RELATIONS INVESTOR Arab Bank Group
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Arab Bank Group
INVESTOR
RELATIONS
PRESENTATION
December 31, 2017
1
• General Information
• Financial Data & KPIs
• Credit Rating
TABLE •
•
Stock Information
Corporate Governance
OF CONTENTS •
•
Disclaimer
Appendix
2
GENERAL INFORMATION
A strong heritage with deep roots…
GENERAL
INFORMATION
HISTORY
Arab Bank was established in 1930, and is registered as a Jordanian publicly
listed company.
PROFILE
• Arab Bank, headquartered in Amman, Jordan, is the largest global Arab Key Financial Highlights
banking network, with over 600 branches in 28 countries spanning five
2016 2017
continents.
Total assets $47.5bn $48.2bn
• Arab Bank is listed on the Amman financial market and represents almost Loans $23.7bn $25.1bn
25% of the market capitalization. Customer deposits $33.6bn $33.8bn
Owners' equity $8.2bn $8.4bn
• Arab Bank provides a wide range of financial products and services for
Revenue $1.93bn $1.98bn
individuals, corporations and other financial institutions.
Net income before tax $ 790.8 m $796.7m
Net profit $532.7m $ 533.0m
4
Arab Bank's core strengths
An established
brand name with
strong equity and
core values
Net operating
income amounted to Superior geographic
USD 1.05 billion as diversification
of December
31, 2017 One of the most
A well provisioned
important providers
loan portfolio with an
of trade finance in
NPLs coverage ratio
the region
stood at 100%
Strong capitalization
Well controlled
and a CAR of 15.28%
operating expenses
according to Basel III
requirements
Strong liquidity ratio
with LTD of 74.4%
The ratios are as of December 31, 2017
5
Spanned in a global network...
Sister Company
Arab Bank Arab Bank Switzerland is a sister company owned by Arab Bank
shareholders, and it provides asset management and investment
advisory for high net worth clients.
Corporate Structure Subsidiaries
Europe Arab Bank (100%) provides corporate and institutional
banking, private banking and treasury services.
Branches
Arab Bank Australia (100%) provides commercial and retail
• Jordan • Offshore Banking Unit – Bahrain
banking services.
• Palestine • Algeria
• Egypt • Morocco
• UAE Islamic International Arab Bank PLC (100%) provides a full range
• Yemen
• Qatar • New York of Islamic banking products and services in Jordan.
• Bahrain • Singapore
• Lebanon Arab National Leasing Company (100%) provides financial
leasing services.
Major Associates
Arab Tunisian Bank (64.2%) provides corporate and retail
Arab National Bank (40%) provides commercial, banking products and services.
Islamic products & services, treasury and
investment services in Saudi Arabia. Al Nisr al-Arabi Insurance Company (50%) provides a full range
of insurance services.
Oman Arab Bank (49%) provides corporate,
retail, investment banking and trade finance • Arab Sudanese Bank (100%)
• Arab Group for Investment Company (100%)
products and services in Oman. • Al Arabi Investment Group (100%)
• Arab Company for Shared Services - UAE (100%)
Turkland Bank (50%) provides corporate and • Arab Gulf Tech for IT Services - UAE (100%)
commercial banking services in Turkey. • Arab Bank Syria (51.29%)
6
Our entities... Always within your reach
Group Network
Arab Bank is the largest Arab banking network, with over 600 branches spanning 5 continents, through Arab Bank PLC branches, subsidiaries, its sister
company and associates:
Country Since Branches Employees
Palestine 1930 32 905
Jordan 1934 120 4,314
Lebanon 1944 10 311
Egypt 1944 43 1,196
Qatar 1957 3 128
Bahrain 1960 6 185
Morocco 1962 5 132
Switzerland** 1962 2 121
UAE 1963 10 444
Yemen 1972 7 213
Saudi Arabia* 1980 143 4,170
USA 1982 1 5
Tunisia 1982 133 1,398
Oman* 1984 65 1,166
Far East 1984 3 52
Australia 1994 8 109
Algeria 2001 8 247
Syria 2005 19 283
Europe 2006 6 131
Turkey* 2006 33 523
* Associates: Arab National Bank (Saudi Arabia) [40%], Oman Arab Bank (Oman) [49%], T-Bank (Turkey) [50%].
