title set in verdana 24 plain - mashreqbank.com · the material in this presentation is general...
TRANSCRIPT
Mashreq Bank
March 2014 results
Disclaimer
The material in this presentation is general background information about
MashreqBank’s activities current at the date of the presentation. It does not
constitute or form part of and should not be construed as, an offer to sale or issue
or the solicitation of an offer to buy or acquire securities of MashreqBank in any
jurisdiction or an inducement to enter into investment activity.
Although MashreqBank UAE has obtained the information provided from sources
that should be considered reliable, it cannot guarantee its accuracy or
completeness. The information provided is purely of an indicative nature and is
subject to change without notice at any time.
The person retrieving information is responsible for its selection and all aspects of
its use. The information may only be used by the person retrieving it. The person
retrieving the information may not transfer, duplicate, process or distribute it. The
person retrieving the information is obliged to follow all instructions from
MashreqBank concerning its use. No part of the content of this presentation may
be copied.
2
>Performance highlights
>Financial results
3 3
March 2014 results
Performance highlights
> Significant growth in profitability (35% YoY)
> Improving asset quality and enhanced coverage
> Improved balance sheet structure leading to higher loan-to-asset ratio
> Prudent cost management resulting in improved efficiency (38%)
> Diversified revenue base from international operations
4
> Stable gains in loans and advances and customer deposits (6% each)
> Consistently high fee and other income proportion (49%)
5
Operating income
Q1 2014
Consolidated Income statement
Q1 2013 Variance
Comments
Operating expense
Operating profit
Impairment charges
Net profit
1,382
524
857
251
575
1,118
487
631
171
425
23.6%
7.7%
35.9%
47.3%
35.2%
> Operating income up by 23.6%
YoY driven by strong growth in both
net interest income and fee and
commission income
> Growth in Operating expenses
was managed at 7.7% leading to
favorable cost-to-income jaws
> Impairment charges increased by
47.3% as bank continues to
increase general provision leading
to an NPL coverage of 101.8%
> Net profit higher by 35.2% on
account of strong growth in
operating profit
Financial highlights – Consolidated Income statement [AED million]
31 Mar 2014
94,079
53,261
61,910
15,037
94,889
6
Assets
Consolidated Balance sheet
Variance
Comments
Loans & Advances
Customer deposits
Shareholder’s funds
Risk weighted assets
31 Dec 2013
89,655
50,431
58,604
15,121
88,975
4.9%
5.6%
5.6%
(0.5%)
6.6%
> Total assets up by 4.9% on
account of growth in loans and
advances
> Customer loans and advances at
AED 53 billion, increased by 5.6%,
led by both corporate and retail
loans
> Customer deposits up by 5.6%
predominantly led by 8.2% growth
in CASA which reflects bank’s focus
on reducing cost of funds
> Shareholder’s funds remained
stable at ~AED 15 billion in spite of
dividend payout of AED 676 million
> Risk weighted assets increased
to reach AED 95 billion driven by
growth in loans and advances
Financial highlights – Consolidated Balance sheet [AED million]
31 Dec 2013
16.4%
18.1%
42.2%
26.5%
86.1%
96.7%
6.0%
2.2%
2.9%
13.1%
15.3%
31 Mar 2014
16.8%
37.9%
25.8%
86.0%
101.8%
5.7%
2.5%
3.1%
16.0%
31 Dec 2012
17.2%
19.3%
45.4%
27.4%
87.3%
56.6%
9.4%
1.7%
2.6%
10.3%
7
Tier I Capital Ratio
Total Capital Ratio
Efficiency Ratio
Liquid Assets to Total Assets
Advances to Deposits
Financial highlights – Financial Ratios [%]
Financial Ratios
NPL Coverage Ratio
NPL to Gross Advances
ROA
Net Interest Margin
ROE
>Key highlights
>Financial results
8 8
March 2014 results
9
Income statement 2014 2013 Variance (% change)
AED million Q1 Q1 Q4 Q1 2014 vs Q1 2013 Q1 2014 vs Q4 2013
Net interest income1) 707 507 708 39.4% (0.1%)
