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Mashreq
INVESTOR PRESENTATION
March 2017
2
50 years…
S P I R I TSocially
Responsible
Passionate
about clientsInnovative
Respect for
colleaguesIntegrity Transparent
“To be the region’s most progressive bank
enabling innovative possibilities for our
clients, colleagues and communities”
3
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
4
3.22.82.8
2.42.31.9
KuwaitOmanKSA QatarBahrain UAE
UAE is the 2nd largest economy in the GCC, with promising economic growth
prospects
UAE - The second largest economy in the GCC Average Real GDP Annual Growth
Rate – 2016E-21F (%)
Ba2 A1 Baa1 Aa2 Aa2 Aa2
Sovereign Rating
by Moody’s
60 638 32 110 375 157
Nominal GDP per Capita – 2016
(USD thousand)
GDP Breakdown by Sector – 2015
(%)Nominal GDP
2016 (USD billion)
SOURCE: IMF WEO October 2016,CIA & OPEC, Moody‘s Ratings, National Bureau of Statistics 2016
UAE ECONOMY – MICROECONOMIC OUTLOOK
▪ Second largest economy in the GCC with GDP of USD
375 billion in 2016
▪ Well diversified economy with oil & gas contributing only
~23% of the total GDP
▪ Despite fall in oil prices, UAE economy remains strong
with current account surplus at 1.1% of GDP in 2016E
▪ Holds 8.1% of the proven OPEC crude oil reserves,
primarily concentrated in Abu Dhabi
▪ Young population with ~61.3% aged between 25-54 years
and a literacy rate of ~94%
UAE Qatar
60.7
Oman
15.1
Kuwait
38.126.1
KSA
24.119.9
Bahrain
11%
13%
6%3%
10%
13%
10% 23%
1%
10%
Construction
Wholesale Retail Trade
Financial Corporations
Government Services
Other
Real Estate
Transport, Storage & Communication
Crude Oil and Natural Gas
Agriculture
Manufacturing
5
1 Rank out of 138 economies
UAE ECONOMY – MICROECONOMIC OUTLOOK
Current Account Balance to GDP – 2016E
(%)
Govt. Net Borrowing to GDP – 2016E
(%)
Global Competitiveness Index – 2016-17 Ranking1 Inflation to Remain Stable Over the Medium Term
(%)
One of the best ranked economies on global competitive index among the
GCC nations
SOURCE: IMF WEO October 2016, World Economics Forum-Global Competitiveness Index 2016
3.53.97.6
13.013.514.7
OmanBahrain KuwaitUAEQatarKSA
1816
Kuwait Oman
66
Bahrain
48
KSAQatar
29
38
UAE
3.61.1
1.84.76.6
21.3
UAE KuwaitQatarBahrainKSAOman
3.53.33.23.1
3.64.1
2017F 2018F 2019F 2020F2016F2015E
6
UAE ECONOMY – MICROECONOMIC OUTLOOK
Scores Highest Among GCC on Govt.
Effectiveness Index1
Among the Best Ranked in GCC on Rule of Law
Index1
Highest Ranking in GCC on Control of Corruption
Index1
Enforcement of Contracts - Ranked Best in GCC
Solid institutional and policy framework as reflected by relatively higher
scores among the GCC nations
0.05
0.300.40
0.60
1.00
0.70
KuwaitKSABahrainOmanUAEQatar
-0.3
0.10.30.3
1.11.2
KuwaitKSAOmanBahrainQatarUAE
0.1
0.20.30.6
1.0
1.5
KuwaitKSAOmanBahrainQatarUAE
112101
8670
58
18
QatarOmanKuwait BahrainSaudi
Arabia
UAE
1 Score ranges from -2.5 (weak) to 2.5 (strong)
SOURCE: World Bank – Worldwide Governance Indicators, World Bank- Doing Business
7
Non-oil growth is supported by strong hospitality and logistics sectors
UAE ECONOMY – MICROECONOMIC OUTLOOK
Non-oil growth continues to be steady with PMI remaining
above 50
Emirates NBD UAE PMI index
Increasing rate of growth
The hospitality sector, especially in Dubai, is one of the major
growth drivers …
Hotel guests (million) Air passengers (million)
50 – no change on previous month
Increasing rate of contraction
14.914.2
13.2
11.010.0
4.44.13.5
2.82.4
20162015201420132012
8478
7066
58
252320
1715
20162015201420132012
Abu DhabiDubai
2.3 2.4 2.4 2.5 2.6
2016
3.4
0.8
2015
3.3
0.8
2014
3.2
0.8
2013
3.1
0.7
2012
2.9
0.6
Abu DhabiDubai
16.115.615.213.613.3
603 668 685 696952 962
170
185 199
211219 232 244
419 402
2012
1,057
2011
928
114
Exports
Re-exports
20161
1,563
2015
1,556
2014
1,072
132
2013
1,065
148
Imports
… along with the logistic sector, which has been growing
continuously over the last three years.
