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National Bank of Canada INTERNATIONAL DEVELOPMENT INVESTOR DAY September 16, 2016 1 September 16, 2016 INTERNATIONAL DEVELOPMENT INVESTOR DAY 1 Caution Regarding Forward-looking Statements From time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Outlook for National Bank and the Major Economic Trends sections of the 2015 Annual Report, in other filings with Canadian securities regulators, and in other communications, for the purpose of describing the economic environment in which the Bank will operate during fiscal 2016 and the objectives it hopes to achieve for that period. These forward-looking statements are made in accordance with current securities legislation in Canada and the United States. They include, among others, statements with respect to the economy—particularly the Canadian and U.S. economies—market changes, observations regarding the Bank’s objectives and its strategies for achieving them, Bank-projected financial returns and certain risks faced by the Bank. These forward-looking statements are typically identified by future or conditional verbs or words such as “outlook,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” and similar terms and expressions. By their very nature, such forward-looking statements require assumptions to be made and involve inherent risks and uncertainties, both general and specific. Assumptions about the performance of the Canadian and U.S. economies in 2016 and how that will affect the Bank’s business are among the main factors considered in setting the Bank’s strategic priorities and objectives and in determining its financial targets, including provisions for credit losses. In determining its expectations for economic growth, both broadly and in the financial services sector in particular, the Bank primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies. There is a strong possibility that express or implied projections contained in these forward-looking statements will not materialize or will not be accurate. The Bank recommends that readers not place undue reliance on these statements, as a number of factors, many of which are beyond the Bank’s control, could cause actual future results, conditions, actions or events to differ significantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include credit risk, market risk, liquidity and funding risk, operational risk, regulatory compliance risk, reputation risk, strategic risk and environmental risk (all of which are described in more detail in the Risk Management section beginning on page 55 of the 2015 Annual Report), the general economic environment and financial market conditions in Canada, the United States and certain other countries in which the Bank conducts business, including regulatory changes affecting the Bank’s business, capital and liquidity; changes in the accounting policies the Bank uses to report its financial condition, including uncertainties associated with assumptions and critical accounting estimates; tax laws in the countries in which the Bank operates, primarily Canada and the United States (including the U.S. Foreign Account Tax Compliance Act (FATCA)); changes to capital and liquidity guidelines and to the manner in which they are to be presented and interpreted; changes to the credit ratings assigned to the Bank; and potential disruptions to the Bank’s information technology systems, including evolving cyber attack risk. The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management section of the 2015 Annual Report. Investors and others who rely on the Bank’s forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf. The forward-looking information contained in this document is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes. 2
Transcript of ...anal Bank anaa INTERNATIONAL DEVELOPMENT INVESTOR DAY 16 2016 4 0+ -$*- -!*-( ) Q /0-) *),0$ /4 A...
National Bank of CanadaINTERNATIONAL DEVELOPMENT INVESTOR DAY
September 16, 2016
1
September 16, 2016
INTERNATIONAL DEVELOPMENT INVESTOR DAY
1
CautionRegardingForward-lookingStatementsFrom time to time, the Bank makes written and oral forward-looking statements, such as those contained in the Outlook for National Bank and the Major Economic Trends sections of the2015 Annual Report, in other filings with Canadian securities regulators, and in other communications, for the purpose of describing the economic environment in which the Bank will operateduring fiscal 2016 and the objectives it hopes to achieve for that period. These forward-looking statements are made in accordance with current securities legislation in Canada and the UnitedStates. They include, among others, statements with respect to the economy—particularly the Canadian and U.S. economies—market changes, observations regarding the Bank’s objectivesand its strategies for achieving them, Bank-projected financial returns and certain risks faced by the Bank. These forward-looking statements are typically identified by future or conditionalverbs or words such as “outlook,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” and similar terms and expressions.
By their very nature, such forward-looking statements require assumptions to be made and involve inherent risks and uncertainties, both general and specific. Assumptions about theperformance of the Canadian and U.S. economies in 2016 and how that will affect the Bank’s business are among the main factors considered in setting the Bank’s strategic priorities andobjectives and in determining its financial targets, including provisions for credit losses. In determining its expectations for economic growth, both broadly and in the financial services sectorin particular, the Bank primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies.
There is a strong possibility that express or implied projections contained in these forward-looking statements will not materialize or will not be accurate. The Bank recommends that readersnot place undue reliance on these statements, as a number of factors, many of which are beyond the Bank’s control, could cause actual future results, conditions, actions or events to differsignificantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include credit risk, market risk, liquidity and funding risk,operational risk, regulatory compliance risk, reputation risk, strategic risk and environmental risk (all of which are described in more detail in the Risk Management section beginning on page55 of the 2015 Annual Report), the general economic environment and financial market conditions in Canada, the United States and certain other countries in which the Bank conductsbusiness, including regulatory changes affecting the Bank’s business, capital and liquidity; changes in the accounting policies the Bank uses to report its financial condition, includinguncertainties associated with assumptions and critical accounting estimates; tax laws in the countries in which the Bank operates, primarily Canada and the United States (including the U.S.Foreign Account Tax Compliance Act (FATCA)); changes to capital and liquidity guidelines and to the manner in which they are to be presented and interpreted; changes to the credit ratingsassigned to the Bank; and potential disruptions to the Bank’s information technology systems, including evolving cyber attack risk.
The foregoing list of risk factors is not exhaustive. Additional information about these factors can be found in the Risk Management section of the 2015 Annual Report. Investors and otherswho rely on the Bank’s forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Except as required by law,the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.
The forward-looking information contained in this document is presented for the purpose of interpreting the information contained herein and may not be appropriate for other purposes.
