U.S. Markets closed

Edited Transcript of EMIRATESNBD.DU earnings conference call or presentation 28-Oct-19 10:00am GMT

Q3 2019 Emirates NBD Bank PJSC Earnings Call

Dubai Nov 8, 2019 (Thomson StreetEvents) -- Edited Transcript of Emirates NBD Bank PJSC earnings conference call or presentation Monday, October 28, 2019 at 10:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Neeraj Makin

Emirates NBD Bank PJSC - Executive VP, Head of Group Strategy & EXCO Coordinator

* Patrick Eugene Clerkin

Emirates NBD Bank PJSC - Head of IR

* Shayne Keith Nelson

Emirates NBD Bank PJSC - Group CEO

* Suryanarayan Subramanian

Emirates NBD Bank PJSC - Group CFO

================================================================================

Conference Call Participants

================================================================================

* Aybek Islamov

HSBC, Research Division - Analyst

* Hootan Yazhari

BofA Merrill Lynch, Research Division - MD and Head of MENA & Global Frontiers Equity Research

* Jagdish Bathija

Lazard Asset Management LLC - VP and Portfolio Analyst

* Naresh N. Bilandani

JP Morgan Chase & Co, Research Division - Research Analyst

* Shabbir Malik

EFG Hermes Holding S.A.E., Research Division - VP of Research, Director of Banking & Banking Analyst

* Suleman Soorani

Tricap Investments - Director

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, welcome to the Emirates NBD 2019 Third Quarter Results Announcement Analysts and Investors Call and Webcast.

If you're all ready to begin, I will now pass the call over to our host, Mr. Shayne Nelson, Group CEO of Emirates NBD. Please go ahead, sir.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [2]

--------------------------------------------------------------------------------

Thank you, operator, and welcome, everyone, to today's results call. Joining me, as usual, is Surya, the Group CFO; Paddy, our Head of Investor Relations; and a newcomer, Neeraj, our Head of International. The results presentation was made available earlier today. We'll review the operational and financial highlights for the first 9 months of the year, after which you'll have the opportunity to ask questions.

Page 3 of the presentation contains a summary of the key results. I'm pleased to report a strong set of results with a net profit of AED 12.5 billion in the first 9 months of 2019. This is a 63% increase from last year and includes a AED 4.4 billion realized and unrealized gain from the Network International transaction.

Excluding this gain, the bank's core operating profit grew 5% year-on-year, supported by 17% in net interest income due to loan growth and a 31% increase in noninterest income from higher foreign exchange and credit card income.

The bank's balance sheet remains strong with healthy credit quality and liquidity. The common equity Tier 1 ratio declined by 3.7% to 13.7% in Q3, as we absorbed over AED 122 billion of risk-weighted assets from the acquisition of DenizBank. We've announced a rights issue of up to $1.75 billion, which could boost capital ratios by around 1.5%. The successful completion of this rights issue will provide a strong foundation to embrace controlled growth in the coming years.

We welcome DenizBank into the Emirates NBD family as we expand the group's presence to 13 countries, servicing over 14 million customers. We'll continue to support business growth across our international locations, including the Kingdom of Saudi Arabia, Egypt, India, London and Singapore and, of course, Turkey. In September, the bank raised the foreign ownership limit from 5% to 20% and signaled the intention to seek shareholder and regulatory approval to further increase this to 40%. We have seen foreign ownership grow steadily to around 7% since this increase.

Earlier today, we announced that Patrick Sullivan will join us as our group -- our new Group CFO. Patrick has extensive international experience and will be on board from the beginning of next year. Surya is retiring and continue to be with us -- well, semi-retiring, with us in the next year and subsequently continue to be on some of our subsidiary Boards.

As our geographical expansion grows, Jonathan Morris has kindly agreed to become our Senior Executive Vice President responsible for Turkey and a member of the Board of Directors of DenizBank. Jonathan will be based in Istanbul. I'm also pleased that Neeraj Makin, in addition to leading Group Strategy, will also become Group Head of International, following the retirement of Kevin Flannery.

Underlying our commitment to amortization, we've announced a number of key appointments within the group. Earlier today, we announced the appointment of Amer Kazim as Chief Audit Officer, Amer takes over from Mark Martinelli remain with the organization as adviser to the Board of Directors. The appointment of Amer Kazim follows the recent appointment of Ahmed Al Qassim as group's Head of Corporate and Institutional Banking, replacing Jonathan Morris. And in addition, Ammar Alhaj as our Head of ALM. Additionally, Mohamed Hadi will join us at senior level within our Regional Banking World Management division very shortly.

We are delighted to be ranked among the top 20 in the Forbes list of World's Best Regarded Companies. And last month, we announced the creation of E20., a digital business bank for entrepreneurs and SMEs. And we are honored to be recognized for pioneering efforts in employee volunteering and corporate social responsibility by IMPACT2030, the corporate volunteering arm of the United Nations.

Turning to the UAE economy. The bank's research team forecast 2% GDP growth this year, but many corporates continue to find the operating environment challenging just in the UAE, but also globally. Residential property prices and rents have continued to decline in 2019 as increased supply and reduced demand remain headwinds.

Overall, I'm pleased with the bank's performance. We delivered a healthy increase in operating profit whilst advancing key strategic initiatives. We will continue to drive efficiencies and capital optimization across the group while supporting cross-functional collaboration. As Expo 2020 draws closer, we are also excited to keep innovating to deliver a modern technology-driven banking experience with a human touch.

I'll now hand over to Surya, to go through some of the details of the presentation. Surya?

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [3]

--------------------------------------------------------------------------------

Thank you, Shayne. As usual, I will speak through Slides 4 and 5 of the financial results. Shayne mentioned the group's net profit of AED 12.5 billion in the first 9 months of 2019, represents a 63% increase on the previous year. This includes a AED 3.2 billion realized gain and AED 1.2 billion unrealized gain from Network International transaction. It also includes AED 198 million of net profit from DenizBank for the 2 months since the acquisition date. Excluding these 2 items, net profit increased 3% in the first 9 months. All business units were able to deliver an increase in revenue during the year.

