1 Members of Burgan Bank Group: 9 Months 2012 INVESTOR PRESENTATION
1 Members of Burgan Bank Group:
Members of Burgan Bank Group:
9 Months 2012
INVESTOR
PRESENTATION
2 Members of Burgan Bank Group:
Agenda
Financial Trends
Inorganic Highlights
Performance vs. Peers
Key Highlights
Conclusion
Financial Performance
Appendix
Economic Highlights
3 Members of Burgan Bank Group:
Economic Highlights
4 Members of Burgan Bank Group:
Key Economy takeaways
GCC: Growth supported by oil revenues and fiscal
expansion
Kuwait: Political deadlock hinders implementation
of development plan
No Major Changes; consistent expectations with low levels of Investment, Trade & Job Creation.
Growth will decelerate from 4.6% (2012) to 3.8% (2013).
Saudi Arabia: Growth to soften from 5.4% (2012) to 4.0%
(2013). Inflation: 4.9% (2012) and 4.6% (2013).
Current outpaces capital spending. As a result, infrastructure
investment and non-oil exports lag behind and competitiveness
indicators deteriorate.
Most countries need oil at $90/barrel to meet spending
commitments. Civil - service wages and subsidies rapidly
increased to prevent social unrest, propping consumption.
In 2011, Saudi Arabia increased spending by 25%, mostly in
entitlements.
Growth down from 4.5% (2012) to 3.0% (2013), as oil
production and exports slow.
Inflation: 4.3% (2012) and 4.1% (2013). Interest rates to
broadly track US rates. Fiscal deficit possible by 2017 (IMF).
About 80% of national labor force employed in the public
sector. In 2012, civil-service salaries increased by 25%, and
7% of GDP spent on fuel-subsidies
Disputes between parliament and government to persist,
resulting in political upheavals and hampering economic
development.
Capital spending constrained by political disputes.
The government increased allocation to the Reserve Fund for
Future Generations from 10 to 25% (2012/13 budget).
Fitch warned that a surge in public unrest could threaten the
AA sovereign rating.
S&P (AA) and Moody’s (Aa2) have stable outlooks.
Net foreign assets: $323 billion (2011) or 191% of GDP.
The Iran oil-embargo is lifting GCC production, especially in
Saudi Arabia. Oil prices are supported by global demand-
supply dynamics and loose monetary policy.
Entitlements are hard to cut and in the long run will undermine
the sustainability of both fiscal trajectory and growth model.
Bahrain is already running a deficit.
In 2012, intra-GCC FDI flows reached 40% of the total,
concentrating firms’ geographical risk.
5 Members of Burgan Bank Group:
Key Highlights
6 Members of Burgan Bank Group:
Summary for the period
9M REVENUE: KD138.9 MILLION, UP 11.1% YOY. Q3 REVENUE OF KD48.2 MILLION.
9M NET PROFITS: KD 46.4 MILLION, UP 12.0% YOY.
ANNUALIZED ROE: 14.1% UP FROM 13.3% IN 2011. ROTE OF 23.1%.
Profitability
Leading
Indicators
GROSS LOAN PORTFOLIO GREW 27.0% YOY. TOTAL ASSETS EXCEEDED KD 5.1 BILLION.
LOAN/DEPOSITS RATIO AT 83.6%, DOWN FROM SEPTEMBER 2011 LEVELS OF 84.1%.
Solvency CAPITAL ADEQUACY RATIO OF 18.0% AS OF SEPTEMBER 2012.
Assets
Quality NPLS INCHING DOWN AND NPL COVERAGE “NET OF COLLATERALS” IMPROVING TO 154%.
SOLID PERFORMANCE VERSUS COMPETITORS ON GROWTH AND RETURNS. Competition
7 Members of Burgan Bank Group:
Financial Trends
8 Members of Burgan Bank Group:
Net Profit (KD million)(1)
Cost of Credit (KD million)(1) Revenue (KD million)(1)
Financial Trends
Key Indicators(1)
Burgan Bank Group 9M 11 9M 12
Revenue Growth (YoY) 1.9% 11.1%
Operating Profit Growth (YoY) 0.3% 10.3%
Operating Profit Margin 63.0% 62.5%
Cost to Income Ratio 37.0% 37.5%
Jaws Ratio (YoY) -2.9% -1.5%
Loans to Cust. Deposits 84.1% 83.6%
NPL to Gross Loans 9.7% 8.8%
NPL net of Collateral to Gross Loans 2.8% 2.5%
ROA 1.3% 1.2%
ROE 13.3% 14.1%
ROTE 23.7% 23.1%
4.4
8.9
16.2
22.4
2.5
8.2 6.5
Q3 11 Q3 12 9M 11 9M 12
8.0 15.9
Additional Provisions.
2,783
Net Loans in KD million.