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National Bank of CanadaINTERNATIONAL DEVELOPMENT INVESTOR DAYSeptember 16, 2016
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Today’sAgenda
InternationalStrategyOverviewLouisVachon,PresidentandChiefExecutiveOfficer
EmergingMarketsDevelopmentFrameworkYvesJacquot,SeniorVice-PresidentDominicJacques,DeputyVice-PresidentInternationalDevelopment(EmergingMarkets)
ABABankAskhat Azhikhanov,ChiefExecutiveOfficerMadi Akmambet,ExecutiveDirector
EmergingMarketsSummaryKarenLeggett,ChiefMarketingOfficerandExecutiveVice-PresidentCorporateDevelopment
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Q&APanel
Break
CredigyBrettM.SamskyChiefExecutiveOfficer
Q&APanel
ClosingRemarksLouisVachon
Luncheon
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Today’sObjectives
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Presentourinternationalstrategy,oversightframeworkandthepathforward
IntroduceourEmergingMarketsdevelopmentteam,andkeyABABankandCredigy executives
Provideanin-depthlookintoABABankandCredigy,ourtwomajority-ownedinternationaloperations
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INTERNATIONALSTRATEGYOVERVIEW
LOUISVACHONPRESIDENTANDCHIEFEXECUTIVEOFFICER
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SuperiorROEPerformance
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ReturnonEquity (ROE) excludesspecifieditems.CanadianpeermedianincludesBMO,BNS,CM,RY andTD.Source:ThomsonReuters
2011 2012 2013 2014 20169MonthsYTD
20.9%
18.0%
20.3%
16.9%
18.9%
16.5%
18.5%
16.0%17.6%
14.7%
2015
RETURNONEQUITYNationalBankCanadianPeers
14.9% 14.2%
4-YearCAGR+5.5%
ConsistentPerformanceOverTime
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2011 2012 2013 2014 2015 20169MonthsYTD
4,8335,075 5,230
5,6385,982
*Excludesspecifieditems.
TOTALREVENUES($M)*
4-YearCAGR+7%
2011 2012 2013 2014 2015 20169MonthsYTD
4.043.59
3.85
4.484.70
EARNINGSPERSHARE($)*
4,647
3.11
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SuccessfulCanadianSuper-RegionalBank
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#1bankinQuebecforconsumersandbusinessesAccelerateddigitalstrategy/strengthenedomni-channelcapabilityLeveragingopportunitiesforefficiencygains
PersonalandCommercialBanking
WealthManagement
FinancialMarkets
LeadingwealthfranchiseinQuebecGrowthmomentumacrossCanadawith41%ofrevenuesoutsideQuebecDifferentiatedopenarchitectureplatform
Strongnationalfranchisewith73%ofrevenuesoutsideQuebec#1debtunderwriterinCanada#1nationallyininfrastructurefinance
SolidandConsistentDividendGrowth
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2005 2006 2007 2008 2009 2010 2011 2012 2013 20152014
$0.86$0.98
$1.14$1.24 $1.24 $1.24
$1.37
$1.54$1.70
$2.04$1.88
10-YearCAGR+9% Solidand
consistentdividendgrowthwith10-yearCAGR
of9%
DIVIDENDSPERCOMMONSHARE
$1.63
20169MonthsYTD
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FocusedandDisciplinedInternationalStrategy
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ComplementCanadiangrowthwithadisciplinedinternationalstrategythatdelivershigherreturns
Focusontwointernationalgrowthpillars› Investinselectedhigh-growth,underbankedemergingmarkets› LeverageCredigy’s adaptablebusinessmodel
Buildaninternationalbusinessthatwillgenerate10%+ofNIBT by2020andanincreasingproportionofprofitgrowth
Enhanceourstrategicoptionsforcapitaldeployment
EmergingandDevelopingMarketsAreLeadingGDPGrowth
NBFEconomicsandStrategy(dataviaIMFWEO)
AdvancedEconomies
World
Emergingand
Developing
Forecast
GDPatconstantprices,indexedto2007
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InternationalGrowthPillars
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Simplebankinginahigh-growth,unbankeddomesticmarket› Super-regionalopportunities
Superiorgrowthandreturnprofile› NBCtotalequityinvestmenttodate:CA$186M*
› Netincome2016E(ABAlevel):US$22M› NetincomeCAGR2011-2016:62%
› ROE2016E:20.1%
*ExcludesCA$32millionofsubordinateddebt
High-performingconsumerfinancevertical› Abletothriveindifferentassetclasses,geographiesandmarketenvironments
Superiorgrowthandreturnprofile› NBCtotalequityinvestmenttodate:CA$77M› Netincome2016E(afterminorityinterest):CA$74M
› NetincomeCAGR2011-2016E:39%› RAROC2016E:32%
EmergingMarkets
EmergingMarketsInvestments
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WestandCentralAfricanEconomicandMonetaryUnions
ASEANEconomicZone
NSIAAssurances&Banque (24%)
IvoryCoast
ABABank(90%)Cambodia
RepublicofMauritius
AfrAsia (17.5%)
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SoundandBalancedCapitalManagementApproach
TargetCET1ratioof10%bytheendofQ1-2017
InvesttocaptureefficiencygainsandstimulatebusinessgrowthinCanada
InvestselectivelytosupportgrowthofcurrentEmergingMarketinvestments
SustainCredigy’s growthmomentum
Maintainsoliddividendgrowthandgeneratesuperiorshareholderreturns
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InternationalStrategy:KeySuccessFactors
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Diversification› Geographical– Africa,Asia,UnitedStates› Linesofbusiness– SpecialtyconsumerfinanceandEmergingMarketsbanking
Controlorexit
Experiencedanddedicatedmanagementteamsatcorporateandinoperations› RobustgovernanceframeworkandactivemanagementofEmergingMarketsportfolio› Proactiveoversightbyseniormanagementandindependentcontrolfunctions
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InternationalLeadershipTeam
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Experiencedexecutives
responsibleforgovernance,
businessstrategyandexecutionBRETTM.SAMSKY
ChiefExecutiveOfficerCredigy
ASKHATAZHIKHANOVChiefExecutiveOfficerABABank
YVESJACQUOTSeniorVice-PresidentInternationalDevelopment(EmergingMarkets)
DOMINICJACQUESDeputyVice-PresidentInternationalDevelopment(EmergingMarkets)
MADIAKMAMBETExecutiveDirectorABABank