Core operating profit grew 5% year-on-year, supported by 17% higher net interest income from loan growth and 31% higher foreign exchange and credit card-related income. Excluding DenizBank, core operating profit grew 2%, helped by a 20% increase in noninterest income and 8% higher net interest income as loans grew by 5%.

The 14% increase in cost is due to a rise in stock and operating costs relating to international expansion, including DenizBank. Excluding DenizBank, cost increased by 4%. The cost-to-income ratio for the first 9 months at 30.3% remains within long-term guidance. However, the bank remains firmly focused on cost controls as we face pressure on income due to falling interest rates.

Provisions of AED 2.755 billion were 149% higher than in 2018 or 94% excluding DenizBank. We had earlier given guidance of an increase in the cost of risk, reflecting the slowdown in regional and international markets. Net cost of risk rose to 103 basis points as a result of higher net impairment charges with lower write-backs and recoveries as compared to 2018.

Loans and deposits grew by 5% and 6%, respectively, during 2019 excluding DenizBank. Loans grew by 2% in the third quarter following flat growth in the second quarter. We continue to guide for mid-single-digit loan growth in 2019 and will provide guidance incorporating DenizBank next quarter.

The liquidity coverage ratio of 149.3% and the advances-to-deposit ratio of 91.8% continues to demonstrate the group's healthy liquidity profile, post-acquisition.

The NPL ratio improved to 4.8%. DenizBank loans were recorded at fair value on the acquisition date and thus resulted in no addition to NPL. The bank's capital ratio were impacted as a result of the increase in risk-weighted assets, as Shayne mentioned, although all ratios remain comfortably above the required minimum.

Moving on to net interest income on Slide 6. We see that margins advanced 1 basis points year-on-year to 2.82%, helped by higher margins from DenizBank. Excluding DenizBank, margins declined 5 basis points on higher deposit costs. Given the floating-rate nature of the loan book and the deposit profile, margins typically follow a pattern similar to short-term interest rates, rising during 2018 as the U.S. Fed increased rates before declining in 2019 as the Fed cuts rate. In Q3, we saw an 11-basis-point improvement in margin as the 19 basis point impact from DenizBank's higher margins more than offset an 8-basis-point margin contraction in the legacy business. These dynamics allow us to maintain margin guidance, and we expect NIM to finish the full year close to 2.80%.

Moving on to Slide 7 on funding and liquidity. We see that the liquidity coverage ratio remains healthy at 149.3%, while the advances-to-deposits ratio strengthened to 91.8%, at the conservative end of the 90% to 100% target range and demonstrates the continuing strong liquidity position of the group, post-acquisition.

Liquid assets are AED 107.3 billion or 18% of total liabilities. During 2019, we raised AED 12.7 billion of term funding in 9 different currencies with maturities out to 20 years. Debt and sukuk represents 9% of total liabilities, down from 10% at the beginning of the year, due to a smaller relative contribution from DenizBank. This is understandable given the challenges that DenizBank had in accessing the capital markets in previous years. And one of the immediate advantages for DenizBank is the greater access and more competitive pricing for wholesale funding. Deniz is experiencing a normalization in money market relationships as well as broad interest for a potential syndicated loan.

We now have Slide 8 on loan and deposit trends. We see that gross loans grew 5% during the first 9 months of 2019 with 2% growth in the third quarter, following a quiet second quarter. Corporate lending grew 6% with demand coming from the manufacturing, services, transport and the communications sector. Emirates Islamic registered a 4% loan growth as it saw demand from manufacturing, personnel and trade sectors. Consumer lending grew by 1% during the same period. As DenizBank has a large retail book, this will effectively double the size of the group's consumer loans.

CASA across the entire group now represents 44% of total deposits, and the domestic CASA engine for Emirates NBD remains strong and represents 50% of domestic deposits.

We have a new Slide 9 on loan composition, given its importance post-acquisition. And we thought it useful to include this slide, and hopefully, we'll continue sharing this with you going forward. It shows that loan book is now more diversified with 74% of the loans from the UAE, 3% from the GCC and 23% of the loans, international. This improvement in diversification also extends to sector level where only 34% of loans are sovereign, 24% retail and 42% corporate if we have also split the Islamic financing accordingly. The chart on the bottom left shows that 4% of the corporate and retail book relates to agriculture lending, with DenizBank being the second-largest lender of agri loans in Turkey.

And with that, I hand you over to Paddy to take us through the next few slides.

--------------------------------------------------------------------------------

Patrick Eugene Clerkin, Emirates NBD Bank PJSC - Head of IR [4]

--------------------------------------------------------------------------------

Thank you, Surya. Slide 10 shows the core fee income improved 26% year-on-year. This increase is driven by higher foreign exchange income from a strong global markets and treasury performance and FX, together with the raise in volume of card transactions. Investments securities and other income also showed a year-on-year improvement due to a higher gain on trading securities as a result of lower interest rates. The net effect of an improvement in core fee and investment securities income is a 31% year-on-year increase in total noninterest income.

On Slide 11, we see that, excluding DenizBank, costs were 3% higher quarter-on-quarter and flat year-on-year as the bank continues to manage costs tightly. As is characteristic of banks with a large retail network, DenizBank has a higher cost-to-income ratio. The Q3 cost-to-income ratio therefore rose to 31.3% and the year-to-date ratio increased to 30.3%, still within our 33% guidance.

On Slide 12, as we mentioned earlier, we see that the NPL ratio improved by 1.1% to 4.8% as DenizBank loans were recorded at fair value on the acquisition date and thus resulted in no addition to NPLs at the group level. We have recorded some NPLs and provisions for DenizBank relating to the 2 months post-acquisition. Provisions for the first 9 months of 2019 amount to AED 2.8 billion, a 149% increase on 2018. The bank has also just under AED 800 million of write-backs and recoveries, significantly less than the AED 1.4 billion recorded last year.

