Mashreq
INVESTOR PRESENTATION June 2018 Celebrating a rich history of over 50 years… S P I R I T Socially Passionate Respect for Innovative Integrity Transparent Responsible about clients colleagues
“To be the region’s most progressive bank enabling innovative possibilities for our clients, colleagues and communities”
2 UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
3 UAE - Second Largest Economy in the GCC with Promising Growth Prospects
UAE - The second largest economy in the GCC Real GDP CAGR – 2017- 23F (%) Sovereign Rating by Moody’s ▪ Second largest economy in the GCC with nominal GDP of USD 412 billion for 2018E ▪ Well diversified economy with oil & gas contributing only A1 B1 Baa3 Aa3 Aa2 Aa2 ~17% of the total GDP 2.7% 2.9% 3.3% 2.4% 2.5% ▪ Despite volatile oil prices, UAE economy remains strong 2.0% with current account surplus at 5.3% of GDP for 2018E ▪ Holds 8.0% of the proven OPEC crude oil reserves, primarily concentrated in Abu Dhabi ▪ Young population with ~61.1% aged between 25-54 years and a literacy rate of ~94% KSA Bahrain Oman Qatar UAE Kuwait
Nominal GDP per Capita – 2018E Nominal GDP GDP Breakdown by Sector – 2017 (%) (USD thousand) 2018E (USD billion) Oil 83 748 38 135 412 184 Manufacturing 15.3% Trade 22.3% Construction 3.8% Financial services 66.2 7.0% Transport & Storage 39.5 Real Estate 22.6 25.5 29.9 8.8% 19.4 6.4% Public admin. 5.9% Utilities 12.3% Others 9.6% 8.7% Oman KSA Bahrain Kuwait UAE Qatar
SOURCE: IMF WEO April 2018,CIA & OPEC, Moody's Ratings, National Bureau of Statistics 2016 4 UAE ECONOMY – MACROECONOMIC OUTLOOK One of the best ranked economies on global competitive index among the GCC nations
Current Account Balance to GDP – 2018E (%) Govt. Net Lending/(Borrowings) to GDP – 2018E (%)
5.3 5.4 5.8 7.1 2.5 2.8
-1.4 -3.2 -5.7 -6.2 -7.3 -11.6
Oman Bahrain Qatar UAE KSA Kuwait Bahrain KSA Oman UAE Qatar Kuwait
Global Competitiveness Index – 2017-18 Ranking1 Inflation to Decline and Remain Stable Over the Medium Term in UAE (%) 62 52 44 4.2 30 25 2.5 2.5 2.4 17 2.0 2.0
2018E 2019F 2020F 2021F 2022F 2023F UAE Qatar KSA Bahrain Kuwait Oman 1 Rank out of 137 economies SOURCE: IMF WEO April 2018, World Economics Forum-Global Competitiveness Index 2017-18 5 UAE ECONOMY – MACROECONOMIC OUTLOOK Solid institutional and policy framework as reflected by relatively higher scores among the GCC nations
Scores Highest Among GCC on Govt. Effectiveness Among the Best Ranked in GCC on Rule of Law Index1 Index1
1.4 0.89 0.86 0.7 0.47 0.46 0.3 0.43 0.2 0.2 0.03
-0.2
Bahrain Kuwait UAE Qatar Bahrain KSA Oman Kuwait UAE Qatar KSA Oman
Highest Ranking in GCC on Control of Corruption Enforcement of Contracts - Ranked Best in GCC Index1 1.3 123 0.9 111 83 73 0.4 0.2 67
12 -0.1 -0.2
UAE Qatar Oman KSA Bahrain Kuwait UAE Oman Kuwait KSA Bahrain Qatar
1 Score ranges from -2.5 (weak) to 2.5 (strong) SOURCE: World Bank – Worldwide Governance Indicators, World Bank- Doing Business 6 Non-oil growth is supported by strong hospitality and logistics sectors
Non-oil growth continues to be steady with PMI remaining Non-oil direct trade flows have witnessed steady growth over the above 50 last few years
Emirates NBD UAE PMI index UAE non-oil direct trade flows (AED billion) Increasing rate of growth CAGR 65 Re-exports Exports Imports ’12-’17
60 1,056 1,065 1,072 1,059 1,079 1,075 2.9% 58 58 57 57 57 57 56 56 56 219 232 244 221 215 252 55 55 55 55 (1.2%) 55 170 148 132 161 169 159
50 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun- (0.1%) 685 696 695 18 668 676 664 45 Increasing rate of contraction 40 2012 2013 2014 2015 2016 2017 50 – no change on previous month
The hospitality sector, especially in Dubai, is one of the major … along with the logistic sector
growth drivers … Dubai Abu Dhabi Hotel guests (million) Air passengers (million) UAE container volumes (TEU million)
18.6 20.2 21.2 20.4 21.0 15.8 88 18.0 14.9 84 14.2 78 3.8 13.2 70 66 11.0 10.0 58 Dubai Abu Dhabi 8.1 44 UAE air freight (million tonnes)
4.4 4.9 25 25 3.3 3.4 3.5 3.5 4.1 20 23 2.9 3.1 3.2 2.4 2.8 2.4 15 17 6* 2.3 2.4 2.4 2.5 2.6 2.7 0.8 0.1 0.6 0.7 0.8 0.8 0.8 0.8 0.6 2012 2013 2014 2015 2016 2017 Jun- 2012 2013 2014 2015 2016 2017 Jun- 2012 2013 2014 2015 2016 2017 Mar-18 18 18 Source: Emirates NBD, Federal Customs Authority, Hotel and Airport authorities of UAE, World Bank, Khaleej Times, National * Abu Dhabi Data as of March 2018 7 Consumer borrowing has slowed due to flat employment levels
Rents continue to be falling … … as can also be seen in the fall in Dubai property prices over the year Avg MPPI inc (%) Cum MPPI inc (%) Dubai 2Q ‘18 Abu Dhabi 2Q ‘18 Mashreq Property Price Index (%)
20 15.9 15.5 15.3 15.0 14.8 14.7 14.4 14.3 14.0 13.9 13.8 13.7 13.7 Rent Rent Rent Rent 15 growth falling growth falling 10 slowing slowing 5 Rent Rent Rent Rent -0.2 -0.5 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.2 -0.1 -0.1 0.0 growth bottoming growth bottoming 0 acceler- out acceler- out
ating ating -5
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Aug Nov Residential Office Retail Hotel May
Consumer borrowing growth has slowed… … due to flat employment levels
Domestic credit to Individuals (AED Bn) Emirates NBD Employment index (#)
65 Increasing rate of growth +6% 50 51 52 51 51 51 51 52 51 50 51 51 51 60 338 337 311 326 283 265 55
50 Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun- 18 45
Increasing rate of contraction 40 2013 2014 2015 2016 2017 Jun-18 50 – no change on previous month
Source: JLL, UAE Central Bank, Emirates NBD 8 UAE ECONOMY – BANKING SECTOR OVERVIEW Well regulated and diversified Banking sector
Diversified and Highly Regulated Banking Sector GCC Banking Assets – 2017 (AED billion)
▪ As of December 2017, UAE banking sector comprised 49 194% 90% 226% 175% 98% 166% banks 2,694 – 22 National Banks with 771 branches and 2,259 – 27 Foreign Banks with 82 branches 1,377 ▪ Diversified loan portfolio - Real Estate and Construction sector 774 267 accounted for only ~20% of loan book in 2017 212 ▪ Well regulated banking system, in line with internationally followed best practices UAE KSA Qatar Kuwait Oman Bahrain ▪ UAE Banking sector has a long-standing track record of Total Banking Assets to GDP Ratio Government support during crisis situations Source: IMF WEO April 2018, Central Bank of respective country
