Uae banks benchmarking and success stories by Sutherland Global Services

UAE Banks’ Benchmarking and Success Stories March 2014

Disclaimer This document is the proprietary and exclusive property of Sutherland Global Services except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of Sutherland Global Services. The information contained in this document is subject to change without notice. The information in this document is for information purposes only. Sutherland Global Services® disclaims all warranties, express or limited, including, but not limited, to the implied warranties of merchantability and fitness for a particular purpose, except as provided for in a separate software license agreement. All confidential or proprietary information contained in Sutherland’s response shall at all times be and remain the sole and exclusive property of Sutherland Global Services, Inc.

©©2014 GlobalServices Services Inc., rights reserved. Privileged and confidential information of Sutherland Global 2010Sutherland Sutherland Global Inc., All All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. Services Inc.

www.sutherlandglobal.com

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks Benchmarking With Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

UAE’s banking sector witnessed healthy growth in 2013 Key Highlights of UAE’s Banking Industry • Against a backdrop of improving macroeconomic performance, real estate sector recovery, MSCI country upgrade and Expo 2020 win for Dubai, the UAE banking industry witnessed healthy growth in 2013 • Aggregate assets of banks operating in the Emirates increased by 6.5% in the first nine months of 2013 compared to the end of 2012 • Bank deposits accounted for a large part of the funding during 2013. It grew by 8.8% in the first nine months of 2013, compared to December 2012 – Residential deposits grew by 10.9% – Non-residential deposits, which account for about 10% of the total deposit base, slightly decreased due to lower deposits from financial institutions • With better macroeconomic fundamentals, the non-performing loans to total loans ratio of the UAE local banks declined to 8.3% in March 2013, compared to a high of 8.7% at the end of December 2012 • UAE banks’ liquidity position also improved in 2013 with the loan to deposit ratio at 92.8% in September 2013 compared to 94.1% at the end of December 2012 and above 100% in 2011 • Profit of UAE banks also improved in 2013. Aggregated net profits of 20 listed banks posted a 16.7% yearly rise in the first nine months of 2013

Source: Central Bank of UAE; Emirates NBD; Sutherland Research

www.sutherlandglobal.com June 3, 2014

UAE’s banking sector is the largest by assets in the GCC region UAE Banking Assets (AED Bn)

UAE Bank Deposits (AED Bn)

2,000

1,400

1,200 1,500

1,000 800

1,000 1,605

1,661

1,906

1,790

600

1,069

1,167

1,270

1,050

2010

2011

2012

Sep-13

400

500

200 0

0 2010

2011

2012

Sep-13

UAE Bank Loans & Advances (AED Bn)

Comments

1,200

•

UAE banking sector is the largest by assets in the GCC region; the sector is dominated by 23 local banks, which account for more than 75% of banking assets; 28 foreign banks account for the remainder

•

Both bank loans and deposits are growing, with deposits growing at a faster pace compared to loans and advances

•

In the past couple of years, the Central Bank of the UAE has sought to play a stronger role in the oversight and governance of the banking sector in the UAE

•

This has resulted in a new regulatory regime with various regulations being considered covering areas such as liquidity risk, large exposures and mortgage caps

1,000 800 600

1,031

1,071

1,099

1,178

400 200 0 2010

2011

2012

Sep-13

Source: Central Bank of UAE; Emirates NBD

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

Emirates NBD has the largest physical presence among the UAE banks UAE Banks’ Benchmarking Electronic Banking Services Units & Pay Offices (June 2013)

Branches (June 2013)

Emirates NBD Bank (Emirates NBD)

119

National Bank of Abu Dhabi (NBAD)

National Bank of Abu Dhabi

Distribution of ATMs by Banks (2012)

Emirates NBD Bank

EmiratesNBD

National Bank of Abu Dhabi

550

Abu Dhabi Islamic Bank

540

Dubai Islamic Bank (DIB)

Union National Bank

Abu Dhabi Islamic Bank (ADIB)

Commercial Bank of Dubai (CBD)

Dubai Islamic Bank

Abu Dhabi Commercial Bank

Mashreq Bank (Mashreq)

Union National Bank (UNB)

697

Ajman Bank

Mashreq Bank

434 294

259

Emirates Islamic Bank (EIB)

National Bank of U.A.Q

National Bank of Ras Al Khaimah

196

Abu Dhabi Commercial Bank (ADCB)