UAE container volumes (TEU million)
UAE air freight (million tonnes)
Non-oil direct trade flows have witnessed steady growth over the
last few years
UAE non-oil direct trade flows (AED billion)
CAGR
’11-’16
9.8%
11.8%
13.8%
1 Annualised – based on 9M (Jan – Sept) data
SOURCE: Emirates NBD, Federal Customs Authority, Hotel and Airport authorities of UAE, DP World, Khaleej Times, National
40
45
50
55
60
65
5454545353
5553
555553
555353
Dec-
16
NovOctSepAugJulJunMayAprMarFebJanDec-
15
8
40
45
50
55
60
65
Consumer borrowing continues to rise along with an increase in employment
levels
SOURCE: JLL, UAE Central Bank, Emirates NBD
UAE ECONOMY – MICROECONOMIC OUTLOOK
… supported by continuous increase in employment levels
Emirates NBD Employment index (#)
Increasing rate of growth
50 – no change on previous month
348331300
280261
2016
+7%
20132012 2014 2015
525250
525153
51
5453
52525152
Jan AprDec-
15
MarFeb JunMay Nov Dec-
16
OctSepAugJul
Increasing rate of contraction
… as can also be seen in the fall in Dubai property prices over the
year
Mashreq Property Price Index (%)
Personal loans to residents (AED)
Consumer borrowing has been rising…
Rents continue to be falling …
Dubai 4Q ‘16 Abu Dhabi 4Q ‘16
Residential Office Retail Hotel
Rent
falling
Rent
bottoming
out
Rent
growth
slowing
Rent
growth
acceler-
ating
Rent
falling
Rent
bottoming
out
Rent
growth
slowing
Rent
growth
acceler-
ating
-0.2-0.3-0.2-0.2-0.3-0.2-0.2-0.4-0.2-0.2-0.4-0.5-0.1
15.916.216.416.616.817.117.317.417.818.118.318.719.2
-5
0
5
10
15
20
De
c-1
6
No
v-1
6
Se
p-1
6
Oct-
16
Au
g-1
6
Ma
y-1
6
Ju
l-1
6
Ap
r-1
6
Feb-1
6
Mar-
16
Jan-1
6
Ju
n-1
6
Dec-1
5
Avg MPPI inc (%) Cum MPPI inc (%)
9
UAE ECONOMY – BANKING SECTOR OVERVIEW
Diversified and Well Regulated Banking Sector GCC Banking Assets1 – 2016 (AED billion)
UAE – Gross Credit & Deposits (AED billion) Loans by Sector –2016 (%)
Total Banking Assets to GDP Ratio
Regulated & Diversified Banking Environment
190% 94% 223% 179% 117% 174%
203.0257.0724.0
1,281.0
2,611.02,207.0
KuwaitQatarKSAUAE BahrainOman
▪ As of December 2016, UAE banking sector comprised 49
banks
– 23 National Banks with 846 branches and
– 26 Foreign Banks with 85 branches
▪ Diversified loan portfolio - Real Estate and Construction
sector accounted for only ~18% of loan book in 2016
▪ Well regulated banking system, in line with internationally
followed best practices
▪ UAE Banking sector has a long-standing track record of
Government support during crisis situations
1,5741,485
1,378
1,1841,074
1,276
1,5631,4721,421
1,1681,070
1,279
2012 20162011 20142013 2015
Deposit Gross credit
CAGR 2011- 2016: 7.9%
1 Data for Oman relates to Nov 2016 and for Bahrain relates to Oct 2016; 2) Others include loans made to service sector & Non profit Institutions
SOURCE: UAE Central Bank, Central Bank of other respective countries, IMF WEO October 2016
9%
10%
20%
11% 10%
4%
11%
18%
1%
5%
1%
0%
Others2
Personal Loans for Consumption
Personal Loans for Business
Government
Financial Institutions (Ex. Banks)
Agriculture
Transport, Storage & Comm
Trade
Construction and Real Estate
Electricity, Gas and Water
Manufacturing
Mining and Quarrying
10
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
11
Mashreq is one of UAE's leading financial institutions
MASHREQ HERITAGE
Heritage ▪ Established in 1967 by the Al-Ghurair Group
▪ ~50 years in UAE banking and financial services market
Private sector
ownership
▪ Oldest regional bank based out of UAE
▪ Combines the entrepreneurial spirit of Dubai with enduring trade banking
relationships across the region
▪ Publicly traded since inception; Listed on the DFM on creation of local
stock exchange
Strong regional
presence
▪ Well positioned to finance regional trade flows
▪ Regional bank with 41 branch network in the UAE and 24 branches / rep-
offices in MENA, Asia, Europe and United States
Diversified business
case
▪ Universal bank offering a comprehensive suite of products and services to
individuals and corporates across all lines of business
▪ Most diversified revenue streams with fee and other income contributing
around 45% of total income
Strong
management team
▪ Combination of long serving senior executives with international
management expertise delivering a robust growth model
▪ Led by Abdul Aziz Abdulla Al-Ghurair, Chief Executive Officer for 26 years
Strong and
supportive
ownership structure
▪ Al-Ghurair Group, the main shareholders of the bank, are a leading
conglomerate in the UAE with numerous business interests
▪ Featured in the Forbes billionaire list for the past 10 years
▪ Mashreq is the flagship business for the family for nearly 50 years
12
Ownership – Al-Ghurair flagship brand
Key shareholders (December 2016)
Stable and supportive ownership structure
MASHREQ HERITAGE
Mashreq’s Leadership
Mr. Abdulla Bin Ahmad Al-Ghurair
Chairman & President
H.E. Abdul Aziz Abdulla Al-Ghurair
Chief Executive Officer & Director
10.3%
3.5%3.6%
12.0%
31.1%
39.5%
Other shareholders
National Cement Company
Majid Capital
Masar Investments
Abdulla Ahmed Al Ghurair Inv. Co.