KARENLEGGETTChiefMarketingOfficerExecutiveVice-PresidentCorporateDevelopment
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Blank
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EMERGINGMARKETSDEVELOPMENTFRAMEWORK
YVESJACQUOTSENIORVICE-PRESIDENTINTERNATIONALDEVELOPMENT
OurApproachtoEmergingMarkets
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Identifyattractivetargetsinspecificregions
Strictselectionandinvestmentcriteria
BuildcomfortInitialminorityparticipationLearnwithourpartnersIncreasestakeorexit
Investinsuccess
AcquirecontrolContributeexpertiseandresourcestoaccelerategrowth
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OurMandate
Emergingmarketsdevelopment› Targetidentification,businesscase,negotiation,duediligence,dealexecution
Portfoliomanagement› Boardrepresentation,shareholder/strategicmeetings,riskmanagement,reportingtoNBCSeniorManagementandBoard
ABABanktransitiontoaNationalBank-ownedentity› Newgovernancestructure,broadalignmentofprinciplesandpolicyobjectives(includingcompliance)
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Focusedteamaccountableforallinvestmentsinemergingmarkets
TargetGeographies:High-GrowthEmergingMarkets
Smalltomedium-sizecountry
HighGDPgrowthwithstrongpotential
Membershipinintegratedtradezones
Lowbutincreasingbankingpenetration
Youngandgrowingpopulation/expandingmiddleclass
Culturalaffinityapositivefactor
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Allcurrentinvestmentsareinemergingmarketswith20%+annual
growthinbankingindustry
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InvestmentCriteria
Top5positioninlocalmarketwithdiversifiedclientbaseandgrowthpotential
Credibilityandreputationofshareholdersandmanagementteams/deepknowledgeoflocalmarkets
Significantinitialstake(10%+)withactiveroleingovernance
Futureoptions:pathtocontrollingstake/exitstrategy
Attractivevaluation:expectedROIof15-20%
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WhatWeBring
Credibilityofaworld-classCanadianfinancialinstitutionwitha150-yearhistory
Capacitytoaccelerategrowthofinvestees
Expertiseinsuper-regionalbankmodelandallfacetsofretailandcommercialbanking
Abilitytocreatebusinessandcostsynergies
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EmergingMarketsRiskOverview
Ourinvestmentsareinthelowerriskspectrumofemergingmarketbanks› Easytounderstandbusinessmodels› Nosignificantbusinessrelationshipswithlocalauthorities› Shareholdersandmanagementhavegoodreputations
RobustregulatoryandlegalduediligenceprocessInvestedingeographicallydiverseregionsMinorityparticipationsprovideopportunitytogaindeeperunderstandingoflocalmarketsbeforemakingfurthercommitments
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Political Regulatory Economic IntegrationLegal
ResilienceofEmergingMarkets
NBFEconomicsandStrategy(dataviaIMFWEO)
AdvancedEconomies
Emergingand
Developing
Forecast
GDPatconstantprices,YoY%change
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ActiveManagementandStrictGovernanceMitigateRisks
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Clearaccountabilityandhands-onapproach› DedicatedInternationalDevelopmentteamresponsibleforinvestmentsinemergingmarkets› Frequentpresenceontheground
InvolvementofNationalBankkeyspecialists› Designatedspecialistsinriskmanagement,compliance,finance,etc.
Dynamicduediligence› OngoingreviewsbyNBCandexternalspecialists
SeniorManagementandBoardoversight
HowWeSupportandMonitorourInvestments
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EMERGINGMARKETSPORTFOLIOINVESTMENTS
ShareholdersBoardManagement
THIRDPARTIESLocalregulatorsInternationalpartners(IFC,EBRD,governmentdevelopmentagencies)
NBCSeniorManagement/NBCBoard
InternationalDevelopment
Team
Internalbusinesspartners
(Risk,Compliance,IT,Finance,etc.)
NationalBankrepresentativesoninvestee
BoardsofDirectors
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EMERGINGMARKETSPORTFOLIOANDPERFORMANCE
DOMINICJACQUESDEPUTYVICE-PRESIDENTINTERNATIONALDEVELOPMENT
DiversifiedEmergingMarketsPortfolio
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Totalinvestedtodate
CA$442M
Investment, CountryandNBCParticipation(%)
EquityInvestment Debt CET1
Used
ABABANK(Cambodia)90% CA$186M CA$32M
(subordinateddebt)27bps
NSIA ASSURANCES &BANQUE(IvoryCoast)24%
CA$142M CA$28M(convertibledebt)
16bps
AFRASIA(Mauritius)17.5% CA$33M – 3bps
TENGERFINANCIAL GROUP(Mongolia)10.5%
CA$21M – 1.5bps
CA$382M CA$60M 47.5bps
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ABABank(Cambodia)
Rapidlygrowingcommercialbankwithadiversifiedclientbase
Provenbusinessmodelandstrongexecution
ImprovedriskprofilesinceNationalBankinvestmentin2014
NationalBankacquiredcontrollinginterestinMay2016
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Transaction Amount(US$) P/BV FP/E
July2014(30%) 23M 1.3x 12.9x
March 2015(12%) 22M 1.5x 11.4x
May2016(48%) 103M 2.0x 7.7x
TOTAL(90%) 148M 1.5x 5.9x
RegionalMarketDynamics
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StrategiclocationofCambodiaintheheartofASEAN› GDPofUS$2.6Tn,3rd largestinAsia› Populationof622M,3rd largestintheworld(2014)› Topdestinationforforeigndirectinvestment,withUS$136Binvestedin2014,overtakingChina
CambodianGDPisgrowingat7%+peryear› Non-commoditydriveneconomybenefitsfromlowoilprices
› CambodiaexportsmoretotheUSthantoChina› US$-basedeconomy
Myanmar Vietnam
Laos
Thailand
Cambodia
Malaysia
Indonesia
BruneiDarussalam
Singapore
Philippines
ASSOCIATIONOFSOUTHEASTASIANNATIONS10MemberStates
Source:ASEANSecretariat,2014;NationalBankofCambodia
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NSIAAssurances&Banque (IvoryCoast)
Diversifiedbanking/insurancegroupoperatingin12countriesinWesternandCentralAfricaMarketposition:› #1insurancegroupinFrench-speakingAfrica› #3bankinIvoryCoast› Assets:CA$2.5B
› RevenueCAGR2011-2015:17%
NationalBankinvestedwithAmethis AfricaFinance
Culturalaffinity
