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Tamweel PJSCMay 2008
C:/Gaurav / IRI Version 7 / 14.05.08 C:/Gaurav / IRI Version 7 / 14.05.08
Investor RelationsConfidentialMay2008
Agenda
Who we are
Our Operating Environment
Our Business
Competitive Environment
Tamweel Stock
2
Investor RelationsConfidentialMay2008
Disclaimer
3
The information herein has been prepared solely for informational purposes, is preliminary in nature and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. These materials and all information herein are highly confidential and may not be taken away from any meetings or be distributed, published, reproduced or disclosed (in whole or in part) without the prior written consent of Tamweel PJSC (“the Company”).
Tamweel PJSC, any of its Director, Executive, Employee, Advisor or any related party, do not take any responsibility for information contained here and any liability, claim or damages will not be entertained. Investor or any legal body relying on the information contained here in, is to conduct its own due diligence and research before making any investment or similar decision.
The information herein is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by the issuer. No representation or warranty, express or implied, can be given with respect to the accuracy, completeness, sufficiency or usefulness of the information, or that any future offer of securities or instruments will conform to the terms hereof. Any investment offer would be made pursuant to a definitive offering memorandum prepared by the issuer (the “Prospectus”) which would contain material information not contained herein and to which prospective investors are referred. In the event of any such offering, these materials and any information herein shall be deemed superseded and replaced in their entirety by such Prospectus.
In addition, the information contains projections and forward-looking statements that reflect the company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. Changes to the assumptions made in this analysis may have a material impact on the returns or results shown by way of example herein. No representation is made that any returns or results indicated will be achieved or that all assumptions in achieving these returns or results have been considered or stated. Past performance is not necessarily indicative of future results. There can be no assurance that future results will not be materially different from those described herein. Price and availability are subject to change without notice. Tamweel PJSC disclaim any and all liability relating to these materials, including without limitation any express or implied representations or warranties for, statements contained in, and omissions from, the information herein.
Additional information is available upon request. In addition, please note that these materials have been issued by Tamweel PJSC which is authorized and regulated by the Emirates Securities & Commodities Authority.
This presentation is strictly not to be distributed without the explicit consent of Tamweel PJSC under any circumstance.
Investor RelationsConfidentialMay2008 4
Tamweel – Who we are
Tamweel is the leading provider of Shari’a compliant mortgage finance in the U.A.E.
Tamweel’s market share ~ 32%
Investor in local real estate – leveraging from dominant position in end user financing
Tamweel has strong share holders where the Government of Dubai holds approximately 38% shares directly or indirectly
Tamweel is the highest rated non banking financial institution in the region- A/F1 by Fitch and an A3/P2 by Moody’s
Top Notch brand equity of the company regionally
Investor RelationsConfidentialMay2008 5
Ownership
JV between Dubai world
Group & DIB Group
Capital
Paid up capital of AED 300 MM
Commercial
1 branch in Dubai
Assets
> AED 1.23 Bn
Net Profit
AED 18MM after 10 mths
Tamweel – Historical Timeline
2004
2005
Ownership
No Change
Capital
Raised to AED 450 MM through a rights issue of AED 150 MM
Commercial
2nd branch in Dubai
Assets
> AED 3.5 Bn
Net Profit
AED 43MM
2006
Ownership
Company converted to PJSC form
Capital
Funding raised to AED 1Bn through an IPO of AED 550MM. Issue oversubscribed 475
times. Listed on DFM
Commercial
Opening of 3rd and 4th branches in Sharjah & Abu Dhabi resp.
Assets
>AED 5.1 Bn
Net Profit
AED 153 MM (excl AED 700 MM from float on IPO
Ownership
No change
Capital
No changeDebt
USD 210MM RMBS
Commercial
Expansion into Saudi Arabia & Egypt
Assets
>AED 10 Bn
Net Profit
AED 451 MM
2007
2008
Ownership
No change
Capital
No change
Debt
USD 300MM convertible Sukuk.