Saif Al Ghurair Investment LLC
▪ One of the most prominent businessmen and
industrialists in the UAE
▪ Former Chairman of the UAE Banks Association
▪ Chairman of UAE Banks Federation
▪ Vice Chairman of the higher board of DIFC
▪ Chairman of Masafi
▪ Chairman of Oman Insurance
▪ Board Member of Emirates Foundation
▪ Former Speaker of the Federal National Council
▪ Al-Ghurair families holds the majority stake in
Mashreq (approximately 87%) and are the
founders of the Bank
▪ Al-Ghurair family has a strong commitment to
the continued growth and financial solidity of
Mashreq
▪ Al-Ghurair family is one of the oldest and
wealthiest families in the UAE
– Featured in Forbes billionaire list for the
past 10 years
– Business interests include shopping
malls, real estate, cement manufacturing,
food industries, Masafi (mineral) water,
contracting, trading, retailing, shipping,
printing & packaging, aluminium
extrusion, building materials, oil refinery,
manufacturing, steel and canning
▪ Mashreq’s shares are listed and traded on
the Dubai Financial Market
13
Strong distribution network in the UAE with 22 branches in Dubai
MASHREQ HERITAGE
Umm Al Quwain
1 branch
Abu Dhabi
8 branches
Ajman
1 branch
Ras Al Khaimah
1 branch
Fujairah
1 branch
Sharjah
7 branches
Dubai
22 branches
Alternate Channels
▪ 41 branches (out of which Mashreq Gold has
presence in 29 branches and SME Banking has
presence in 24 branches) and 3 Retail Customer
Service Centers in UAE serving ~500K customers
▪ ATMs and CCDMs increased coverage to 272 units
in UAE
▪ 35,000 POS machines spread 13,000 merchant
location in the UAE. Second Largest Merchant
acquirer in the UAE with over 35% market share
▪ Internet Banking through Mashreq Online (Retail incl.
Brokerage), Mashreq Business online (Corporate),
Mashreq-FI online (Correspondent Banking);
263,999 active users are registered with online
banking
▪ Mobile banking services: Snapp registration has
grown up by 38% year on year and financial
transactions has grown by 28% as compared to last
year figures. Snapp has been recently upgraded with
unique new features such as card control, ChatBot
and voice banking.
▪ Fully integrated electronic platform for transaction
banking (GTS)
▪ State of the art Polaris System (mashreqMATRIX) to
provide online services to corporate customers
▪ 24 x 7 Direct Banking Call Centre
14
Regional and international banking presence with 24% of revenues from
outside of UAE
International
branches
Financial Institution
branches
New York
London
Representative
Offices
Hong KongIndia
Bangladesh
NepalPakistan
EgyptKuwait
Bahrain
Qatar
MASHREQ HERITAGE
15
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
16
Mashreq organization chart
STRUCTURE AND LEADERSHIP
Note: Financials as of 31 December 2016
Board of Directors
Chief Executive Officer
Corporate Banking
Group (CBG)(21% of revenue)
Treasury & Capital
Markets (TCM)(9% of revenue)
Retail Banking
Group (RBG) (27% of revenue)
International Banking
Group (IBG)(24% of revenue)
Corporate Affairs
(CA)
Audit , Fraud &
Compliance Group
(AFCG)
Risk
Management (RM)
Operations &
Technology (O&T)
17
Mashreq is a universal bank that covers significant lines of business with a
full product and channel suite
STRUCTURE AND LEADERSHIP
Offers personal banking
Offers banking services outside UAE
Retail Banking Group
(RBG)
International Banking Group
(IBG)
▪ Personal Banking
▪ SME
▪ Mashreq Gold
▪ Private Banking
▪ Payments
▪ Islamic banking products
▪ Distribution
▪ Alternate Channels
▪ Direct Sales
▪ Direct Banking Centre
▪ Marketing & Customer
Experience
▪ Wholesale and investment banking
▪ Treasury and investment products
▪ Personal banking
▪ Financial Institutions globally
▪ Islamic banking products
Offers wholesale banking
Offers treasury and investment products
Corporate Banking Group (CBG)
Treasury & Capital Markets
(TCM)
▪ FX and Investments
▪ Rates & Structured
Solutions
▪ Mashreq Capital
▪ Islamic banking products
▪ Equity Derivatives &
Institutional Sales
▪ Mashreq Securities
▪ Islamic Banking –
Product House
▪ NBFI
▪ Emerging Corporates
Division
▪ Global Transaction
Services
▪ Corporate Finance
▪ Islamic Banking
products
▪ Energy, Services &
Manufacturing
▪ Trading
▪ Contracting Finance
▪ Abu Dhabi Division
▪ Real Estate
18
Oman Insurance is the largest subsidiary of Mashreq
MASHREQ - KEY SUBSIDIARIES
Mashreqbank Psc
Note: Figures are based on draft audited statements
Mashreq Al Islami Finance (99.8%)
▪ Islamic Finance Company
▪ Provides full range of Islamic Products & Services
▪ Dec ’16 Equity: AED 795 mn
▪ 2016 profit: AED 70 mn
Mashreq Securities (99.98%)
▪ Securities brokerage Company registered at Dubai
Financial Market
▪ One of the leading brokerage in the UAE
▪ Dec ’16 Equity: AED 183 mn
▪ 2016 Profit: AED 7 mn
Oman Insurance Company (63.94%)
▪ Largest insurance company in the UAE
▪ Provides full range of Insurance Products &
Services
▪ Dec ’16 Equity: AED 1,934 mn
▪ 2016 profit: AED 79 mn
Mashreq Capital (100%)
▪ Registered in DIFC for Brokerage, Asset
Management and Fund Management services
▪ One of the largest asset management in UAE with
USD 800 mn in asset under management
▪ Funds rated highest in the market
▪ Dec ’16 Equity: AED 32 mn
▪ 2016 profit: AED 7 mn
19
Corporate Banking (CIBG) business
30,91129,50129,617
Dec-14 Dec-16Dec-15
0% +5%
STRUCTURE AND LEADERSHIP
1,3191,3241,429
0%-7%
20152014 2016
CIBG Revenues (AED million)Business highlights
CIBG Assets (AED million)
▪ Corporate Banking Group provides financing solutions to
corporate and commercial customers in the UAE
▪ Major products offered include trade finance, contracting
finance, project finance, corporate finance advisory and
cash management
▪ Corporate Banking has moved to a best-in-class, expertise-
led coverage model for clients. The relationship teams have
been realigned into industry verticals that best serve the
corporate financial needs. Our diverse industry coverage
includes among others: Contracting Finance, Services &
Manufacturing, Government, Multinational Corporates, Real
Estate, Trading Companies, Non-Banking financial
Institutions and Emerging Corporates – including DXB NE &
Abu Dhabi.
