Emirates NBD Creating a Banking Leader in the Middle East

1
Emirates NBDCreating a Banking Leader in the
Middle East
CONFIDENTIAL
2
Index

• Rationale for the merger

• Financial overview and key indicators

• Strategy

3
Merger context and aspirations
What merger has led to so far

• Creation of UAE champion
• Largest UAE bank by assets and market
  capitalisation
• Enhanced distribution network and business mix
  strengthening competitive position
• Increased financial strength/scale
• Largest bank in GCC by assets and Top 5 player by
  market capitalisation
• Increased regional presence
• Superior value creation potential
• Significant cost and revenue synergies driving
  value creation

What merger should allow going forward
To become the leading regional financial
institution, with an increasing international
presence Leverage financial strength, scale and
market positioning to capture domestic and
regional opportunities To become the partner of
choice for corporate and retail clients seeking
financial services in the GCC
1
2
3
4
The merger will provide significant benefits to
all the banks stakeholders

• Enhanced regional and international expansion
  opportunities
• Increasing financial strength and capital
  position to support future growth
• Value creation through established management
  expertise and best practices

• Greater convenience through broader domestic
  branch and ATM networks
• Wider access to regional and inter-national
  markets
• Broader product suite

• Enhanced career opportunities
• Improved training and career development
  capacity
• Greater ability to attract and retain top talent

5
Structuring of merger
Emirates NBD offered to buy shares in EBI and NBD
by way of a share for share exchange through an
unregulated contractual offer
Equal representation on Board and management
Committee of 2 banks working side- by-side

• 6 members from EBI and 6 members of NBD appointed
  to Board of Emirates NBD, under Chairmanship of
  H.E Ahmed Humaid Al Tayer and Deputy Chairman
  Abdullah Mohammad Saleh
• Executive Management Committee of Emirates NBD
  comprises of senior appointments from both EBI
  and NBD reflecting the new groups intention of
  bringing in best practice from both banks - key
  appointments upon announcement of merger
• Rick Pudner, CEO
• Sanjay Uppal, CFO
• Douglas Dowie, Advisor to the Board, Board member
  and Chairman of Investment Bank
• Shahzad Shahbaz, CEO Investment Bank

EBI Shareholders
NBD Shareholders
66
34
Emirates NBD (public company)
EBI
NBD
Assumed 100 acceptance of EBI and NBD
shareholders Source Merger Offer Document
6
Emirates NBD will become the dominant player in
the UAE . . .
1.8
Last 12 months to 1H 2007
Net profits m, Last 12 months to 1H 2007
Assets b, 1H 2007
Equity b, 1H 2007
Emirates NBD
Emirates NBD
Emirates NBD
4.0
906
53.4
2.8
ADCB
601
DIB
30.5
NBAD
26.2
ADCB
2.5
NBAD
592
ADCB
2.5
Mashreq
472
NBAD
20.6
DIB
2.5
FGB
457
Mashreq
19.2
Mashreq
2.2
DIB
443
FGB
15.6
FGB
1.7
UNB
319
UNB
12.3
UNB
1.4
ADIB
194
CBD
11.2
ADIB
1.1
CBD
174
ADIB
6.0
CBD
Source Bank websites Press releases Zawya
team analysis
7
. . . with largest domestic market share
8
2006 Corporate loans market share
2006 Personal loans market share
22bn
8bn
EBI
NBD
Emirates NBD
EBI
NBD
Emirates NBD
2006 Islamic assets market share
UAE Islamic assets
94.8
Emirates NBD
5.2 (2bn)
Includes government loans Islamic loans
gross of provisions excludes interbank
loans Includes Islamic loans gross of
provisions Based on 2006 assets for Tamweel,
Amlak, SIB, DIB, ADIB and EIB based on 2006
Annual Reports Source Retail and corporate
loans are included net of provisions
8
. . . in a fast growing but highly competitive
market
57
UAE has seen high growth in the recent past . . .
. . . but the market remains relatively fragmented
200006 bank assets CAGR,
Market share of top 3 banks (by assets, )
UAE
KSA
Kuwait
Bahrain
Oman
Qatar
France
U.K.
Qatar
UAE
Bahrain
Kuwait
KSA
Oman
9
Emirates NBD will also become the largest bank in
the GCC by assets
1.0
Last 12 months to 1H 2007
GCC ranking by assets b, 1H 2007
Equity b, 1H 2007
GCC ranking by profits m, Last 12 months to 1H
2007
53.4
Emirates NBD
Al Rajhi
1,852
NCB
7.2
49.1
NCB
1,835
NCB
6.0
Al Rajhi
34.4
SAMBA
1,438
SAMBA
5.1
KFH
990
NBK
33.3
Al Rajhi
4.2
SAMBA
NBK
31.8
907
Emirates NBD
4.1
Emirates NBD
30.5
NBAD
827
BSF
3.3
NBK
816
SABB
27.8
KFH
3.0
Riyad
815
Riyad
27.6
GIB
2.8
ADCB
725
ANB
27.3
ABC
2.6
BSF
26.2
Riyad
704
KFH
2.6
SABB
QNB
635
26.2
ADCB
QNB
2.5
601
DIB
23.3
BSF
2.5
NBAD
592
ADCB
22.7
SABB
2.5
ANB
503
GBK
22.0
ANB
2.5
Mashreq
Ahli United
21.5
472
NBAD
2.5
FGB
457
Mashreq
20.8
QNB
2.3
GIB
443
FGB
20.6
DIB
2.1
DIB
19.2
Mashreq
282
GIB
2.1
ABC
16.3
GBK
258
Ahli United
1.8
Ahli United
15.6
FGB
254
ABC
1.5
GBK
Source Bank websites Press releases team
analysis
10
. . . with significantly enhanced representation
in the regions key markets
Emirates NBD (UAE footprint)
EBI presence
NBD presence
11
Current position of Emirates NBD by geography
2006
Geographies
UAE
GCC
MENA
MENAAsia
Global
Rankings