National Bank of Ras Al Khaimah

Union National Bank

178

Sharjah Islamic Bank

HSBC Bank Middle East

175

Emirates Islamic Bank

Commercial Bank of Dubai

National Bank of Ras Al Khaimah (RAK Bank) Sharjah Islamic Bank (SIB)

142

Source: Central Bank of UAE

www.sutherlandglobal.com June 3, 2014

NBAD is the largest bank in the UAE by total assets UAE Banks’ Benchmarking (Data as of September 30, 2013) Assets (AED Bn)

NBAD

345

Emirates NBD

332

First Gulf Bank (FGB)

190

ADCB

175

DIB

111

ADIB

Emirates NBD

ADCB

Emirates NBD

2,583

ADCB

2,572

UNB

Mashreq

RAK

1,137

ADIB

1,106

Mashreq

ADIB

3,402

DIB

Mashreq

RAK

3,656

FGB

NBAD

UNB

CBD

Profits (AED Mn)

Shareholder’s Equity (AED Bn)

1,430

1,301

CBD

752

RAK

DIB

700

Source: Bank Financial Statements and Press Releases; Emirates NBD

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

NBAD has the fastest growing assets base among peer banks Total Assets (in Bn AED)

Large Banks

Mid-Size Banks

350

120 308.3

300

281.6

282.4

286.2

100

284.6

94.6 93.2

300.6 80

84.8

84.3

180.8

196.8 150

178.3

183.7

160.2

175.0

157.5

125.5

100

NBAD

•

17.1 13.9 11.2

0 2008

•

64.1

140.8 107.5

2009

2010

Emirates NBD

74.3

51.2

211.4

147.7

85.7

79.2

75.3

255.7

164.7

84.8

98.6

90.6

76.4

250

200

89.9

2011 FGB

2012 ADCB

2008 CBI

24.5

21.4

27.3 12.7

10.9

11.8

11.4

2009

2010

2011

RAK Bank

ADIB

DIB

2012 Mashreq

Emirates NBD is the largest bank in the UAE by assets. Apart from FY 2012, when the asset base improved, the bank assets size remained constant in the recent years NBAD is the second largest bank by asset size. The asset size of NBAD almost doubled in the five-year period of FY 2008-FY 2012

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

There is no clear trend in revenue growth across banks in the UAE. Emirates NBD and NBAD are the top banks by revenue Revenue (in Mn AED)

Large Banks

Mid-Size Banks

20,000

10,000

8,000

16,350.5 16,000

8,684.1

9,000

17,388.2

18,000

8,056.4 7,139.5

15,700.4

7,000

6,274.4

14,400.4

14,008.0

14,000

5,112.1 5,000

12,000

11,229.5

8,000

6,000

9,558.5

9,158.5

8,823.0 8,737.1

7,756.5

8,247.5

8,780.2

9,350.8

8,667.6

8,484.9

6,819.5

4,694.1

3,000

3,502.3 3,044.1

2,651.8

4,989.5

4,923.3 4,533.9

4,410.4 3,018.5

3,243.7

2,111.3

2,000

1,627.9

1,000

865.4

959.2

891.2

824.0

2009

2010

2011

915.5

2008 NBAD

• •

9,417.0

9,241.9

5,114.6

4,167.5 4,000

10,337.7 10,000

6,069.3

6,000

2009

2010

Emirates NBD

2011 FGB

2012 ADCB

2008 CBI

RAK Bank

ADIB

DIB

2012 Mashreq

In terms of revenue, only few banks have shown consistent growth in the five-year period of 2008-12, both in the large and mid-size category ADCB among large banks and RAK Bank & ADIB among mid-size banks have continuously grown in the last five years

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

NBAD – Overview Ownership Structure(1)

Business Description

Individuals 21.9%

•

Incorporated in 1968 to serve as a banker to the Emirate of Abu Dhabi

•

Owned (70%) by the Government of Abu Dhabi, via the Abu Dhabi Investment Council (ADIC)

•

Listed on the Abu Dhabi Securities Exchange (ADX)

Corporate and Public Institutions 7.4% Abu Dhabi Investment Council (ADIC) 70.2%

Other Govt. Entities 0.5% (1)

As of December-end 2013

Key Focus Areas

1 •

Home Market Build the largest, safest and best performing bank in the UAE, and replicate it in the GCC region over time