▪ Successfully closed number of multibank deals establishing
the best DCM platform amongst local / regional banks
▪ Mashreq’s Global Transaction Services team maintained its
regional dominance in the transaction banking space by
winning the Global Finance - World’s Best
Corporate/Institutional Digital Bank Award in UAE in 2016
for the second consecutive year.
▪ Mashreq won the best trade finance award in 2Q of 2016 by
M&A awards
20
Retail Banking (RBG) business
13,57914,43114,061
+3%-6%
Dec-16Dec-15Dec-14
STRUCTURE AND LEADERSHIP
1,6841,838
1,626
+13%-8%
20152014 2016
Business highlights
▪ With 28% market share & 35,000 POS machines across the
UAE, we are now the second largest acquirer in the country
▪ Achieving 36% growth in 2016, we are the fastest growing
ecommerce acquirer in the country.
▪ Products offered include current / savings / fixed deposits,
investment products, personal loans, auto loans,
mortgages, small business loans, credit cards with unique
loyalty programs, bank assurance, private banking and
wealth management.
▪ 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 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 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; first bank to
integrate Apple’s Siri for voice-powered payments;
introducing UAE’s First Chat Bot; an AI agent to interact with
customers
▪ The Award-winning mobile banking application ‘Mashreq
Snapp’ has added recent user friendly features
▪ Key awards for 2016 include Best Regional Retail Bank by
Banker ME Industry Awards, Best Digital Bank by Global
Banking & Finance Review Awards, Best Private Bank for
Super Affluent Clients in UAE by Euromoney’s 13th Annual
Private Banking Survey.
RBG Revenues (AED million)
RBG Assets (AED million)
21
Treasury and Capital Markets (TCM) business
15,65713,698
17,004+14%
+9%
Dec-16Dec-15Dec-14
STRUCTURE AND LEADERSHIP
553599
564
+2%-8%
201620152014
Business highlights
▪ Treasury and Capital Markets business consists of
customer flow business and proprietary business. Customer
flow business includes transactions for FX, derivatives,
hedging, investment products, equities and regional asset
management undertaken on behalf of customers.
Proprietary business includes trading and investing activity
undertaken on behalf of the bank
▪ Mashreq was able to grow its Treasury product suite across
asset classes, supported by an online trading platform and
24 hour dealing room
▪ The Rates & Structured Solutions business closed several
large ticket hedging transactions for clients across the
region, including a structured profit rate swap for a real
estate loan
▪ The Makaseb Income Fund received the Liper Fund Award
as the best fund over 3 & 5 years in the Bond Emerging
Markets Global-Hard Currency category
▪ Our best in class Asset Management business achieved
strong growth: Mashreq’s fixed income funds (both
conventional and Sharia’h compliant) remain amongst the
top performing funds in the market
– Best Sharia’h Compliant MENA Fund Manager Award
from CFI
– Best Sharia’h compliant Fixed Income fund of the year
award from MENA Fund Manager magazine
– Moody’s upgraded Mashreq Capital’s Investment
Manager rating to MQ2
TCM Revenues (AED million)
TCM Assets (AED million)
22
1,4631,301
1,059
+13%+23%
201620152014
International Banking (IBG) business
32,50532,831
28,548
Dec-15Dec-14
+15% -1%
Dec-16
STRUCTURE AND LEADERSHIP
Business highlights
▪ International banking business consists of retail and
corporate business in Qatar, Egypt, Bahrain and Kuwait and
Financial Institutions business in other locations including
trade services, reimbursements – arranging debt capital
market transactions, undertaking and financing, export bill
collections and risk participations
▪ Mandated lead arrangers in important loan syndications in
overseas markets and also consolidated our position in
some of our markets as leading bank for strategic project
finance
▪ Introduced the upgraded SNAPP (mobile banking app) in
Qatar simultaneously with UAE and now offer our
customers the convenience of cardless cash withdrawals,
mobile to mobile cash transfers and the Money Manager
feature
▪ Electronic Fund Transfer System (EFTS) was launched for
Corporate Houses through the Mashreq Matrix portal
▪ In key African countries we expanded our offerings from
transactional banking to raising funds for the top Banks and
Development Financial Institutions in Africa and continue to
be the leading Middle Eastern Bank in the FI business in
Africa
▪ 2016 also witnessed success in the efforts to increase the
exposure to the NBFI (Non-Banking Financial Institutions)
segment.