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Well-positionedtobecome#1 financialinstitutionin
French-speakingAfrica
Super-RegionalBancassurance Model
REVENUESBYCOUNTRY
GEOGRAPHICALFOOTPRINT
REVENUESBYLINEOFBUSINESS
BeninCameroonCongoGabonGhanaGuineaGuinea-BissauIvoryCoastMaliNigeriaSenegalTogo
IvoryCoast51%
11OtherMarkets49%
LifeInsurance23%
Banking34%
Non-LifeInsurance43%
NSIAisbasedinIvoryCoastandoffersbanking/insuranceintwomarketsandinsuranceonlyin10othermarkets
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RegionalMarketDynamics
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Totalregionalpopulationof150M
Twointegratedeconomiczones› Single sharedcurrency(FrancsCFA)› Harmonizedbusinesslaw› 2centralbanks:WestAfricaandCentralAfrica› Harmonizedbankingandinsuranceregulations
Bestlong-termeconomicandbankingsectorgrowthoutlook› 5.1%GDPgrowth(IMFforecast)› 10-20%bankingpenetrationrate
UEMOA(Unionéconomique etmonétaireouest-africaine)
CEMAC(Communauté économique etmonétaire del'Afrique centrale)
AfrAsia (RepublicofMauritius)
Boutiquecorporateandprivatebankcapturinggrowing businessbetweenAsia,AfricaandEuropeflowingthroughMauritius› 3rd largestdomesticbankinMauritius› “BestPrivateBankinMauritius”,Euromoney 2015
› Welldiversified(businessandgeographic)
› US$depositgatheringcapacity
› Assets:CA$3.2B
› RevenueCAGR2011-2016E:40%
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OpportunitytoleveragepositionofMauritiusascrossroads
betweenAfricaandAsia
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Tenger (Mongolia)
Formermicrofinancefocusedinstitutiontransformingintoafull-fledgedbank› Diversifiedfinancialgroupwhichowns4th largestbankinMongolia(XACBank)
› “BestBankinMongolia2016”,GlobalFinance› Over100retailbranchesand600,000clients
› Supportedbystronginternationalorganizations(IFC,EBRD,socialimpactinvestmentfunds)
› Assets:CA$1.4B
› RevenueCAGR2010-2015:30%
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NationalBankEmergingMarketsPortfolioFinancialProjections
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Attractive2016forecastreturn:
ROI=19%ROC*=24%
NIBT
Revenues
(CA$M)
2016E 2017E
62
97
51
121
2018E
69
137
ABAre-valuationgain(CA$41M)
*Returnonregulatorycapital
41
5641
21
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ExecutiveBiographies
YVESJACQUOT,SENIORVICE-PRESIDENT,INTERNATIONALDEVELOPMENT
Yves Jacquot joined National Bank following a distinguished career with French financial institutions, includingdeep experience in emerging markets.
Between 1980 and 1993, Mr. Jacquot held senior positions, including CEO, in French banks and financialinstitutions, notably in retail banking, investment banking, financial markets and asset management. He joinedBRED Banque Populaire in 1993 and became Deputy CEO of the Bank and CEO of COFIBRED, the holding companyfor BRED’s subsidiaries. At BRED, he was responsible for the finance, IT, back office and general administrationdepartments. In addition, he was Vice-Chairman of the Credit Committee and Chairman of the FinanceCommittee, as well as the Risk Management Committee for BRED’s subsidiaries.
Mr. Jacquot led and managed COFIBRED’s successful expansion into the French overseas territories and severalother emerging markets in Asia Pacific and Africa, as well as certain European markets. This expansion accountedfor more than 30% of BRED’s profit when he stepped down.
He is a graduate of the ESSEC Business School (France).
ExecutiveBiographies
DOMINICJACQUES,DEPUTYVICE-PRESIDENT,INTERNATIONALDEVELOPMENT
As Deputy Vice-President, International Development, Dominic Jacques is responsible for managing NationalBank’s portfolio of emerging market investments and developing ancillary business opportunities.
Mr. Jacques possesses broad banking expertise acquired during 15 years of advising financial institutions ontransactions and partnerships. He has been based in Montreal, London, Paris and Silicon Valley.
He began his career as auditor at PriceWaterhouseCoopers, where he was appointed Senior Manager, TransactionServices, in 2008, with responsibility for due diligence, valuation and M&A advisory. He joined National Bank in2010 as Senior Manager in the Strategy and Corporate Development team. In this capacity, he advised seniormanagement on strategic initiatives, partnerships and M&A activities.
He is a graduate of HEC Business School (Canada), a Chartered Accountant (CPA, CA) and a CFA Charterholder.
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ASKHATAZHIKHANOVCHIEFEXECUTIVEOFFICER
ABABANK
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ABABANKOVERVIEW
MARKETOPPORTUNITYANDCOMPETITIVEPOSITIONING
FOCUSEDLENDINGANDDEPOSITSTRATEGIES
PERFORMANCE2012– 2016
OUTLOOK2016– 2020
FOUNDATIONFORGROWTH
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ABABankOverview
Establishedin199642branchesClients› 22,577borrowers/125,291depositors
1,500employeesRevenueCAGR2010-2015:49%ROE:24%NPL:0.1%
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(AsatAugust31,2016)
“BestBankinCambodia”awards
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ABABANKOVERVIEW
MARKETOPPORTUNITYANDCOMPETITIVEPOSITIONING
FOCUSEDLENDINGANDDEPOSITSTRATEGIES
PERFORMANCE2012– 2016
OUTLOOK2016– 2020
FOUNDATIONFORGROWTH
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Cambodia:PositiveEconomicIndicators
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FDI
Averagegrowthrate
22% p.a.(2010-2015)
GDP
Averagegrowthrate
7.2% p.a.(2010-2015)
InflationRate
3.3%(2010-2015)
1.2%(2015)
Cambodiaisa
US$-basedeconomy
Currency
30%
19%17%
15%
9%
10%
GDPSectorComposition
AgricultureServicesManufacturing
TradeConstructionOther
Source:NationalBankofCambodia
Inflation
Cambodia:PositiveDemographicIndicators
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72%Below35yearsold
AverageGrowthRate
1.6%p.a.
