A few words about the past, present and future of FGB.
Message from top management about the vision, future plans, results and ratings. Usually companies break down the messages as follows:
On behalf of the Board of Directors, I am pleased to present to our shareholders the Audited Financial
Statements of FGB for the year ended 31 December 2015, reflecting a year of resilience and positive
achievements as we continue to put our customers at the heart of our activities.
With a backdrop of rising macro headwinds both on a global and regional level, significant progress continued to be made towards executing our medium term plans as we focused on expanding and diversifying our core businesses. Many domestic economies and governments are implementing economic and regulatory reforms, to minimise negative impacts as a result of current conditions.
The UAE undoubtedly continues to set itself apart from the region through its diversification strategy away from relying solely on oil, and by growing service industries, establishing a resilient and sustainable growth model. Against this challenging backdrop, the fundamentals of the UAE banking and financial services sector remained strong thanks to robust capital positions, solid balance sheets, and improved profitability levels. Furthermore, the UAE Central Bank released liquidity regulations in May this year, under the Basel III framework, ensuring compliance with best practice.
I am pleased to report that in 2015, FGB marked the 16th consecutive year of revenue and net profit growth with a full year net profit of AED 6.01 Billion in 2015, and an increase of 6% compared to 2014. The Bank’s good performance in a challenging operating environment is attributed to a continued focus on ensuring disciplined growth while leveraging the strengths of FGB’s reshaped and enhanced business model.
The Board is encouraged that given our optimised balance sheet, good business momentum and our efficient business model, FGB is well positioned to continue to deliver consistent and sustainable growth, maximising value for our stakeholders despite the challenges that the banking sector is facing. In light of our strong financial performance, the Board of Directors recommended the distribution of 100% cash dividends for the financial year ended 31 December 2015. This implies total cash dividends of AED 4.5 Billion compared to AED 3.9 Billion in 2014.
On behalf of FGB’s Board of Directors, I would like to take this opportunity to express my gratitude to the President of the United Arab Emirates, Sheikh Khalifa bin Zayed Al Nahyan for his guidance, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and the Ruler of Dubai, His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and their Highnesses, Rulers of the UAE, and members of the Supreme Council for their continued support. We want to express our appreciation and thanks to our shareholders, customers and correspondent banks for helping us in achieving continued success. We also want to thank the UAE Central Bank for their continuous co-operation and support.
We are fortunate to employ strong teams of talented and dedicated people throughout the Group. On behalf of our Board of Directors, I would like to extend our sincere thanks to our employees for their continued commitment and loyalty. The progress made during the year, despite challenging operating conditions, is a credit to our employees’ hard work and success.
Tahnoon Bin Zayed Al Nahyan
Managing Director's Message
The bank delivered good progress in 2015, achieving a number of key milestones despite challenges in
the evolving macroeconomic environment. Solidifying our position as one of the leading banks in the
UAE, I am pleased to present another year of net profit growth, our 16th consecutive year of improved
performance, reflecting the underlying strength of the fundamentals of the business. This year, we
significantly improved our ratios and maintained a comfortable liquidity and capital position.
The global economy experienced increased volatility in 2015 as we witnessed a sustained weakness in oil prices, combined with a slowdown in global markets, as well as geopolitical discord in the region. The UAE economy, whilst overall resilient to economic headwinds due to its national diversification strategy and regulatory reform, slowed in 2015 leading to tightening liquidity conditions in our domestic operating environment.
However, FGB continued to demonstrate a strong and resilient business model, allowing us to deliver a solid financial performance and joint successes across the businesses. I am proud of our achievements in executing our strategic vision and accelerating our revenue diversification programme. We continued to undertake a considered and disciplined approach to cost and risk management and looking ahead we will continue with our prudent strategy.
In 2015, we made great strides to focus on improving our capabilities across the businesses and enhancing our core products and service offerings for our customers. Over the year, we adapted to the evolving digital environment by upgrading our online and mobile banking platform and updating our branches with new digital capabilities, as well as widening our social media presence and digital security features. These innovative multi-channel approaches remain key to our strategic ambitions, putting our customers at the heart of everything we do.
