MANAGEMENT DISCUSSION & ANALYSIS
H1 2022
www.uab.aeKey Highlights – H1’2022
UAB Reports Financial Results for H1 2022
UAB reported H1 2022 Net Profit ofAED 83.3 Mn as compared to Net Profit of AED 26.9 MninH1 2021 (↑ 209%), simultaneously
Q2’2022 Net profit of AED 52.9 Mnhas recorded a increase of 74%when compared to net profit recorded in Q1 2022 of AED 30.4 Mn
YoY Income higher by 3%
Operating Profit higher
from 236m in H1 2021 to 243m in H1
by 9% (YoY)
2022
from 117m in H1 2021 to 127m in H1 2022
52% YoY reduction in
3% YoY Reduction in Operating
Provisions
Expenses
Cost of Risk reduced from 2.1% in H1’21
With ongoing focus to rationalize costs
to 1.1% in H1’22, also reduced from FY 21
ratio of 1.6%
Adequate Liquidity profile
Maintained
CAR at 13.2%
(ASR 83%, ELAR 15%)
CET1 at 12.0%
Above currently applicable regulatory
Loan : Deposit Ratio
requirements
Maintained at 80%
2Management Discussion & Analysis – H1 2022
Financial Performance Summary
United Arab Bank P.J.S.C ("UAB" or “the Bank”) announces its Financial Results for the half year ending 30th Jun 2022.
Strong performance is evidenced across the period with the Bank reporting a Net Profit of AED 83.3m for H1 2022
compared to a Net Profit of AED 26.9m in H1 2021, similarly Net profit for Q2 2022 has increased by 74% in comparison
to Q1 2022 as the successful execution of the turnaround strategy has paved the way for a return to profitability with UAB
continuing to strengthen its core businesses; streamline the cost base; and maintain key banking fundamentals.
UAB’s financial performance was aided by a significant progress within the ‘core’ businesses recording a 3% YoY uplift in
Total Operating Income, whilst Operating Expenses continue to be robustly managed and recorded a reduction of 3% YoY.
The Balance sheet has been significantly strengthened with a focus on asset quality which resulted in a 52% YoY reduction
in Net Impairment Loss compared to H1 2021. Cost of Risk reduced from 2.1% in H1 2021 to 1.1% in H1 2022.
Provision coverage (including collateral) has improved to 132% whereas NPL ratio has been reduced to 11%
These positive results provide tangible evidence that the Bank’s low risk and efficient UAE focused business model is
appropriate and our turnaround strategy is delivering positive results.
The Bank’s distribution network comprises of 6 full fledged commercial branches and 17 ATMs providing full banking
services to our customers.
Moody's Rating Fitch Rating
Bank Deposits-Long Term Ba1 Long Term IDR BBB+
Outlook Stable Outlook Stable
3Financial Performance – H1 2022
AED millions
2022-Actuals 2021 -Actuals Variance
Income Statement H1'22 Q2 Q1 FY'21 Q4 Q3 H1'21 Q2 Q1 QoQ% YoY%
Net Interest Income 140.9 74.0 66.9 277.8 62.8 71.7 143.3 79.1 64.1 11% -2%
Non-Interest Income 101.8 51.8 50.0 171.8 50.3 28.4 93.1 24.9 68.2 4% 9%
Total Operating Income 242.7 125.9 116.9 449.6 113.1 100.2 236.4 104.0 132.3 8% 3%
Operating Expenses (116.0) (57.6) (58.5) (243.7) (63.4) (60.6) (119.7) (60.1) (59.6) -2% -3%
Profit before Impairment Loss 126.7 68.3 58.4 205.9 49.7 39.6 116.6 43.9 72.7 17% 9%
Net Impairment Loss (43.4) (15.4) (28.0) (135.7) (24.2) (21.8) (89.7) (27.2) (62.5) -45% -52%
Net Profit 83.3 52.9 30.4 70.2 25.5 17.8 26.9 16.7 10.2 74% 209%
2022- Actuals 2021- Actuals Variance
Balance Sheet Q2 Q1 Q4 Q3 Q2 Q1 QoQ% YoY%
Loans and Advances 8,374 7,884 8,213 8,035 8,035 8,501 6% 4%
Investment Securities 3,425 3,808 3,530 3,582 3,402 3,299 -10% 1%
Other Assets 2,949 2,328 3,436 2,649 3,112 2,620 27% -5%
Total Assets 14,748 14,021 15,180 14,267 14,549 14,419 5% 1%
Customer Deposits 10,517 10,120 10,406 10,328 10,639 10,839 4% -1%
Due to Banks 1,911 1,582 2,411 1,702 1,544 1,373 21% 24%
Other Liabilities 919 818 851 737 869 772 12% 6%
Total Liabilities 13,347 12,520 13,668 12,768 13,052 12,984 7% 2%