Population
15.6M
MinimumWage
US$5.40perday
UrbanizationRatio
20%
UrbanizationGrowth
3%
AgeDistribution
Source:NationalBankofCambodia
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Cambodia
56%
India Vietnam Singapore
75%
Malaysia China Thailand
114%126%
145%169%
182%
Cambodia:Under-BankedWithStrongGrowthPotential
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BANKINGLOANSTOGDP2CREDITPENETRATION1
DEPOSITPENETRATION1
Numberofloanaccounts3%
Unbankedpopulation97%
Numberofdepositaccounts17%
Unbankedpopulation83%
2 Source:IMFandWorldBankdata1 Source: NationalBankofCambodia
Cambodianbankingsectorisexpectedtogrow20%/yeartoreach100%loanstoGDPratioby2020
ABABank:Favourable CompetitivePositioning
ABABankranksamongthetop
commercialbanksinCambodia
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36commercialbanksinCambodia
Metric ABABankRanking2012
ABABankRanking2015
Assets #11 #6
Deposits (Retail) #6 #4
Loans #9 #6
ROE #8 #3
Branch network #7 #3
ATMnetwork #6 #2
Employees #5 #4
Cards #7 #5
› 8local› 28foreign
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ABABank’sMarketShareGrowth2010-2015
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2010 2015
4.1%
2.4%
2010 2015 2010 2015
5.2%
2.7%
4.1%
2.2%
ABABank’smarketshareinassets,
depositsandloansnearlydoubledin
fiveyears
ASSETS DEPOSITS LOANS
ABABank:OutperformingCambodianBankingSector
ABABankisgrowing
fasterthantheCambodian
bankingsector
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40%
25%
38%
21%
44%
29%
Bankingsector
ABABank
CAGR2010-2015
Bankingsector
ABABank
Bankingsector
ABABank
ASSETS DEPOSITS LOANS
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ABABANKOVERVIEW
MARKETOPPORTUNITYANDCOMPETITIVEPOSITIONING
FOCUSEDLENDINGANDDEPOSITSTRATEGIES
PERFORMANCE2012– 2016
OUTLOOK2016– 2020
FOUNDATIONFORGROWTH
LendingStrategy
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ClientSegments
Retailclients
Lowincomeclients
Corporateclients
LargeSMEsandfamilybusinesses
MicrobusinessesandSMEs(MSME)
Execution
› Leveragebranchnetworkinprovinces
› Marketingcommunicationmix(direct,TV,radio)
› Partnershipswithlocalpaymentcompanies(SmartLuy,TrueMoney)
› Refinancinggoodqualityloansfromcompetitors
› EffectivelendingbusinessprocessesadaptedtoCambodianeconomy
› Focusonqualityandmotivationofloanofficers(trainingacademy,IBSC)
Products
MicroSMEloans
$5K- $50K
SmallSMEloans
$50K- $500K
MediumSMEloans
$500K- $1M
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UnderbankedSignificantly1
MicroBusinessandSME(MSME):ALargeandGrowingMarket
49
MSMEBasedEconomy1
› 99.8%ofbusinessesinCambodiadefinedasMicro(max10staff&US$50Knetassets)orSMEs(max100staff&US$500Knetassets)
› MSMEsemploy73% oftheentireworkforce› SMEsalonecontributeabout65% ofGDP
› 57% ofMSMEsdonothaveabankaccount› 39% ofCambodiansborrowinformally
1 Source:ADBAsiaFinanceMonitor,2013;NationalBankofCambodiaannualreport,2014; WorldBank,2011;IFCUnderstandingCambodianSMEneeds,2010;ThePhnomPenhPost,28May,2009
Diversified› MSMEsoperatemainlyintheTrade (58%),Service (27%)
andManufacturing sectorsoftheeconomy
MSMEClients:GrowingBusinesswithABABank
50
PRODUCTIONOFCASHEWNUTS
PRODUCTIONOFRICE
PRODUCTIONOFKAMPOTPEPPER
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NationwideBranchNetworkSupportsMarketPenetration
6-8 newbranchesopenedannuallysince2012
9newbranchesopenedin2016
42 branchesasatAugust31,2016
65outletsby2020
51
CurrentnetworkNetworkexpansionplan2016-2020
LoanPortfolioDiversification
100%ofdebtiscollateralized
100%ofloan bookis
US$-denominated
52
LOANSBREAKDOWNBYINDUSTRYLOANSBREAKDOWNBYAMOUNT
LOANSBREAKDOWNBYCLIENTSEGMENT LOANSBREAKDOWNBYCOLLATERAL
TradeServiceRealestateManufacturingAgricultureFIOthers
<US$500KUS$500K– 1M˃US$1M
SME($50K- $2M)Commercial(˃ $2M)Microbusiness(< $50K)FIRetail&Other
RealestateCashMovableassets
3%4%4%4%
16%
33%
36%87%9%
4%
93%6%1%3%5%
46%
6%
40%
MSME87%
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DepositStrategy
53
ClientSegments Execution
› LeverageonDigitalBankingproducts
› Marketingmixwithfocusondigitalmarketing
› Cross-selling
› Focusonqualityofservice
› LeverageoncredibilityofBank’sshareholders
› Personalclientrelationship(RMs,CSAs)
› Effectivebusinessprocesses
› Motivatedstaff(IBSC)
Products
Corporateclients
Financialinstitutions
Retailindividualclients
Retailfamilybusinesses
› Depositproducts(Fixed,Flexi,CASA)› Paymentscards(Visa,Master,UPI)› Internetbanking› Mobilebanking› Facebookbanking(comingsoon)› Self-servicebankingkiosk› Callcenter24/7
› Payrollservice› CorporateiBanking› Remittances› Tradefinance› Transactionalcashmanagement
SMEs
State-of-the-ArtDigitalandSelf-BankingPlatform
54
MobileBankiBanking
SocialMedia
WebsiteLive-chat
CallCentre
ATM
Client-centredapproach
Self-ServiceBankingKiosk
24/7instantcashdeposittoanyABABankaccountandbillpaymentstovariousproviders
AdvancedInternetBankingserviceforretailandcorporatecustomers