As part of our approach to embed specialisation across the Group and develop new financial products and services for our customers, last year FGB launched its Corporate Finance franchise offering a number of Corporate Finance solutions, including M&A and equity capital markets advisory. This year we were proud to execute our first landmark transaction, reflecting significant progress and achievements of our Corporate Finance business since its inception, which will generate an additional revenue stream to our bottom line as we continue to grow this business.
We established a Global Islamic Banking Centre of Excellence, which we expect to grow in 2016 and beyond, as we saw a significant demand in Islamic banking from customers. Our Consumer Banking Group developed a wide range of Shariah-compliant products and services to customers across our international offices, offering expertise from Islamic banking specialists, along with product execution capabilities.
Additionally, FGB continues to strengthen its position as one of the leading banks in the UAE, receiving a number of industry awards in 2015, including “Best Bank in the UAE” and “Best Bank in the Middle East” from The Banker. These achievements clearly demonstrate our continued commitment to foster innovation for all of our customers.
We will continue to support businesses and customers, as they are essential for fostering economic growth and innovation in the UAE. In 2015, FGB became the first bank in the country to facilitate access to a finance package for start-up businesses, providing a unique range of solutions for new companies and local entrepreneurs. We also hosted our third annual investment conference where we gathered wealth relationship managers from across the UAE, providing them with an opportunity to gain insight into the latest global financial market trends and practices as well as future developments and opportunities. We remain deeply committed to our customers here at home. In recognition of our Emirati employees, in 2015, we introduced the Idkhari programme; a savings plan designed exclusively for UAE National employees working within the bank. We also maintained our measured approach to selective regional and international expansion and will continue to focus on strengthening our market position and capabilities to additionally support further entry into new international markets over the coming years.
Our talented and high-performing employees are the driving force behind our success and over the last year we implemented our ‘Employee Value Proposition’ framework designed to develop, nurture and engage employees in alignment with our core values and strategic vision. We remain committed to investing in our people through our FGB Business School, enhancing employee growth through our innovative learning and development programmes and becoming an employer of choice for new talents. As we enter 2016, we are confident that our solid fundamentals are positioning the business with a solid foundation to continue our success story. This would have not been possible without the continuous support of our shareholders and clients, and for their trust in our brand.
Abdulhamid Mohammed Saeed
2015 was another successful year for us, marking 16 consecutive years of consistent asset
growth and increasing profitability for FGB. Our enhanced, well considered strategy has enabled
us to withstand challenging market conditions, which have seen global markets characterised
by apprehension and caution. Our focus on cross-business synergies and revenue diversification
ensured that we were able to face market challenges, and our customer-centric model led us to
In 2015, we continued to invest in and develop our people who are the key drivers behind our operations. At FGB we are proud to have a talented, creative and dedicated team of experts who are continuously working towards growing our business, whilst ensuring that our brand and values are preserved in all that we do.
Overall, it has been a very successful year for FGB, and we are confident in our ability to maintain our outstanding performance in 2016 and beyond.
2015 in Review
At the close of 2015 our net profit amounted to AED 6.01 Billion, representing a 6% increase from
2014. We experienced growth across the business, where the Consumer Banking Group contributed
35% to Group revenues, Wholesale & International Banking group contributed 36% and the Treasury &
Global Markets group 12%. Subsidiaries and associates including Dubai First and Aseel Islamic Finance
generated 8% of FGB’s total revenues, while real estate subsidiaries contributed 9%. The Group’s
international operations provided 5% of revenues in 2015.
FGB is an agile bank highlighted by our customer-centric philosophy, as well as our efficient distribution model and increasing focus on digital channels, which are especially important for us. This is why our Consumer Banking Group has invested in online and mobile banking platforms, adding a range of new features which have improved our customers’ banking experience with us. Keeping customercentricity in mind, the Group continued to create meaningful partnerships with leading entities and to launch innovative products based on consumer needs.