• Assets

1
23
209
1
3
160
5
21
1
9

• Profits

Including Turkey Including Turkey and
excluding China and Japan Source The Banker
(Top 1000 rankings), team analysis
12
Index

• Rationale for the merger

• Financial overview key indicators

• Strategy

13
Emirates NBD has experienced very strong growth
in the last 6 years
4.1
22
32
2000
01
02
03
04
05
06
1H07
2000
01
02
03
04
05
06
1H07
9
19
2000
01
02
03
04
05
06
1H07
2000
01
02
03
04
05
06
1H07
Source Bloomberg, Financial Statements, simple
aggregation of EBI and NBD results 1H07 Equity
is net of dividends paid on 2006 profits
14
Profits have increased accordingly
351.2
21
Net Profits, m
01
2000
04
05
06
1H07
02
03
21
250.4
20
2000
01
02
03
04
05
06
1H07
02
03
04
05
06
1H07
2000
01
Source Bloomberg aggregated for EBI and NBD
15
Diversified Business mix with growth in each
segment
4
2006,
Assets
Net Profits
100 45b
100 800m
Islamic
Islamic
Retail
Wholesale
Wholesale
Retail
Wholesale include corporate banking,
investment banking and investment management and
treasury Source 2006 annual results
16
Wholesale Banking and in particular Corporate
Banking has been a driver of growth in the past
605
CAGR
Highlights
Loans b
50

• Wholesale Banking comprises of services provided
  to Multinational, Large Local and Local Corporate
  as well as Government linked institutions,
  Financial Institutions and Investment
  Institutions
• Product offering comprises mainly Corporate
  Banking Lending, Deposits, Trade Finance,
  Syndications, Structuring as well as increasingly
  Treasury and Investment Banking
• Historically, Corporate Banking has been a major
  contributor to the growth of the bank with
  Corporate lending and deposits growth far in
  excess of GDP growth
• Emphasis increasingly placed on providing
  tailored Treasury and Investment Banking
  solutions

22.8
15.2
Income m
57
2005
2006
Including fee income and IPO income, excludes
investment management Source Commercial due
diligence pack figures converted to at 1
3.67 AED
17
Retail Banking The merged entity has the
largest distribution network and market share
5.76
CAGR
Loans b
Highlights
74
3.2