The cost of risk in the first 9 months was 103 basis points, up from 63 basis points in 2018. Earlier, we had signaled that the cost of risk for the existing business would rise to between 80 and 100 basis points due to lower write-backs and recoveries, coupled with a slower economy. This is slightly higher than the expected range as it now also includes the impact of DenizBank. The coverage ratio improved by 1% in Q3 to 126.6% on the back of increased provisions. The coverage ratio, including collateral, remains healthy at around 250%.

As Surya mentioned earlier, we will look to provide guidance incorporating DenizBank when we report next quarter's results.

Stage 1 and 2 ECL alliances, excluding the pre-acquisition impact of DenizBank, now stands at AED 8.4 billion or 2.2% of credit risk-weighted assets and this comfortably exceeds the 1.5% Central Bank requirement.

Slide 13 on capital adequacy shows that, in the third quarter, capital ratios declined as the bank absorbed AED 122 billion increase in risk-weighted assets. Common Equity Tier 1 ratio fell 370 basis points to 13.7%. However, all capital ratios remain comfortably above the minimum regulatory requirement.

The group generated AED 5 billion of net profit, which comfortably absorbed a AED 1 billion adjustment relating to acquired intangibles. There was also an increase in Tier 2 capital on increased eligibility of reserves from a larger credit risk-weighted asset base. The proposed rights issue of $1.75 billion will enhance the capital ratios, as Shayne mentioned, by approximately 1.5% and bring the Common Equity Tier 1 ratio in line with the average of the 4 large UAE banks.

Turning to divisional performance on Slide 14. We see that, in 2019, RBWM revenue improved 10% year-on-year. Net interest income grew by 11%, supported by growth in liabilities, while fee income advanced 8% due to an increase in cards and foreign exchange transactions. Loan balances rose 2%, supported by strong acquisitions of personal and auto loans.

New card sales were up 21% over the previous period, whilst deposits grew by 1%, backed by enhanced promotions and new product launches. Liv. has now over 300,000 customers as new products were extended to the Liv. offering. The bank announced the creation of E20., a digital business bank for entrepreneurs and SMEs.

Emirates Islamic delivered a 15% year-on-year increase in revenue to AED 715 million on higher lending activity. Financing receivables grew 3% and customer accounts increased by 9% during the year. CASA represents 63% of EI's customer accounts. And EI's headline financing-to-deposit ratio stood at 83% and is comfortably within the management's target range.

On Slide 15, we see that Wholesale Banking revenue declined 4% year-on-year as the compression in margins more than offset the growth in fee income. Fee income of AED 321 million increased 6% quarter-on-quarter, due to higher lending-related fees and increased investment banking activity. Loans grew 6% during the year from growth in the bank's core and short-term lending business. Strong deposit growth of 10% reflects the bank's ability to attract and retain liquidity.

Global Markets & Treasury revenue declined 32% year-on-year as net interest income was affected by falling interest rates. The foreign exchange and rate desks contributed to a year-on-year increase in fee income by taking advantage of volatility in their respective markets. Global Funding desk raised AED 12.7 billion of term funding through private placements with maturities out to 20 years in 9 currencies, and the desk also successfully raised a $1 billion Perpetual Tier 1 security earlier in 2019.

With that, I'll pass you back to Shayne for some further comments on DenizBank and his closing remarks.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [5]

--------------------------------------------------------------------------------

Thanks, Paddy. We've included a couple of extra slides to highlight some of the key features of the acquisition that have not already been covered elsewhere.

On Slide 16, it shows there was negative goodwill of AED 142 million from the acquisition. The fair value of net assets acquired was AED 10.1 billion, compared to a purchase consideration of AED 9.95 billion. A AED 1.6 billion fair value adjustment was applied to the AED 10.7 billion book value of assets acquired. The purchase price also includes just over AED 1 billion adjustment for intangibles relating to such things as brand value.

The final slide gives some further detail on the profile of DenizBank. There are 4 points to highlight.

Firstly, as well as providing loan diversification, DenizBank also provides margin diversification. As interest rates have fallen, DenizBank has widened its margins from 3.18% last year to around 4%. This helped reduce impact of falling rates on the overall group.

Secondly, DenizBank's NPL ratio during 2019 increased above the level indicated on the BRSA guidelines, which demonstrates DenizBank's proactive approach to risk management.

And thirdly, DenizBank's liquidity has improved since the start of the year, reflecting the benefit of improved access to funding.

And finally, one can see that DenizBank's cost-to-income ratio has improved during 2019 and since the acquisition is running at 33%. Again, it's a good achievement given its extensive branch network.

To summarize, I'm pleased that we have delivered another strong quarter of results with growth in both net interest income and fee income, while keeping expenses under control. We have made significant progress with strategic initiatives, including the acquisition of DenizBank, the increase in the FOL, the announcement of the rights issue. As we face pressure from falling interest rates and modest economic growth, we have a strong balance sheet to help us navigate through these challenges, which will enable us to continue delivering long-term value to our shareholders.

And with that, I'd like to open the call to questions. Operator, can you please go ahead?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) We can now take our first question. It comes from Shabbir Malik of EFG Hermes.

--------------------------------------------------------------------------------

Shabbir Malik, EFG Hermes Holding S.A.E., Research Division - VP of Research, Director of Banking & Banking Analyst [2]

--------------------------------------------------------------------------------

All the best on the consolidation and the Turkish acquisition. A quick question about the provisioning this quarter. I just want to understand that at the standalone level, can the bank take extra provisions to compensate for any risks that you see -- foresee in the Turkish subsidiary going forward? Because I noticed that provisioning this quarter of -- at the standalone level trended upwards. And the NPL formation, if I look at the standalone level again, it has not been that significant, so I just want to understand that.

Secondly, in terms of the provisioning model, the IFRS 9 model, what we've seen with one of the regional banks is that, even after the consolidation, there has been an extra provision taken through the P&L because of the, I guess, differences in the IFRS 9 model between the acquired entity and the acquirer. Is that being something that's been reflected this quarter, differences in the provisioning standards between DenizBank and Emirates NBD, that's been recognized through the P&L this quarter?