ThefirstinCambodiafull-scalemobilebankingappforbankingonthego
Round-the-clockcallcentre forexpertsupportandemergencycases
ThelargestFacebookpageinCambodiaamongbanks
FullyresponsivewebsitetodeliverthelatestinfoonABABank’sfinancialsolutions
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GrowingDigitalandSelf-BankingPenetration
OnlineBankingSelf-Banking
8 1424
37 44
1225
2012 2013 2014 2015 Q22016
NUMBEROFUSERS(inthousands)
InternetBanking Mobileapp
27 88183
230
136406
2012 2013 2014 2015 Q22016
NUMBEROFTRANSACTIONS(inthousands)
InternetBanking Mobileapp
61 56 48 39 31
39 44 52 61 69
2012 2013 2014 2015 2016
TRANSACTIONSNUMBERBREAKDOWN,%
Overthecounter Self-Banking
96 94 91 87 84
4 6 9 13 16
2012 2013 2014 2015 2016
TRANSACTIONSAMOUNTBREAKDOWN,%
Overthecounter Self-Banking
ATMs&Cards
16 2444
7294
2012 2013 2014 2015 Q22016
CARDSBALANCE(inUS$millions)
18 2639
74 85
2012 2013 2014 2015 Q22016
NUMBEROFCARDS(inthousands)
55
123
ModernBranchNetwork
56
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DepositPortfolioDiversification
Diversifiedportfoliowith99%
ofdepositsUS$-denominated
57
DEPOSITSBYAMOUNT DEPOSITS BYTYPE
US$500K– 1M9%
Retail73%
Corporate20%
FinancialInstitutions7%
US$50K– 100K12%
US$100K– 500K25%
<US$50K25%˃US$1M
29%
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58
MADIAKMAMBETEXECUTIVEDIRECTOR
ABABANK
59
ABABANKOVERVIEW
MARKETOPPORTUNITYANDCOMPETITIVEPOSITIONING
FOCUSEDLENDINGANDDEPOSITSTRATEGIES
PERFORMANCE2012– 2016
OUTLOOK2016– 2020
FOUNDATIONFORGROWTH
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SolidandConsistentGrowthinDepositsandLoans
61
224 277
433
654
805
139177
270
482
638
CAGR+55%
CAGR+44% ABABank’sgrowth
isorganicallydrivenbydeposits
LoanportfoliotargetsdiversifiedMSMEmarket
Deposits
Loans(net)
(US$M)
2012 2013 2014 2015 Q22016
SolidandConsistentGrowthinAssetsandEquity
60
2012
265
2013 2014 2015 Q22016
323
505
806
980
37 42 64100 112
Assets
Equity
CAGR+45%
(US$M)
Assetsincreasedthreefoldinthreeyearsandcontinuetogrowsteadilyin
2016
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SteadyInterestMarginImprovement
62
0,0%
20,0%
2012 2013 2014 2015 Q22016
NETINTERESTMARGINCOSTTODEPOSITS
YIELDONLOANS
12.0%11.8%11.5%11.5%11.2%
6.5%6.3%5.7%
4.9%
4.6%3.6%3.5%3.8%4.1%
4.6%
ImprovementinloanyieldandnetinterestmarginisdrivenbystrategicfocusonMSME
market
SolidandConsistentNetIncomeGrowth
Netincomegrowingfasterthanassets:nearlyfivefoldincreasefrom2012to2015
63
3.44.0
7.5
15.9
12.4
2012 2013 2014 2015 20166MonthsYTD
(US$M)
12.4
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SoundEfficiencyandCreditRiskManagement
65
59% 57% 58%
46%
39%
2.5% 2.1%0.3% 0.1% 0.1%
Costtoincome
NPL
EFFICIENCY&ASSETQUALITYRATIOS
2012 2013 2014 2015 Q22016
Costtoincomeimprovingdespitebranchexpansion
NPLimprovementreflectsgrowthindiversifiedMSME
portfolio
SolidandConsistentImprovementinProfitabilityRatios
Profitabilityperformance
doubledinregardtoequityand
assets
64
9.5%10.3%
14.2%
19.5%
23.4%
1.5% 1.4% 1.8% 2.4% 2.8%
ROE
ROA
2012 2013 2014 2015 Q22016
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SoundFundamentals
66
63% 65% 63%
74%80%
56%51%
55% 54%
79%
17% 17% 17% 16% 15%
2012 2013 2014 2015 Q22016
Credittodeposit(CDR)
Liquidity(LCR)Capitaladequacy(CAR)
BenchmarksinCambodia:
CDR(avg.):100%LCR(min.):60(50%until2016)
CAR(min.):15%
LIQUIDITY&CAPITALISATIONRATIOS
67
ABABANKOVERVIEW
MARKETOPPORTUNITYANDCOMPETITIVEPOSITIONING
FOCUSEDLENDINGANDDEPOSITSTRATEGIES
PERFORMANCE2012– 2016
OUTLOOK2016– 2020
FOUNDATIONFORGROWTH
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NetIncomeandProfitability2016– 2020
69
Performancetobedrivenby
economiesofscaleandstrategicfocusonMSMEmarket
ROAA2
ROAE1
2.4% 2.3% 2.5% 2.7% 3.0%2.8%
19.5% 20.1% 23.2% 24.4% 25%24.9%
NETINCOME(US$M)
1622
32
43
72
56
2015 2016E 2017E 2018E 2020E2019E
CAGR+35%
1Returnonaverageequity2Returnonaverageassets
BusinessGrowth2016– 2020
ExpectedCAGR(2015-2020)
Totalassets:+26%Totaldeposits:+23%Totalloans:+31%
68
2015 2016E 2017E 2018E 2020E
654854
1071
1306
1559
1831
806
1112
1425
1777
2180
2605
482
690
940
1222
1538
1879
2019E
(US$M)
Totaldeposits
Totalloans
Totalassets
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70
ABABANKOVERVIEW
MARKETOPPORTUNITYANDCOMPETITIVEPOSITIONING
FOCUSEDLENDINGANDDEPOSITSTRATEGIES
PERFORMANCE2012– 2016
OUTLOOK2016– 2020
FOUNDATIONFORGROWTH
SolidFoundationforGrowth
RapidlygrowingCambodianeconomyandunderbankedmarket
Successfulomnichannel bankingmodel
Well-diversifiedloananddepositbase
FocusonMSMEinlendingandRetailindeposits&servicesisdrivingbusinessgrowth
Experiencedmanagementteamandstronggovernance
71
FocusedbusinessstrategyoffersacompellingvaluepropositiontotheCambodianmarket
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ExecutiveBiographies
ASKHATAZHIKANOV,PRESIDENTANDCEO,ABABANK
Askhat Azhikhanov joinedABAin2009asDeputyCEOandwasappointedCEOin2012.