UAE - Loans & Deposits (AED billion) Loans by Sector – 2017 (%) CAGR 12- 1H’18 1% 6% Mining and Quarrying 10% 1% Loans 5.9% Manufacturing 20% Electricity, Gas and Water Deposits 6.8% 21% 1,580 1,627 Construction and Real Estate 1,575 1,684 1,485 1,567 1,622 Trade 1,378 1,425 1,476 1,276 1,283 1,184 1,170 Transport, Storage and Comm. Financial Institutions 10% 5% Government 11% 5% Personal Loans for Business 10% Personal Loans for Consumption Others 2012 2013 2014 2015 2016 2017 1H 2018 Source: UAE Central Bank Note: Others include loans made to service sector & Non profit Institutions Source: UAE Central Bank Largest banking system in the GCC with total assets of AED 2.7 trillion; sound regulatory framework with widespread support from the Government 9 UAE ECONOMY – BANKING SECTOR OVERVIEW UAE Banking Sector Snapshot for June 2018 [AED billion]
Loans Dec ’17 1,580.3 Government 5 UAE Banking Public Sector/GRE’s (4) Sector- Business & Industrial Credit 31 +2.7% Gross Credit Individual Credit 0 NBFI’s 1 Foreign Credit* 8 Loans Jun ’18 1,622.3 * Foreign credit is lending to Non-Residents: Loans to NBFI, Trade Bills discounted and Loans and Advances to Govt/ Public sector, Private sector (corporate and individuals) in local and foreign currency
Deposits Dec ’17 1627.3 Government Sector 39 UAE GREs 0 Banking Private Sector 19 +3.5% Sector- Bank NBFI 0 Deposits Non-Resident Deposits (2) Deposits Jun ’18 1,684.3
10 Source: Central Bank UAE data June 2018 UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
11 MASHREQ HERITAGE Mashreq is one of UAE's leading financial institutions
. Established in 1967 by the Al-Ghurair Group Heritage . 51 years in UAE banking and financial services market
. Oldest regional bank based out of UAE Publicly listed . Combines the entrepreneurial spirit of Dubai with enduring trade banking relationships across the region . Listed on the DFM on creation of local stock exchange
Strong . Prominent Regional bank with presence in most GCC countries and leading international network with regional / 26 branches / rep-offices in MENA, Asia, Europe and United States international presence . Well positioned to finance regional trade flows
. Universal bank offering a comprehensive suite of products and services to individuals and corporates Diversified across all lines of business business . Most diversified revenue streams with fee and other income contributing over 40% of total income; high degree of geographic diversification with 21% of revenue coming from outside UAE
Strong . Long serving senior executives along with international management expertise delivering a robust management growth model team . Led by Abdul Aziz Abdulla Al-Ghurair, Chief Executive Officer for 28 years
Strong and . Al-Ghurair Group, the main shareholders of the bank, are a leading conglomerate in the UAE with supportive numerous business interests ownership . Featured in the Forbes billionaire list for the last 10 years structure . Mashreq is the flagship business for the family for over 50 years
12 MASHREQ HERITAGE Stable and supportive ownership structure
Mashreq’s Leadership Ownership – Al-Ghurair flagship brand Mr. Abdulla Bin Ahmad Al-Ghurair ▪ Al-Ghurair families holds the majority stake in Chairman Mashreq (approximately 87%) and are the ▪ One of the most prominent businessmen and founders of the Bank industrialists in the UAE ▪ Al-Ghurair family has a strong commitment to ▪ Former Chairman of the UAE Banks Association the continued growth and financial solidity of H.E. Abdul Aziz Abdulla Al-Ghurair Mashreq Chief Executive Officer & Director ▪ Al-Ghurair family is one of the oldest and ▪ Chairman of UAE Banks Federation wealthiest families in the UAE ▪ Vice Chairman of the higher board of DIFC – Featured in Forbes billionaire list for over ▪ Chairman of Masafi 10 years ▪ Chairman of Oman Insurance ▪ Board Member of Emirates Foundation – Business interests include shopping ▪ Former Speaker of the Federal National Council malls, real estate, cement manufacturing, food industries, Masafi (mineral) water, Key shareholders (June 2018) contracting, trading, retailing, shipping, printing & packaging, aluminium 9.6% Saif Al Ghurair Investment LLC extrusion, building materials, oil refinery, Abdulla Ahmed Al Ghurair Inv. Co. manufacturing, steel and canning 3.6% Masar Investments 3.5% 39.5% Majid Capital ▪ Mashreq’s shares are listed and traded on 12.7% National Cement Company the Dubai Financial Market Other shareholders
31.1%
13 MASHREQ HERITAGE Strong distribution network in the UAE with 26 branches in Dubai
Alternate Channels ▪ 50 branches (out of which Mashreq Gold has presence in 29 branches and SME Banking has Umm Al Quwain Ras Al Khaimah presence in 24 branches) and a Retail Customer Ajman 1 branch 1 branch Service Center in UAE serving ~500K customers 1 branch ▪ ATMs and CCDMs increased coverage to 343 units in UAE
Sharjah ▪ 35,000 POS machines spread 14,000 merchant location in the UAE. Second Largest Merchant 8 branches acquirer in the UAE with close to 30% market share ▪ Internet Banking through Mashreq Online (Retail incl. Brokerage), Mashreq Business online (Corporate), Dubai Mashreq-FI online (Correspondent Banking); 306,662 26 branches active users are registered with online banking ▪ Mobile banking services: Snapp registration has grown up by 29% year on year and financial transactions has grown by 21% as compared to last year figures. Snapp has been recently upgraded with unique new features such as transfer your credit card balance from other banks card control, Quick remit to Pakistan, Mashreq Pay and Samsung Pay. ▪ Fully integrated electronic platform for transaction banking (GTS) Abu Dhabi Fujairah ▪ State of the art Polaris System (mashreqMATRIX) to provide online services to corporate customers 12 branches 1 branch ▪ 24 x 7 Direct Banking Call Centre
14 MASHREQ HERITAGE Regional and international banking presence with ~ 20% of revenues from outside of UAE
London New York Pakistan Nepal Bangladesh
Kuwait India Hong Kong International Egypt branches Bahrain Financial Institution Qatar branches Representative Offices
15 MASHREQ HERITAGE Strong track record in International expansion
10 12
Egypt, London,