Source: Company Website

2 •

Wholesale Network Markets Deepen the bank’s wholesale network across the new West-East corridor* and further integrate its existing European & North American platforms into this network

•

New Franchise Markets Build five International bank franchises in the largest and fastest growing economies in the West-East corridor*

* includes Middle East, Africa, China, Indian Sub-continent and South East Asia

www.sutherlandglobal.com June 3, 2014

NBAD – Key Financials Trend Total Assets (AED Bn)

Customer Deposits (AED Bn)

350

250

300

200

250 150

200 150 100

196.8

211.4

255.7

300.6

325.1

100 50

50 0

190.3 121.2

123.1

2009

2010

211.1

151.8

0 2009

2010

2011

2012

2013

Loans & Advances (AED Bn)

2011

2012

2013

Comments

200

•

In 2013, asset growth of 11.4% to AED 325.1 Bn was primarily led by lending growth and increased liquidity

150

•

Net loans and advances grew from AED 164.6 Bn in 2012 to AED 183.8 Bn in 2013, driven by loan growth across domestic and international businesses

•

Customer deposits grew by 10.9% in 2013 compared to AED 211.1 Bn, backed by strong growth of 30% in CASA deposits

100 132.3

136.8

2009

2010

159.5

164.6

2011

2012

183.8

50 0 2013

Source: Company Website

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

FGB has the best Cost to Income or Efficiency ratio Cost to Income Ratio*

Large Banks

Mid-Size Banks

2595%

3000% 700%

1224%

1586%

600% 600% 500% 500%

400%

100% 0%

434%

267%

300% 200%

525%

400% 125% 103% 48% 41%

148%

106%

104%

61% 36%

58%

67%

31%

33%

152% 73% 64% 34%

300%

263% 206%

-100% 100% -200%

203% 189% 132% 132% 114% 91%

164%

200% 104% 107% 102% 102%

113% 103%

137%

129%

147% 129% 94%

94%

-210% -300%

0% 2008 NBAD

• •

2009

2010

Emirates NBD

2011 FGB

2012 ADCB

2008 CBI

2009 RAK Bank

2010 ADIB

2011 DIB

2012 Mashreq

FGB has one of the best cost/income ratio, which compares very well internationally, and is one of the best in the region Despite a relatively small branch network and low staff numbers, FGB has been able to grow its retail business by using low-cost alternate distribution channels to source retail deposits and grant loans

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

FGB has consistently maintained its leadership position as the bank with the best operating margins for years Operating Margins

Large Banks 70.0%

60.0%

61.7%

60.0% 50.0%

Mid-Size Banks

53.1%

57.4%

57.2%

56.5%

50.0%

57.4%

46.9% 51.3% 47.1%

40.0%

49.4%

47.0%

40.0% 41.4%

30.0% 20.0%

36.3% 28.3%

25.9%

10.0%

31.7% 28.6%

19.1% 17.2%

16.7%

9.9%

10.0%

-20.0%

11.9%

NBAD

2009

2010

Emirates NBD

2011 FGB

2012 ADCB

3.1%

3.2%

0.0% 2008

24.0%

18.3%

-15.8%

-10.0%

35.2%

28.3%

0.0%

• •

35.6%

31.0% 20.0%

1.3%

32.0%

42.1%

23.7%

13.4%

32.3%

48.5%

38.7%

30.0%

28.9%

45.6%

41.8%

32.7% 30.5%

45.3%

2008 CBI

2009 RAK Bank

2010 ADIB

2011 DIB

2012 Mashreq

FGB uses low-cost alternate distribution channels to source retail deposits and grant loans FGB utilizes outsourced marketing agents for selling its products in the retail segment

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

FGB has the best NPA ratio among peers NPAs (NPA/Total Loan)

Large Banks

Mid-Size Banks

16%

16% 14.3%

13.8%

14%

14.0%

14% 12.6%

12%

11.1%

10%

11.5%

11.7% 11.7%

10%

10.0%

9.6%

10.0%

9.4% 8.8%

8.5%

7.4% 7.8%

5.2%

4.6% 3.7%

2% 0%

1.6%

5.4% 3.4%

2.9%

2.3%

NBAD

2009

5.4% 4%

2.9%

0% 2010

Emirates NBD

2011 FGB

5.0%

3.7% 3.7%

2.5%

1.3%

2008

• •

3.4%

2.3%

1.4% 1.1% 1.0% 0.6%

7.3%

2012 ADCB

0.7% 2008 CBI

2009 RAK Bank

2010 ADIB

2011 DIB

2012 Mashreq

FGB has a better NPL ratio compared to the peer group, mainly due to its favorable exposure to the Abu Dhabi government and private sector Additionally, FGB has a significant retail loan portfolio, however asset stress risk in this segment is mitigated by the fact that about 80% of the loans are made to Emirati nationals