Sudan 2008 3 80 ** Sister Company: Arab Bank (Switzerland)
7FINANCIAL DATA & KPIs
Strong and robust balance sheet
USD ‘000 USD ‘000
Assets
AB Group –
Dec. 2016 Dec. 2017
Cash and due from banks 12,607,642 11,749,717
Investment portfolio 8,810,383 8,626,240
Consolidated
Loan portfolio - net 21,898,121 23,488,575
Investment in associates 3,077,008 3,226,231
Fixed assets - net 463,633 459,141
Balance Sheet Other assets
Total assets
603,604
47,460,391
613,817
48,163,721
USD ‘000 USD ‘000
Liabilities & Shareholders' Equity Dec. 2016 Dec. 2017
Due to banks 4,024,184 4,109,378
Customer deposits & cash margin 33,643,578 33,780,748
Other liabilities & other provisions 1,628,093 1,864,323
Total liabilities 39,295,855 39,754,449
Capital & reserves 5,069,944 5,112,860
Other equity items 2,972,225 3,177,399
Shareholders' equity 8,042,169 8,290,259
Non-controlling interests 122,367 119,013
Total shareholders' equity 8,164,536 8,409,272
Total liabilities & shareholders' equity 47,460,391 48,163,721
9AB Group consolidated income statement
USD ‘000 USD ‘000
Income Statement
Dec. 2016 Dec. 2017
Net interest income 1,114,518 1,186,562
Net commission 315,903 301,711
Group’s share of profits of associates 334,964 350,278
Other revenue 161,027 145,448
Net operating revenue 1,926,412 1,983,999
Operating expenses 956,541 936,969
Net operating income 969,871 1,047,030 *
Provision for impairment - direct credit facilities 179,056 250,377
Net income before tax 790,815 769,653
Income tax 258,149 263,690
Net income after tax 532,666 532,963
* Excluding the effect of foreign currency devaluations, net operating income achieved double digit growth of 12%.
10AB Group key financial indicators
Dec. Dec. Dec. Dec. Dec.
Key Financial Indicators
2013 2014 2015 2016 2017
Loan to deposit 67.1% 67.7% 67.6% 70.4% 74.4%
Cost to income - excluding provision for doubtful debts & legal provisions 42.0% 42.3% 42.3% 41.9% 39.7%
Return on equity 6.5% 7.3% 5.5% 6.5% 6.3%
Return on assets 1.1% 1.2% 0.9% 1.1% 1.1%
Capital adequacy - Tier 1 15.15% 14.80% 14.20% 14.35%* 14.11%*
Capital adequacy - total 15.15% 14.80% 14.20% 15.47%* 15.28%*
NPL to gross credit facilities - excluding suspended interest 5.60% 5.20% 4.80% 4.90% 5.20%
NPL coverage ratio - excluding suspended interest 102% 106% 109% 116% 100%
* According to Basel III (CBJ requirements)
11Diversified and well-controlled geographic coverage
Loans Deposits Revenue Net Operating
Income
GCC 28% GCC 24% GCC 37% GCC 50%
Jordan 30% Jordan 35% Jordan 29% Jordan 24%
North Africa 17% North Africa 16% North Africa 15% North Africa 13%
Europe 10% Europe 10% Europe 6% Europe 3%
MENA 10% MENA 13% MENA 11% MENA 9%
Far East and Far East and Far East and Far East and
Other 5% Other 2% Other 2% Other 1%
Geographical diversification as of December 31, 2017
12Financial trend in recent years
Customer Deposits
Assets in USD billions Loans in USD billions
in USD billions
2013 46.86 2013 23.09 2013 34.39
2014 48.81 2014 23.68 2014 34.97
2015 49.04 2015 23.81 2015 35.24
2016 47.46 2016 23.67* 2016 33.64*
2017 48.16 2017 25.14 2017 33.78
Net Income in USD
Equity in USD billions Revenue in USD billions
millions
2013 7.77 2013 1.81 2013 502
2014 7.89 2014 1.88 2014 577
2015 8.02 2015 1.91 2015 442
2016 8.16 2016 1.93 2016 533
2017 8.41 2017 1.98 2017 533
* Excluding the effect of foreign currency devaluations, the bank has shown a consistent solid growth
during 2016 whereby loans and advances grew by 6% and customer deposits grew by 3%.
