investor presentation - burgan bank bank_q3_12_ir... · 2012. 11. 18. · members of burgan bank...

1 Members of Burgan Bank Group:

Members of Burgan Bank Group:

9 Months 2012

INVESTOR

PRESENTATION


Agenda

Financial Trends

Inorganic Highlights

Performance vs. Peers

Key Highlights

Conclusion

Financial Performance

Appendix

Economic Highlights


Economic Highlights


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.


Key Highlights


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


Financial Trends


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%



- Consolidated


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)


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



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%


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)



- By Country


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.


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


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.


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.


Performance vs. Peers


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


∆-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


∆ 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


Inorganic Highlights


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


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


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.


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%


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


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


Conclusion


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.


Thank You


Appendix


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


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

investor presentation - burgan bank bank_q3_12_ir... · 2012. 11. 18. · members of burgan bank...

Documents