USD 235MM syndication
Commercial
Launched 48 hour approval service
Assets
AED 11.5 Bn in Q1 2008
Net Profit
AED 176 MM in Q1 2008
Note: 3.675 Aed = 1USDNote: 3.675 Aed = 1USD
Investor RelationsConfidentialMay2008 6
Tamweel – The Franchise Value
Tamweel has established itself as a strong and recognised brand:– Dominant market share in the UAE– High brand and franchise salience and recognition– Well-recognised as the “Home of Home Finance”
Product innovation and industry firsts: – First Shari’a-compliant real estate financing company – First company to offer a pre-approval service– First Company to conduct a true sale rated Islamic RMBS securitization deal in the
region (USD 210M in 2007)– First Financial institution to be licensed to act as Escrow account agent by Dubai’s
Lands Department– First ever sub libor convertible sukuk in the region– First Company to introduce a TAT with money back guarantee (48 Hours)
Management Team and People focus– Experienced management team members– First finance company to introduce Employee Stock Option Plan (ESOP)
Investor RelationsConfidentialMay2008 7
Tamweel – Shareholding
Dubai Government ownership in excess of 38% Number of public shareholders in excess 65,000 shareholders Free Float of AED 550M Foreign Ownership up to AED 400M (40% of Capital of AED 1B) RIC Code: TAML.DU Bloomberg Code: TAMWEEL UH ISIN Code: AE000A0KFPL7 Market Capitalization in excess of AED 7.7 Billion (USD 2.0 Billion)
(Number of shares held # / Total shares #)
Total Shareholders Tamweel Ownership
100%
Government of Dubai Ruler of Dubai
Dubai IslamicBank
Dubai World
Istithmar DubaiHolding
100%
30% 100%
Tamweel
20% 22% 10%
Investor RelationsConfidentialMay2008 8
Tamweel – Awards
39th most admired company in the GCC
Considered the 39th most admired company in the GCC
Considered the 4th most admired amongst financial institutions in the GCC
Awarded the Super-brand status in 2007
Awarded the ‘Best Islamic Mortgage Product’ in 2008 Awarded the ‘Deal of the year – Tamweel Residential ABS’ in 2008
Investor RelationsConfidentialMay2008
Agenda
Who we are
Our Operating Environment
Our Business
Competitive Environment
Tamweel Stock
9
Investor RelationsConfidentialMay2008 10
Macro Economic Overview – UAE
The UAE is the second largest economy among the Gulf Co-operation Council (GCC)
The UAE’s GDP per capita accomplished an outstanding increase of 72%, from USD 24,945 to USD 42,934
Non-oil sectors have contributed to over 60% of the GDP over the last four years, signalling successful income diversification and lower dependence on oil
The strong economic performance of the UAE has been recognized in its significantly improved credit rating
The 2007 UAE’s GDP per capita was very close to the US and UK figures
GDP per capita (current prices) - USD
Source: IMF
Investor RelationsConfidentialMay2008 11
Macro – Economic Overview
UAE GDP (current prices) AED Bn
CAGR 11%
CAGR 16%
Actual Forecast
Growing economy projected at CAGR of 11.32% for the next 5 years
The 2007 UAE GDP was equal to AED 707 Billion
Dubai’s GDP grew 10.5% to AED 168B in 2006, where oil accounted for only 5% of the total
Ongoing infrastructure investments include the AED 15.5B Dubai Metro project and AED 6B road expansion projects
Passenger traffic through Dubai International Airport has increased 260% over the last ten years with 60mn passengers expected by 2010
Total hotel guests in Dubai increased to 5.9M with occupancy at 89% for Q1 2007 alone, signaling a substantial growth in tourism
Under the Dubai “Strategic Plan”, 882,000 additional workers are expected to join the workforce by 2015
UAE population estimated at 4.5 Mn in 2007 & forecast to grow at CAGR 5.6% to 6 Mn by 2012
Source: Ministry of Planning, UAE Govt
Investor RelationsConfidentialMay2008
UAE GDP – sector-wise
UAE strategy is to diversify away from oil sector
The UAE diversification strategy is 2 fold :
Vertical diversification through increased investments in the tourism, manufacturing, construction, and service sectors
Horizontal diversification by increasing the production of refined and semi-refined products
Real estate and construction sectors are
expected to be the new growth drivers in the UAE economySource: Gulf News, UAE ministry of Economy, Central Bank of the UAE, NCB Capital, UAE 2008 year book
2010 GDP 2006 GDP
12
Investor RelationsConfidentialMay2008
GCC – Mortgage Overview
Residential GrowthUAE -72%Qatar – 35%Oman – 28%Bahrain – 83%KSA – 10%Kuwait – 28%