Fees and commission 437 328 355 33.3% 23.1%
Investment income / (loss)1) 46 31 20 46.2% 133.7%
Other income 192 252 254 (23.6%) (24.6%)
Total operating income 1,382 1,118 1,337 23.6% 3.3%
Operating expenses (524) (487) (535) 7.7% (2.0%)
Impairment allowance (251) (171) (247) 47.3% 1.9%
Overseas tax expense (13) (12) (2) 7.1% 708.0%
Minority interest (18) (23) (49) (22.2%) (63.9%)
Net income 575 425 505 35.2% 14.0%
1) NII component booked under net investment income as per IFRS, reclassified under NII
March 2014 financials – Consolidated Income statement [AED million]
s
Balance sheet 31 Mar 2014 31 Dec 2013 Variance (% change)
Assets
Cash and balances with Central Banks 10,602 10,830 (2.1%)
Deposits and balances due from Central Banks 13,711 12,947 5.9%
Loans and advances 47,432 44,280 7.1%
Islamic financing and investment products 5,829 6,151 (5.2%)
Other financial assets 8,541 7,974 7.1%
Goodwill 27 27 NA
Interest receivable and other assets 6,376 5,871 8.6%
Investment properties 475 473 0.5%
Property and equipment 1,085 1,101 (1.5%)
Total Assets 94,079 89,655 4.9%
Liabilities
Deposits and balances due to banks 6,151 5,081 21.1%
Repurchase agreement with banks 1,030 1,045 (1.4%)
Customers’ deposits 57,326 54,158 5.8%
Islamic customers’ deposits 4,584 4,446 3.1%
Insurance and life assurance funds 1,598 1,427 12.0%
Interest payable and other liabilities 5,572 5,840 (4.6%)
Medium-term / long-term loans 2,780 2,538 9.5%
Total Equity 15,037 15,121 (0.5%)
Total Liabilities and Equity 94,079 89,655 4.9%
10
March 2014 financials - Consolidated Balance sheet [AED million]
11
Net income and expense [AED million]
Net fee and other income1)
Key Points
Net interest income1)
Operating income and expenses
44% 46% 40% 40% 38% Cost efficiency
> Q1 2014 Operating Income increased by 23.6% on YoY basis led by 39.4% growth in Net Interest Income and 10.5% growth in Net fee, commission and other income
> On a QoQ basis, Q1 2014 Operating Income rose by 3.3% led by 7.2% increase in Net fee, commission and other income
> Fees & other income as % of total income remained high at 49%
> Q1 2014 Operating expenses rose by 7.7% on a YoY basis, but declined by 2.0% on a QoQ basis
> Efficiency ratio at 38%, improved by 206 bps and 560 bps as compared to Q4 2013 and Q1 2013 respectively
707708651
579507
0
200
400
600
800
2.0
2.5
3.0
3.5
4.0
3.2%
Q2 2013
2.9%
Q1 2013
2.6%
Q1 2014
3.1%
Q4 2013
3.3%
Q3 2013
NII NIM (%)
45% 51% 52% 53% 51% % of total income
328 355 402 355 437
Q2 2013
561
11
196
Q1 2013
611
31
252 46
192
Q1 2014
675
Q4 2013
629
20
255
Q3 2013
591
19 170
Fee & Comm. Inv. Income Other Income
55% 49% 48% 47% 49% % of total income
535
1,3821,3371,243
1,1401,118
524499521487
Q2 2013 Q1 2014 Q4 2013 Q3 2013 Q1 2013
Operating expenses Operating income
1) NII component booked under net investment income as per IFRS, reclassified under NII 2) Based on annualized quarterly NII
2)
12
Asset mix [AED billion]
Loans portfolio split as of March 2014
Key Points
Total assets
Loans and advances
> Total assets increased by 4.9% to reach AED 94.1 billion, as compared to AED 89.7 billion at the end of 2013
> Customer loans and advances increased by 5.6% to reach AED 53.3 billion, as compared to AED 50.4 billion at the end of 2013
> Diversified loans portfolio with top 5 sectors accounting for ~77% of overall loan portfolio
> Loans portfolio is dominated by Personal loans at 25% followed by Trade at 21% and Islamic finance at 11%; Top 3 sectors account for ~57% of the overall loan portfolio
> Loans and advances as % of total assets remained stable at 57% in Q1 2014
94.189.7
83.081.277.8
Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013
53.350.448.747.442.7
Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q1 2014
8.4%
9.3%
10.8%
21.3%
25.1%
9.6%
9.9%
1.6% 0.1%
4.1% Personal
Services
Islamic finance
Trade
Construction
Manufacturing
Govt / Public sector
Other
Financial institutions
Transport & Comm.
