GCC Economic & Banking system outlook & Trade Finance Capabilities September 2013 Frank Haak, Transaction Bank Group BNP Paribas Fortis

2 Gulf Cooperation Council (GCC)

3 GCC Outlook elevated public spending - forecast to rise 6-7 % in improving private sector conditions overall economic growth 4 % (non-oil 6 %) in H2014 GCC inflation remains low at 2-3 % in fiscal surplus decline from 12 % of GDP in 2012 to 5 % in 2014 GCC needs to address job creation & fiscal reforms

4 Country by country Bahrain - Restored oil output & high government spending to drive faster growth - GDP growth forecasts: 4.6 % in % in Budget deficit to widen further Kuwait - Growth supported by strong consumer sector – high oil revenues – hope for improvement in execution of government projects - GDP growth forecasts: 1.3 % in % in 2014 Oman - Elevated levels of public spending – sectors like transport/trade/tourism perform very well - GDP growth forecasts: 4.4 % in 2013 – 3.4 % in Rapid population growth – job creation high on governments agenda

5 Country by country - continued Qatar - Robust non-hydrocarbon growth as a result of the governments investment program (USD 200 billion development spendings) - Rising rents drive inflation (forecasts 2013 => 3.4 % and 2014 => 4 %) / current account surplus reduction / fiscal space narrows - GDP growth forecasts remain high: 5.7 % in 2013 – 6.2 % in 2014 Saudi Arabia - Non-oil growth moderates – also government spending growth may be entering a softer phase… but will remain at solid levels - Noticed the highest GDP growths of the GCC in 2012 (oil & non-oil) - Inflation & budget surplus remain under control UAE - Further signs of economic recovery – took advantage of its safe heaven status in the MENA region - Strong trade ties with emerging markets in Asia – important role for the upcoming African markets - Real estate sector in Dubai appears to have turned a corner with higher levels of buyer/investor interests - GDP growth forecasts: 2.7 % in 2013 – 2.1 % in Reduction in government bailout spending

6 Saudi Arabia 1.Banking system: strong banking system – support authorities systemic banks Private sector credit growth eases but remains solid – liquid banking system L/C and L/G heavily used 2. BNP Paribas Fortis offers in trade: Confirmation of L/Cs and re-issuance of L/Gs on 15 banks (main players are National Commercial Bank, Arab National Bank, Banque Saudi Fransi, Samba Bank, Riyad Bank, Saudi British Bank, Saudi Hollandi Bank, Al Rahji Bank) open and silent confirmation all-in duration of 36 months - longer tenors case by case BNP Paribas has branch in Riyadh.

7 Bahrain 1. Banking system: two banking systems (local retail banks & offshore banks) Banking system is recovering but political uncertainty has its impact L/C and L/G heavily used 2. BNP Paribas Fortis offers in trade: Confirmation of L/Cs and re-issuance of L/Gs on 7 banks (main banks: Ahli United Bank, Arab Banking Corporation, Bank of Bahrain and Kuwait, Gulf International Bank, National Bank of Bahrain) open and silent confirmation all-in duration of 36 months - longer duration case by case BNP Paribas Bahrain branch is the hub for BNP Paribas network in the GCC

8 Kuwait 1. Banking system: banks have beside NPL also important amount of restructured loans (part of it on investment companies and indirectly in real estate – takes time to digest…) Credit growth improved, but softer than most other Gulf countries L/C and L/G heavily used 2. BNP Paribas Fortis offers in trade: Confirmation of L/Cs and re-issuance of L/Gs on 12 banks (main banks are National Bank of Kuwait, Al Ahli Bank of Kuwait, Commercial Bank of Kuwait, Ahli United Bank, Burgan Bank, Industrial Bank of Kuwait, Kuwait Finance House, Gulf Bank) open and silent confirmation all-in duration of 36 months - longer tenors case by case BNP Paribas has branch in Kuwait

9 Oman - Qatar 1. Banking system: well capitalized/monitored banking systems Public sector drives deposits and credit growth Focus on liquidity management by financial authorities 2. BNP Paribas Fortis offers in trade: Confirmation of L/Cs and re-issuance of L/Gs on 7 Omani (main banks in Oman are Bank Muscat, National Bank of Oman, Oman International Bank, Bank Dhofar, Oman Arab Bank) and 9 Qatari bank (main banks in Qatar are Commercial Bank of Qatar, Doha Bank, Qatar National Bank, International Bank of Qatar, Ahli Bank QSC, Al Khalij Commercial Bank, Qatar Islamic Bank, Qatar International Islamic Bank) open and silent confirmation all-in duration of 36 months - longer tenors case by case BNP Paribas has branch in Qatar

10 United Arab Emirates (UAE) 1.Banking system: Abu Dhabi based banks are better capitalized & government support is a fact some Dubai banks still have important restructured loans Bank lending remains weak & liquidity management high on the agenda Government issues tighter lending restrictions to prevent property market speculation (lesson from the past) 2. BNP Paribas Fortis offers in trade: Confirmation of L/Cs & re-issuance of L/Gs on 20 UAE based banks - main Abu Dhabi banks are National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, First Gulf Bank, Union National Bank - main Dubai banks are Emirates-NBD Bank, Mashreq, Commercial Bank of Dubai - main other Emirates based banks are National Bank of Fujairah, Bank of Sharjah, National Bank of Umm Al Qaiwain, National Bank of Ras Al-Khaimah open/silent with all-in duration of 36 months - longer tenors case by case BNP Paribas has operations in UAE (Abu Dhabi, Dubai)

Network of Trade Finance experts around the world Dedicated sales force: more than 250 professionals addressing mainly 15,000 clients Global synergy across the banks entire network.

12 Any import/export need with any GCC country can be handled by BNP PARIBAS FORTIS with thanks for your attention