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [3]

--------------------------------------------------------------------------------

Thank you, Shabbir. This is Surya, I'll take those questions. In terms of the provisioning level, if you noted the -- when Paddy was taking us through the slide, we talked about lower write-backs and recoveries. So compared to last year, and this is I'm talking about the ENBD-based business, excluding DenizBank, compared to last year, write-backs and recoveries were almost AED 600 million lower. And that's one of the reasons why the net cost of risk goes up. And we had earlier indicated that the cost of risk would normalize in the 80 to 100 basis points range, and that was a range we gave excluding DenizBank.

As far as DenizBank itself is concerned, on acquisition date, which is 31st of July, we took over their asset fair value, which means it comes across, effectively, free of NPL from an accounting perspective. However, new NPL formation or increase in those NPLs post-31 July would have been recorded in our books, and that is a minor number at the moment.

As we go along for the rest of the year, it -- those figures could change, but you would note in the Note 22 to the financial statements operating segment, the retail and SME provisions of DenizBank that flowed through for 2 months are captured. It's primarily the corporate provisions that tend to get fair valued.

Moving on to the second part of your question, which is on IFRS 9 model. DenizBank has always been reporting IFRS 9 results because their earlier parent, Sberbank, also used to report under IFRS 9. So they have their existing models that have been certified by their auditors. The -- what we will be doing going forward is to make sure that model governance policies are aligned between the 2 organizations.

However, there could be differences in the model inputs themselves because the Turkish economic condition do not apply to the UAE and vice versa as well as the market dynamics in the 2 markets are different. So it's very, very likely that model inputs will be different, but model governance -- model methodology will be aligned. At the moment, during our due diligence, we did not find any significant reason to overlay, as you call it, their results, but this will be a continuing piece of work that we would do.

--------------------------------------------------------------------------------

Shabbir Malik, EFG Hermes Holding S.A.E., Research Division - VP of Research, Director of Banking & Banking Analyst [4]

--------------------------------------------------------------------------------

So basically, when you do the -- run the IFRS 9 model at the group level, you only run it at the ENBD standalone level -- and DenizBank level and then you consolidate the provision that those 2 models throw up rather than applying an ENBD-centric model.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [5]

--------------------------------------------------------------------------------

Shabbir, I'd like to clarify. We have modeled at a granular level. So even as ENBD, it's not fair to say ENBD because we have distinct models for ENBD Egypt, distinct models for ENBD Saudi, distinct models for Emirates Islamic because they have a different client profile and different models for the conventional Emirates NBD. So there is no such thing as a consolidated model. There is a model that is fit for purpose for a market or a customer segment or a product.

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

We can now move along to our next question. It comes from [Ali Sossan of SICO].

--------------------------------------------------------------------------------

Unidentified Analyst [7]

--------------------------------------------------------------------------------

It's actually similar to the previous question. I just wanted to know DenizBank's NPL is 0.2, as shown in your presentation. But according to DenizBank's website for Q2 2019, it was TRY 8 billion. Could you please explain the discrepancy between these 2 figures?

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [8]

--------------------------------------------------------------------------------

It is exactly what I told Shabbir earlier. DenizBank reports locally under BRSA guidelines. Those are slightly different from IFRS. However, the key answer to your question is that on the date of takeover, which is 31st of July, although Deniz has existing NPLs under local accounting, we take it over at fair value.

So let me give you an example. Let's say that there is a gross loan of 100 at DenizBank for which they have a provision of 60. In the local books, they would show you NPLs of 100, provision of 60. Therefore, coverage of 60, et cetera.

When we take it over on consolidation, post-acquisition, we take it over at a net fair value of 40 because that is the value that we assigned to it in the purchase consideration. So it comes to us at 40, NPL 3. Now we've done this earlier when we acquired Dubai Bank, when we acquired BNP Paribas Egypt. But those numbers were obviously small relative to the group, not to make much of impact on the group NPL. However, DenizBank is about 1/3 of our balance sheet, so it shows up.

But the more important point, if I may note, is really the diversification. We talked about the diversification of the loan book and that effectively spreads the risks and the reward we have in the organization and gives us different opportunities to grow the business as well. And that's really why you're seeing this number changing. All incremental new NPL formation in Deniz will be recorded as a consolidated NPL in Emirates NBD as well.

--------------------------------------------------------------------------------

Patrick Eugene Clerkin, Emirates NBD Bank PJSC - Head of IR [9]

--------------------------------------------------------------------------------

There's a couple of questions have come in on the web, one is from Alok Nawani, one's very similar and asking about the 200 million -- why is it 200 million? The 200 million relates to new NPLs that arose in DenizBank post-acquisition. And also asked about the profits that would accrue to Emirates NBD and why we're only showing 2 months' profits and not the profits since the -- back to 2018. Those profits are reflected in the purchase price. And as we mentioned, we only report the profit from the acquisition date onwards.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

(Operator Instructions) We can now move along to our next question. It comes from [Jagadasar Parsanari] of Franklin Templeton.

--------------------------------------------------------------------------------

Unidentified Analyst [11]

--------------------------------------------------------------------------------

So the minimum CET1 in the UAE is 11% for ENBD. And I believe it's 8% in Turkey. How will it be in a consolidated basis? Is it like 11% across applied in Turkey as well or is it a combination? That's one question.

And the second question is like you reported like 103 bps of cost of risk, excluding Deniz, in the last quarter. So that's like on the high end of your guidance. So going forward, do you see that high end going to be meeting? Or is it on the low-end or somewhere in the middle-end? Can you tell me about like what are the sectors that are impacting this high cost of risks? If you can talk about the risk nature and what's happening in the UAE, that would be great.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [12]

--------------------------------------------------------------------------------

On the capital ratios for Emirates NBD, we are a D-SIB, so we have a minimum CET1 of 11%. Now irrespective of what each local jurisdiction has, on consolidation, the minimum requirement for us would remain 11%. Also, as I mentioned earlier, when DenizBank is assessed, in Turkey, they are assessed under their local BRSA, which is the banking supervision authority -- local authority guidelines rather than IFRS. So there are differences between what the local regulator wants and what IFRS wants. We consolidate on IFRS and we'll still maintain above 11%.

