Emirates NBD announces 2007 results

Emirates NBD Chairman, His Excellency Ahmed Humaid Al Tayer said:
"When NBD and EBI came together last year, the vision was to create a national banking champion that is greater than the sum of its parts. The move was one that brings benefits to everyone in the business, all our customers, shareholders and other stakeholders. We are already seeing the benefits of this landmark merger - and these record results further strengthen our position as the UAE's biggest banking group. "

Rick Pudner, Emirates NBD CEO added:

"This has been a year of very strong growth for Emirates NBD. The momentum of growth from both NBD and Emirates banks has gained pace and continues under the Emirates NBD umbrella. Relatively soon after the merger, we are witnessing the benefits and returns of everyone's hard work over a very busy year."

"Our continued investment in people, technology and infrastructure capabilities has driven the bank's growth across all core areas of the business. The bank has delivered excellent performance across the board. We expanded our product offerings, increased our market share of loans, deposits and further consolidated our leading corporate banking presence in the UAE and, increasingly, across the GCC region.

"Looking ahead, we expect to see continued growth across our businesses as we are well positioned to capture the opportunities in our markets, especially from continued growth in UAE and the broader GCC region.

Total Income

Total income at Emirates NBD reached Dhs7.1bn on a pro forma basis. The primary drivers for the increase in total income were robust growth in customer assets supported by a rise in customer deposits across both the retail and wholesale businesses. The growth in income is supported by a steady increase in our fee based product revenue. The bank has continued to maintain a healthy mix of funded and non funded income.

EBI's total income for 2007 was Dhs4.23bn, a 46% increase from the previous year while NBD's total income for the period was Dhs2.82bn, a year on year increase of 53%.

Total costs

Operating costs for Emirates NBD in 2007 reached Dhs2.7bn on a pro forma basis, an increase of 51% over 2006. The increase in costs were driven by continued investments in expanding distribution and product capabilities , building robust infrastructure and developing strong governance capabilities across the group.

EBI's total costs increased by 46% to Dhs1.7bn while NBD's costs increased by 55% year-on-year to Dhs1.0bn.

Net profits

Net profits for the group were Dhs4bn (excluding amortisation of intangibles) for 2007, on a pro forma basis, an increase of 35% over 2006. This makes Emirates NBD the profit leader in the UAE. EBI's net profits at Dhs2.39bn rose by 27% while NBD's net profits at Dhs1.6bn were 44% higher than in 2006,

Normalised Proforma EPS for Emirates NBD stood at Dhs1.22 per share.

Profit growth was driven in a number of ways in 2007. For example, a focus on strengthening existing corporate customer relationships through providing a wider range of products and solutions created additional profit momentum. Additional efforts to enhance retail customer experience by focusing on reach, service quality, efficiency and products achieved the same result. The continued expansion and differentiation of our offering in the Islamic banking sector was a key contributor to profit growth.

Return on Equity

Emirates NBD reported a 25.12% return on average shareholders equity. On a standalone basis, EBI reported a 24.3% return on equity, a 1.6% increase from 2006. NBD offered a 23.7% return of equity, which represents a 4.5% increase year-on-year.

Total Assets

Total assets recorded at the end of 2007 were Dhs253.8bn, an increase of 53% in EBI and NBD's combined assets in 2006. This positions Emirates NBD with a 20.5% market share of banking assets in the UAE.

EBI's total assets of Dhs145bn reflected a growth of 51% in the year. NBD's total assets in 2007 reached Dhs107bn, a 52% increase over 2006

Loans

Total loans at the end of 2007 reached Dhs152bn, a 48% increase over the combined loans of EBI & NBD in 2006. Emirates NBD 's loan book accounts for 21% market share of loans among UAE Banks. EBI's total loan stood at Dhs87bn, a 47% increase from 2006 and NBD's total loans stood at Dhs65bn at the end of 2007, a 50% increase over the previous year. Both EBI & NBD benefited from a booming corporate business and new retail financing initiatives in 2007.

Deposits

Emirates NBD Deposits reached Dhs124.1bn, a 44% growth over 2006. Dhs60bn of these deposits are held with EBI divisions and Dhs64.1bn within NBD at end of 2007.