▪ Key awards- Global Finance Digital Bank Conference: Best
consumer digital bank in Qatar
IBG Revenues (AED million)
IBG Assets (AED million)
23
Islamic Banking (ISB) business
8,797
7,5956,574
+16%
+16%
Dec-16Dec-15Dec-14
STRUCTURE AND LEADERSHIP
321308311
+5%-1%
201620152014
Business highlights
▪ Mashreq Al Islami is the Islamic Banking arm of Mashreq
(Mashreq Al Islami Finance Company PJSC and Islamic
Banking Division, Mashreqbank PSC) and offers a wide
range of Shari’ah compliant products and services
▪ Amongst the top ten Islamic institutions in the UAE based
on market share as per MEED
▪ Products offered include Ijara home finance, Mudarabah
deposit and savings, Musharaka finance, Murabaha
commodity finance, Ijara equipment finance, sukuk
underwriting, Musharaka LC, Murabaha LC, TR Murabaha,
Kafala, Wakala deposit, Reserve Murabaha deposit and
sukuk advisory
▪ Successfully closed a 5 year USD 500 million senior
secured syndicated facility for Ezdan Holding Group
Company, the largest private sector real estate developer in
Qatar - Mashreq Al Islami UAE acted as Mandated Lead
Arranger, Sole Book Runner and Facility Agent for the
facility
▪ “Most Innovative Islamic Banking Solution Provider” by
Global Banking & Finance Review
ISB Revenues (AED million)
ISB Assets (AED million)
24
Insurance business (Oman Insurance Company)
STRUCTURE AND LEADERSHIP
3,5553,1903,249
+11%-2%
201620152014
7981
229
106
30
101
+253%-70%
Dec-15Dec-14 Dec-16
Underwriting ProfitNet Profit
Business highlights
▪ 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,
motor, marine cargo and hull, aviation, property, fire and
general accidents, engineering, energy, liabilities and
personal lines insurance
▪ Largest distribution network in the UAE; OIC has 12
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 &
Poor’s and ‘A Excellent’ Stable Outlook by AM Best,
supported by leading multinational reinsurers such as
Everest Re, XL Re and Munich Re
▪ Oman Insurance launched its exclusive Healthcare
Wellness Program ‘LivFit’ in May 2016
▪ Oman Insurance in collaboration with Commerzbank and
Blackrock introduced a Invest Protect Plan for its clients
further enhancing the menu of products
Gross written premium (AED million)
Profit (AED million)
25
Profile of Senior Management
STRUCTURE AND LEADERSHIP
Abdul-Aziz Abdullah Al-GhurairChief Executive Officer
• A Graduate of California Polytechnic State University, H.E. Abdul-Aziz Al-
Ghurair joined Mashreq, then Bank of Oman, in 1977
• He worked in different Divisions and through rigorous training in various
assignments climbed to his current position as of March 1991
Ali Raza KhanHead of Corporate Affairs
• Ali Raza Khan is a Member of the Institute of Chartered Accountants of
India (1978)
• Joined Mashreq in 1980; as Head of Corporate Affairs, he is
responsible for Finance, HR and Administrative functions in the bank
Hammad NaqviActing Head of Treasury & Capital Markets
• Mr. Hammad Naqvi has an MBA from the IBA, University of Karachi
• Prior to joining Mashreq in 1996, he was Head of Treasury with Bank of
America, Pakistan and he was also posted as Treasurer of Bank of
America, Poland
• He has also spent 2 years in the merchant banking division of ANZ
Grindlays in Pakistan
• Jan-Willem Sudmann has a Masters in Economics from the University of
Hamburg, Germany
• Prior to joining Mashreq he was a Managing Director at Commerzbank
Shanghai
• Before joining Commerzbank he worked for close to two decades at
Dresdner Bank across various geographies such as Germany, UK and Egypt
Jan-Willem Sudmann Head of International Banking
Jose K JosephHead of Risk Management
• Jose K. Joseph is a Commerce Graduate and an MBA in Finance from XLRI,
India
• He joined Mashreq in October 2013
• Prior to joining Mashreq he spent over 28 years with Citibank
Sandeep ChouhanHead of Operations & Technology
• Sandeep Chouhan has a Masters in Technology, Management &
Systems from IIT, Delhi, India
• Joined Mashreq in March 2015 from CBQ, Qatar
• Prior to this, he was CIO with Barclays and Morgan Stanley
• 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
Nasser A. Paracha Head of Audit, Fraud & Compliance Group
Nabeel Waheed ShaikhHead of Corporate Banking Group
• Nabeel Waheed Shaikh has a BSc from Syracuse University, New York
• Joined Mashreq in 1996, from Bank of America, Pakistan where he spent
over 15 years and held various positions including Head of Corporate
Banking
Subroto SomHead of Retail Banking Group
• Subroto Som is a graduate of IIT Delhi and has an MBA from IIM
Ahmedabad
• Joined Mashreq in 2015 from the Boston Consulting Group
• Prior to this, he has experience at senior positions at Citibank,
Standard Chartered & Seoul First Bank
26
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
