227
0%
154
3%
140
(2%)
115
0%
ENBD
426
5%
NBAD
419
3%
172
DIB
ADIB
122
UNB
102
CBD
61
RAK
41
3%
62
286
203
15%
109
6%
2%
0%
70
2%
1%
28
243
12%
80
41
298
(1%)
3%
6%
0%
73
4%
2%
125
97
73
41
28
4%
4%
13%
3%
(2%)
2%
1%
37
Financial track record – 1H ‘16 [AED billion]
Market position in UAE
Bank
Revenue – 1H ’16 [AED bn]
Bank
Net profit – 1H ’16 [AED bn]
Abu Dhabi based banks
Dubai based banks
YoY
growth
Mashreq
3.2
ENBD
7.7
5.4
NBAD
YoY
growth
5%
Mashreq
1%
ENBD
0%
NBAD
2.6
(8%)
FGB
2.6
(8%)
(17%)
1.1
3.7
12%
FGB
4.4
(6%)
ADCB
4.3
1%
ADCB
6%
DIB
8%
ADIB
1.0
4%
(12%)
UNB
0.9
(22%)
1%
CBD
0.5
(21%)
3%
RAK
0.4
(38%)
DIB
ADIB
UNB
CBD
RAK
3.4
2.7
1.7
1.2
2.0
2.1
1.8
(15%)
5%
38
> UAE economy
> Strategy
> Accolades
39
Trading history
Trading performance over the last 1 year
Mashreqbank’s trading price – LTM [June 2015 – June 2016]
12 month performance
Key multiples – Mashreqbank1)
Mashreqbank
(45%)
Current P/E
5.9x
DFM GI
(19%)
Current P/B
0.8x
Mashreq
115
150
63
100
50
0
DFM General Index
4,073
6,000
3,311
4,000
2,000
Jun-15
1) Based on price as of September 06 2016; EPS as of 1H 2016 and Book value as of June 2016
Source: DFM
Jun-16
0
40
Dividends
Progressive dividend policy based on solid performance
Net profit and Cash Payout [AED million] and Cash dividend [%]
Net profit
Cash payout
38%
Cash dividend (%)
40%
40%
38%
40%
40
35
2,401
2,500
2,000
20%
20%
25
1,806
20
1,312
1,500
1,000
30
2,402
820
338
500
15
643
676
676
710
5
0
0
2011
2011
EPS
[AED]
10
4.85
2012
2012
2013
2013
2014
2014
7.76
10.68
13.53
1)
2015
2015
13.53
1) Plus 5% Bonus Shares
41
Credit rating
Rating Agency
Long term
Short term
Baa2
P-2
BBB+
A-2
A
F1
A-
A1
> No of shares in issue: 177.5 million
> Market cap at September 06, 2016: AED 13.9 billion
> Free float: 13%
> Foreign ownership limit: 49%
42
> UAE economy
> Strategy
> Accolades
43
Corporate Governance
Mashreqbank is regulated by the UAE Central Bank and
follows international banking standards
Supervisory Authority
> Mashreqbank’s home supervisory authority is the UAE Central Bank which is
responsible for licensing, monitoring and supervising banks, finance companies
and exchange companies in the UAE
> Internationally, Mashreqbank comes under the purview of respective country
regulators such as the Federal Reserve and NY-SBD in the USA and Prudential
Regulation Authority & Financial Conduct Authority in the UK
Basel II and III
Accounting Standard
> Banks are expected to follow the Standardized
Approach for both credit and operational risks.
Migration to Foundation Internal Ratings Based
Approach (“IRB”) for Credit Risk is expected
> The Central Bank made it mandatory in 2000 for all
Banks to publish their Annual Financial Statement as per
International Financial Reporting Standards (IFRS)
> Basel III is under implementation in line with the
Basel III schedule (by 2019)
> The CB has also recently initiated impact analysis on
IFRS 9 implementation – impact study is underway and
we will be ready for implementation in 2018
Bank monitoring - liquidity
Credit Limit
> Cash ratio requirements (1% on Time Deposits and 14% on
Demand Savings and Call deposits)
> Lending limits fixed by the Central Bank in relation to
capital:
● Lending to large private borrowers: 25% (10% for
funded)
● Commercial entities of Federal Govts and UAE Local
Govts: 25% (15% for funded), 100% aggregate
● UAE Local Govts and non-Commercial entities: 25%
Individual, 100% aggregate
> Maintenance of 1:1 ratio is mandatory, i.e. utilization of
funds should not exceed stable sources
> As per Basel III, liquidity coverage ratio (Jan 2016) and net
stable funding ratio (Jan 2018) is under implementation; in
the meantime Central Bank has introduced ‘eligible liquid
assets ratio (ELAR)’
> Mashreq has applied to Central Bank to be allowed to use
Basel III standards for LCR reporting
44
Corporate Governance
Board Supervision





Chairman, Vice-Chairman and 4 Directors form Mashreqbank’s Board. Two of the six board members are independent
CEO is the only executive director
The Board of Directors meet at least once every quarter
Management issues are raised at Board level where the bank’s senior management presents details to the Board
Board has delegated certain powers to CEO for effective day-to-day management
Remuneration Committee
Audit Committee
Management Supervision

Executive Management Committee (reporting to the CEO) discusses and debates bank-wide issues, develops strategic
plans for the Board’s approval and takes decisions on pan-bank issues.
Executive Management Committee
Risk
Committee
Investment
Committee
ALCO
Committee
1) One Director resigned in 2015 due to health reasons
Audit &
Compliance
Committee
Information
Security
Committee
Technology
Steering
Committee
Human
Resources
Committee
45
> UAE economy
> Strategy
> Accolades
46
Accolades
> Gallup Great Workplace Award, 2015 & 2014
> CSR Label – Dubai Chambers – 2015, 2014,
2013, 2012 & 2011
> Banker Middle East Product Awards 2015
• Best Premium Banking Service
• Best Mobile Banking Service
• Best Real Estate Advisory
• Best Self Employed Finance
• Best Debit Card
• Best SME Exchange Service
> Global Banking & Finance Review Awards
2015
• Best Corporate Bank Qatar
• Best Retail Bank Qatar
• Best Customer Service Bank Qatar
• Best Retail Bank UAE
• Most Innovative Banking Initiative
(imashreq) UAE
• Innovative Islamic Banking Solutions
Provider UAE
> Banker ME Industry Awards - Best Regional
Retail Bank 2015 & 2014
> First Bank in UAE to achieve IIA Conformance
> Asian Business Leadership Forum - Business
Excellence Award 2015
> Islamic Finance News Awards 2015
• Best Islamic Deal of The Year Awards in
Qatar
> EMEA Finance Awards Treasury Service
Awards 2015
• Best Cash Management Service in the
ME
• Best Factoring Service in the ME
> IAIR Banking Awards - Best Bank in UAE
• International Finance Magazine
• Best Internet Bank in UAE
• Best Online Bill Payment in UAE
> World Finance Banking Awards 2014
• Best Investment Bank - UAE
• Best Commercial Bank – Qatar
> The ME Excellence Awards 2014
• Financial Market Trading Automation
and System Excellence Award
> MasterCard Innovation Forum 2014
• Best Use of Innovative Technology’ in
the ME & Africa
> Celent Awards 2014
• Best Cash Management and Trade
> EMEA Finance ME Banking Awards 2014
• Best Local Bank in the UAE
• Best Regional Investment Bank in ME
• Best Loan House in the UAE
> Islamic Business & Finance Awards Best Islamic Window 2014
47
48

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Transcription

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