On the cost of risk, the 103 basis points for 2019 includes DenizBank. Our guidance range had been excluding DenizBank. We will be providing fresh guidance at next quarter, which is with full year results, which will include 5 months of DenizBank. And going into 2020, we will provide all the full year guidance for 2020 at that point in time.

In terms of sectors, we do not really reflect sectors of NPL formation at this moment. However, at the year-end, we do provide an appendix that includes the Pillar 3 disclosures, which will show you sectoral breakdowns of NPL. That is done once a year. At the moment, the problem was not so much new NPL formation -- new provisions, it was more lower recoveries and write-backs. And these are just falling asset values generally across all asset classes. So that impacts recoveries and write-backs.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

We can now move along to our next question. It comes from Aybek Islamov of HSBC.

--------------------------------------------------------------------------------

Aybek Islamov, HSBC, Research Division - Analyst [14]

--------------------------------------------------------------------------------

I wanted to ask you about the, firstly, clarify the Network International gain on sale. So I think you mentioned that includes both realized and unrealized gain on sale in third quarter, right? So that's -- I wanted to clarify that in the first place.

And I think, secondly, you just spoke about the cost of risks in the UAE. Well, definitely, it looks like it picked up, the bad asset charges in the core UAE business. They increased quite a bit quarter-on-quarter. And you mentioned that recoveries have reduced.

So my question is what's your sense for the cost of risk? I guess are we getting on to the new level of cost of risk in the core UAE business and domestic business here? That's my second question; and that's it for now, thank you.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [15]

--------------------------------------------------------------------------------

Okay. I think I'll take the NI question, and I'll pass on to Paddy for the cost of risk. Just in terms of NI, today, we continue to own 11.9% of the company, still. The last quarter, we were above 20%, so we were accounting for it as an associate then. Now we stopped accounting for it as an associate. And in accounting terms, we treat the asset as fair value OCI, which is through other comprehensive income. And there is a Note 28 in the financial statements that talks about the accounting aspects.

What it means is we recover -- sorry, we record profit on the unrealized profit on the unsold portion. However, any subsequent gain or loss on that unsold portion would not affect income statement. It will go directly to equity. Now that is an election choice that is allowed under IFRS 9, and we have taken that.

--------------------------------------------------------------------------------

Patrick Eugene Clerkin, Emirates NBD Bank PJSC - Head of IR [16]

--------------------------------------------------------------------------------

Aybek, just regarding the cost of risk. Yes, one of the components where it has picked up is for the lower write-backs and recoveries. And I mentioned that we had AED 1.4 billion of write-backs and recoveries last year. The comparable number this year is AED 800 million. So that is one of the drivers.

Again, what we stressed at the beginning of the year when we gave our 80 to 100 basis points guidance was that the 63 basis points that we had last year was historically low. And long-term average, we've seen closer to the 80 to 100 basis points, so we did expect that reversion up towards 80 to 100 basis points.

In terms of future guidance, we haven't given any guidance for next year onwards. We will look to do that at the next quarter results, not just for cost of risk, but for all the other metrics that we give guidance on. And -- but I do stress that the 80 to 100 basis points that we guided for was in relation to this year's cost of risk.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [17]

--------------------------------------------------------------------------------

But it's fair to say that it's harder to get recoveries in a very small property market, given that most of our collateral is property, yes? So generating sales for those recoveries in this market is difficult. And some of the provisions -- you see is us topping up our provisions on existing portfolio to reflect that decrease in the valuations that we have in the security as well.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [18]

--------------------------------------------------------------------------------

We have a few questions on the web, which I will take. One is from Alok Nawani of Ghobash. Continuing on the theme of cost of risk, he wants to know what you expect it to be -- the figure to be in Q4 '19 and he is looking as far forward as 2021.

I think we haven't yet given guidance into 2021, and we will give guidance for 2020 with the results -- full year results in January. For the moment, as Shayne and Paddy have mentioned, we've talked about a slight increase in the cost of risk, but we are not talking about out-of-range cost of risk.

Alok has a second question on how should we think about ENBD's dividend payout ratio, post- the consolidation of Deniz. Alok, that is a shareholder call, and you will know the answer to that at the next AGM. We have, as you know, in the past, been consistent with the 40 fils dividend payout -- payment, and it is fair to say that the financials of the bank, post-acquisition, will continue to support at least that level of dividend payout if the shareholders wish to choose to maintain that and if the regulators approve.

There is a question from [Mohammed Al Namash of Avalon]. He says, what will be the impact of the latest request from the banking regulation commission in Turkey to reclassify loans as nonperforming by the end of the year? Will it -- what will the impact be on Emirates NBD NPL ratio and coverage?

Shayne?

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [19]

--------------------------------------------------------------------------------

I think the good thing about that was, in some regards, it took a lot of the management argument out of NPLs because we, as you know, by the time we'd acquired DenizBank, we did 2 due diligence on the bank. And we'd been seeing all their high-risk or large exposures for about 18 months. So we had a very good view of what our views were on the portfolio.

And in fact, the BRSA coming out with that list was quite helpful for us because it's -- it took any argument out of -- with the existing management over ourselves because it concerned the portfolio that we had highlighted. I think the over 200 names that came out, I think we had 2 small ones that weren't picked up because it was too small for us to see it. For us, it was a confirmation that we'd done the right due diligence on the portfolio.

I think on the NPLs, ratio and coverage, I think we just need to see how that pans out as we go through the portfolio going forward.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [20]

--------------------------------------------------------------------------------

Thank you, Shayne. And there's one more question on the web from [Mohammed Mustaf Hassana]. He says, how much of DenizBank's funding and assets are in TRY versus USD? And what are the benchmark rates and duration for DenizBank's liabilities and assets?

[Mohammed], these are details that are public in DenizBank's own financials. They are a listed company in Turkey, so I refer you to their Q2 financial statements. Or if you wait another week or so, their Q3 financial statements will be published and most of these questions would be answered. We would be sharing these dynamics in our consolidated balance sheet to some extent at the year-end financials. We do not show this at the interim.