27
Well Defined Strategic Objectives…
“To be the
region’s most progressive
bank enabling innovative
possibilities for our clients,
colleagues and
communities”
VISION
Strategic Objectives
Become primary bank & grow
‘New to Bank’
Enhance brand
Foster innovation & drive digital
transformation
Strategic cost management & middle
office rationalization
Enhance human capital
Leader in service excellence/ customer
experience
Ethical, regulatory, internal policy
compliance – zero tolerance
Additional risk taken into
consideration
Delivering superior service to clients
Actively contributing to the community
through responsible banking
Leading with innovation
Treating colleagues with dignity
and fairness
Pursuing opportunities that grow
shareholders’ value
Mission
Build longterm relationships by:
Recalibrate margins vis-à-vis
market benchmarks
28
Business Objectives
STRATEGY
Drive operational
efficiencies
▪ Leverage existing infrastructure to drive growth and returns
▪ Significantly improve efficiencies across the bank to bring cost/income ratio in
line with market
Strengthen risk
management and
asset quality
▪ Reduce charge-to-loans ratio in line with pre-crisis levels, through continued
focus on portfolio and asset quality
▪ Selective portfolio / asset sales as part of an ongoing portfolio balancing
strategy
Grow
international
contribution
▪ Support franchise client needs internationally and international client needs in
our franchise by providing solutions to corporate clients across network
▪ Provide cross border accessibility to clients, such as offshore booking location
for private and gold customers and non-resident proposition across the network
▪ Maintain momentum in our core South Asia FI market and build scale in Qatar,
Egypt and Africa
Accelerate
domestic growth
▪ Win new customers and increase customer penetration through a differentiated
customer centric, service oriented approach and focus on continued product
innovation
▪ Leverage balance sheet strength and liquidity position to grow market share
▪ Capitalize on leadership position in fee-generating businesses
Optimize balance
sheet
▪ Optimize liability mix to lower cost of funds and enhance margins
▪ Increase leverage and deploy liquid assets into higher yielding opportunities
29
Business segments outlook
Diversified earnings base with strong growth potential
Gross Loans portfolio split as of Dec 2016
28.5%
16.3%3.3%
11.7%
15.2%
0.6%
0.0%
6.5% 6.9%
11.6%
Govt / GRE
Personal
Financial institutions
Transport & Comm.
Services
Trade
Other
Other
Construction
Manufacturing
STRATEGY
Revenue split as of YE 2016 Asset split as of Dec 2016
27.3%
21.4%
9.1%
6.2%7.1%
5.2%
23.7%53.9%13.6%
13.0%
7.1%
12.5%
Cash and balances with CB
Loans & Advances
Interbank deposits & balances
Other assets
Financial Investments
Retail
International
Corporate
Treasury &
Capital markets
Insurance
Others
Islamic
(AED 64.3 bn)
(AED 6.2 bn) (AED 122.8 bn)
▪ UAE Retail: Pick up in mortgage business; strong growth in
cards and payment business and wealth management
▪ UAE Corporate: Strong growth from trade, manufacturing,
tourism and logistics driving overall UAE GDP in the coming
years leading to increased demand for credit & trade services
▪ International Banking: Robust regional trade flows and
lending opportunities in higher growth countries such as Qatar
and Egypt
▪ Insurance: As the largest insurance company in the UAE,
Mashreq’s Oman Insurance Company (OIC) subsidiary is
expected to grow in line with the market
30
Strategic advantage through innovation
STRATEGY
Innovation
Mashreq was the first bank in the UAE to:
▪ Introduce consumer loans
▪ Install ATM cash dispensers
▪ Issue debit/credit cards
▪ Introduce Point-of-Sale terminals
▪ Offer Visa Connectivity across the world
▪ Centralize foreign trade services
▪ Offer a direct banking centre
▪ Introduce a comprehensive corporate cash management solution offering (GTS)
▪ Introduce “Tap & Go”, mobile NFC sticker payment method
▪ Introduce “E cube retail branch” concept in distribution
▪ Launch UAE’s first fully EMV Chip & PIN compliant mobile POS solution
▪ Launch i-mashreq - the first fully automated branch in the region
▪ Integrate Emirates ID with bank account and allow its usage as a Debit Card
31
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
32
Solid performance over the past decade
FINANCIAL TRACK RECORD
Net loans and advances (AED billion)
Net profit (AED million)
Growth & Expansion Crisis & Risk Management Accelerated Growth & Profitability
1,9261,806
1,312
8208031,000
1,6431,901
1,571
2,4022,401
2006 2007 2008 20112010 201420122009 2013 20162015
+2%
61605850
41384148
55
3529
2012 201320102009 2011 2014
+8%
2016201520082006 2007
▪ Growth-led strategy with a focus on