85% growth in GCC mortgages over last 3 yrs
75% growth in expatriate ownership in UAE, Bahrain, Oman & Qatar due to recent ownership law changes
80% of the market captured by Islamic products
Source: GIH, Government Website, Gulf News
13
Investor RelationsConfidentialMay2008 14
Industry Outlook – Mortgage Market Potential
The emergence of Dubai’s residential mortgage market is fairly recent; nevertheless, it has been expanding at a high rate driven by a growing real estate market
The volume of facilities extended in Dubai has almost quadrupled between 2004 and 2007 to reach approximately AED 31B
The overall UAE mortgage market is expected to grow to 9% of GDP by 2010
The variable rates of return payable by borrowers under real estate financings have been relatively stable at around 7 to 9%, ensuring stable revenues for mortgage providers
Currently less than 30% of real estate transactions are mortgage financed
Global Mortgage Debt to GDP Ratios (2005)
Source: European Mortgage Federation, November 2006
Opportunity
3%
Mortgage Debt as %of GDP-UAE
Source : Cheuvreux Report
AED 30 Bn
AED 110 Bn
Investor RelationsConfidentialMay2008
Industry Outlook – Legal Framework
HOME OWNERS ASSOCIATION
LONG TERM LEASE CONTRACT
SECURITIZATION LAW
Tamweel firmly believes that the legal framework in the UAE is continuously strengthening
Evidence of the progress lies in the substantial legal advancements made in the last 2-3 years:
15
Title Deeds
Investor RelationsConfidentialMay2008
Agenda
Who we are
Our Operating Environment
Our Business
Competitive Environment
Tamweel Stock
16
Investor RelationsConfidentialMay2008 17
Robust framework guiding the business – The 4 PILLARS
Multiple sales channels
Product innovation
Wide networks and partnerships
Adequately capitalized
Securitization
Sukuk Programs
CID
Bilateral facilities
Sound and stable core banking platform
Workflow management
Servicing capability
Operational risk management
Risk adjusted pricing model
Rated assets & portfolio management
Credit scoring
Credit risk framework
Support: Governance, Strategic planning, Scalable Services
Values: Team work, Reliability, Caring professionalism, Inclusive Islamic, Preserving confidentiality
Origination Underwriting Servicing Funding
VisionTo be the most admired leader in the financial industry regionally
Investor RelationsConfidentialMay2008
Key financial indicators reflect Tamweel’s position as market leader
Market Share (2007)
Source : Company Financials
Source : Shuaa Report
Net profitYear USD MM
2004 5
2005 11
2006 42
2007 123
2008(Q1) 48
Total AssetsYear USD MM
2004 119
2005 432
2006 886
2007 2,313
2008(Q1) 2,609
18
Investor RelationsConfidentialMay2008 19
Our Mortgage Portfolio
Diversified Customer Nationality Mix Salaried vs. Self-employed (2007)
Property Type (2007) Government Backed Developers (62% of portfolio-2008)
Investor RelationsConfidentialMay2008 20
Our Portfolio – minimum credit and market risk
Attractive LTV at origination and at market Very Low and decreasing delinquency pattern (2008)
• Reduced risk on Tamweel balance sheet due to increase in property prices
• Increase in customer equity and property prices provides sufficient cushion (50%) to absorb losses
• Reduced risk on Tamweel balance sheet due to increase in property prices
• Increase in customer equity and property prices provides sufficient cushion (50%) to absorb losses
Investor RelationsConfidentialMay2008 21
Our Corporate Governance Framework
Regulated By: – Central Bank of UAE– Emirates Securities & Commodities Authority
Adoption of Best Practices:– Dubai Financial Market (DFM)– Dubai Government – Audit Department– External Audit (Ernst & Young)– Sharia Supervisory Board
Management Committees:– Executive Committee
– Audit & Risk Management Committee
– Credit Committee
– Investments Committee
– Asset Liability Committee
– Remuneration Committee
Investor RelationsConfidentialMay2008
Our Funding Diversification Strategy
Bilateral
Bilateral
Bilateral
Securitisation
Syndication
Sukuk
Corporate deposits
Corporate deposits
Corporate deposits
Securitisation
Equity & retained earningsEquity & retained
earnings
Equity & retained earnings
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 H1 -08
• Funding strategy is diversify, deeper and cost effective.
• Lengthening the duration of funding in line with assets book duration.
• Funding strategy is diversify, deeper and cost effective.
• Lengthening the duration of funding in line with assets book duration.