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

First Gulf Bank – Overview Ownership Structure(1)

Business Description

UAE Companies and Individuals 20.4%

•

Incorporated in 1979 and headquartered in Abu Dhabi

•

64.2% owned by Abu Dhabi’s ruling family

•

Wide range of financial products and services offered through a network of 22 branches in the UAE; global presence in Libya, Qatar, India, Singapore and Hong Kong

•

1,452 employees

•

Listed in 2002; Market cap. of AED 56.4 Bn (USD 15.4 Bn) as of December 31, 2013

Foreign Shareholders 10.8%

GCC Nationals 4.6% Abu Dhabi Ruling Family 64.2% (1)

As of December-end 2013

Key Strategy

Organic Growth of Core Banking Activities

Selective Regional and International Expansion

Synergies with Subsidiaries and Associates

•

Build deeper client relationships, providing solutions and high-quality service

•

Geographic diversification through expansion of existing operations and penetration in key markets

•

Aseel Finance to provide innovative Islamic products to a broad base of customers and businesses

•

Continue to target large creditworthy UAE-based customers

•

Develop and strengthen a customercentric approach emphasizing on bespoke service quality and product range

Focus on trade and financial flows through the UAE into target international locations

Enhance fee income business through property management and equity brokerage services

•

Sourcing and distribution of trade and financing opportunities across the FGB network

•

Specialized subsidiaries for property development and Private Equity

Source: Company Website

www.sutherlandglobal.com June 3, 2014

First Gulf Bank – Key Financials Trend Total Assets (AED Bn)

Customer Deposits (AED Bn)

250

160 140

200

120 100

150

100 50

125.5

140.8

157.5

175.0

195.0

60 40

86.4

98.7

103.5

2010

2011

138.0

0 2009

2010

2011

2012

2013

2009

Loans & Advances (AED Bn)

100

In 2013, FGB added AED 12.3 Bn in its loans and advances compared to 2012 to reach AED 126.9 Bn. This growth mainly originated from the retail and services business sectors

•

Reflecting ample liquidity available in the UAE banking sector, FGB added AED 18.6 Bn in customer deposits during 2013

•

In 2013, FGB generated revenues of AED 8,421 Mn, up 16.1% YoY. Revenue growth during 2013 was mainly driven by

90.4

95.6

104.7

114.6

126.9

20 0 2009

2010

2011

2012

2013

•

120

2012

Comments

140

119.3

2013

• AED 473 Mn addition in Net Interest and Islamic Financing income driven by higher volumes and sustained NIMs at 3.7% • Solid increase in property income by AED 334 Mn and in fees and commissions by AED 272 Mn

Source: Company Website

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

RAK Bank and CBI are the banks with the highest and lowest total capital ratio Total Capital Ratio

Large Banks

Mid-Size Banks

25.0%

30.0% 22.6%

26.4%

22.9% 23.1%

22.5% 21.5%

20.8%

22.6%

20.7%

20.0%

20.5%

20.1%

21.3% 21.1% 20.6%

25.0%

23.4%

20.2% 20.0% 18.8% 17.9%

17.4%

15.0%

17.4% 15.0%

15.4%

24.3%

22.6%

16.7% 10.0%

14.1% 12.9% 12.3% 12.0% 11.8%

22.7%

21.4%

17.8%

18.2%

19.3%

16.0%

17.4%

17.4% 16.2%

15.9%

14.9%

15.3%

13.5%

14.1% 5.0% 11.4% 11.6% 10.0%

0.0% 2008 NBAD

• •

2009

2010

Emirates NBD

2011 FGB

2012 ADCB

2008 CBI

2009 RAK Bank

2010 ADIB

2011 DIB

2012 Mashreq

RAK Bank has the largest capital ratio (total) or capital adequacy ratio among UAE banks Commercial Bank International (CBI) has the lowest total capital ratio in the UAE banking industry

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

RAK Bank's profitability margins are among the strongest in the region with a net interest margin of over 10% Net Interest Margin (%)