On the Wholesale side, the group participated in a number of key transactions throughout 2015, and continued to diversify and enhance its core business operations, providing a platform for solid performance. Investment in new products, competencies and technology was significant. Our Treasury & Global Markets business saw solid growth through the year as high market volatility led to an increase in demand for risk management solutions, supported by an ability to price and warehouse risk. One of our major milestones in 2015 was the raising of over USD 2 billion in diversified wholesale funding, achieved at competitive pricing, placing FGB in a strong liquidity position in 2016 and beyond.
In 2015, we also hosted the second edition of our highly successful National Housing Loans exhibition, which ran over the course of four days. As the sole manager of Abu Dhabi’s National Housing Loans programme in the UAE, we provided a unique opportunity for visitors to explore the services provided by the bank in this area, and to meet with exhibitors which included contractors, design companies, and other building-related specialists to help them in creating their dream houses. We had over 6,000 visitors and 195 exhibitors, and we are planning to make the event even bigger in its third cycle. Our successes in 2015 did not go unnoticed. We received a range of accolades from industry leaders, including receiving the titles of “Best Bank in the UAE” and “Best Bank in the Middle East” during the 2015 Banker Middle East Industry Awards, “Bank of the Year” by the 2015 Arabian Business Achievement Awards, “Shariah-Compliant Window” by The Banker 2015 Islamic Banker of the Year Awards, “Best Wealth Management in the Middle East Award” and “Best Mortgage and Home Loan Product in the Middle East Award” by the Asian Banker 2015 Middle East and Africa Country Awards, “Project Finance Deal of the Year”, “Structured Finance Deal of the Year” and “Syndicated Loan Deal of the Year” during the 2015 Bonds, Loans & Sukuk Middle East Awards, “SME Bank of the Year” in the 2015 Arabian Business Startup Awards, and “Most Impressive Middle East Borrower Award” during the 2015 Global Capital Bond Market Awards.
Not only that, but we received seven titles during the 2015 Banker Middle East UAE Product Awards, reflecting our innovation and continuously evolving customer-service strategy. The titles were: ’Best Call Centre”, ”Best Credit Card”, ”Best Personal Loan”, ”Best Wealth Management Service/Proposition“, “Best Offshore Wealth Proposition”, ”Best Deposit Account Product” and ”Best Bancassurance Product”. As our business was growing, we completed a milestone initiative for our staff by introducing our ‘Growing Together to Be First’ employer value proposition which sets out the core pillars for FGB and its staff to grow successfully. Such efforts brought recognition as we won the ‘Innovation in Learning and Development’ award and were runner up for the ‘Employer of Year’ at the 2015 Middle East HR Excellence Awards.
The Business Groups
Consumer Banking Group (CBG)
Our Consumer Banking Group delivered a solid performance throughout 2015, returning positive
growth in revenues to AED 3.34 Billion, representing a 6% increase from 2014. CBG also continued to
make great strides in enhancing our digital offering and this year, our Dubai Mall branch became FGB’s
first digitally enhanced branch offering a range of self-service technologies and touch screen, ‘quick
advice’ tables for customers to view products and receive instant feedback. Customers can now receive
information through their mobile phones via QR codes and we recently opened digitally enhanced
branches in Al Ain Mall and Dragon Mart plus extended opening hours at Dubai mall from 10am to
10pm to improve the customer experience.
To close the year, CBG launched its ‘Accelerator’ programme, a banking ecosystem for customer’s everyday banking activities and preferences that bundles FGB products and enables customers to maximise benefits they receive. Supported by an intuitive digital application, customers can at any time simply optimize their choice of product and selected benefits. CBG’s partnership story continued with an FGB-Du co-branded credit card offering significant telco and lifestyle benefits whilst we solidified our relationship with LIC International, offering a FGB LIC International credit card.