There's a question from [Elena Fonseca from the National Investor]. Can you share how you are going to deploy the proceeds of the rights issue? And best of luck to Surya.

Thank you very much, [Elena]. I need that in my retirement. But Shayne, would you like to take the first question?

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [21]

--------------------------------------------------------------------------------

It's only a semi-retirement.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [22]

--------------------------------------------------------------------------------

Yes, semi-retirement.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [23]

--------------------------------------------------------------------------------

I think the first thing I'd say is that if you look at the average of the 4 large banks in UAE, the CET1 ratio is around 15%. So I think that's the first thing I'd say about that. For us, we see good growth opportunities in Saudi, Turkey and Egypt. So I think, from our perspective, there's plenty of growth opportunities outside the UAE where -- don't get me wrong, do we still want to grow in the UAE? Absolutely. But if you look at loan growth within the UAE, it's pretty constrained.

So you know, whilst you've analyzed this long enough. We're a conservatively run bank. We like good capital buffers. We don't like to be below industry average, but we also believe that we can use this capital productively in our offshore markets as they grow. And also, it gives us strategic flexibility if something else comes along.

But having said that, before you ask me the questions, no, we are not considering anything at the moment, we certainly baked down to this Deniz acquisition.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [24]

--------------------------------------------------------------------------------

Shayne, the next question is also for you, from [Mohammed Mustaf Hassana]. How healthy is the UAE Retail Banking market? Any signs of recovery?

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [25]

--------------------------------------------------------------------------------

I think that the way I would answer that question is it depends who you are. And what I mean by that is we've invested, as you know, a lot of money in our digital technology and we would argue that we're the market leader in the Middle Eastern digital technology and we are picking up market share. So even though the market is not growing much, we are picking up market share.

So if I look at our bad debt in Retail Banking, they really haven't increased much at all despite how we feel in the economy. So our risk management on that retail book has been very strong. We are seeing market share growth in that. And I think that will continue because, if you think about it, if we're arguably the best digital bank in the country and the region, and we're investing so much more in it as we come to the end of our digital transformation by the end of next year, how are these other banks going to compete with our technology going forward with that investment?

So I think even in a market that is not showing big growth, you can still grow by taking market share. And I think our investment in technology is certainly paying off when it comes to growing our customer base. And you can tell that by things like Liv., over 300,000 customers. A lot of banks in this country haven't even got 300,000 customers. So I think we've done some great innovation that's bringing more clients to the bank and more market share to the bank.

--------------------------------------------------------------------------------

Patrick Eugene Clerkin, Emirates NBD Bank PJSC - Head of IR [26]

--------------------------------------------------------------------------------

Daniel, is there any more calls on the line? We'll pass back to the phone lines.

--------------------------------------------------------------------------------

Operator [27]

--------------------------------------------------------------------------------

Yes. We have a couple of questions on the phone lines. We can now take our next question. It comes from Suleman Soorani of Tricap Investments.

--------------------------------------------------------------------------------

Suleman Soorani, Tricap Investments - Director [28]

--------------------------------------------------------------------------------

I've got 3 questions. First, on the capitalization. Right now, you stand at about 13.70% CET1 versus 11% requirement and you're doing a rights issue, which will boost it up to 15%. So I want to understand what sort of CET1 are you comfortable with. Like long term, you really want to maintain 15%? Or -- because I mean, frankly, right now, even at 13.70%, you've got a decent buffer there, right? So I just want to understand the rationale for right and would you want to keep it at 15% going forward? Number one.

Number two, on the provision calculation, if I look at the financial statement, I get about AED 35 billion provision on AED 22 billion NPL, so that's about 162% coverage versus 127% shown on the presentation. So I'm assuming you're adjusting it for the ECL provision. But how does it work? Because for our calculation, we still assume that you are 162% covered, which is very adequate, right? So how does it compare with what you've shown in the presentation?

And thirdly, on the outlook on DenizBank, again on Slide 17. I see that DenizBank had AED 1.7 billion profit in FY '18 and this year we're looking at annualized about AED 1.2 billion. So how is the outlook for 2020? Do you think you can -- the bank can go back to AED 1.77 billion number in 2020? And I'm assuming you're all calculated on the same exchange rate, right?

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [29]

--------------------------------------------------------------------------------

Can you just repeat your last question again, please?

--------------------------------------------------------------------------------

Suleman Soorani, Tricap Investments - Director [30]

--------------------------------------------------------------------------------

Yes. So DenizBank profit in FY '18 was AED 1.8 billion. And this year, if I just annualize the 2 months number, I'm looking at about AED 1.2 billion. So going forward, say, in 2020, are you looking DenizBank to at least match the FY '18 profit? What's the outlook, basically? And also, the numbers are all calculated on the same exchange rate, right? TRY 5.75 or whatever the number is for all, like FY '18 exchange rate is the same as FY '19, right, for the presentation?

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [31]

--------------------------------------------------------------------------------

Okay. Let me start with your second question. In terms of the provision and the coverage, if you look at the financial statement, Page 33, Notes to Risk Management 22, we have a line on additions through acquisition of close to AED 8 billion. Now that was brought in just to show the gross and net and reconciliations in the financial statement. And going forward, you'll be able to see the movement in both provisions and NPLs going forward.

However, the acquisition assets are really on a net asset basis, which is why the IR slide shows you like 22 on -- closer to like 22-on-22 number, 28-on-22 number. We can show you reconciliations, if you want, working on the notes that I said, if you come to us off-line. That is more of a presentation issue.

In terms of capital buffers, we have always maintained conservative capital buffers. And as Shayne mentioned earlier, we need capital to both support our organic and our inorganic growth strategies. We have never been public about what buffer we maintain. However, it's fair to say that you have a regulatory minimum. You have a normal Emirates NBD conservative buffer. And now that we have Turkey, we also need to have a little bit of a buffer for the foreign exchange volatility that you mentioned as well.

