National Bank of Abu Dhabi : NBAD Reports 1st Quarter 2016 Results

GLOBAL WHOLESALE BANKING

Global Wholesale Banking revenues grew 6% sequentially over 4Q'15 driven by consistent performance in strategic focus areas of flow, trade and value-added products, with strong momentum in fees. Costs were controlled following investments made in 2015 towards strengthening the Bank's product infrastructure and hiring talent. The business has maintained its strong liquidity position and has continued to benefit from local, regional and international funding sources.

Global Markets revenue during 1Q'16 were up 12% sequentially, but lower by 19% versus Q1'15 due to higher investment income during the prior year period. During the quarter, the business generated strong performance, particularly in flow trading, driven by the emerging market desk on GCC and MENA FX & Rates trading. This more than offset lower revenues from Global Market's investment book on significantly lower liquidations as well as negative mark-to-market impact due to heightened market volatility across asset classes. Global Markets sales continued to maintain revenue momentum with a focus on providing quality yield solutions for financial institutions, non-banking financial institutions and corporate customers as well as increasing flows across locations.

Global Banking continues to deliver best-in-class financing solutions, advisory and transaction banking through an originate-to-distribute model. Revenues grew 4% sequentially and 6% over 1Q'15 in overall terms but core revenue growth through Global Transaction Banking and Debt Origination & Distribution was stronger at 21% (y-o-y) and 48% (y-o-y) respectively, thus demonstrating a well-diversified revenue base. NBAD continues to strengthen its cash management proposition both locally and regionally. To ensure better alignment and a greater level of service to clients, the Custody business was brought under Global Transaction Banking.

Highlights from 1Q'16 include:

• 'Best Treasury and Cash Management Bank in the Middle East' from Global Finance
• 'Best Trade Finance Bank in the UAE' by Global Trade Review
• 'Bes‎t Bond House in the Middle East', 'Best Syndicated Loan House in the Middle East' and 'Best Sukuk House' from EMEA Finance
• #1 Bookrunner in Bloomberg league tables for Q1'16 for GCC Bonds & Sukuk, MENA Bonds & Sukuk & MENA Syndicated Loans

GLOBAL RETAIL & COMMERCIAL

Global Retail and Commercial continued its trend of strong growth in revenues in 1Q'16 to record a double-digit y-o-y growth of 19% (up 1% on a sequential basis), driven mainly by the increase in retail product sales and market share in the UAE along with the increase in commercial trade business. Operating expenses were well-controlled and showed a slight drop compared to Q1'15, driven by the optimisation of the Bank's branch network and prudent cost control policy. Liquidity ratios continued to be strong.

Retail lending grew 20% (22% in the UAE and faster than the market), in line with Pillar 1 of the strategy, backed by strong sales performance and customer acquisition, particularly in personal loans, mortgages and credit cards. Robust growth in the Commercial trade business drove a 70% y-o-y increase in revenues from trade, contributing to higher fees and FX income.

Highlights from 1Q'16 include:

• Investment focused on digital platform enhancement, increasing distribution capacity and capability:
  • In the process of significantly upgrading online banking system as well as ATM / CDM platforms
  • Customers continue to join the new NBAD mobile banking platform
• Stronger risk controls with the introduction of portfolio management teams within SME banking in order to strengthen the first line of defense
• NBAD continues to support the SME sector as NBAD's skill-based workshop series, 'NBAD SME Academy', delivered two sessions that were attended by over 145 SME delegates

GLOBAL WEALTH

Global Wealth revenue was down 7% sequentially and 11% y-o-y to AED 222 million in 1Q'16 due to continued challenging market conditions. As investors have become more risk averse, negative sentiment has resulted in declines in trading volumes. The correction in MENA regional financial markets has acted as a significant headwind, particularly within the securities and asset management businesses. Nevertheless, the Global Private Banking business continues to focus on our strategy to be the best private bank for the Arab world and is building momentum with strong client acquisition and an increasingly diverse client base.

Highlights from 1Q'16 include:

• Five new mandates won in 1Q'16 totaling AUMs of AED 852 million within Asset Management
• NBAD MENA Dividend Leader and NBAD MENA Bond Fund continue to be largest mutual funds in our tracked peer groups
• NBAD Securities achieved 8.6% market share during that time with AED 9 billion of traded value
• Asset Management & Securities businesses continue winning key industry awards