The year saw CBG become the first bank in the country to offer UAE small business start-ups a comprehensive financing package for their early development as they build up their core operation. As a proudly local bank, we also remain firmly committed to providing UAE Nationals with the best banking services and products available. We continued to manage the National Housing Loans programme in 2015, in addition to introducing a very attractive new prize structure for our Emirati Al Awwal Islamic Certificate (EAAIC) scheme.
In 2015, our wealth management practice continued to be recognised by our industry and peers and notably we organised our third annual investment conference to share our expertise with wealth relationship managers from across the UAE and FGB, providing them an opportunity to gain insight into the latest global financial market trends, developments and practices.
Wholesale and International Banking Group (WBG)
WBG ended the year recording AED 3.42 billion in revenues, with a net profit of AED 2.51 billion, up 5%
compared to 2014. Total assets recorded a 6% increase as well, to AED 97 billion. The Group continued
to make investments in products and platforms across trade finance and cash management to increase
its share of cross border flows into FGB network countries. We invested in our global operations, to
ensure we can service clients in countries where FGB is present and where we are seeking further
expansion in the future as we evolve to meet clients’ needs, particularly in Asia.
In the local arena, we have also sought organic growth of our operations through improving on products and competencies. We introduced Commercial Banking (CMB) and contracting to complement our existing platform and brought further sector expertise and relevance to our clients in historically high growth segments. We have also continued to invest in technology, as illustrated by the roll out of TI+ back end trade platform and significant ongoing work on FGB Online, our global front end cash management and trade finance platform, which will be officially released in the next eighteen months. The Wholesale Islamic Finance business also continued to expand its footprint and capabilities. The Corporate Finance business successfully advised on a number of transactions including NMC Health’s acquisition of a 51% shareholding in Fakih IVF Group for USD 189 million.
FGB was also associated with other landmark transactions in the UAE and internationally, which has been recognised through various awards such as ‘Syndicated Deal of the Year’ for Aujan Coca-Cola Beverages by Islamic Finance News and ‘Industrial Deal of the Year’, MEA for Jazan ASU by Project Finance International.
Our international operations are now fully integrated into a global client coverage model, enabling us to help UAE clients grow internationally as well as help international clients grow into the Middle-East.
Treasury and Global Markets Group (TG&M)
Our T&GM Group saw strong growth through the year in our core client business as high market
volatility led to an increase in clients requiring risk management solutions, supported by the business’s
ability to price and warehouse risk. By the end of 2015, T&GM contributed AED 1.14 billion to FGB’s
overall revenues with a net profit of AED 784 million. Total assets for T&GM grew to AED 54 billion, an
increase of 12%.
Against a backdrop of liquidity challenges in 2015 in the region, our Group Funding Team continued to successfully build FGB’s reputation as a globally sophisticated capital markets issuer with access to a diverse range of short term and long term funding sources. FGB raised USD 2.2 billion equivalent of senior term funding across six different currencies, in both bond and loan format, putting FGB in a strong liquidity position as we move into 2016. Further diversifying FGB’s funding sources, a Euro Commercial Paper Programme (ECP) programme was established in June, with USD 775 million equivalent outstanding at the end of December. As a result of our funding diversification strategy, FGB was recognised as the ‘Most Impressive Middle East Borrower’ at the 2015 Global Capital Bond Market Awards in London.
The Global Markets Sales team achieved a 37% increase in revenues, realising our fourth consecutive year of increased cross-sell of T&GM solutions. This was achieved through continued strengthening of the FGB brand, close collaboration with our WBG and CBG partners, and further expansion of our product offering and distribution capabilities. The team delivered risk management and investment solutions to more clients in 2015 than ever before, resulting in a 182% increase in derivative deals. The expansion of our product offering into commodities, a focus on establishing closer partnerships with clients, and initiatives to boost cross-sell opportunities, all contributed to making 2015 a successful year of key achievements. Our teams in Singapore and the UAE partnered to deliver improved solutions to clients in Asia Pacific, which will continue to be a key area of focus in 2016.