Large Banks

Mid-Size Banks

4.0%

12% 3.7%

3.6%

3.7%

3.5%

10%

3.0%

3.1%

3.0%

7.3% 6%

2.9% 2.9%

2.8% 2.8%

2.9%

2.7%

6.2%

4.1% 2.9%

2.5%

2.3%

6.5%

5.1% 2.7% 2.6%

2.5% 2%

2.4%

2.0%

3.8% 2.8%

2.4% 2.3%

3.7%

3.3%

4.0%

3.1%

3.3%

3.2% 2.5%

2.9%

2.5%

0% 2008 NBAD

â&#x20AC;˘

8.3% 7.4%

3.0%

10.2%

8.8%

3.5%

3.2%

10.0%

9.4%

2009

2010

Emirates NBD

2011 FGB

2012 ADCB

2008 CBI

2009 RAK Bank

2010 ADIB

2011 DIB

2012 Mashreq

RAK Bank's business profile is unique in the UAE due to its focus on retail banking and highly profitable unsecured medium-term lending to SMEs

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

RAK Bank – Overview Ownership Structure(1)

Business Description •

RAK Bank, also known as the National Bank of Ras Al-Khaimah, was founded in 1976

•

RAK Bank is a public joint stock company, headquartered in the emirate of Ras Al-Khaimah, in the UAE. The Bank is 52.75% owned by the Government of Ras Al-Khaimah and its shares are publicly traded on the ADX

•

The bank underwent a major transformation in 2001, with a shift in focus from corporate banking to retail and small businesses

•

Currently, the bank offers a wide range of personal and business banking services through its 34 branches and its portfolio of electronic banking solutions, which include Telephone, Online, and Mobile Banking. It also offers Sharia-compliant personal and business banking services via its Islamic banking unit, RAKBANK AMAL

Government of RAS Al-Khaimah 88.31%

Al Naeem Ahmed ESSA 11.24% Wasatch Advisors, Inc. 0.45%

(1)

As of February 2014

Strategy

Focus on Islamic Banking

•

RAK Bank launched RAKBANK AMAL to extend Islamic banking to customers in Ras al Khaimah and other emirates that prefer Shari’ah-compliant products and services

•

Currently, Islamic banking makes up 30% of the incremental business and includes auto, personal and business finance besides accounts, deposits, debit and credit cards, and thirdparty Takaful policies

2 •

Increase Physical Presence The bank continues to reinforce its physical presence to support its service across all its contact channels with customers

Source: Company Website, Sutherland Research

www.sutherlandglobal.com June 3, 2014

RAK Bank – Key Financials Trend Total Assets (AED Bn)

Customer Deposits (AED Bn)

25 15

20 15 10

17.1

21.4

24.5

27.3

30.1

10 5

5 0

13.9

16.4

20.7

23.1

0 2009

2010

2011

2012

2013

2009

2010

Advances (AED Bn)

13.4

16.4

20.3

22.4

0 2009

2010

2011

2013

In 2013, RAK Bank earned AED 1,430.8 Mn in net profit. In its maiden year, the bank’s Islamic Finance division – AMAL – broke even, recording a small profit of AED 3.0 Mn for the year

•

Gross loans and advances grew by 8.5% to AED 22.4 Bn in 2013, AED 1.2 Bn of which came from Islamic financing assets

•

In 2013, total operating income increased by AED 257.2 Mn to AED 3.2 Bn

•

Net interest income and income from Islamic financing grew by 5.5% largely on the back of continued focus on garnering low-cost current and savings accounts

15 18.4

2012

•

2011

Comments

18.3

2012

2013

Source: Company Website

www.sutherlandglobal.com June 3, 2014

Agenda

UAE Banking Sector – Overview UAE Banks’ Benchmarking with Case Examples 1

Benchmarking – Top Line Growth Case Study – NBAD Bank

Benchmarking – Efficiency Case Study – First Gulf Bank

Benchmarking – Stability Case Study – RAK Bank

Benchmarking – Segment Focus

www.sutherlandglobal.com June 3, 2014

Share of commission & fee in total income is the largest for Mashreq Bank Commission and Fee Earned/Total Income (%)