22
Investor RelationsConfidentialMay2008
Balance Sheet Position
AED BillionAED Billion
3.23.23.93.9 4.24.2
7.27.2
8.58.59.69.6
• Total assets have grown by 300% over past 2 yrs• Total assets have grown by 300% over past 2 yrs
23
Investor RelationsConfidentialMay2008
Outlook for next 3 yrs – High and Aiming Higher
Growth fuelled by macro economic factors– UAE growing at CAGR ~ 9 – 10%– Rising regional liquidity led by oil price hike– Growing international interest in UAE property market
Enter new segment of Commercial property financing (Retails and office spaces etc.) & accelerate Abu Dhabi business in UAE
Regional expansion to new markets in next 3 years – Saudi Arabia & Egypt in 2008– Aim for presence in 5 countries by 2010
Increase focus on Fee income from core and subsidiary business ( Mortgage, Escrow)
Diversification of funding base will help improve ROE & ROA, and minimize tenor mismatch
Moving up the value chain and leveraging the leader position of mortgage business to execute property transaction to enhance profitability
Customer focused strategy – 48 Hour campaign
24
Investor RelationsConfidentialMay2008
Agenda
Who we are
Our Operating Environment
Our Business
Competitive Environment
Tamweel Stock
25
Investor RelationsConfidentialMay2008
Two main mortgage finance companies account for 56% of market share
23 commercial / Islamic banks account for balance 44%
Funding, better distribution channels & bigger customer base is the strength for the banks
Greater business focus, wider product range & better developer tie-ups helps the mortgage companies derive competitive advantage
Demand for Islamic products increasing amongst all population segments
Tamweel’s size and key financial indicators gives us an edge over not only the finance companies, but also many banks
The Mortgage Landscape
26
Investor RelationsConfidentialMay2008
Competitors key comparisons
AED MillionAED MillionAED MillionAED Million
27
Source: Company FinancialSource: Company Financial
Investor RelationsConfidentialMay2008
Competitors key comparisons
28
Source: Company FinancialSource: Company Financial
Investor RelationsConfidentialMay2008
Tamweel vs. key competitors rankingTamweel vs. key competitors ranking
Rank Financial Institution 2007 Total Assets (AED MM)
1 National Bank of Abu Dhabi 139,431
2 Abu Dhabi Commercial Banking 106,214
3 Dubai Islamic Bank 84,300
4 First Gulf Bank 73,198
5 Union National Bank 55,457
6 Abu Dhabi Islamic Bank 44,042
7 Commercial Bank of Dubai 30,436
8 National Bank of Fujairah 12,293
9 National Bank of Ras Al Khaimah 10,974
10 Amlak 9,463*
11 Tamweel 8,514
12 National Bank of Umm Al-Quwain 8,426
13 Invest Bank 8,248
14 United Arab Bank 6,185
15 Gulf Finance House 2,245
16 Finance House 2,160
Source: GN Financial Review magazine (* Figures corrected)Source: GN Financial Review magazine (* Figures corrected)
Tamweel climbing the ladder year on year, with
focus on its core business “Mortgage”. Tamweel is well
positioned amongst the multi product regional banks
and financial institution.
Tamweel climbing the ladder year on year, with
focus on its core business “Mortgage”. Tamweel is well
positioned amongst the multi product regional banks
and financial institution.
Investor RelationsConfidentialMay2008
Agenda
Who we are
Our Operating Environment
Our Business
Competitive Environment
Tamweel Stock
30
Investor RelationsConfidentialMay2008
Our EPS growth trendOur EPS growth trend
AED per shareAED per share
• Consistently high growth rate in EPS expected to continue • Consistently high growth rate in EPS expected to continue
31
Investor RelationsConfidentialMay2008
Key Stock IndicatorsKey Stock Indicators
Current Market Price
AED 7.95 ( 08 May 2008)
AED 6.80 ( 31st March 2008)
EPS 0.71 (Annualized for 31st March 2008 earnings)
PE 9.6X (As on 31st March 2008)
Market Capitalization
AED 7.95 Bn (As on 08 May 2008)
AED 6.80 Bn ( As on 31st March 2008)
Foreign Ownership40% Limit
13.57% O/s ( as on 07 May 2008)
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Investor RelationsConfidentialMay2008 33
About Tamweel – Available Readings
Research Notes
Shuaa Capital EFG Hermes Goldman Sachs
Reports
Fitch Ratings Moody’s Investor Services
Investor RelationsConfidentialMay2008
THANK YOU
Name Title Contact E-mail
Wasim Saifi CEO +97150 4640735 [email protected]
Gaurav Agarwal CFSO +91750 4524483 [email protected]
For further information:
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