UAE Pakistan, Hong Kong Bahrain Bangladesh Nepal
1967 1978 1981 2001 2010
1971 1980 1984 2009
Qatar India New York Kuwait
2 7 9 11
Presence in number of countries 16 UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
17 STRUCTURE AND LEADERSHIP Mashreq organization chart
Board of Directors
Chief Executive Officer
Corporate Banking Retail Banking International Banking Treasury & Capital Group (CBG) Group (RBG) Group (IBG) Markets (TCM) (22% of revenue) (26% of revenue) (20% of revenue) (12% of revenue)
Audit , Fraud & Corporate Affairs Risk Operations & Compliance Group (CA) Management (RM) Technology (O&T) (AFCG)
Note: Financials as of 30 June 2018 18 STRUCTURE AND LEADERSHIP Mashreq is a well diversified universal bank that covers significant lines of business with a full product and channel suite
Offers wholesale banking Offers personal banking Energy, Services & Manufacturing Personal Banking Trading SME Contracting Finance Mashreq Gold Corporate Real Estate Retail Banking Private Banking Banking Group Islamic Banking Products Group (RBG) Payments (CBG) NBFI Islamic Banking Products Emerging Corporates Division Distribution Global Transaction Services Alternate Channels Direct Sales Corporate Finance Direct Banking Centre Islamic Banking Offers treasury and investment products Offers banking services outside UAE FX and Investments Wholesale and Investment Banking Rates & Structured Solutions Treasury and Investment Products Mashreq Capital Personal Banking Treasury & International Islamic Banking Products Financial Institutions Globally Capital Banking Group Equity Derivatives & Institutional Sales Markets (TCM) (IBG) Islamic Banking Products Mashreq Securities Investments
Note: Islamic Banking is offered through Mashreq Al Islami for RBG & through an Islamic window for CBG; it is also offered in International countries and is a product line within TCM 19 STRUCTURE AND LEADERSHIP Oman Insurance is the largest subsidiary of Mashreq
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 & ▪ Provides full range of Islamic Products & Services Services ▪ Jun ’18 Equity: AED 847 Mn ▪ Jun ’18 Equity: AED 1,816 Mn ▪ 1H 2018 Profit: AED 15 Mn ▪ 1H 2018 Profit: AED 59 Mn
Mashreq Capital (100%) Mashreq Securities (99.98%) ▪ Registered in DIFC for Brokerage, Asset ▪ Securities brokerage Company registered at Dubai Management and Fund Management services Financial Market ▪ One of the largest asset management in UAE with ▪ One of the leading brokerage in the UAE USD 800 mn in asset under management ▪ Jun ’18 Equity: AED 76 Mn ▪ Funds rated highest in the market ▪ 1H 2018 Profit: AED (2) Mn ▪ Jun ’18 Equity: AED 25 Mn ▪ 1H 2018 Profit: AED 3 Mn
Note: Figures are based on draft audited statements 20 STRUCTURE AND LEADERSHIP Business Highlights – Domestic Corporate
Business Highlights Operating Income (AED million)
• Corporate banking is the largest segment in terms of assets contribution (~26% in 2017). 3.2%
• Corporate Banking provides financing solutions to corporate and commercial customers in the UAE. 1,324 1,319 1,361 11.5% • Major products offered include trade finance, contracting finance, project 695 finance, corporate finance advisory and cash management. 623
• 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. The 2015 2016 2017 1H 2017 1H 2018 diverse industry coverage includes among others: Contracting Finance, Services & Manufacturing, Government, Multinational Corporates, Real Estate, Trading Companies, Non-Banking Financial Institutions and Emerging Corporates – including DXB NE & Abu Dhabi. Segment Assets and Liabilities (AED billion)
• The Corporate Finance team has retained its position amongst the premier institutions for debt capital raising in the region. Mashreq was Assets Liabilities amongst the top 5 loan Bookrunners in the GCC, as per Bloomberg.
• Mashreq’s Global Transaction Services team maintained its regional 36.3 34.0 dominance in the transaction banking space by winning 8 awards in 2017 29.5 30.9 29.6 32.8 32.5 for Trade Finance, Factoring and Cash Management. 26.8
• In line with its Mission, Mashreq continued to lead innovation. GTS won the innovators award 2017 by Global Finance for providing card less cash to its corporate clients, a first in the region. Mashreq was also the first bank to go live in the region with SWIFT ‘s Global Payment Initiative. 2015 2016 2017 1H 2018
21 STRUCTURE AND LEADERSHIP Business Highlights – Domestic Retail
Business Highlights Operating Income (AED million)
• Retail banking is the largest contributor to operating income at ~25% in 2017. • 35k POS machines spread over 14k merchant locations in the UAE. (9.1%) Second largest merchant acquirer in UAE with ~30% market share.
• Comprehensive product/service offerings including current, savings & 1,838 1,684 4.8% fixed deposits, investment products, personal loans, auto loans, 1,530 mortgages, small business loans, credit cards with unique loyalty programs, bank assurance, private banking and wealth management. 761 798 • In SME segment, unsecured lending has totally been stopped while the focus has been shifted to fee based business e.g. account management, forex, remittances etc. 2015 2016 2017 1H 2017 1H 2018 • Key innovations include: • First bank in the Region to have early access of Samsung Pay - a best in class and secure mobile payment service that works as a Segment Assets and Liabilities (AED billion) contactless credit or debit card • POS Plus - UAE’s first ever handheld payment acceptance device with built in digital product catalogue (customers can see a Assets Liabilities merchant’s entire product line and variants on a digital tablet) • 1-click payments - a unique service that lets merchants collect payments from customers by sending them an SMS or email 24 25 23 • First bank to integrate Apple’s Siri for voice-powered payments 23 • Launched Mashreq NEO, a full-service digital bank to cater to the day-to- 14 14 13 13 day needs of a world on the move. • Key awards for 2017 include Best Digital Bank in the UAE and Best Mobile Banking Application in UAE by World Finance and a number of awards from Global Finance like Best Consumer Mobile Banking Global, 2015 2016 2017 1H 2018 Best Consumer Digital Bank Middle East, Most Innovative Consumer Digital Bank Middle East etc.