portfolio quality, balance sheet structure
optimization, improved cost efficiencies and
higher infrastructure utilization
▪ Prudent management focused on strengthening the bank,
de-risking and conserving capital
– Balance sheet de-risking and de-leveraging
– Strengthening capital and liquidity position
– Enhancing risk management functions
▪ Significant expansion on the back of
buoyant macroeconomic conditions
33
Rapid improvement in performance over the last four years
FINANCIAL TRACK RECORD
Loans & Advances (AED billion) Customer deposits (AED billion)
Total Revenue (AED billion)
61.060.258.050.4
7%
2016201520142013
77.073.668.558.6
10%
2016201520142013
Net profit (AED billion)
2,445 3,125 3,423 3,567
2,3932,720 2,555 2,602
8%
2016
6,169
2015
5,978
2014
5,845
2013
4,837
Net interest income1)Fee and other income
13.1% 15.7%ROE
1,9262,4022,401
1,806
2%
2016201520142013
1 NII component booked under net investment income as per IFRS, reclassified under NII
14.2% 10.6%
34
Key financial ratios
FINANCIAL TRACK RECORD
Tier I Capital Ratio
Total Capital Ratio
Efficiency Ratio
Liquid Assets to Total Assets
Advances to Deposits
NPL Coverage Ratio
NPL to Gross Advances
ROA
Net Interest Margin
ROE
Capital adequacy
Liquidity
Asset quality
Performance
15.9%
16.9%
41.4%
29.9%
81.7%
31 Dec 2015
145.0%
2.8%
2.2%
3.60%
14.2%
42.8%
16.0%
16.9%
39.0%
30.4%
79.2%
31 Dec 2016
151.1%
3.1%
1.6%
3.52%
10.6%
42.2%Fee and other income to total income
15.7%
16.7%
38.3%
26.8%
82.8%
30 Sep 2016
136.0%
3.6%
1.7%
3.59%
10.9%
42.6%
35
Well-funded balance sheet …
FINANCIAL TRACK RECORD
Operating leverage
Liquidity
30.4%
2015 2016
29.9%
2014
27.7%
2013
26.5%
86.1%81.7%
2016
79.2%
20152014
84.8%
2013
Loan to Deposits
Funding as of 31 December 2016
74.6%
9.9%
8.6%
4.8%
0.6%
1.5%
Liquid Assets to Total Assets
Customer deposits
Due to banks
Insurance Funds
Medium term loans
Other liabilities
Repo
7.6%
23.4%7.2%
28.7%
2.5%
22.4%
8.2%
Others
Retail
Insurance
Islamic
Treasury &
Capital markets
Corporate
International
(AED 103.3 bn)
36
Capital adequacy (%)
Risk weighted assets Tier 1 and Tier 2 capital
…along with stable adequacy
16.0%16.9% 16.9%
20162015
15.3%16.6%16.4%
2014
15.9%
2013
18.1%
Total Capital ratio
Tier I Capital ratio
118,874113,514106,62888,975
2013 20152014 2016
14,578 16,277 18,001 18,965
1,178
2015
19,179
1,4501,568
17,726
2013
16,146
2014 2016
20,042
1,077
Tier 2 capitalTier 1 capital
FINANCIAL TRACK RECORD
37
+6.6%
123
115
+8.2%
DXB AUH
1,880 730 1,150
1,737 655 1,083
61
60
+1.4%+4.9%
DXB AUH
1,144 476 668
1,091 435 656
77
74
+4.6%+7.4%
DXB AUH
1,241 506 734
1,155 466 689
+3.2%
6.2
6.0
+0.6%
DXB AUH
65.7 27.9 37.8
65.3 28.2 37.1
Total assets (AED bn)
Peer group1) Mashreq
Total deposits (AED bn)
Peer group1) Mashreq
Total loans (AED bn)
Total revenue (AED bn)
Peer group1) Mashreq
Peer group1) Mashreq
Dec ‘15
11.4% 6.3% 9.5% 1.7%
8.8% 6.5% -0.8% 1.7%
Dec ‘16
Dec ‘15
Dec ‘16
Dec ‘15
Dec ‘16
FY ’15
FY ’16
Market performance in 2016 – Outperforming the market in Revenue Growth
FINANCIAL TRACK RECORD
SOURCE: Banks’ financial statements
1 Peer group includes 9 banks: ENBD, NBAD, ADCB, FGB, CBD, UNB, ADIB, DIB and RAK
38
Market position in UAE
Bank
NBAD
UNB
Total assets
RAK
ADIB
Mashreq
43
64
104
122
123
175
245
258
421
448
Total loans (net) Total deposits
Growth vs
Dec ’16
CBD
10%
11%
2%
3%
7%
17%
13%
3%
8%
5% 29
78
42
74
157
115
61
158
201
290 7%
8%
8%
0%
1%
18%
3%
(3%)
5%
3%
149
77
78
44
311
253
122
99
29
155
8%
8%
4%
4%
5%
11%
8%
8%
5%
6%
Growth vs
Dec ’16
Growth vs
Dec ’16
ENBD
FGB
ADCB
DIB
FINANCIAL TRACK RECORD – DECEMBER’16 (AED BILLION)
39
Market position in UAE
(7%)
(3%)
5%
3%
4%
2%
2%
3%
5% 0.7
1.0
5.3
1.9
3.6
1.6
6.0
4.1
2.0
7.2 2%
Bank Revenue – FY ’16 (AED bn)
YoY growth
Bank Net profit – FY ’16 (AED bn)
YoY growth
(6%)
(15%)
(20%)
1%
1%
1%
0%
(16%)
(53%)
NBAD
UNB
RAK
ADIB
Mashreq
CBD
NBAD
UNB
RAK
ADIB
CBD
ENBD
FGB
ADCB
FGB
ADCB
ENBD
DIB DIB
Mashreq
14.9
6.2
5.4
2.5
8.5
9.6
10.8
6.8
3.5
3.8
FINANCIAL TRACK RECORD – FY ‘16 (AED BILLION)
(3%)
40
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
41
Trading performance over the last 1 year
Mashreq’s trading price (1 March 2016 – 1 March 2017)
Mar ‘16 Mar ‘17
7582
3,6213,287
0
20
40
60
80
100
120
140
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
DFMMashreq
Mashreq DFM General Index
Share performance
Mashreq – 12 months (8.5%)
DFM GI – 12 months 10.2%
P/E (1 Mar ’17) 6.9x
P/B (1 Mar ’17) 0.7x
Share details
Currency AED
Par value/ share 10
Number of shares (Mn) 177.5
Market Cap (1 Mar ’17) (Mn) 13,315
TRADING HISTORY
EPS as of YE 2016 and Book value as of December 2016
SOURCE: DFM
42
1,926
2,4022,401
1,806
1,312
710710676676643
0
500
1,000
1,500
2,000
2,500
201420132012 2015 2016
Progressive dividend policy based on solid performance