13Revenue and net operating income
Revenue (USD Million) Revenue by segment Dec. 2017
2013 1,064 437 310 1,811
2014 1,075 454 348 1,877
Other
20%
2015 1,091 460 357 1,908
Corporate
38%
2016 1,115 476 335 1,926
Consumer
2017 1,187 447 350 1,984 25%
Interest Income Non-Interest Associates Treasury
17%
Net Income before Tax (USD Million)
2013 741
2014 841
2015 719
2016 791
2017 797
14Profitability ratios
Return on Assets Return on Equity
Return on Assets
Return on Equity
1.2%
1.1% 1.1% 1.1% 7.3%
6.5% 6.5% 6.3%
0.9% 5.5%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Cost to Income - Excluding Provision for
Cost to
Impairment income - excluding
& Non-recurring Expenses
EPS (USD)
provision for Impairment & EPS (USD)
Non-recurring expenses 0.93
1.01
0.81 0.81
0.67 *
42.0% 42.3% 42.3% 41.9%
39.7%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
* EPS equals USD 1.22 excluding legal provisions for 2015.
15Asset quality and liquidity ratios
Loan to Deposit NPL Coverage Ratio - Excluding
Suspended Interest
NPL Coverage Ratio - excluding
Loan to Deposit
suspended interest
109% 116%
74.4% 102% 106% 100%
67.7% 67.6% 70.4%
67.1%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
Total Shareholders' Equity to Total NPL to Gross Credit Facilities -
Assets Excluding Suspended Interest
Total Shareholders' Equity to NPL to Gross Credit Facilities -
Total Assets excluding suspended interest
5.6%
17.5% 5.2% 5.2%
17.2% 4.9%
16.6% 4.8%
16.2% 16.3%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
16Loan quality
Highlights 1.30
1.28
1.28
1.21 1.21
1.12
1.31
1.13
1.27 1.28
116%
• Arab Bank classifies the loan portfolio in compliance with
109%
IFRS requirements and the Bank’s stringent guidelines, 106% 100%
whichever is stricter. 102%
• NPLs include old loans which are fully provided. The Bank
is very cautious in writing off loans to safeguard its legal
position for collection.
2013
2014
2015
2016
2017
• Credit portfolio quality remains strong despite regional
conditions.
Provision NPL - Excluding Int. in Suspense Coverage Ratio
• As of December 2017, the NPL coverage ratio stood at100% (USD Billions) (USD Billions)
in line with the Bank’s prudent provisioning policy.
Gov. Banks & FI
• 72% of the Bank’s loan book is composed of corporate 5% 1%
clients, which is well-diversified across economic sectors
GCC
and regions. Consumer 28%
22% Jordan Far East
• Consumer loans represent 22% of the loan portfolio, and 30% and Other
the amount of 90 days overdue represents only 2.1% of the MENA
5%
consumer loan portfolio. Corporate
Corporate
North
10%
73% 72% Africa Europe
17% 10%
• Loans as of December 31, 2017
17Capital adequacy
Highlights 31.3
32.3 33.0
34.5
35.6
• Solid capital adequacy ratio well above Basel III requirements
with CAR to 15.28% as of December 31, 2017.
• High quality capital; mostly comprised of CET1.
15.47
• Solid leverage ratio well above Basel III & CBJ requirements. 15.15
15.28
• High liquidity ratios (liquidity coverage ratio and net stable 14.80 14.20
funding ratio) well above Basel III.
2013
2014
2015
2016
2017
Risk Weighted Assets CAR
(USD Billions)
18CREDIT RATING
Credit ratings
Agency Entity Rating
Arab Bank plc - Jordan
Long Term Bank Deposits - Local Currency Ba2/Stable/NP
Moody’s Long Term Bank Deposits - Foreign Currency B2/Stable/NP
Arab Bank plc - Dubai branch
Ba2/Stable/NP
Long Term Bank Deposits - Foreign Currency
Arab Bank plc
Fitch Ratings BB/Stable/B
Issuer Default Ratings (IDRs)
Arab Bank plc
B+/ Stable/B
Issuer Default Ratings (IDRs)
Standard & Poor’s
Arab Bank Group Operating Entities Europe Arab Bank
BB+/ Stable/B
Arab Bank Australia Ltd Issuer Default Ratings (IDRs)
• International credit rating agencies (Moody’s, Fitch, and standard & poor’s) emphasized on the banks’ pioneer position supported by its’ solid business
franchise, superior geographic diversification, well-known brand, strong management, and conservative financial policies which allow the bank to be
rated above its sovereign and peers.