Large Banks

Mid-Size Banks

20% 19%

35% 33.1%

30.9%

32.5%

19.1% 30%

18%

17.2%

17%

17.0% 16.3%

21.9%

20%

14.9% 15% 14% 13%

14.8% 13.6%

17.1%

15.3%

14.3% 13.9% 13.4%

13.9%

13.8%

13.2%

15%

15.7%

19.5% 14.7%

13.0%

26.1%

20.0% 16.0%

17.3%

14.6%

14.0% 12.6%

12.8%

9.8%

12.2% 5%

11.9%

11%

15.8% 15.0% 14.8% 12.6%

12.6%

10%

12%

5.1%

6.8%

11.3%

10%

0% 2008 NBAD

• •

25%

15.8%

15.9%

16%

24.5%

2009

2010

Emirates NBD

2011 FGB

2012 ADCB

2008 CBI

2009 RAK Bank

2010 ADIB

2011 DIB

2012 Mashreq

Share of commission and fee of Mashreq Bank in its total income has traditionally remained highest among its peers and is rising steadily The bank claims this as a testimony to its strength as a universal bank with a strong cross-sell capability

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

Mid-size banks in UAE have a comparatively larger CASA ratio CASA Ratio (%)

Large Banks

Mid-Size Banks

45%

55%

40.8%

52.0% 51.0%

42.6%

40%

50%

48.8%

46.1% 35%

35.4% 31.0%

30% 25.7% 25% 20%

30.6% 29.4%

27.1%

24.5% 21.8%

40%

25.7%

23.9% 18.8%

35%

8.9%

10%

8.7%

6.9%

7.7%

37.5% 37.2% 36.5%

39.6%

39.2%

38.1%

27.9%

25% 12.7% 20%

15%

24.2%

14.4%

26.0%

21.5%

19.9%

13.6% 14.5%

10% 2008 NBAD

•

38.3% 38.0% 36.2%

43.6%

44.1%

39.5%

30%

24.1%

21.7%

15%

•

45.1%

45%

2009

2010

Emirates NBD

2011 FGB

2012 ADCB

2008 CBI

2009 RAK Bank

2010 ADIB

2011 DIB

2012 Mashreq

CASA ratio of most of the banks under study has shown growth. This indicates that banks are now increasingly focusing on low-cost current and saving deposits CASA ratio of ADIB and RAK Bank is above 50%

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

Net Revenue by Segment (FY 2012) Net Revenue by Segment – Large Banks (in Mn AED) NBAD Investment Banking Division 2,797.7 32.3% Islamic Business 269.8 3.1%

Emirates NBD Domestic Banking Division 1,957.9 22.6%

International Banking Division Financial 1,357.3 Markets 15.7% 1,047.9 12.1%

Global Wealth Head Office 341.9 Support 3.9% Functions 898.4 10.4%

Retail Banking 4,376.2 Other 42% -159.5 -3%

FGB

ADCB Retail Banking 4,435.4 57%

Other Operations 502.9 7%

Investment & Funds Management 528.1 5% Islamic

Government, Corporate & Commercial Banking 4,279.6 41%

Banking 1,187.4 11%

Net Revenue: 8,670.8

Retail Banking 2,968.0 41%

Corporate Banking 2,744.3 38%

Real Estate 201.1 3%

Corporate Support 129.7 2%

Commercial Banking 2,602.6 34%

Treasury 810.4 11%

Net Revenue: 10,211.9

Net Revenue: 7,226.7

Investment Banking -572.6 -7%

Net Revenue: 6,595.2

Net Revenue by Segment – Mid-Size Banks (in Mn AED) RAK Bank

ADIB Retail Banking 2,738.9 95%

Corporate Banking 52.2 2% Treasury and others 102.1 3%

Net Revenue: 2,893.2

Real Estate -45.3 -1%

Retail and Commercial Banking 2,280.1 62%

DIB Real Estate 49.1 1% Others 336.8 9%

Others 13.6 1% Capital Markets 133.1 Private 4% Banking 223.2 6%

Treasury 504.1 13% Wholesale Banking 960.8 26%

Net Revenue: 3,565.6

Retail Banking 1,897.6 49%

Corporate & Investment banking 1,091.0 28%

Net Revenue: 3,878.5

Mashreq

Islamic Banking 179.9 4%

Corporate Banking 1,135.9 28%

Head Office and Others 262.8 6% Treasury and Investment Banking 333.8 Other 8% income 346.4 9%

Retail Banking 749.9 18%

Insurance 446.1 11%

International Banking 638.7 16%

Net Revenue: 4,093.4

Source : Sutherland Research

www.sutherlandglobal.com June 3, 2014

Thank You