The sustained growth in our Global Markets Sales team is as a result of the investments made over recent years in our Global Markets platform and the increased ability of the Global Markets Trading & Execution team to price and warehouse risk, which resulted in 126% increase in revenues for our trading and execution team as client flows increased. T&GM’s Proprietary Investments desk ended the year with strong performance and a healthy investments book, reflecting successful reduction of geographic concentration and balanced decisions of risk appetite versus search for yield. In Q3 2015, we achieved a major milestone in T&GM with the implementation of the Murex platform. The move to an integrated, end-to-end platform with sophisticated structuring, pricing and risk monitoring capabilities will result in improved client offering, scalability and internal efficiencies and controls. This important multi-year investment was a key component of the T&GM strategy and will have a lasting impact on the future of the business.
Going into 2016, T&GM is in a strong position to realise the opportunities made possible by strategic investment in infrastructure, people, cross-business synergies and FGB branding. Supported by ongoing investment in 2016, T&GM will continue to add breadth and depth to our platform capabilities and optimise synergies with WBG and CBG to make us the first choice for clients.
Aseel Islamic Finance
Aseel continued to deliver on its promise to cater to the Islamic financing needs of UAE consumers
and corporates, particularly SME and mid-market businesses. In 2015, revenues were up by 22%, to
This was achieved through a range of initiatives, including the formation of a partnership with the UAE’s largest telco, Etisalat, to offer small and medium businesses (SMB) in the UAE, 10GB free business data every month with a subscription to Aseel Platinum Business Cards.
Aseel received two awards from VISA, recognising the company as the first financial organisation to issue a Visa Platinum business credit card in the UAE and MENA region.
In 2015, Dubai First continued to record exceptional performance with an annual revenue growth of 40% (to AED 415Mn) and a net profit growth of 48% (AED 207Mn). In line with FGB Group values and its brand promise of ‘Staying Ahead’, Dubai First embodies the commitment to develop sustainable long term value to all its stakeholders, as well as the environment and community it operates in. This is built upon a solid foundation of sustainable thinking and core values that help Dubai First define and decide how it provides its products and services, how it serves its customers, how its treats its employees and finally how it engages with the community. Dubai First remains committed towards being a responsible corporate citizen of UAE and developing sustainable, long term value for its stakeholders.
In 2015, First Gulf Properties continued to operate in line with its strategy of providing excellent
customer service to both its landlords and its tenants. FGP worked towards ensuring occupancy and
sustainable revenues with proactive facility management to support our objectives.
The business continues to provide shareholders with robust, diverse and sustainable revenue of rental income and capital appreciation. Our strategy for FGB Real Estate, and more particularly Mismak, is to continue to monetise current lands through either development or disposal.
Our team is at the heart of our success and we are committed to enhancing our employees’ capabilities
to enable our business and our people to grow together. Over the past year, FGB has implemented a
framework for its Employee Value Proposition through a series of programmes and initiatives. We also
made notable strides in our Emiratisation strategy.
HR took part in leading career fairs, including Tawdheef, where FGB representatives met with potential recruits and introduced them to the bank, its operations and Emirati-specific initiatives. FGB’s participation this year also entailed a number of workshop sessions on interview techniques and CV development. The bank also recently introduced its Idkhari programme, a savings plan designed exclusively for UAE National employees working within the bank to encourage enrollers to save. It involves employees contributing a percentage of their monthly salary, where they will then be paid out an amount determined by the agreed duration. All Emirati employees in FGB are eligible to participate in Idkhari.
Moving forward, we will continue to expand on our eight Emirati-specific initiatives to attract and retain UAE nationals and to further enhance our Business School offerings.