Business review

Retail banking

The group introduced 88 new ATM's in 2007 taking the total number of ATMs to 440, the largest ATM network of any bank in the UAE. Customers of both EBI and NBD customers can access their accounts through this combined network without incurring any additional charges. Continuing the bank's aspiration to expand its distribution and services, the group also opened 19 new branches taking the total to 114.

The award winning retail unit launched various new products in the year, including the prestigious Visa Infinite credit card, an invitation only card. The introduction of mortgages for expatriates was another significant step taken by the retail business in 2007. The Consumer Finance Business launched in 2007 will present product offerings in the form of secured and unsecured consumer loan products.

Corporate & SME banking

In 2007 NBD was selected as one of the banks in the UAE to provide Escrow accounts to its property developer customers. EBI completed significant enhancements to its Smart Business on-line banking service. The loans book grew substantially and the client base increased across the region.

Islamic banking

Launched just over 3 years ago, Emirates Islamic Bank continues to outperform its peers. EIB maintained its focus on expanding its distribution network and suite of products. This was an area of significant growth in profits.

Total assets of Emirates Islamic bank grew to Dhs17bn as at end of 2007, an increase of 65% over 2006. The total financing receivables increased to Dhs10.8bn in 2007 a growth of 65% over 2006. The deposits stood at Dhs13.9bn at end of 2007 a growth of 54% over the previous year.

Investment Banking

2007 was a good year for our growing investment banking business with a number of deals closed during the year on behalf of major entities across a range of sectors. Additionally several mandates involving financing and advisory transactions are under execution both in the UAE and the Gulf region.

Wealth Management

The wealth management business of Emirates NBD consists of asset management and private banking. The businesses continued to perform strongly, and the asset management divisions increased their assets under management to over $2bn.

Merger Update

Since the close of merger transaction on 15th October 2007, the group has made significant progress in integration process. The group has instituted an Integration Office, headed by a General Manager.

A target business model has been developed, drawing on the strengths of the existing business models and benchmarked against international best practice. The new organization structure, including management positions for Emirates NBD, was announced in October 2007. Subsequently, the combined group's strategy and integration milestones have been defined.

Early achievements include:
• The leveraging of the extended product range started, e.g. the cross-selling of NBD mortgage products to Emirates Bank customers
• Free ATM transactions for customers of both the banks on ATMs of Emirates NBD.
• Local awareness was increased through co-sponsorship of several high profile events during 2007 & 2008.
• CEO and the executive management of Emirates NBD were announced on 19 September 2007.
• Financial statements of EBI and NBD for 2007 were consolidated to prepare the financial statements for Emirates NBD.
• Operational and IT integration, a complex challenge, is well under way. Emirates NBD commenced the implementation of Oracle E business suite to complement the requirements of general ledger, payments and property management. Emirates NBD also commenced the implementation of the Finnacle system as the Group's core banking system.

Further announcements on integration will be made in due course.

2008 Outlook and Strategy

Going in to 2008, the Group expects to see continued growth opportunities across its businesses. Emirates NBD is in a strong position, as the leading UAE banking group, to benefit from continuing growth in UAE. Additionally 2008 will also see our focus to pursue expansion outside UAE.

The bank will continue to focus on the integration of EBI and NBD while rolling out its seven point strategy:
• Increase share of wallet and continue to grow the UAE's biggest retail banking business, expanding its network of branches and ATMs
• Expand the bank's wealth management business across the GCC, leveraging the platforms of EBI's Al Shaheen and NBD's Suhail businesses; and leverage investment banking, asset management, structured product, real estate, trust and family office product capabilities
• Grow the large corporations and government institutional client base of the corporate and SME banking business and enhance trade finance, cash management and treasury offering
• Leverage Dubai's development as a regional financial centre and enhance cross-selling to the corporate and institutional clients base in our world class investment banking division
• Expand Emirates Islamic Bank branch network, cross sell to a broader customer base and continue to develop innovative Islamic banking products
• Strengthen presence in Saudi Arabia, Qatar and expand/enter selected strategic markets and exploit the financial strength and scale in the GCC and the wider region
• Integrate the back-office operations of EBI and NBD and maintain investment in technology; and develop best-in-class corporate governance and risk management

Dividend

The board of directors has recommended distribution of a cash dividend of 35 fils per share and bonus shares of 15 % on outstanding shares as at 31 December 2007. The proposed dividend and bonus issue will be approved by the share holders in the annual general meeting of the bank proposed for March 2008.