22 STRUCTURE AND LEADERSHIP Business Highlights – International Banking
Business Highlights Operating Income (AED million)
• International Banking contributed ~21% to operating income and ~25% to the assets in 2017. (15.2%) • The decline in operating income in 2017 was primarily the result of devaluation adjustment impact in Egypt while the fall in 1Q 2018 was the 1,463 result of slowdown of business in Qatar. 1,301 1,241 (7.5%) • International banking business covers Financial Institutions (FI) services globally and also offers Corporate and Retail Banking services to 665 615 customer segments in Bahrain, Egypt, Kuwait, Qatar and India. This business also caters to corporate clients in non presence markets. • During the year, a new corporate banking strategy for India was rolled out, which shows a promising start with a healthy pipeline. In addition, an 2015 2016 2017 1H 2017 1H 2018 OBU unit was established in Bahrain. • The Bank was mandated lead arranger in important loan syndications in Segment Assets and Liabilities (AED billion) overseas markets. • Introduced key sales management systems and processes like Client Relationship Management and Automated Account Planning. Corporate Assets Liabilities Mobile Banking App was launched in Egypt, Qatar and Bahrain and Mashreq Matrix (Online banking platform for corporate clients) was 33 33 launched in Kuwait. 31 29 • In key African countries, the Bank assisted in raising funds for the top 23 21 20 banks and development financial institutions and continued to be the 19 leading Middle Eastern Bank in the FI business. • Key Awards: Best Corporate & Institutional Digital Bank – Qatar by Global Finance. 2015 2016 2017 1H 2018
23 STRUCTURE AND LEADERSHIP Business Highlights – Treasury and Capital Markets
Business Highlights Operating Income (AED million)
• Treasury & Capital Markets accounted for ~14% of assets as of December 2017. 9.2% • Treasury and Capital Markets business consists of customer flow business and proprietary business. Customer flow business includes 616 23.5% transactions for FX, derivatives, hedging, investment products, equities 553 564 and regional asset management undertaken on behalf of customers. 362 Proprietary business includes trading and investing activity undertaken 293 on behalf of the Bank.
• Operating income increased ~9% YoY in FY 2017 and ~29% YoY in 1Q 2018, primarily driven by increase in customer flow business. 2015 2016 2017 1H 2017 1H 2018 • Mashreq was able to grow its Treasury product suite across asset classes, supported by an online trading platform and 24 hour dealing room. Segment Assets and Liabilities (AED billion)
• The Rates & Structured Solutions business closed several large ticket hedging transactions for clients across the region, including a structured Assets Liabilities profit rate swap for a real estate loan.
• Makaseb Income Fund won Thomson Reuters Lipper Fund award for 18 16 17 Best Fund Performance over 5 Years. 15
• Global Finance award for the best Treasury and Cash Management in 9 9 9 7 the UAE.
• EMEA Finance – Best Treasury services in the Middle East
2015 2016 2017 1H 2018
24 STRUCTURE AND LEADERSHIP Business Highlights – Islamic Banking
Business Highlights Operating Income (AED million)
• 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 49.2% products and services. 479 4.7% • Amongst the top ten Islamic institutions in the UAE based on market 308 321 share as per MEED. 215 225 • Products offered include Ijara home finance, Mudarabah deposit and savings, Musharaka finance, Murabaha commodity finance, Ijara equipment finance, sukuk underwriting, Musharaka LC, Murabaha LC, 2015 2016 2017 1H 2017 1H 2018 TR Murabaha, Kafala, Wakala deposit, Reserve Murabaha deposit and sukuk advisory. Segment Assets and Liabilities (AED billion) • 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 Assets Liabilities Lead Arranger, Sole Book Runner and Facility Agent for the facility. 12 • “Most Innovative Islamic Banking Solution Provider” by Global Banking & 10 8 9 8 9 Finance Review. 8 7
2015 2016 2017 1H 2018
25 STRUCTURE AND LEADERSHIP Business Highlights – Insurance business (Oman Insurance Company)
Business highlights Net Profit (AED million) ▪ Mashreq owns 63.94% of Oman Insurance Company ▪ Oman Insurance Company (OIC) is the largest insurance company in the UAE Products offered include life, medical, 32.9% motor, marine cargo and hull, aviation, property, fire and general accidents, engineering, energy, liabilities and 105 15.4% personal lines insurance 81 79 ▪ Largest distribution network in the UAE; OIC has 12 52 60 branches, with operations across all Emirates in the UAE, the Sultanate of Oman, Qatar and Turkey. In addition, OIC has over 20 bank partners in the region ▪ The company is rated ‘A-’ Stable Outlook by Standard & 2015 2016 2017 1H 2017 1H 2018 Poor’s and ‘A Excellent’ Stable Outlook by AM Best, supported by leading multinational reinsurers such as Everest Re, XL Re and Arch Re Gross written premium (AED million) ▪ Oman insurance continued its focus on digital and now offers online sales and service capability through web portals and mobile apps for its Motor & Medical lines 4.6% ▪ With launch of DigiTerm and DigiCI products, Oman 3,555 3,718 Insurance became the 1st insurance company in UAE to 3,190 provide an online offer in the life segment 2,200
2015 2016 2017 1H 2018
26 STRUCTURE AND LEADERSHIP Profile of Senior Management
Abdul-Aziz Abdullah Al-Ghurair Ali Raza Khan Chief Executive Officer Head of Corporate Affairs • A Graduate of California Polytechnic State University, H.E. Abdul-Aziz Al- • Ali Raza Khan is a Member of the Institute of Chartered Accountants of Ghurair joined Mashreq, then Bank of Oman, in 1977 India (1978) • He worked in different Divisions and through rigorous training in various • Joined Mashreq in 1980; as Head of Corporate Affairs, he is assignments climbed to his current position as of March 1991 responsible for Finance, HR and Administrative functions in the bank