Mr.Azhikhanov startedhiscareerin1998intheBankingSupervisionDepartmentoftheNationalBankofKazakhstan.Between2001and2005,heheldmanagementpositionsatHalyk Bank(Kazakhstan).In2006-2008,heworkedforCreditSuisseKazakhstanasaHeadofAssetManagement.
HeholdsaPhDinEconomicswithdistinctionfromKazakhStateUniversity,anMScinBankingandInternationalFinancewithdistinction fromCassBusinessSchool(UK)andadegreeinEconomics(AccountingandAudit)withdistinctionfromtheKazakhStateAcademyofManagement.
ExecutiveBiographies
MADIAKMAMBET,EXECUTIVEDIRECTORANDMEMBEROFTHEBOARD,ABABANK
Madi Akmambet served as CEO of ABA Bank from March 2009 to June 2012. Since then, he has continued hiswork for ABA as Executive Director and member of the Board of Directors.
Mr. Akmambet started his career in 1997 in the Treasury Department of the Ministry of Finance of the Republic ofKazakhstan. Between 1998 and 2005, he held management positions at the Banking Supervision Department ofthe National Bank of Kazakhstan, several national companies and the Financial Institutions Association ofKazakhstan. In 2006-2007, he worked for Tsesnabank (Astana, Kazakhstan) as Deputy Chairman and then FirstDeputy Chairman of the Management Board. In 2007, Mr. Akmambet joined a private equity business andrelocated to Tashkent (Uzbekistan).
He holds an MBA with distinction from Cass Business School (UK) and a degree in Economics from the KazakhState Academy of Management.
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ABABankManagementTeam
Askhat AzhikhanovChiefExecutiveOfficer
YoungHoLeeDeputy ChiefExecutiveOfficer
Babu RamGyawaliChiefFinancialOfficer
Galymzhan TemirovChiefTechnology&InfrastructureDevelopmentOfficer
AdelLeilanie G.LegartaChiefClientRelationshipOfficer
BibhuPandeyChiefCreditOfficer
Sanzhar AbdullayevChiefCard&e-bankingOfficer
Zokhir RasulovChiefMarketingOfficer
ZhigerAtchabarovChiefInternationalRelationsOfficer
Polin MeyChiefBusinessDevelopmentOfficer
ABABankBoardofDirectors
YvesJacquotNationalBankofCanadaChairmanoftheBoardChairman,GovernanceCommittee MadiAkmambet
ExecutiveDirectorABABankExecutiveMemberoftheBoard
AndréBérardFormerCEONationalBankofCanadaMemberoftheBoard
Damir KarassayevMemberoftheBoard
DominicJacquesNationalBankofCanadaMemberoftheBoardChairman,RiskCommittee
DavidFurlongNationalBankofCanadaMemberof theBoardChairman,ComplianceCommittee
HenriCalvetIndependentMemberoftheBoardChairman,CreditCommittee
EtienneChenevierIndependentMemberoftheBoardChairman,AuditCommittee
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EMERGINGMARKETSSUMMARY
KARENLEGGETTCHIEFMARKETINGOFFICERANDEXECUTIVEVICE-PRESIDENTCORPORATEDEVELOPMENT
EmergingMarketsSummary
73
ABABank:top-tieremergingmarketinvestment
Disciplinedandphasedinvestmentapproachwithstrictinvestmentcriteria
Diversifiedinvestmentportfolioinhigh-potentialregionsinthelowerriskspectrumofemergingmarkets
Robustriskmanagementframeworkandactive,on-the-groundgovernanceofinvestments
Experienced andtalented managementteams
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74
EMERGINGMARKETSQ&APANEL
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ExecutiveBiographies
KARENLEGGETT,CHIEFMARKETINGOFFICERANDEXECUTIVEVICE-PRESIDENT– CORPORATEDEVELOPMENT
As a member of National Bank's Office of the President, Karen Leggett is responsible for banking productdevelopment and management, pricing, profitability and portfolio risk modeling as well as payments, clientstrategy and the financial performance of mobile and online channels and ABMs. She has bank-wideresponsibility for client data & analytics, digital/mobile strategy & capabilities, brand, client experience,advertising & campaigns, donations & sponsorships, public affairs and government relations.
Karen Leggett is also responsible for identifying international development opportunities, overseeing the Bank’sportfolio of investments in emerging countries and managing its equity interests in financial institutions based inAsia and Africa.
Prior to joining National Bank, she worked for two of the largest financial institutions in banking and insuranceacross Canada, leading the financial performance of major lines of business.
She holds an Executive MBA from the Richard Ivey School of Business, University of Western Ontario, and aBachelor of Commerce from Concordia University. She also holds the ICD.D designation from the Institute ofCorporate Directors, University of Toronto's Rotman School of Management.