Shareholders' Equity 1,402 1,501 1,512 1,499 1,497 1,435 -7% -6%
Total Liabilities & Shareholders'
Funds 14,748 14,021 15,180 14,267 14,549 14,419 5% 1%Key Ratios – H1 2022
Key Ratios 2022 2021 Variance
Q2 Q1 Q4 Q3 Q2 Q1 QoQ% YoY%
Regulatory
Capital Adequacy 13.2% 14.3% 13.8% 13.6% 13.4% 14.2% -1.1% -0.2%
Tier 1 12.0% 13.1% 12.6% 12.5% 12.3% 13.0% -1.1% -0.3%
CET 1 12.0% 13.1% 12.6% 12.5% 12.3% 13.0% -1.1% -0.3%
Advances to Stable Resources 82.8% 80% 81% 77% 76% 79% 2% 7%
Eligible Liquid Assets 15% 16% 19% 15% 17% 15% -1% -2%
Performance
Cost : Income Ratio 46% 50% 54% 54% 51% 45% -4% -5%
NPL's : Gross Loans 11.0% 12.4% 12.6% 15.4% 16.7% 12.2% -1.4% -5.8%
Provision Coverage 79% 73% 71% 82% 82% 105% 6% -3%
Provision Coverage (Including Collaterals) 132% 126% 122% 121% 99% 131% 6% 34%
Loans : Deposits Ratio 80% 78% 79% 78% 76% 78% 2% 4%
Return on Average Equity 11.5% 8.2% 4.7% 4.1% 3.7% 2.9% 3.3% 7.8%
Return on Average Assets 1.1% 0.8% 0.5% 0.4% 0.4% 0.3% 0.3% 0.8%
Cost of Risk 1.1% 1.4% 1.6% 1.7% 2.1% 2.9% -0.4% -1.1%
CASA % 31% 30% 30% 27% 29% 27% 1% 2%
5Income Statement Review
Total Income for H1’
H1 2021 Total Income H1 2022
2022 was AED 243m,
Increased 8%quarter-
on-quarter & 3%(YoY)
39% 42%
58%
61%
Net Interest Income Non Interest Income Net Interest Income Non Interest Income
NIM %
The NIMshave
2.42% increased in Q2’22 as
2.19% 2.13% the bank benefits
1.92%
from the higher
interest rate
environment
FY2020 FY 2021 Q1-22 Q2-22
6Income Statement Review (cont.)
Operating Expenses Provision Charge (AEDm)
(AEDm)
90
(52%)
120 (3%)
116
43
H1 '21 H1 '22
H1 '21 H1 '22
OperatingExpensesforH12022wereAED 116m,representing3%reductionagainstH12021,astheBankcontinuestorationalizeits
cost base through optimization of staff costs and avoiding non essential general and administrative expenditure and branch
rationalization.
Net Impairment Lossdropped (52%) vs. H1 2021on a total portfolio basis, as the bank focuses on higher quality assets and on its
remediation efforts and recoveries.
7Balance Sheet Review
Total Funding
Dec-21 Jun-22
10% 10%
6% 6%
16% 13%
69%
71%
Customer Deposits Due to Banks Other Liabilities Equity Customer Deposits Due to Banks Other Liabilities Equity
Customer Depositshave and will continue to represent the Bank’s key source of funds contributing 71% of total funding
compared to 69% in Dec’21.
CASADeposits continue to grow and are now 31% of total deposits which is higher than Dec’21, as the Bank continues to
deploy various initiatives to efficiently manage the cost of funds.
8Liquidity Metrics and Capital Ratios
LOANS:DEPOSITS RATIO ADVANCES TO STABLE CAPITAL ADEQUACY RATIO
RESOURCES RATIO
CB UAE threshold 13.8%
under TESS
(110%) 13.2%
82.8%
79% 80% 80.7%
Dec-21 Jun-22 Dec-21 Jun-22 Dec-21 Jun-22
Y
N
D
I
N
G
U
I
D
I
T
P
I
T
A
L
U Q A
F NOCANS-ACO:TROET PAOL RDTEFPOOLSIOIT S
L
I ELIGIBLE LIQUID C
RISK WEIGHTED ASSETS
(AEDm) ASSETS RATIO
YoY -56% (AEDm)
19.1%
1
31% 11,924 11,684
30%
15.3%
CB UAE threshold
under TESS
(7%)
Dec-21 Jun-22 Dec-21 Jun-22
Dec-21 Jun-22
Loan : Deposit Ratio of 80% Satisfactory Liquidity base Overall Capital adequacy of 13.2%
underpins a robust liquidity profile, substantiated by both ASR / ELAR position with a Common Equity Tier1
whilst CASAcompositionat 31% Ratios managed well above CB (CET1) ratio of 12.0%, ahead of
supports reduction in cost of funds UAE thresholds currently applicable regulatory
requirements
9Asset Quality
NPL : GROSS LOANS
COVERAGE RATIOS
132%
12.6%
122%
11.0%
Dec-21 Jun-22 Dec-21 Jun-22
UABcontinueswithitsdecisiveandprudentprovisioningapproach,andtoproactivelyrecognizeproblemloanswhichhasresulted
in NPL ratio of 11.0%in Jun 2022 comparedto 12.6%in Dec2021.The Provision Coverage ratio (including collaterals)increased to
132%asatJun2022comparedto122%inDec2021
10

Sentiment: neutral