Net profit and Cash Payout (AED million) and Cash dividend (%)
Cash payoutNet profit
7.76 10.8510.68 13.53 13.53EPS
(AED)
1)
78.28 105.6685.45 91.04 100.09BVPS
(AED)
DIVIDENDS
40%40%40%38%
0
5
10
15
20
25
30
35
40
20%
Cash dividend (%)
1 Plus 5% Bonus Shares
43
Rated by four rating agencies
Rating Agency Long term Short term
Baa2 P-2
BBB+ A-2
A F1
A- A1
CREDIT RATING
44
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
45
Mashreq is regulated by the UAE Central Bank and follows international
banking standards
Basel II and III Accounting Standard
Bank monitoring - liquidity Credit Limit
CORPORATE GOVERNANCE
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 NY-SBD in the USA and Prudential Regulation Authority & Financial
Conduct Authority in the UK
▪ Lending limits fixed by the Central Bank in relation to capital:
– Lending to large private borrowers: 25% (10% for funded)
– Commercial entities of Federal Govts and UAE Local Govts:
25% (15% for funded), 100% aggregate
– UAE Local Govts and non-Commercial entities: 25%
Individual, 100% aggregate
▪ Cash ratio requirements (1% on Time Deposits and 14% on
Demand Savings and Call deposits)
▪ Maintenance of 1:1 ratio is mandatory, i.e. utilization of funds
should not exceed stable sources
▪ As per Basel III, liquidity coverage ratio (Jan 2016) and net stable
funding ratio (Jan 2018) is under implementation; in the meantime
Central Bank has introduced ‘eligible liquid assets ratio (ELAR)’
▪ Mashreq has applied to Central Bank to be allowed to use Basel III
standards for LCR reporting
▪ Banks are expected to follow the Standardized Approach for both
credit and operational risks. Migration to Foundation Internal
Ratings Based Approach (“IRB”) for Credit Risk is expected
▪ Basel III is under implementation in line with the Basel III schedule
(by 2019)
▪ The Central Bank made it mandatory in 2000 for all Banks to
publish their Annual Financial Statement as per International
Financial Reporting Standards (IFRS)
▪ The CB has also recently initiated impact analysis on IFRS 9
implementation – impact study is underway and we will be ready
for implementation in 2018
46
Board and Management Committees
CORPORATE GOVERNANCE
Chairman, Vice-Chairman and 4 Directors form Mashreq’s Board. Two of the six board members are independent
CEO is the only executive director
The Board of Directors meet at least once every quarter
Management issues are raised at Board level where the bank’s senior management presents details to the Board
Board has delegated certain powers to CEO for effective day-to-day management
Information
Security
Committee
Audit &
Compliance
Committee
Risk
Committee
ALCO
Committee
Investment
Committee
Technology
Steering
Committee
Human
Resources
Committee
Management Supervision
Executive Management Committee
Board 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.
Remuneration Committee Audit Committee
47
Mashreq
Investor
Presentation
UAE economy
Mashreq heritage
Structure and Leadership
Strategy
Financial track record
Trading history, rating and dividends
Corporate governance
Accolades
48
Key Awards
ACCOLADES
Gallup Great Workplace Award, 2016, 2015, 2014
CSR Label – Dubai Chambers – 2016, 2015,
2014, 2013, 2012 & 2011
Banker ME Product Awards
▪ Best Mobile Banking Service – Snapp
▪ Best Customer Loyalty Programme – Salaam
▪ Best Premium Credit Card – Solitaire
▪ Best Trade Finance Offering – Trade Finance
▪ Best Real Estate Advisory
Global Finance Digital Bank Conference
▪ Best corporate digital bank in the U.A.E
▪ Best consumer digital bank in Qatar
▪ Best consumer digital bank in the U.A.E
Banker ME Industry Awards
▪ Best Regional Retail Bank 2016, 2015, 2014
▪ Best Banking Innovation
▪ Best Real Estate Finance
Euromoney’s 13th annual private banking survey
▪ Best Private Bank for Super Affluent Clients in the
UAE
MEFTECH Innovation Awards
▪ Best Customer Experience Initiative
Annual Islamic Business & Finance Awards
▪ Best Innovation in Islamic Banking Solution
World Finance Awards
▪ Best Digital Bank – UAE
▪ Best Mobile Banking Application – UAE
Daman Corporate Health Awards
▪ Best Corporate Health and Wellness Organization
Award
Gulf Business Awards
▪ Business Leader of the Year – Banking Industry
(H.E. AbdulAziz Al Ghurair)
Retail Banking Conference & Awards: London
▪ Middle East Retail Bank of the Year
Global Banking & Finance Review Awards 2016
▪ Best Retail Bank UAE
▪ Best Customer Experience UAE
▪ Best Digital Bank UAE
▪ Best Corporate Bank Qatar
Cards & Payment Middle East 2016
▪ Best Credit Card
▪ Most Improved Payment Card
Islamic Finance News Awards
▪ Corporate Finance Deal of the Year – ENOC US$
1.5 Billion Syndicated Loan Facility
▪ Syndicated Deal of the Year – Aujan Coca Cola
Beverages AED900 Million Commodity Murabahah
Financing
49