2,252
FY 10
2,136 2,194
FY 11
(1) Figures are reported after consolidation adjustments.
16.1 15.2
41.4
46.4
Q3 11 Q3 12 9M 11 9M 12
43.5 48.2
125.0
138.9
Q3 11 Q3 12 9M 11 9M 12
∆11.1%
∆10.7%
9 Members of Burgan Bank Group:
Financial Performance
- Consolidated
10 Members of Burgan Bank Group:
Financial Performance – Income Statement
23.0
27.1 28.6
26.6
29.3
30.9
Q1 11 Q2 11 Q3 11 Q1 12 Q2 12 Q3 12
Operating Profit (KD million)
Q1 11 Q2 11 Q3 11 Q1 12 Q2 12 Q3 12
40.7% 36.5% 34.3% 37.7% 39.1% 35.8%
Cost to Income
38.8
42.7 43.5 42.6
48.1 48.2
Q1 11 Q2 11 Q3 11 Q1 12 Q2 12 Q3 12
Revenue (KD million)
11 Members of Burgan Bank Group:
Financial Performance – Income Statement
(1) Excludes Additional Reserves.
ROE are calculated on a Quarterly basis
4.4
7.4
4.4 5.0
8.5 8.9
4.6 3.5
4.0 2.5
Q1 11 Q2 11 Q3 11 Q1 12 Q2 12 Q3 12
4.5
Cost of Credit (KD million)
Additional Provisions.
11.7% 12.9% 15.6% 16.6% 12.7% 13.8% 16.4% 16.4% 15.6% 16.6% 16.5% 16.1%
11.8 13.5
16.1 17.5
13.6 15.2
Q1 11 Q2 11 Q3 11 Q1 12 Q2 12 Q3 12
Net Profit (KD million)
ROE ROE
3.9
5.0
6.4
9M 2011: KD 16.2 million
9M 2012: KD 22.4 million
16.3
16.8
16.1
17.5 17.5 17.6
Q1 11 Q2 11 Q3 11 Q1 12 Q2 12 Q3 12
Net Profit (KD million)(1)
12 Members of Burgan Bank Group:
2.2
2.8
4.3
5.2
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Loans & Advances Total Assets
Financial Performance - Balance Sheet
2.6
3.3
3.7
4.6
Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Deposits Total Liabilities
Assets Progression (KD billion) Liabilities Progression (KD billion)
KD (million) Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
Loans & Advances 2,194 2,252 2,405 2,592 2,783
Total Assets 4,290 4,552 4,773 4,971 5,171
Deposits 2,608 2,796 3,040 3,164 3,330
Total Liabilities 3,731 3,986 4,205 4,386 4,573
Shareholder's Equity 441 447 450 468 478
Liabilities & Sh. Equity 4,290 4,552 4,773 4,971 5,171
∆26.8%
∆20.6% ∆22.6%
∆27.7%
13 Members of Burgan Bank Group:
6.1%
4.8%
3.6% 2.8%
2.1% 2.2% 2.8% 3.1% 2.8% 2.8% 2.5%
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12
NPLs net of collateral to Gross Loans (%)
Financial Performance - NPL Trends
Non Performing Loans (KD million)
266.2
254.5
253.3 70.1 75.5 72.0
145% 139%
154%
80%
100%
120%
140%
160%
50
120
190
260
330
400
Q1 12 Q2 12 Q3 12 NPL NPL net of collateral Coverage net of collateral (RHS)
14 Members of Burgan Bank Group:
Financial Performance
- By Country
15 Members of Burgan Bank Group:
Revenues Diversity
Revenue 9M 2012(1)(2)
Kuwait, KD44.9m 49%
Jordan, KD22.5m 25%
Algeria, KD16.0m 17%
Iraq, KD6.1m 7%
Tunisia, KD1.8m 2%
2012 Revenue for 9 Months grew 11.1% from 2011 levels, Led by
Kuwait, and Algeria.
Operating Profit Margins 9M 2012(1)(2)
65.1% 66.8%
71.1%
57.4%
40.2%
Kuwait Jordan Algeria Iraq Tunisia
Burgan Group
at 62.5%.(2)
68.7%(3) 68.9%(4)
(1) Reported contribution excluding consolidated adjustments.
(2) Based on Kuwait CBK Reporting Standards.
(3) Kuwait Operating Margins excludes Subdebt cost of KD6.7m.
67.6%(4)
Burgan Group at
KD138.9m.(2)
(4) Based on subsidiary local reporting Standards.
16 Members of Burgan Bank Group:
Revenue (KD million)(1)
Diversity Trends
2,194
(1) Figures are reported excluding consolidation adjustments.