55% 58% 59% 56% 57% Loans to total assets
13
Liability mix [AED billion]
Key Points
Liability mix
Customer deposits
> Customer deposits accounted for 78% of total liabilities, slightly lower than in Q4 2013
> Bank increased its customer deposits by 5.6% as compared to Q4 2013
> CASA for a majority portion of customer deposits at 58% as compared to overall market at 50% in Sep 2013
> Time deposits contributed 42% of total deposits, slightly lower than the market contribution at 49% in Sep 2013
61.958.653.051.049.2
Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q1 2014
79% 78%
4%3%
1%1%
Mar-14
79.0 (100%)
8% 9%
Dec-13
74.5 (100%)
7% 10%
Customer deposits
Due to banks
Other liabilities
Medium term loans
Repo
1) Represents data of Mashreq Group including overseas deposits 2) Represents data of UAE banking sector as of Sep 2013 sourced from Central Bank Statistical Bulletin Sep 2013
Medium term loans (EMTN) split and maturity
Dec-13
2.8
1.0
1.8 May 2014 – Feb 2017
Jan 2017
Maturity
Customer deposits split comparison (Mar 2014)
Mashreq Group1
UAE banking sector2
Savings A/c 6%
Current A/c 52%
Time deposits 42% 49%
10%
40%
Notes
Sub. FRN
14
Asset quality and liquidity [AED billion]
NPLs and Coverage
Key Points
Liquid assets trend
> Liquid assets to total assets as of Q1 2014 was at 26%, as compared to 27% in both Q4 2013 and Q1 2013
> NPLs have reduced by 20.2% as compared to Q1 2013 to reach AED 3.2 billion leading to NPLs as % of Gross loans and advances of 5.7%
> Coverage ratio in Q1 2014 has improved to 102% vs. 62% in Q1 2013 and 97% in Q4 2013
> Continuing with prudent provisioning policy, Mashreq has set aside AED 251 million for Impaired assets in Q1 2014 as against AED 247 million for Q4 2013
20.718.1 19.1
23.8 24.3
30
25
20
15
10
5
0
25
20
15
10
5
0
Q1 2014
26%
Q4 2013
27%
Q3 2013
23%
Q2 2013
22%
Q1 2013
27%
% of total assets Liquid assets
4.13.2 3.3 3.2 3.2
0
1
2
3
4
5
0
20
40
60
80
100
120
Q1 2014
102%
Q4 2013
97%
Q3 2013
88%
Q2 2013
83%
Q1 2013
62%
NPLs Coverage ratio
15
Tier I and Tier II Capital [AED billion]
Key Points
Risk-weighted assets and capital adequacy
Movement of capital
> The banks’ overall capital adequacy ratio at 16.8% is higher than the regulatory requirements as per Central Bank of and Basel II
> Tier 1 and Tier 2 capital decreased slightly to reach AED 14.5 billion and AED 1.5 billion respectively
> Tier 1 capital ratio of the bank was at 15.3% as of March 2014 as compared to 16.4% at end of 2013
78.0 82.0 85.8 89.0 94.9
20
15
10
5
0
100
90
80
70
60
50
40
30
20
10
0
Q1 2014
16.8%
Q4 2013
18.2%
Q3 2013
18.2%
Q2 2013
18.5%
Q1 2013
18.9%
Risk weighted assets Capital adequacy ratio
1.61.61.61.61.5
Q1 2014
16.0
14.5
Q4 2013
16.2
14.6
Q3 2013
15.7
14.1
Q2 2013
15.2
13.6
Q1 2013
14.8
13.2
Tier 1 capital Tier 2 capital
15.94
0.03
0.01 0.58 0.03
16.15
Capital as of Mar
2014
General provision
(0.68)
CCF, CTA &
Retained earnings
adj
Inc in OIC reg. capital
FRN purchased
/ sold
(0.05)
Dividend paid
Capital as of Dec
2013
Current year profit
Capital adequacy [AED billion]
16
Business segment information [AED billion]
Segment assets
Key Points
Segment operating income
Segment liabilities
> Corporate banking accounted for the largest portion of assets and liabilities; while Retail banking was the largest contributor in operating income at 27%
> Contribution of International business formed 17% of operating income, 18% of assets and 19% of liabilities leading to a more diversified base of business
> International banking saw the largest increase in assets of 10% followed by Retail and Corporate banking at 9% each
> International banking also witnessed the largest increase of 11% in liabilities followed by Retail banking at 9%, and Corporate banking at 5%; Treasury and Capital markets reported 2% decline in liabilities
26% 24%
13% 9%
27%
11%
17%
6%
5%
Mar-13
1,118 (100%)
27%
8%
16%
5%
5%
Mar-14
1,382
Corporate
Retail
Treasury & Capital markets
International Banking
Islamic
Insurance
Others
29% 30%
14% 13%
14%
15%
18%
7% 4%
Dec-13
89.7 (100%)
13%
15%
18%
7% 4%
Mar-14
94.1 (100%)
Corporate
Retail
Treasury & Capital markets
International Banking
Islamic
Insurance
Others
41% 40%
3%3%
Mar-14
79.0 (100%)
20%
9%
19%
6% 3%
Dec-13
66.4 (100%)
20%
9%
18%
6% 3%
Corporate
Retail
Treasury & Capital markets
International Banking
Islamic
Insurance
Others