In terms of understanding what is the profit of DenizBank going forward, the IR slide shows 2018, 2019, 6 months. And that's based on public numbers that DenizBank has disclosed. Those are their BRSA numbers, they are not the IFRS numbers. What we show you for the 2 months post-acquisition is the IFRS numbers, which are, of course, restated at average exchange rates applicable to each month.

So going forward, it may not be possible just to say I multiply by 6 to get an annualized number because exchange rates could be different. Also, the dynamics of Turkey being such interest rates have moved dramatically as have currency rates in the last 12 months the provision outlook will also change. So bear with us for one more quarter. We will give you guidance in January. But it's fair to say that as -- and it's not a short-term statement. It's more of a medium-term statement. It's fair to say that as the risk position normalizes in Turkey, there is definitely upside to the earnings.

--------------------------------------------------------------------------------

Operator [32]

--------------------------------------------------------------------------------

We can now move along to our next question. It comes from Hootan Yazhari of Bank of America.

--------------------------------------------------------------------------------

Hootan Yazhari, BofA Merrill Lynch, Research Division - MD and Head of MENA & Global Frontiers Equity Research [33]

--------------------------------------------------------------------------------

With a few months at least of DenizBank now behind you, I really wanted to just get some comments on what are the opportunities that you see in optimizing this bank. Where are the areas where you think you can really add value both on the asset side and on the liability side? And anything that surprised you that they've done particularly well or areas that have surprised you negatively? I really want to understand if there are significant opportunities for you as a new parent company to add significant value to what you've acquired.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [34]

--------------------------------------------------------------------------------

Okay. I think that the first thing -- let's just talk about when we looked at the opportunity of Deniz. And I'd say the first thing when we built the financial model for Deniz, to obtain what we thought was a fair value, and you remember we got a significant discount from the initial price to what we end up paying for Deniz. Our financial model always assumed we would get an increase of bad debts in Turkey. Our financial model always assumed we would have a reduction in the value of the Turkish lira. So the first thing I'd say is we built our model for this acquisition quite conservatively when we came to the value that we were prepared to pay for this organization.

On where we can add value, I think the first thing we've been able to demonstrate value just about immediately is on their funding and liquidity. They were us, as the new parent, versus a sanctioned silver bank means that there's capacity just to go into the syndicated loan market, as all Turkish banks do, to raise money with 0 debt. So it went from 0 to now they're out in the market gaining bids and getting -- opening all their interbank limits from a lot of banks that would not historically have opened their limits because of the sanctions of Russia.

Having said that, I would reiterate, Deniz itself was never sanctioned. But because of the Russian parent, some banks just would not do business with them. So I think that's the third thing.

So I think, from liquidity, we will be restructuring some of their capital. There's a bunch of Tier 2 that we took over from the Russians that we will restructure to make that more efficient.

On the business side, I think, on technology, they sold to about over 30 banks their technology. They've got a technology company called Intertech that provides DenizBank itself with technology and also a lot of other banks with technology, including HSBC offices.

Now what I do not foresee in the foreseeable future that would do a massive merger of systems other than what we have already done, we can integrate things like risk management systems, et cetera, GLs, et cetera. We have been, as we've been doing in our technology in UAE, we have been doing -- getting a lot of Turks over to the UAE to actually do a lot of our software work over here. So we now have the capacity internally to do that and source people on a lot cheaper basis within Turkey. So I think, from a technology, leveraging the 2 organizations will provide synergies over time.

When it comes to loans, actually, if you look at the trade and capital flows between Turkey-Egypt, Egypt-Saudi, Turkey-UAE, it's considerable. There is very large trade between those 3 countries. And guess what, we're in all 3. And as you know, we're growing in Saudi as well. We're got another 20 branches opening in Saudi. So capturing those trading capital flows for us, also going to be important. And one of the reasons we wanted to go into Turkey was our customers are investing there and our customer buying assets there. So also, we think we can add customers to their base.

Someone's going to ask me, is Brexit going to happen or not? If Brexit happens, we now also have with their Austrian/German operations, an easy solution for our European business with that. So I think there's quite a lot of business that we can do between the network. And I think one of the things we need to leverage very much around is the network effect of the international locations.

But having said that, Deniz is a well-run bank in its own right. It's got over 700 branches. It's been in existence for over 20 years. It's been through lots of crisis. It's got strong management, strong technology and they're good at what they do. So sometimes trying to teach them to do your way is the wrong thing to do because markets are different. And certainly, Turkey is a different market to the UAE where we're predominantly strong.

--------------------------------------------------------------------------------

Patrick Eugene Clerkin, Emirates NBD Bank PJSC - Head of IR [35]

--------------------------------------------------------------------------------

Daniel, before we go to the last 2 questions on the phones, there's one final question on the web, and I'll give that to Shayne. The question is from [Vijay Alfayer] asking any M&A opportunities under consideration in the Kingdom of Saudi Arabia.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [36]

--------------------------------------------------------------------------------

We're booked in Saudi many, many, many times. And to be honest, it's one of our preferred locations. But we haven't been able to find anything suitable to date. One of the key criteria we have when we do an acquisition is we have to have control. We have to be able to consolidate. It doesn't make a lot of sense, otherwise, in your numbers unless you can consolidate. There are opportunities in Saudi. But actually, to have management control and board control to enable consolidation, there's very few opportunities. So we will continue to build on the organic side. But if something comes up, obviously, Saudi is a market we'd love to be much bigger in than we currently are.

--------------------------------------------------------------------------------

Patrick Eugene Clerkin, Emirates NBD Bank PJSC - Head of IR [37]

--------------------------------------------------------------------------------

Daniel, we go back to the lines. I think there's 2 final questions queuing.

--------------------------------------------------------------------------------

Operator [38]

--------------------------------------------------------------------------------

We can now move to our next question. It comes from Jagdish Bathija of Lazard.

--------------------------------------------------------------------------------

Jagdish Bathija, Lazard Asset Management LLC - VP and Portfolio Analyst [39]

--------------------------------------------------------------------------------

With regards to the strategy in Saudi, I believe you are licensed to open about 20 branches. Where do we stand there? And do you think, with 20 branches, you could make a serious dent, I mean, or do we see another acquisition on the cards, mid-sized bank in the near term?