• “AB group has been a consistently solid performer, even during difficult domestic or regional operating conditions. The group’s performance reflects its
broad geographical diversification, its conservative attitude to risk, and a policy of making liquidity paramount.” (Fitch)
• “The group's top management has proven skills, capacity, and expertise to run the bank, in line with its strategy, which we view as well defined and
prudently exercised.” (S&P)
20STOCK INFORMATION
Stock information
• Arab Bank is the largest listed company on Amman stock exchange with a market Others
capitalization of USD 5.1 billions as of 31 December, 2017;representing almost 3%
25% of total market. Institutions
29%
• Arab Bank shares are traded in multiple lots of 18 shares coupled with 1 share of
Arab Bank Switzerland.
• A strong and diversified base of shareholders. Governments Individuals
25% 42%
• An attractive share price with 9.8 P/E ratio, and 0.6 P/B ratio as of December 31,
2017.
• A dividend yield of 7.3% as of 31 December, 2017.
Mutual Funds
1%
22Stock information
(USD as of 31 December)
11.04
10.01
9.10
8.70
7.90
1.01
0.93
0.81 0.81
0.67
0.43 0.36 0.43 0.58
0.18
2013 2014 2015 2016 2017
EPS Dividend per Share Stock Price
11.04
10.01
9.10
8.70
7.90
14.55
13.85 13.12
12.51 12.74
2013 2014 2015 2016 2017
Book Value Stock Price
23CORPORATE
GOVERNANCE
24Corporate governance
Arab Bank adopts the latest corporate governance regulations according to the best practices and Central Bank of Jordan instructions.
•• Arab Bank’s Board of Directors, led by Mr. Sabih Taher Masri, Chairman of the board, is composed of 12 members, all non-executives elected for a
period of four years by the General Assembly.
•• The board meets at least six times a year and has strong adherence to good corporate governance standards.
Member Name
Mr. Sabih Taher Masri Chairman
H.E. Dr. Bassem Ibrahim Awadallah Deputy Chairman
H.E. Mr. Suleiman Hafez Suleiman Masri
Mr. Hisham Mohammed Attar On Behalf/Ministry of Finance, Saudi Arabia
Dr. Musallam Ali Musallam
Board of Directors
Dr. Hamzeh Ahmad Jaradat On Behalf/Jordan Social Security Fund
H.E. Mr. Khaled Anis (Zand Irani) On Behalf/Abdul Hameed Shoman Foundation
Mr. Wahbe Abdullah Tamari
Mr. Bassam Wael Kanaan
Mr. Abbas Farouq Zuaiter
H.E. Mr. Alaa Arif Batayneh
Mr. Usama Ramiz Mikdashi
25Corporate governance structure
• Board committees: • Country committees
- Audit committee - Local asset & liability committee
- Risk management committee - Country credit committee
- Credit committee - Country management committee
- Corporate governance committee
- Strategy committee • Supported by three lines of
- Nomination and remuneration control/defense
- Business line and country internal
committee
control units
- IT governance committee
- Group risk management (GRM)
- Compliance committee
and Group regulatory compliance
(GRC)
• Executive committees - Group internal audit (GIA)
- High asset & liability committee
- Senior credit committee
- Operational risk committee
- IT steering committee
26Disclaimer
• The material in this presentation has been prepared by Arab Bank plc (the “Bank”) and represents general background information about Arab Bank
Group (the “Group”) activities current at the date of the presentation. The information in this presentation is given in a summary form and does not
assume to be complete and it is not intended to be relied upon as advice to investors or potential investors. Some of the information relied on by the
Bank in this presentation is obtained from sources available to the public and believed to be reliable, but the Bank does not guarantee its accuracy,
completeness or correctness.
• The presentation has been prepared for information purposes only and is not and does not form part of any offer for sale or solicitation of any offer to
subscribe for or purchase or sell any securities nor shall it form the basis of or be relied on in connection with any contract or commitment whatsoever.
• While the information included in the presentation document has been prepared in good faith, neither the Bank nor its related entities, directors,
employees or agents, nor any other person, accepts any liability from reliance on this presentation document. The Bank bears no responsibility in any
instance for loss which may result from reliance on the information in this presentation.
• This presentation should be read in conjunction with other publically available material. It is not to be relied upon as such in any manner as legal, tax
or investment advice and should not be used in substitution for the exercise of independent judgment and each recipient hereof shall be responsible
for conducting its own investigation and analysis of the information contained herein in conjunction with other publically available information.