• The combined entity has the largest distribution
  network in UAE and highest market share in terms
  of Personal Loans and Deposits
• Investment on service has been a key focus for
  both banks, which coupled with the branch and ATM
  footprint, is expected to be a real
  differentiator for the UAE customer base going
  forward
• The retail business of both banks have shown
  robust growth and have won numerous awards
  between them including Best Retail Bank and Best
  e-Banking awards. Combining best practice will be
  a key success criteria and is a management focus.
• Retail banking contributed 30 of the merged
  entity revenues
• The merger provides an opportunity to generate
  significant cost and revenue synergies in Retail
  Banking - US 30mn
• Core Retail products include Current and Savings
  Accounts, Credit Cards, Personal Loans, Auto
  Loans, Mortgages and Investment Products

1.9
Deposits b
31
5.8
4.4
Income m
59
383
241
2005
2006
Source Commercial due diligence pack figures
converted to at 1 3.67 AED, Central Bank
data, Team analysis
18
Islamic Banking business has achieved the fastest
growth in UAE
2.85
CAGR
Highlights
Assets b
119

• Emirates Islamic Bank has become the fastest
  growing Islamic bank in the UAE, since its
  inception in 2004
• The business has been more than doubling assets
  and income every year and is rapidly increasing
  its market share of Islamic banking traditionally
  dominated by two other banks
• NBD had recently entered Islamic banking business
  and would now capitalize on the strengths of
  Emirates Islamic Bank
• Significant market opportunities still exist for
  the combined group to significantly grow its
  Islamic footprint
• A broad product range is on offer for Islamic
  financing which includes
• Retail Vehicle Goods Murabaha financing,
  Credit Cards, Home Finance, Finance for Services
  (e.g. rent), Investments and Current, Savings and
  Investment Deposit Accounts
• Corporate Murabaha, Ijara, Real Estate
  Financing, Trade Finance, Secured Overdraft,
  Syndications, Sukuks and Islamic Investment
  Products

Revenues m
_109
2005
2006
Source Commercial due diligence packs, figures
converted to at 1 3.67 AED
19
Strong Credit Ratings - Emirates NBD will be
engaging rating agencies for a single rating in
2008
4
Current Ratings
EBI
NBD
Moodys1

• A1/P-1

• A1/P-1

SP2

• A/Positive/A-1

• A/Positive/A-1

Fitch3

• AA-

• -

Capital Intelligence4

• AA-

• AA-

• 1 Moodys Long-term rating/Short-term rating
• 2 SP Credit rating
• EBI s Long term Issuer Default rating is AA-
  NBD has not been rated by Fitch. Support rating
  available by both EBI and NBD is 1
• Capital Intelligence Foreign currency long term
  rating for EBI recently upgraded to AA-. This
  will be published soon.

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Index

• Rationale for the merger

• Financial overview and key indicators

• Strategy

21
Emirates NBD strategy
1
Pursue profitable growth in Retail Banking
2
Establish a distinctive Wealth Management offering
3
Consolidate and enhance market position in
Corporate Banking
4
Develop a leading regional Investment Banking
franchise
5
Expand Islamic Banking
6
Pursue expansion in the GCC and other key
strategic markets
7
Integrate organisational resources to build a
scalable platform
22
Emirates NBD Strategic Priorities
Emirates NBD Strategy
1

• Create and exploit the largest distribution
  network in the UAE
• Increase share-of-wallet
• Develop a strong brand
• Leverage best practice
• Offer superior service
• Operational efficiency

Retail
2
Wealth Management

• Leverage platforms of EBIs Al Shaheen and NBDs
  Suhail
• Expand to other countries in the GCC region
• Increase share of wallet
• Grow the existing private banking business
• Leverage investment banking, asset management,
  structured product, real estate, trust and family
  office product capabilities

3
Corporate and SME

• Increase share of wallet from large corporate and
  institutional clients
• Enhance Mid Cap/ SME customer base
• Enhance trade finance, cash management and
  treasury offering
• Leverage balance sheet and capital to win larger
  deals
• Expand the financial institution business on an
  international basis

23
Emirates NBD strategic priorities
Emirates NBD Strategy
4

• Create a world class platform in terms of people
  and product capability
• Enhance cross-selling to the corporate and
  institutional clients base
• Leverage Dubais development as a regional
  financial centre

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6
7