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [40]

--------------------------------------------------------------------------------

Well, since -- yes. Since we brought Neeraj along as our Head of International this time, how about we let him answer that question? Neeraj, you get one.

--------------------------------------------------------------------------------

Neeraj Makin, Emirates NBD Bank PJSC - Executive VP, Head of Group Strategy & EXCO Coordinator [41]

--------------------------------------------------------------------------------

Right. So in terms of the branches, we got approval to kind of open the branches back in April. And as you would know, it takes time for us to kind of scout for locations, get the real estate organized and get the infrastructure ready. We envisage to have all these 20 branches up and running in the next 24- to 36-months period, depending upon how soon we are able to get these locations finalized. And for every location, we have to go back to somewhere and get that location approved, so that obviously takes its own piece of time. So that will be a gradual kind of uplift from what we have from, currently, 4 branches to 24 branches.

With regard to an acquisition, I think Shayne answered quite clearly that until and unless something changes in Saudi in terms of what is allowed, because right now, we have a limit that we cannot own more than 40% of a bank out there, which doesn't allow us to consolidate or control the bank. So unless some of that -- those regulations change, and there's been lots of changes in Saudi which have been coming, so we're not saying that, that cannot happen, that probably could happen. If that happens, then if they're the right kind of opportunity, we'll certainly look at it.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [42]

--------------------------------------------------------------------------------

I think it's fair to say that with Saudi, they've treated us extremely well. We had only one branch for many, many years. We asked for more, they gave us another 3. And when we successfully opened that, they gave us another 20.

Now when you say, I think you asked the question is that enough. Frankly, I think, probably, 20 -- 24 branches around 24, 25 is enough for a while. As you know, branches are becoming less and less relevant in a network. And in the digital side, it's becoming more and more important. We believe you still need some bricks-and-mortar. Both Saudi and the UAE are very heavy cash economies and it needs those outlets. So I think we'll continue to see bricks-and-mortar for the foreseeable future.

The size, I think, of the footprint will change. They will become smaller as we have less transactional volume over the counters and there will be more advisory wealth management. So I think, in Saudi, we will have some purely digital branches, teller-less, as we roll out that network. But I think the bricks-and-mortar and the branding is also very important when you build into a market as you go forward. But it's fair to say that our first avenue to push in Saudi as we go forward is really around our digital strategy.

--------------------------------------------------------------------------------

Operator [43]

--------------------------------------------------------------------------------

We'll take our very last question today. It comes from Naresh Bilandani of JPMorgan.

--------------------------------------------------------------------------------

Naresh N. Bilandani, JP Morgan Chase & Co, Research Division - Research Analyst [44]

--------------------------------------------------------------------------------

Just one question and on Network International, please. So your second -- your sale of the second tranche of NI, just trying to understand the strategic thought behind this. Was this purely being opportunistic to take advantage of the valuations while supporting the capital? And what could be the plan for the balance 11.9% stake?

If this was just being strategic to build up the capital base, my understanding is that if you wanted to record a capital mark-to-market support from NI on your capital ratios, that could have been done doing a sale of much lower than, I think, about -- just about 10% or over that you did recently. On the other hand, if NI still remains a strategic investment, then what is the plan for working together since it seems like ENBD has strong ambitions to grow in Saudi and Network also has similar ambitions. So do you foresee any synergies from this perspective in your view?

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [45]

--------------------------------------------------------------------------------

Naresh, this is Surya. I'll start with the answer and then I'll ask Shayne if he wants to add onto that. First of all, you'll have to excuse both Shayne and myself from talking about future plans because we are both directors of Network International, which is a London-listed company. And if we say anything now that we should not be saying in this forum, we will both be in trouble, and I'm sure you wouldn't want that to happen to us, at least not before my semi-retirement.

But just going back to the broader question, as you know, we have incubated and developed this business over the past 20 years. And even almost 10 years back when we first sold 49% to a private equity partner, it was quite evident that there would be an exit moment. And as Neeraj mentioned, we do not remain in businesses that we do not control, whether it be a bank or a non-bank.

The IPO marked a seminal moment to bring a UAE champion to the international market, and we were very proud of that. We are very strong in our cards business, as you know, and we continue to have a very strong customer client relationship with Network International for our credit card business. And as we continue to grow in other markets, whether it be Saudi or Egypt, we continue to partner with Network International in many of those markets.

And NI, frankly, is better able to execute its growth and development strategy without being viewed as associated with one banking partner. So the IPO also gives them a certain level of management and corporate independence that helps them gather future business. As I said, just help keep Shayne and myself out of jail. Shayne, do you want to add onto that?

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [46]

--------------------------------------------------------------------------------

No, I don't want to go to jail.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [47]

--------------------------------------------------------------------------------

Daniel, just a final check if there's no more questions.

--------------------------------------------------------------------------------

Operator [48]

--------------------------------------------------------------------------------

No, we have no further questions today so at this point I'll hand back to the speakers for any additional or concluding remarks.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [49]

--------------------------------------------------------------------------------

Well, thank you very much for joining us today and I'd like to thank you for your participation. Apologies if you found the acquisition accounting of Deniz as confusing as I do.

--------------------------------------------------------------------------------

Suryanarayan Subramanian, Emirates NBD Bank PJSC - Group CFO [50]

--------------------------------------------------------------------------------

You have blamed me for that.

--------------------------------------------------------------------------------

Shayne Keith Nelson, Emirates NBD Bank PJSC - Group CEO [51]

--------------------------------------------------------------------------------

Yes, I had to blame Surya and I had to sit down and say explain this to me. So I think it's good to see some good questions that were similar to the ones I had that were -- when I saw the consolidated numbers. So thank you very much for your participation. I think we've delivered a strong set of numbers. Look forward to talking to you at the end of the quarter, early next year. Cheers.

--------------------------------------------------------------------------------

Operator [52]

--------------------------------------------------------------------------------

That will conclude today's conference call. Thank you for your participation.