64.3 68.8
32.2 33.9
16.6
24.5 8.9
9.5 3.0
2.5
9M 11 9M 12
Tunisia Iraq Algeria Jordan Kuwait
∆11.1%
125.0
138.9
Net Profit (KD million)(1)
30.0 35.1
6.5
4.0 4.6
9.5 2.3
2.4
1.1
-1.4 9M 11 9M 12
Tunisia Iraq Algeria Jordan Kuwait
∆12.0%
41.4
46.4
Figures taking into account consolidation adjusts.
17 Members of Burgan Bank Group:
68.9%
49.0%
50.2%
49.4%
66.4%
65.3%
62.4%
7.8%
24.8%
23.5%
24.4%
17.9%
16.8%
15.4%
18.6%
19.1%
14.8%
17.6%
7.3%
16.8%
15.4%
4.7%
5.9%
8.4%
6.8%
6.4%
1.0%
4.3%
3.1%
1.8%
2.0%
0.2%
2.4%
Net Profit^
Operating Profit
Operating Expense
Revenue
Customer Deposits
Customer Loans
Total Assets
Kuwait Jordan Algeria Iraq Tunisia
Contribution for 9M 2012(1)
Contribution Summary by Country
(1) Reported contribution excluding consolidated adjustments.
^ Net Profit contribution of BB Share; Tunisia Net Profit Contribution NM.
18 Members of Burgan Bank Group:
Performance vs. Peers
19 Members of Burgan Bank Group:
Deposits (KD billion) Net Customers Loans (KD billion)
7.9
2.1
3.3 2.2 2.2
8.4
2.0
3.3 2.8
NBK ABK^ GBK CBK Burgan
6.5
2.0
3.3 2.3 2.6
7.7
2.0
3.2 3.3
NBK ABK GBK CBK Burgan
∆-3.8%
∆0.9% ∆26.8%
∆6.7%
∆-1.4%
∆-3.0% ∆27.7%
∆18.8%
Net incomes (KD million) Revenues (KD million)
400
87 116 100 125
390 92
133 139
NBK ABK GBK CBK Burgan
∆-2.6%
∆5.9% ∆14.6% ∆11.1%
^ ABK customer loans are containing Bank loans and customer loans. As of
Dec 2011, bank loans were of 1.9% of total net loans.
485
NBK figures are as reported in Red. figures were adjusted for ‘12, Loans & deposits
are excluding Islamic finance loans & deposits consolidated from Boubyan.
Revenues and net profits are adjusted and are excluding KD 81.5 million of
consolidation gains in Q3 and incomes from Islamic finance during Q3 2012.
226
39.9 27.4
8.3
41.4 147
30.4 22.4
(12.2)
46.4
NBK ABK GBK CBK Burgan
∆ 12.0% ∆-18.2% ∆-23.9%
∆-35.0%
8.6
9M 2012 NBK ABK GBK CBK Burgan
ROE 8.5% 8.5% 7.0% N/A 14.1%
ROTE 9.4% 8.5% 7.0% N/A 23.1%
229
N/A
N/A N/A
9.6
9M 2012 Vs. 9M 2011: Competitive landscape
20 Members of Burgan Bank Group:
Inorganic Highlights
21 Members of Burgan Bank Group:
Footprint Evolution
Kuwait – Burgan
2006
Kuwait - Burgan
Jordan – JKB
Cyprus - JKB
2008
Kuwait - Burgan
Jordan – JKB
Algeria – AGB
Iraq – BoB
Tunis – TIB
Lebanon – BoB
Cyprus - JKB
2010
Kuwait - Burgan
Jordan – JKB
Algeria – AGB
Iraq – BoB
Tunis – TIB
Lebanon – BoB
Cyprus - JKB
2012
Malta – FIM Bank (25%)
Turkey – ET
In process
22 Members of Burgan Bank Group:
Turkey
Key Updates
Approval received from Kuwait
Regulator on acquisition of ET.
Pending Turkish Regulators Approvals.
Target Closure 2012.
Fitch upgrade to Investment grade of Turkey reflects a combination of easing macro financial risk & declining government debt burden.
Breakdown by Segment (1)
58.4%
60.7%
59.4%
19.0%
18.8%
16.2%
5.6%
5.8%
4.7%
4.6%
1.4%
3.4%
2.2%
0.3%
2.7%
10.2%
13.1%
13.6%
Deposits
Loans
Assets
Note: (1) Figures reflect the FY – 2011.
Jordan
Kuwait Bank
Tunis International
Bank
Bank of
Baghdad
Gulf Bank
Algeria
Burgan Bank
23 Members of Burgan Bank Group:
Malta
Key Updates
Finalized Due Diligence .
Approval received from Kuwait
Regulator to acquire 25% stake.
Pending Maltese Regulators Approval.
Joint offer from UGB to acquire the
12.56% of FIM bank as well, having
KIPCO Total Group potential
acquisition of 37.56%.