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BRETTSAMSKYCHIEFEXECUTIVEOFFICER
CREDIGY
WhoWeAre
Sophisticatedconsumerfinanceinvestmentcompany› Foundedin2001› NBCacquiredan80%interestin2006
Portfoliois93%performing
Diversifiedacrossawidevarietyofassetclasses
HeadquartersinAtlanta,GA
300+employeesworldwide
2016ERevenuesCA$316M
2016ENIBTAfterMinorityInterest
CA$113M
77
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WhatWeDo
Weprovidecreativesolutionsfortheconsumerindustry
Wehaveflexibilityacrossthecapitalstructuretoacquireorfinancetheconsumerreceivablesmarket
DataAnalytics&ModelingExpertise
Acquireconsumerreceivables
Financeconsumerreceivablesmarket
Activeaccount
management
78
Investment Strategy
Emphasizemodelriskovercreditrisk
Leverageaflexiblemodelforservicingproducts
Maintaintheperspectiveofalong-term,valueinvestor
Optimizerisk-rewardforallparties
TargetinvestmentsizeUS$100MtoUS$1B
Disciplined,yetadaptableinvestmentstrategy
79
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PortfolioSummary
80
Acceleratedinvestment
drivenbyfocusonperforming
assets
2011 2013 2014 2015 2016E20122007 2008 2009 20102006
41 59 78144 248
346 402546
1,658
775
3,000
AVERAGEASSETS(US$M)
PortfolioEvolution
93%ofcurrentbookofassetsareperformingreceivables,comparedtonilin2006
2016BOOKOFASSETS2006BOOKOFASSETSUS$40MILLION US$3.2BILLION
81
Performingconsumerreceivables
Non-performingconsumerreceivables
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PortfolioDiversification
Diversifiedacrossawidevarietyofasset
classes
82
2016BOOKOFASSETSUS$3.2BILLION
Non-performingUnsecured2%
AutoProducts52%
MortgageProducts28%
Non-performingSecured5%
StudentLoans3%
OtherConsumer10%
83
FINANCIALPERFORMANCE
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FinancialPerformance:RevenueGrowth
84
(CA$M)
2011 2013 2014 2015 2016E2012
*Assetsales
154168
191216
316
232
*
FinancialPerformance:NIBTGrowth
85
2011 2013 2014 2015 2016E2012
*Gainonassetsales
154168
191
216
316
30 37
7257
113
22
232NIBTCAGR+39%
(CA$M)NIBTafterMinorityInterest
Revenues
*
*
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FinancialPerformance:AssetGrowthandROA
86
MinimumROAtargetof2.5%
(US$M)(%)
2011 2013 2014 2015 2016E2012
AverageAssets
ROA
346
3,000
402
8.9% 8.7% 8.9%
3.8%3.1%
546
775
7.9% 1,658
*Excludesgainonassetsales
*
KeyRisksandMitigationFactors
DiversifiedacrossassetclassesDiversificationoffsetsdependenceonanyoneassetclassormarketAdaptablemodeltocapturemarketopportunities
Supply&Economic/MarketConditions
Pricing&ValuationDisciplinedpricingstrategyContinuousrefinementofourmodelsasourdatabaseexpandsfollowingnewassetinvestments
87
Reputation&Regulatory
Robustcompliancepolicies,proceduresandmonitoringShifttoperformingassetshasreducedoverallrisk
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StrategicPriorities
DeliverNIBTAfterMinorityInterestofCA$125Min2017and
CA$160M in2020
88
Developnewassetclassesinthemarketsthatmeetourinvestmentcriteria
Focusoncreativestructureswithinconsumerfinance
Bethefirstthatfinancialinstitutionscallforapotentialtransaction
StrongFoundationforGrowth
Oursuccesswillbeensuredby:
› Targetedbusinessdevelopment/dealsourcing
› Continuousacquisitionofdata
› Relentlessenhancementofmodelingandadvancedanalyticsskills
› Steadfastexecutionpostclosing
› Ongoingcommitmenttohireanddeveloptherightpeople,whosevaluesalignwithourculture
Ourphilosophy:
Smartpeople+
Calculatedrisk=
Disciplinedgrowth
89
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90
CREDIGYQ&APANEL
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ExecutiveBiographies
MALINERIKSSON,CHIEFINVESTMENTOFFICER
As one of Credigy’s founders, Malin’s initial focus was launching our Sao Paulo, Brazil operations in 2001 and shehas been critical to the business since inception, serving in many capacities. As Chief Investment Officer, Malindirects global credit, due diligence and pricing efforts, while continuing to oversee Brazil operations. Malin isalso responsible for oversight of global IT organization and Credigy’s sophisticated analytics and modeling teams.
Malin’s experience prior to Credigy includes serving as President of Rio Branco Aquisição e Administração deCréditos, a Brazilian joint-venture between Goldman Sachs and Worldwide Collections with a focus on acquiringnon-performing loans from banks and other issuers of credit. Other professional endeavors andaccomplishments include working as a Senior Consultant in the New Ventures Group at MGDK ManagementConsultants (acquired by Monitor Group), Manager of Universum’s North America division, selected to lead thestartup of the company’s research and consulting business in the US market and her career began as an InvestorRelations Analyst with Scania.
Malin graduated summa cum laude, earning her BA in International Business from Ithaca College.
ExecutiveBiographies
BRETTSAMSKY,CHIEFEXECUTIVEOFFICER
As one of Credigy’s founders, Brett has served as Chief Executive Officer since inception. Brett oversees alloperations and investments, partnering with the Board of Directors and executive team to develop and executeCredigy’s strategic growth plan.
Prior to creating Credigy, Brett had over two decades of experience in the consumer finance industry includingserving as the former CFO and one of the founders of CompuCredit Corporation (NASDAQ: CCRT), a marketerand servicer of general purpose credit cards and related fee based products and services. Prior to CompuCredit,Brett served as CFO of HBR Capital, an investment management company and was previously the CFO ofAccount Portfolios, a consumer distressed asset purchasing and servicing company which became the platformcompany of OSI (subsequently acquired by NCO). Brett’s professional career began as a Senior Accountant in theDeloitte & Touche tax group.
Brett graduated magna cum laude, earning a BBA and MAcc in Accounting from the University of Georgia andwas a licensed CPA.
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ExecutiveBiographies
ASHLEYJOHNSON,CHIEFADMINISTRATIVEOFFICER
As one of Credigy’s founders, Ashley serves as Chief Administrative Officer. Ashley has a concentration on thecorporate structuring of Credigy’s investments and transactions. She directly oversees the majority of globalcorporate functions – Legal, Compliance, Finance, Accounting, and US Operations – while also managing USBusiness Development efforts.
Prior to joining Credigy, Ashley served as the Controller, Treasurer and ultimately the Chief Financial Officer ofCompuCredit Corporation (NASDAQ: CCRT). While at CompuCredit, Ashley developed and managed the dailyfinancial operations of a US$ 2.3B securitization and conduit program and the coordination of the company’sprivate and public equity offerings. Prior to CompuCredit, Ashley was the Controller of Account Portfolios.Ashley’s professional career began as a Senior Accountant at Deloitte & Touche focusing on emerging marketclients.
Ashley graduated magna cum laude from Clemson University with a BS in Accounting and is a licensed CPA in theState of Georgia.
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LOUISVACHONPRESIDENTANDCHIEFEXECUTIVEOFFICER
CLOSINGREMARKS
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