Ahmed Abdelaal Subroto Som Head of Corporate Banking Group Head of Retail Banking Group • Ahmed Abdelaal is an MBA from the London Business School • Subroto Som is a graduate of IIT Delhi and has an MBA from IIM • Joined Mashreq in 2017 from HSBC where he was the Regional Head Ahmedabad of Corporate Clients Coverage MENAT and Head of Commercial • Joined Mashreq in 2015 from the Boston Consulting Group Banking UAE • Prior to this, he has experience at senior positions at Citibank, • Prior to this, he has experience at senior positions at ABN Amro, Standard Chartered & Seoul First Bank American Express and Arab Bank
Jan-Willem Sudmann Nabeel Waheed Shaikh Head of International Banking Group Head of Treasury & Capital Markets • Jan-Willem Sudmann has a Masters in Economics from the University of • Nabeel Waheed Shaikh has a BSc from Syracuse University, New York Hamburg, Germany • Joined Mashreq in 1996, from Bank of America, Pakistan where he • Joined Mashreq in 2015; prior to joining Mashreq he was a Managing spent over 15 years and held various positions including Head of Director at Commerzbank Shanghai Corporate Banking • Before joining Commerzbank he worked for close to two decades at Dresdner Bank across various geographies such as Germany, UK and Egypt
Arif Usmani Head of Risk Management Group Sandeep Chouhan • Arif Usmani is an alumni of the Imperial College of Science and Technology, Head of Operations & Technology University of London and holds a Bsc (Hon) in Physics • Sandeep Chouhan has a Masters in Technology, Management & • Joined Mashreq in 2017 from ADIB where he was the Head of Wholesale Systems from IIT, Delhi, India banking since 2012 • Joined Mashreq in 2015 from CBQ, Qatar • Before joining ADIB, Arif worked for over three decades with Citigroup across • Prior to this, he was CIO with Barclays and Morgan Stanley various geographies such as Pakistan, Saudi Arabia, West Africa, Slovakia, Hong Kong and Singapore Nasser A. Paracha Head of Audit, Fraud & Compliance Group • Nasser A. Paracha has a BSc from the University of Leeds. He completed a General Management Program from HBS • Joined Mashreq in 1995 from Deutsche Bank AG in Pakistan • Overall banking experience of approximately 25 years, covering corporate banking, internal audit and compliance
27 UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
28 STRATEGIC OBJECTIVES Well defined strategic objectives…
“To be the region’s most progressive bank enabling innovative possibilities for our clients, colleagues and communities” Vision
Build long term relationships by: Delivering superior service to clients Actively contributing to the community through responsible banking Leading with innovation Mission Treating colleagues with dignity and fairness Pursuing opportunities that grow shareholders’ value
Become primary bank & grow ‘New to Enhance human capital Bank’ Leader in service excellence/ customer Enhance brand experience Foster innovation & drive digital Further leverage Islamic Banking Strategic transformation opportunities Objectives Strategic cost management & middle office Ethical, regulatory, internal policy rationalization compliance – zero tolerance
29 BUSINESS OBJECTIVES …Supported by clearly laid down business objectives
. Win new customers and increase customer penetration through a differentiated customer centric, service Accelerate oriented approach and focus on continued product innovation domestic growth . Leverage balance sheet strength and liquidity position . Capitalize on leadership position in fee-generating businesses
. Support franchise client needs internationally and international client needs in our franchise by providing Grow solutions to corporate clients across network international . Provide cross border accessibility to clients, such as offshore booking location for private and gold contribution customers and non-resident proposition across the network . Maintain momentum in our core target markets
Optimize balance . Optimize liability mix to lower cost of funds and enhance margins sheet . Deploy liquid assets into higher yielding opportunities
Strengthen risk management and . Reduce charge-to-loans ratio through continued focus on portfolio and asset quality asset quality . Selective portfolio / asset sales as part of an ongoing portfolio balancing strategy
Drive operational . Leverage existing infrastructure to drive growth and returns efficiencies . Significantly improve efficiencies across the bank to bring cost/income ratio in line with market
Business objectives are strongly integrated with the long-term strategic direction of Mashreq 30 DIVERSIFICATION Diversified earnings base with strong growth potential
Gross Loans portfolio split as of (AED 72.0 bn) Business segments outlook June 2018 ▪ UAE Retail: Pick up in mortgage business; strong growth in Manufacturing cards and payment business and wealth management 8.7% 12.7% Construction ▪ UAE Corporate: Strong growth from trade, manufacturing, Trade tourism and logistics driving overall UAE GDP in the coming 15.6% years leading to increased demand for credit & trade services Transport & Comm. ▪ International Banking: Tap and strengthen Regional market Services 24.9% footprint to assist local corporations operating regionally Financial institutions ▪ Insurance: As the largest insurance company in the UAE, 16.2% Personal Mashreq’s Oman Insurance Company (OIC) subsidiary is 2.3% Govt/GRE expected to grow in line with the market 13.6% 6.0% ▪ Treasury: Build on the market leading menu of TCM products including hedging and FX products and increase cross-sell
Revenue split 1H 2018 (AED 3.1 bn) Asset split as of June 2018 (AED 127.0 bn)
7.9% Corporate 13.1% 5.3% 22.4% Retail Loans & Advances 7.2% 7.8% Treasury & Cash and balances with CB Capital markets Interbank deposits & balances 53.3% Financial Investments International 14.6% 19.8% Islamic Other assets 25.7% Insurance Others 11.2% 11.7%
31 INNOVATION Strategic Advantage through Product and Service Innovation