Relative numbers as of June 30th, 2012 (US$ million)
Assets
Loans 1
Deposits 2
Equity
Revenues 3
Net Incomes 3
17,656
9,213
11,246
1,649
322.5
110.8
1,076
713.0
844.0
126.0
18.7
4.5
1 FIM bank Loans comprising loans to banks and loans to customers. 2 FIM bank Deposits are containing amounts owed to customers and owed to banks. 3 Revenues and net incomes are for 6 months.
KWD/USD 3.5544. Exchange rates are taken from Oanda.com as on June 30th 2012.
24 Members of Burgan Bank Group:
FIM Bank – key Financials
1 ROE for June 2012 is annualized
Asset (US$ million) Capital Adequacy Ratio
127 204 230 239
313 326
418 460 133
223
245 253
123
107
124 124
2009 2010 2011 Jun-12
Trading assets Loans to banks Loans to customers Other
696
860
1,017 1,076
CAGR 19.1%
29.3%
20.6% 19.3%
18.1%
2009 2010 2011 Jun-12
1.3%
5.8%
7.5% 7.4%
2009 2010 2011 Jun-12
ROE 1 Revenues and Profit
26.1 32.2
37.4
18.7
1.6 6.7 9.1
4.5
2009 2010 2011 Jun-12
Operating income Net Profit
93.2% 80.1% 77.7%
73.7%
Cost to income
Regulatory Minimum 8%
25 Members of Burgan Bank Group:
Malta – FIM Bank
BUSINESS FOCUS
A Boutique Bank in Trade Finance covering all related
business.
Having a growing global presence in the main Trade
Finance centers.
Recognized by international partners and professionals in
the industry as a quality partner.
SERVICE OFFERING
FORFAITING
TRADE FINANCE
FACTORING
SERVICE OFFERING & GLOBAL FOOTPRINT
26 Members of Burgan Bank Group:
277 276 276 225 247 248 233 274 316 313
400 401 414 411 413 406 439 437 424 436 427
31 128 132 133 125 124
125 114 74
146 145 144 143 144 146 150 152 152 252
16.6%
12.3%
16.9%
20.9%
19.3%
18.0%
14.9%
309 353 398
547 550 588
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
22%
24%
Q4'0
7
Q4'0
8
Q4'0
9
Q4'1
0
Q4'1
1
Q1'1
2
Q2'1
2
Q3'1
2
Q4'1
2
Elig
ible
Cap
ital (K
D M
n)
Tier 1 Cap. Tier 2 Cap. Regulatory Security Optimum Readiness for Growth Actual CAR
Capital Adequacy Trends
CAR (2008A-2012F)
Historical CAR, Quarterly
Working to issue a Subdebt for KD 100 million (within 60 days).
Acquired
JKB
Acquired
AGB Acquired
BoB
Acquired
TIB
Acquisition ET
17.0%
Sub debt
KD100 mn
Estimate following
ET Acquisition
27 Members of Burgan Bank Group:
Conclusion
28 Members of Burgan Bank Group:
SOLID QUARTER WITH STEADY, HEALTHY TRENDS.
Conclusions
LEADING INDICATORS ARE POINTING NORTH.
INORGANIC INITIATIVES ON TRACK.
CAPITAL ADEQUACY RATIO REMAINING STRONG SUPPORTING ORGANIC AND INORGANIC GROWTH.
29 Members of Burgan Bank Group:
Thank You
30 Members of Burgan Bank Group:
Appendix
31 Members of Burgan Bank Group:
External Recognitions - 2012
Q1 2012 Q2 2012
Best Corporate
Bank in Kuwait –
Global Banking &
Finance Review
2012
Best Banking
Group in MENA –
Global Banking &
Finance Review
2012
Best Banking
Brand –
Banker Middle
East 2012
Best Banking
Group In
Kuwait – World
Finance 2012
Best Private
Bank In Kuwait
– World
Finance 2012
All awards mentioned above are the results of “peers & customers voting” process organized by the publications.
Q3 2012
Best Private
Bank in Kuwait
– Capital
Finance
International
Deal of the Year
“ET Deal” –
Acquisition
International
32 Members of Burgan Bank Group:
The information contained in this document has been provided on the basis of
current knowledge, assumptions and expectations. In the event that any information
is incorrect or any party misrepresented, Burgan Bank and its consultants cannot be
held responsible for this. Various factors could cause future results, performance or
events to differ materially from those given in this document. No obligation is
undertaken to update this document or the statements / information contained in it.
The information contained in this document should by no means be interpreted as an
invitation to making any investment decision based on the same. Our continuous
advice is that every investor must rely on his/her own advisor and resources to
ensure the correctness of the information presented to him/her and then makes
his/her investment decision accordingly.
Disclaimer