Forward-Looking Statements
• It is possible that this presentation could contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions
about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. The
inclusion of such forward looking statements shall not be regarded as a representation by the Bank that its objectives or plans will be achieved. Undue
reliance should not be placed on any such statements because, by their very nature, they are subject to known and unknown risks and uncertainties
and can be affected by other factors that could cause actual results, and the Group’s plans and objectives, to differ materially from those expressed or
implied in the forward-looking statements.
• Arab Bank undertakes no obligation to revise or update any forward looking statement contained within this presentation, regardless whether those
statements are affected as a result of new information, future events or otherwise.
• The Bank holds copyright to this presentation document, unless expressly indicated otherwise or is self-evident from its nature written permission
from the Bank is required to republish the presented information on the Bank or to distribute such information. This shall apply regardless of the
purpose for which it is to be republished or distributed.
27APPENDIX
28Group balance sheet
December, 31 December, 31 December, 31 December, 31
2016 2017 2016 2017
USD '000 USD '000 USD '000 USD '000
ASSETS OWNERS' EQUITY
Cash and balances with central banks 7 809 343 7 607 064 Share capital 926 615 926 615
Balances with banks and financial institutions 4 622 181 3 992 234 Share premium 1 225 747 1 225 747
Deposits with banks and financial institutions 176 118 150 419 Statutory reserve 798 443 841 359
Financial assets at fair value through profit or loss 698 516 470 654 Voluntary reserve 977 315 977 315
Financial derivatives - positive fair value 58 011 35 420 General reserve 1 141 824 1 141 824
Direct credit facilities at amortized cost 21 898 121 23 488 575 General banking risks reserve 363 458 395 828
Financial assets at fair value through other Reserves with associates 1 540 896 1 540 896
470 912 395 563
comprehensive income
Foreign currency translation reserve ( 402 682 ) ( 350 550)
Other financial assets at amortized cost 7 640 955 7 760 023
Investment revaluation reserve ( 267 672 ) ( 313 438)
Investment in associates 3 077 008 3 226 231
Retained earnings 1 738 225 1 904 663
Fixed assets 463 633 459 141
Total Equity Attributable to Shareholders of the Bank 8 042 169 8 290 259
Other assets 472 203 491 174
Non-controlling interests 122 367 119 013
Deferred tax assets 73 390 87 223
Total Owners' Equity 8 164 536 8 409 272
TOTAL ASSETS 47 460 391 48 163 721
TOTAL LIABILITIES AND OWNERS' EQUITY 47 460 391 48 163 721
LIABILITIES
Banks and financial institutions' deposits 3 752 999 3 927 288
Customer deposits 31 082 152 31 080 459
Cash margin 2 561 426 2 700 289
Financial derivatives - negative fair value 52 517 42 154
Borrowed funds 271 185 182 090
Provision for income tax 242 377 272 205
Other provisions 259 795 326 040
Other liabilities 1 072 128 1 220 231
Deferred tax liabilities 1 276 3 693
Total Liabilities 39 295 855 39 754 449
29Group income statement
December, 31 December, 31
2 016 2 017
USD '000 USD '000
REVENUE
Interest income 1 865 835 1 984 069
Less: interest expense 751 317 797 507
Net interest income 1 114 518 1 186 562
Net commissions income 315 903 301 711
Net interest and commissions income 1 430 421 1 488 273
Foreign exchange differences 61 185 84 665
Gains from financial assets at fair value through profit or loss 5 147 5 380
Dividends on financial assets at fair value through other comprehensive income 7 813 6 995
Group's share of profits of associates 334 964 350 278
Other revenue 86 882 48 408
TOTAL INCOME 1 926 412 1 983 999
EXPENSES
Employees' expenses 439 105 459 957
Other expenses 331 285 342 445
Depreciation and amortization 54 773 56 546
Provision for impairment - direct credit facilities at amortized cost 179 056 250 377
Other provisions 131 378 78 021
TOTAL EXPENSES 1 135 597 1 187 346
Profit before income tax 790 815 796 653
Less: Income tax expense 258 149 263 690
Profit for the Year 532 666 532 963
Attributable to :
Bank shareholders 522 187 521 961
Non-controlling interests 10 479 11 002
TOTAL 532 666 532 963
Earnings per share attributable to Bank shareholders
- Basic and diluted (US Dollars) 0.81 0.81
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