Mashreq was the first bank in the UAE to:
Introduce consumer loans Introduce a comprehensive corporate Integrate Emirates ID with bank account cash management solution offering (GTS) and allow its usage as a Debit Card
Introduce “Branch of the future – self Introduce “Tap & Go”, mobile NFC service autonomous branches” sticker payment method
Centralized branch operations and Introduce Point-of-Sale terminals foreign trade services
Innovation Issue debit/credit cards Offer a direct banking centre
Offer Visa Connectivity across the Install ATM cash dispensers world
Launch full service digital bank “Mashreq Launch UAE’s first fully EMV Chip & PIN Neo“ compliant mobile POS solution
32 UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
33 FINANCIAL TRACK RECORD Solid performance over the past decade
Net profit (AED million)
+3% 2,401 2,402 2,052 1,926 1,806 1,643 1,312 1,161 1,000 803 820
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H 2018
Net loans and advances (AED billion)
+1% 68 61 63 58 60 55 48 50 41 41 38
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jun-18
34 FINANCIAL TRACK RECORD Rapid improvement in performance over the last four years
Total Assets (AED billion) Loans & Advances (AED billion)
9% 6% 122.8 125.2 127.0 62.7 67.7 115.2 58.0 60.2 61.0 105.8 50.4 89.7
2013 2014 2015 2016 2017 Jun-18 2013 2014 2015 2016 2017 Jun-18
Customer Deposits (AED billion) Customer Deposits / Funding Base
65.4% 64.7% 63.9% 62.7% 60.8% 61.3% 87.1% 84.2% 84.0% 84.2% 82.5% 83.6%
43.5% 37.9% 38.3% 37.2% 36.9% 46.0%
62.1% 61.7% 63.1% 56.5% 62.8% 54.0%
2013 2014 2015 2016 2017 Jun-18 2013 2014 2015 2016 2017 Jun-18 CASA Deposits Term Deposits Customer Deposits / Total Assets
35 FINANCIAL TRACK RECORD Steady growth in revenue over the last four years
Total Revenue (AED million) Operating Costs (AED million)
Fee and other income Net interest income1) 4% 6% 2,210 2,472 2,407 2,361 5,845 5,978 6,169 6,016 2,042 4,837 1,310 2,720 2,555 2,602 2,437 2,393 3,104 1,250 3,125 3,423 3,567 3,579 2,445 1,854 2013 2014 2015 2016 2017 1H 2018 2013 2014 2015 2016 2017 1H 2018
NIM 2) 3.43% 3.72% 3.60% 3.52% 3.41% 3.47% CIR 42.2% 37.8% 41.4% 39.0% 39.2% 42.2%
Operating Margin (AED million) Net Profit (AED million) 3% 7% 2,401 2,402 3,762 2,052 3,635 3,505 3,655 1,806 1,926 2,796 1,161 1,794
2013 2014 2015 2016 2017 1H 2018 2013 2014 2015 2016 2017 1H 2018
ROE 13.1% 15.7% 14.2% 10.6% 10.5% 11.7%
1) NII component booked under net investment income as per IFRS, reclassified under NII 36 2) NIMs calculated on average Earning Advances Financial track record
30 Jun 2018 31 Dec 2017 30 Jun 2017
Capital adequacy
Tier I Capital Ratio 1) 15.9% 16.2% 16.3%
Total Capital Ratio 1) 17.0% 17.2% 17.2% Liquidity
Liquid Assets to Total Assets 25.9% 29.6% 29.6%
Advances to Deposits 87.0% 82.5% 80.2% Asset quality
NPL Coverage Ratio 179.1% 149.7% 150.1%
NPL to Gross Advances 2.9% 2.9% 3.3% Performance
ROA 1.8% 1.7% 1.8%
ROE 11.7% 10.5% 11.7%
Net Interest Margin 3.49% 3.41% 3.37%
Efficiency Ratio 42.2% 39.2% 39.3%
Fee and other income to total income 40.3% 40.5% 41.2%
Note: 1) June 2017 Capital Ratios as per Basel II and Dec 2017 and June 2018 as per Basel III 37 FINANCIAL TRACK RECORD Well-funded balance sheet …
Operating leverage (%) Liability by type as of June 2018
Loan to Deposits 11.3% (AED 106.9 bn)
6.6% Other Liabilities 86.1% 84.8% 82.5% 87.0% 81.7% 79.2% 1.7% Med. Term FRN 7.8% Insurance Funds Due to Banks Customer deposits 72.8%
2013 2014 2015 2016 2017 Jun-18
Liquidity (%) Liability segment split as of June 2018
Liquid Assets to Total Assets (AED 106.9 bn)
30.4% 3.0% 29.9% 29.6% Corporate 26.5% 27.7% 25.9% 8.0% 8.0% 32.0% Retail Treasury & Capital markets 19.0% International Islamic Insurance 2013 2014 2015 2016 2017 Jun-18 9.0% 22.0% Others
38 FINANCIAL TRACK RECORD …along with strong capital adequacy…
Risk weighted assets (AED million)1) Tier 1 and Tier 2 capital (AED million) 1) Credit risk Tier 1 capital Tier 2 capital Market risk 122,312 122,219 118,874 Operational risk 113,514 20,993 20,743 19,179 20,042 106,628 17,726 1,192 1,370 16,146 1,178 1,077 1,450 106,008 110,139 109,568 1,568 99,732 88,975 95,600 18,965 19,801 19,373 16,277 18,001 4,424 2,498 2,221 14,578 84,028 2,982 1,744 531 8,046 9,358 10,368 10,429 10,429 4,416 2013 2014 2015 2016 2017 Jun-18 2013 2014 2015 2016 2017 Jun-18
Capital adequacy (%) 1)
18.1% Tier I Capital ratio 16.4% 16.6% 16.9% 16.9% 17.2% 17.0% 15.3% 15.9% 16.0% 16.2% 15.9% Total Capital ratio
2013 2014 2015 2016 2017 Jun-18
Note: 1) December 2017 onwards data as per Basel III 39 FINANCIAL TRACK RECORD …and consistent improvement in asset quality
NPLs (AED million) NPL Ratio (%)
8.8% 4,126 3,204 5.1% 2,723 2,492 2,014 2,275 2,226 3.7% 2.8% 3.1% 2.9% 3.0%
2012 2013 2014 2015 2016 2017 1H 2018 2012 2013 2014 2015 2016 2017 1H 2018
Loan Loss Reserves (AED million) & Coverage (%) Loan Loss Provisions (AED million)
179% 1.7% 1.5% 1.7% 1.6% 2.6% 2.2% 1.8% 1.6% 145% 151% 150% 120% 96% 1,696 53% 4,439 1,446 3,097 3,185 3,276 3,186 1,017 995 2,815 809 2,335 752 301 282
2012 2013 2014 2015 2016 2017 1H 2018 2012 2013 2014 2015 2016 2017 1H 1H 2017 2018 Total Provisions (Incl. IIS) Provisions Coverage Risk Charge (loan loss provisions, net / gross loans)
40 Market performance in 1H ‘18
Total assets (AED bn) Total loans (AED bn) Peer group1) Mashreq Peer group1) Mashreq
DXB AUH DXB AUH
1,962 797 1,165 125 1,158 517 641 63 Dec’17 Dec '17
+2.0% 2.1% 1.9% +1.4% +3.0% 4.2% 2.0% +7.9%
2,000 813 1,187 Jun’18 127 1,193 539 654 Jun ‘18 68
Total deposits (AED bn) Total revenue (AED bn) Peer group1) Mashreq Peer group1) Mashreq
DXB AUH DXB AUH
1,292 554 738 Dec '17 76 33.2 14.4 18.8 1H ’17 3.0
+3.9% 2.5% 5.0% +2.3% +4.5% 9.5% 0.6% +3.7%
1,343 568 774 Jun ‘18 78 34.7 15.7 18.9 1H ’18 3.1
1) Dubai Banks: ENBD, CBD, DIB & RAK; Abudhabi Banks: FAB, ADCB, UNB & ADIB SOURCE: Banks’ financial statements 41 Market position in UAE
Bank Total assets Total loans (net) Total deposits