2015 saw FGIT embark on a three year transformation journey underpinned by the bank’s strategic
themes of ‘customer-centricity’ and a ‘digitally-enabled organisation’. Specifically, the past 12 months
have seen improvements in our customer experience, delivery against core infrastructure as well as
the onboarding of key Intellectual Property and talent. Establishing FGIT as a standalone entity has
delivered numerous benefits to FGB by having a more pro-active focus on efficiencies and capability
building. The entrepreneurial nature of FGIT has also been a major draw card for attracting leadership
Key highlights for 2015 include the launch of a new online and mobile platform for CBG customers, the transformation of FGB branches into next-generation banking centers and the establishment of FGB’s presence on social media, across various platforms.
Realizing that security is of the utmost importance, FGB has introduced an enhanced security feature, SecurePass. This allows customers to easily generate and receive a secure “one-time password”, which is required for login and transactions. Information security at FGB is based on the multiple IT security systems woven together to provide a layered security system. This combines with proactive security intelligence that syncs to generate real time information and allow tracking of any unauthorised activity or potential threat. The system enables us to keep our systems updated to avoid any breach or potential loss. Customer vigilance is an essential part of digital security, and we regularly update our customers with security advice to help safeguard them.
We have started 2016 with strong momentum. The focus throughout this year will be on the continued delivery of strategic initiatives and transformation of the underlying technology landscape to ensure faster time to market for future change. We will also focus on capability uplift – in how technology delivers more, faster, and in a more agile way with our business partners, whilst ensuring that the right levels of governance continue to be applied. FGIT will continue to evolve and refine its delivery in line with the bank’s strategic direction, to ensure ongoing success.
Enterprise Risk Management
2015 has been a challenging year for the banking industry worldwide as well as in the region. These
challenges stemmed from several macroeconomic risk factors including continued reduction in
oil prices, anticipation of rise in interest rates, increase in geo-political instability and manifested
in the form of high volatility in the capital markets and capital flows. This was compounded by
reduced liquidity and increased cost of funds owing to reduction in systemic deposits and credit
deterioration in certain economic sectors. While these had an effect on the income growth rate of
UAE banking industry, the industry, backed by strong capitalisation levels and adequate provisions,
FGB had another robust year of growth complemented by proactive management of diverse risks in an integrated manner. This was made possible by strictly adhering to the basic principles of enterprise risk management; sound fundamentals and strong risk bearing capacity to withstand macroeconomic risks; strategic alignment and enduring partnership with all businesses; integrated corporate and risk governance framework for effective oversight and robust risk infrastructure to manage enterprise wide risks in a holistic manner.
In 2015, we implemented several key risk management initiatives towards further enhancing the established Enterprise Risk Management (ERM) framework across FGB Group. These included: enhancements in the risk appetite framework so as to identify early warning risk indicators across businesses; implementation of group compliance framework; operationalization of AML center for efficient management of liquidity and interest rate risks. Revamp of legal and fraud risk management framework and the enhancement of information security risk framework.
Looking ahead, we will continue to build on our ERM framework, in all areas to address ever changing market dynamics.
In 2015, we saw a volatile economic environment, but despite all challenges we continue to
demonstrate resilience with strong fundamentals and a solid balance sheet. This was in large part
due to our enhanced business model and prudent risk management strategy, but also to the UAE’s
continued focus on diversifying sources of income, away from commodities, which has allowed it to
continue to exhibit growth, despite current challenging conditions.
The UAE’s economic environment in 2016 will continue to capitalize on its key competitive advantages to show further resilience in a volatile global economic backdrop. In addition, local authorities are working on enhancing the UAE model by implementing various regulations to safeguard the country’s economy and maintain its growth, through the implementation of number of new initiatives, in line with IMF recommendations in regards to gradual fiscal consolidation.
Going forward, we will continue to look for opportunities for growth whilst ensuring that we maintain our speed and focus to safeguard our leading market positioning. With a solid business model, strong fundamentals and the right strategy in place, we will focus on enhancing capabilities and synergies across our business groups throughout 2016, as well as diversifying geographically and across product and service lines. We are also continuing to strengthen our channels of distribution through digitisation and investing in our people to support future growth.
We are fully confident that the Bank is in a solid position to capture future opportunities, support sustainable growth and continue to maximise shareholder value.