Growth vs Growth vs Growth vs Dec '17 Dec '17 Dec '17
FAB 692 3% 345 4% 431 9%
ENBD 478 2% 316 4% 335 3%
ADCB 272 3% 166 2% 172 5%
DIB 216 4% 142 6% 151 3%
ADIB 127 1% 68 8% 78 2%
Mashreq 123 0% 76 0% 101 1%
(5%) UNB 101 (6%) 67 70 (11%)
0% CBD 69 (2%) 47 48 (1%)
3% 5% RAK 51 5% 33 34
1) Total growth over the period and not CAGR 42 Source: Banks’ financial statements Market position in UAE
Bank Revenue Net interest income Fee & other income
YoY YoY YoY growth growth growth
FAB 9.8 (1%) 6.5 0% 3.3 (2%)
ENBD 8.5 14% 6.2 20% 2.3 0%
ADCB 4.6 7% 3.6 9% 1.0 0%
DIB 4.0 10% 2.9 14% 1.2 1%
Mashreq 3.1 4% 1.9 5% 1.3 1%
ADIB 2.7 (2%) 1.8 (1%) 0.9 (4%)
RAK 1.9 (3%) 1.4 2% 0.5 (12%)
UNB 1.8 (3%) 1.4 6% 0.4 (26%)
CBD 1.3 1% 0.9 6% 0.4 (9%)
1) Total growth over the period and not CAGR 43 Source: Banks’ financial statements Market position in UAE
ROE1) [%] Bank Net profit [AED billion] 20.9 20.6 18.9 16.4 13.3 13.2 YoY 12.7 11.9 11.7 Ø 16
growth
DIB
FAB
RAK
UNB CBD
FAB 6.1 10% ADIB
ENBD ADCB MASQ
ENBD 29% 5.0 ROA2) [%]
ADCB 2.4 15% 2.0 2.0 1.8 1.8 1.7 1.7 1.7 1.6 1.5 Ø 1.8
DIB 2.3 10%
DIB
FAB
RAK
CBD UNB
Mashreq 1.2 3% ADIB
ENBD ADCB MASQ
ADIB 1.2 5% Return on RWA [%]
UNB 0.8 (12%) 3.5 2.6 2.4 2.3 2.3 2.2 1.9 1.8 1.6 Ø 2.3 CBD 0.6 69%
RAK DIB FAB
13% RAK UNB
0.4 CBD
ADIB
ENBD ADCB MASQ
Source: Banks’ financial statements 1) Equity excludes tier 1 capital notes and their interest expense is deducted from net profits 44 2) Total net profits (including minority) after Tier 1 interest expense divided by total assets UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
45 TRADING HISTORY Trading performance over the last 1 year
Mashreq’s trading price (June 2017 – June 2018) Share details Share performance Currency AED Mashreq – 12 months -6.7% Par value/ share 10 DFM GI – 12 months 28.3% Number of shares (Mn) 177.5 P/E (1 Sep ’18) 5.7x Market Cap (1 Sep ’18) (Mn) 12,081 P/B (1 Sep ’18) 0.6x Mashreq DFM 80 4,000 70 70 75 3,500 60 3,621 3,000 50 2,821 2,500 40 2,000 30 1,500 20 1,000
10 Mashreq DFM General Index 500 0 0 Jun ’17 Jun ’18
Source: DFM & Bloomberg 46 DIVIDENDS Stable dividend policy based on solid performance
Net profit and Cash Payout (AED million) and Cash dividend (%)
Net profit Cash payout Cash dividend (%) 40% 40% 40% 40% 38%
2,500 2,401 2,402 2,052 2,000 1,806 1,926 1,500
1,000 676 676 710 710 710 500 0 2013 2014 2015 2016 1) 2017 EPS 10.68 13.53 13.53 10.56 11.56 (AED)
BVPS 85.45 91.04 100.09 105.66 119.00 (AED)
1 Plus 5% Bonus Shares 47 CREDIT RATING Rated by four rating agencies
Rating Agency Long term Short term Last rating action Long term rating upgraded to A- in A- A-2 June ’18
Viability Rating (VR) upgraded to A F1 bbb- in July ‘17
Long term rating upgraded to Baa1 Baa1 P-2 in June ‘17
Long term rating upgraded to A in A A1 May ‘18
All 4 rating agencies have upgraded Mashreq ratings in the course of the last year
48 UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
49 CORPORATE GOVERNANCE Mashreq is regulated by the UAE Central Bank and follows international banking standards
Supervisory Authority ▪ Mashreq’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, Mashreq comes under the purview of respective country regulators such as the Federal Reserve and NYSDFS 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 ▪ The Central Bank made it mandatory in 2000 for all Banks to credit and operational risks. publish their Annual Financial Statement as per International ▪ UAE CB has rolled out Capital Adequacy Ratio (CAR) as per Financial Reporting Standards (IFRS) Basel III effective 1 Jan 2018 ▪ Banks are expected to follow IFRS 9 w.e.f 1st Jan2018
Bank monitoring - liquidity Credit Limit
▪ Cash reserve ratio requirements (1% on Time Deposits and 14% ▪ Lending limits fixed by the Central Bank in relation to capital: on Demand Savings and Call deposits) – Commercial entities of Federal Govts and UAE Local Govts: ▪ Maintenance of 1:1 ratio is mandatory, i.e. utilization of funds 25%, 100% aggregate should not exceed stable sources – UAE Local Govts and non-Commercial entities: 25% ▪ As per Basel III, liquidity coverage ratio (LCR) and net stable Individual, 100% aggregate funding ratio (NSFR) is under implementation. In the meantime – Principal shareholders and their related entities: 20% Central Bank has introduced ‘eligible liquid assets ratio (ELAR)’ as Individual, 50% aggregate a surrogate for LCR. Banks will continue to report Advances/ Stable resources in place of NSFR. ▪ UAE CB has approved Mashreq submission to follow LCR from 31st March 2018 50 CORPORATE GOVERNANCE Robust Corporate Governance Framework
Chairman, Vice-Chairman and five Directors form Mashreq’s Board. Two of the seven board members are independent Board CEO is the only executive director Supervision 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
Audit & Information Technology Human Risk Investment ALCO Compliance Security Steering Resources Committee Committee Committee Committee Committee Committee Committee
51 Risk Management – Vision and Pillars
To be the most referenced Risk Management function by external
stakeholders among peer banks
People
Problem Problem Recognition
Policies Policies & Processes
Portfolio Portfolio Management Partnership Partnership withBusiness
Predictable Earnings
52 Critical Risk Management Functions
Risk Analytics Credit Retail Risk & Documentation Policy Architecture
Basel II, Capital Administration Management & Credit Control and IFRS9 Special Credit Risk – Assets- Wholesale Wholesale and SME Remedial & Policy Recovery Retail Cross-Border Recovery & Risk Collections
Market Risk – Legal Operational Trading & (in-house) Risk ALM Risk
53 Risk Governance Framework
The Enterprise Risk Committee, Assets and Liabilities Committee and Investment Committee work under a mandate from the Board of Directors to manage the overall risk of the Bank via an approved Risk Appetite Statement
The Enterprise Risk Committee (RC) has oversight responsibility for all key risk policies and portfolio issues.
Highly experienced and trained Risk Managers operate within delegated authority to approve credit risk transactions and monitor market and operational risk.
The Risk Architecture & Analytics Department within Risk Management Group is responsible for ensuring risk data integrity, portfolio reporting and developing & validating risk rating models.
Risk and Business functions are segregated. All credit facilities / commitment booking, monitoring and documentation are independently administered and monitored by Credit Administration & Control Department.
Audit is an independent function within the Audit, Fraud and Compliance Group (AFCG) that is responsible for monitoring compliance with the Group’s risk management policies and procedures by undertaking reviews of the various risk-taking units
54 Risk Management Differentiators
Risk management functions operate independently, but in partnership with all the businesses: Retail, Corporate, Financial Institutions and Treasury.
Independent credit approval & Portfolio management through guidelines origination functions governed by an applying differentiated limits by obligor, sector overall Risk Appetite Statement and country (where applicable) supported by business level TM/RAC
Focus on core business Focus on application of technology Key competencies (Trade Finance, to risk processes and risk solution Attributes Contracting Finance, Financial to generate greater efficiencies. Institutions and Real Estate)
Detailed program-based approval system Pro-active wholesale risk management for each retail product, supplemented by with focus on potential portfolio weaknesses application and behavioral scoring and problem assets through a dedicated models. A strong collection and recovery Special Assets function function supports all retail originations.
55 UAE economy
Mashreq heritage
Structure and Leadership
Mashreq Strategy Investor Presentation Financial track record Trading history, rating and dividends
Corporate governance & Risk Mgmt.
Accolades
56 ACCOLADES Key Awards
Gallup Great Workplace Award 2018, 2017, 2016, World Finance Awards 2015, 2014 ▪ Best Digital Bank – UAE CSR Label – Dubai Chambers – 2018, ▪ Best Mobile Banking Application – UAE 2017,2016, 2015, 2014, 2013, 2012 & 2011 Daman Corporate Health Awards Banker ME Product Awards ▪ Best Corporate Health and Wellness Organization ▪ Best Mobile Banking Service – Snapp Award ▪ Best Customer Loyalty Programme – Salaam Gulf Business Awards ▪ Best Premium Credit Card – Solitaire ▪ Business Leader of the Year – Banking Industry ▪ Best Trade Finance Offering – Trade Finance (H.E. AbdulAziz Al Ghurair) ▪ Best Real Estate Advisory 2017 Retail Banking Conference & Awards: London Global Finance 2017 ▪ Middle East Retail Bank of the Year ▪ Innovator in Transaction Services (for the Card less Global Banking & Finance Review Awards 2018 Cash Withdrawal Using Internet Banking offering in ▪ Best Retail Bank UAE the product innovation category for 2017) ▪ Best Customer Experience UAE ▪ Best Treasury and Cash Management Bank in the Best Digital Bank UAE UAE ▪ ▪ Best Corporate Bank Qatar Banker ME Industry Awards Cards & Payment Middle East 2016 ▪ Best Regional Retail Bank 2017,2016, 2015, 2014 ▪ Best Credit Card ▪ Best Banking Innovation ▪ Most Improved Payment Card ▪ Best Real Estate Finance Islamic Finance News Awards Euromoney’s 13th annual private banking survey ▪ Corporate Finance Deal of the Year – ENOC US$ ▪ Best Private Bank for Super Affluent Clients in the 1.5 Billion Syndicated Loan Facility UAE ▪ Syndicated Deal of the Year – Aujan Coca Cola MEFTECH Innovation Awards Beverages AED900 Million Commodity Murabahah ▪ Best Customer Experience Initiative Financing Annual Islamic Business & Finance Awards ▪ Best Innovation in Islamic Banking Solution 57 APPENDIX 2Q 2018 financials – Consolidated Income statement [AED million]
Income statement 2018 2018 2017 Variance (% change)
2Q 2018 vs 2Q 2017 2Q 2018 vs 1Q 2018 2Q 1Q 2Q (Y-o-Y) (Q-o-Q)
Net interest income 945 909 909 3.9 3.9
Net Fees and commission 383 357 387 (0.9) 7.4
Investment income / (loss) 5 13 39 (86.9) (62.1)
Other income 254 239 200 26.8 6.2
Total operating income 1,586 1,518 1,535 3.4 4.5
Operating expenses (718) (592) (606) 18.4 21.2
Operating profit 869 925 929 (6.4) (6.1)
Impairment allowance (287) (302) (341) (15.8) (5.0)
Overseas tax expense (7) (14) (22) (66.6) (49.3)
Non-Controlling Interest (11) (11) (9) 29.2 3.3
Net Profit 563 598 557 1.0 (5.8)
58 APPENDIX 1H 2018 financials – Consolidated Income statement [AED million]
Income statement 2018 2017 Variance (% change)
1H 2018 vs 1H 2017 1H 1H (Y-o-Y)
Net interest income 1,854 1,762 5.2
Net Fees and commission 739 763 (3.0)
Investment income / (loss) 18 74 (75.1)
Other income 493 397 24.2
Total operating income 3,104 2,994 3.7
Operating expenses (1,310) (1,175) 11.5
Operating profit 1,794 1,819 (1.4)
Impairment allowance (589) (652) (9.6)
Overseas tax expense (21) (46) (53.1)
Non-Controlling Interest (22) (18) 22.3
Net Profit 1,161 1,104 5.2
59 APPENDIX June 2018 financials – Consolidated Balance sheet [AED million]
Balance sheet 30 Jun 2018 31 Mar 2018 31 Dec 2017 Variance YTD (% change) Assets
Cash and balances with Central Banks 14,243 14,768 16,899 (15.7%)
Deposits and balances due from Banks 18,596 17,964 20,135 (7.6%)
Loans and advances 57,036 55,973 53,394 6.9%
Islamic financing and investment products 10,650 9,220 9,339 13.6%
Other financial assets 14,696 14,232 14,164 3.8% Goodwill 12 14 14 (15.1%) Other assets 9,894 9,385 9,381 5.5% Investment properties 518 518 518 0.0% Property and equipment 1,352 1,346 1,343 0.7% Total Assets 126,997 123,419 125,188 1.4% Liabilities
Deposits and balances due to banks 7,007 8,089 9,313 -24.8% Repurchase agreements with banks 1,279 1,218 557 129.6% Customers’ deposits 69,753 68,965 69,380 0.5% Islamic customers’ deposits 8,038 7,560 6,681 20.3% Insurance and life assurance funds 1,775 1,711 1,583 12.1% Other liabilities 12,036 10,888 10,321 16.6% Medium-term loans 7,018 5,439 6,226 12.7% Total Equity 20,091 19,548 21,126 (4.9%)
Total Liabilities and Equity 126,997 123,419 125,188 1.4% 60 61