United Bank Limited · PSX:UBL
United Bank — FY2020 Earnings Presentation
48 slides from United Bank's earnings presentation, Feb 26, 2021
Slide 1: UBL 2020 Results Performance Highlights
UBL 2020 Results Performance Highlights Investor Relations Conference Call February 26, 2021 Speakers: Mr. Shazad Dada - President & CEO Mr. Aameer Karachiwalla - Chief Financial Officer Mr. Arif Saifie, CFA - Financial Controller & Head of Investor Relations
Slide 2: Table of Contents
Table of Contents 1 Overview of Performance for 2020 2 Our Segments are poised to grow as economy opens up 3 Financial Summaries 4 A Historical Perspective - 6 Years Review 5 Quarterly Trends 2
Slide 3: Overview of Performance for 2020
Overview of Performance for 2020 3
Slide 4: The Big Picture so far on Macros – UBL Delivers consistent ROE
The Big Picture so far on Macros – UBL Delivers consistent ROE Economy signals signs of stability… Market deposits grow by 22% in 2020 to reach at Rs. 17.9 tln (UBL up 17%) Currency in Circulation up 17% in FY’20 … 35% of Market Deposits Market Advances increase by 4% at Rs. 8.5 tln Inflatio
Slide 5: Balance Sheet Review - Deposit led build up supports core earnings
Balance Sheet Review - Deposit led build up supports core earnings Rs in bln Var % Deposits Performance - Led by Branch Banking Group Balance Sheet Dec'20 vs Dec'20 Dec'19 Dec'19 Avg Dom deposits at Rs 1.3 tln, up 15% YoY - inc vols of Rs 167 bln Advances 530 636 -16.6% Avg Domestic current acco
Slide 6: 2020 Results - Overall revenues up with strong positioning in Investments
2020 Results - Overall revenues up with strong positioning in Investments Rs in bln Rs in bln Revenue Performance – better margins Income Statement Var % Var % Domestic NII (over 73% of Bank’s revenue) up 27% YoY 2020 2019 Q4'20 Q3'20 Bank NIMs improved to 4.7% in 2020 from 4.3% in 2019 Interest
Slide 7: Key Conclusions and strategic priorities
Key Conclusions and strategic priorities Digital Improve Branch profitability with cost synergies Deepening and entering new markets, segments, quality credits Building Digital strategy aiming at creating a wider Payments system Create a more sustainable business model for International Stronger com
Slide 8: Key Highlights Capital Base strengthens with conservation and de-risking
Key Highlights Capital Base strengthens with conservation and de-risking Capital Adequacy Ratio Risk Weighted Assets +549 bps 147 158 24.4% 49 Dec'19: 54 Dec'20: 533 18.9% Rs 837 bln 642 Rs 745 bln 1.3% 4.0% 1.2% Credit Market Operational Credit Market Operational Risk Weighted Assets Concentration
Slide 9: Key Ratios for the quarter – NIM compression but with controlled expense base
Key Ratios for the quarter – NIM compression but with controlled expense base Gross Revenues Cost to Income Ratio Net Interest Margins Rs in bln -10.3% Rs in bln -61 bps 26.0 5.3% 52.6% 52.9% 4.7% 22.0 23.2 20.8 4.5% 4.6% 20.9 4.1% 4.3 43.0% 42.6% 4.7 4.1 37.2% 4.5 4.1 21.8 19.1 21.8 16.4 17.3 16.7
Slide 10: Drivers for earnings – core KPIs review for 2020 vs 2019
Drivers for earnings – core KPIs review for 2020 vs 2019 Key Metric 2020 2019 YoY Delta BUSINESS VOLUMES AND REVENUE DRIVERS 1 Average Current Account Growth – YoY 13.4% 8.0% 5.4% 2 NTB run rate - C/A per branch per day 1.8 1.6 0.2 3 Aggregate number of NTB C/As in '000s 571 534 37 4 Domestic Cost o
Slide 11: Summary of Results for the year ended December 2020
Summary of Results for the year ended December 2020 Key Metric 2020 2019 YoY Delta RETURN ON EQUITY 1 Profit Before Tax - Rs in bln 34.2 34.2 0% 2 PAT - Rs in bln 20.9 19.1 9% 3 RoE 13.9% 13.8% 16 bps 4 EPS – Rs 17.07 15.63 9% 5 Capital Adequacy Ratio 24.4% 18.9% 549 bps 6 Risk Weighted Assets - Rs
Slide 12: Key Highlights 2020 Balance Sheet core positions
Key Highlights 2020 Balance Sheet core positions Bank Level Deposits 20% Current 43% Saving Rs 1.6 tln Term PBT Rs. 34.2 bln 37% RoE 13.9% Net Advances Investments 18% T-Bills 18% CAR 24.4% 31% Domestic Fixed PIBs Rs 530 bln Rs 1.1 tln Floaters PIBs International 30% Others 82% 21% 12
Slide 13: Market Information – Build up in Book Value
Market Information – Build up in Book Value Trends - KSE 100 Index and UBL’s share price Equity and Book Values 320 55 Max Price in 2020: Rs. 181.96 Price as at 23-Feb'21: Rs. 123.34 50 Rs in bln Cons. Equity Dec’20 - Rs. 208 bln 270 Cons. Book value Dec’20 - Rs. 170 per share 184 169 45 220 152 159
Slide 14: Recognition and Awards
Recognition and Awards UBL “Firsts” – Initiatives to stay ahead of the market Market recognition and awards Recognized for the highest number of Roshan Digital Accounts opened First Commercial Bank in Pakistan to launch Branchless Banking (UBL Declared ‘Best Digital Bank in Pakistan for 2020’
Slide 15: Our Global Presence - Pakistan business dominates performance
Our Global Presence - Pakistan business dominates performance Globally around 20% of the asset base is overseas PAKISTAN BRANCHES 1356 Asset mix by region 2020 2019 OVERSEAS BRANCHES Domestic Operations 80.3% 77.9% 14 International Operations 19.7% 22.1% SUBSIDIARIES 4 Middle East 12.4% 15.1% Europe
Slide 16: Our Segments are poised to grow as economy opens up
Our Segments are poised to grow as economy opens up 16
Slide 17: Key Highlights Drivers of performance
Key Highlights Drivers of performance 1 He Strong Deposits Growth Domestic Deposits growth of 17% lead by build up in CASA - one of the lowest Cost of Deposits 2 Prudent Asset Lending Maintaining all large relationships – with focus on NFI and with efficient capital allocation Digital - The Future o
Slide 18: Core Business Segments Branch Banking Group
Core Business Segments Branch Banking Group Deposit Market Share Total Customers 10 mln + 571 K new C/A opened 7.9% at Dec’20 (Dec’19: 8.3%) Branch Banking - 5.5 mln + Current Account NTB Run Rate Domestic Deposits - PE Rs in bln Omni Accounts – 2.5 mln + Per Branch Per Day - 1.8 in 2020 16.8% (2019
Slide 19: Core Business Segments Corporate Banking Group
Core Business Segments Corporate Banking Group Rs in bln 410 Average Performing Advances 388 57 64 63 60 290 264 FY'19 FY'20 Advances General Commodity Refinance and Others Total Yield on Advances (General + Commodity) Trade Volumes -32% 13.1% FY'19 FY'20 11.1% Imports Imports USD 4.3 bln USD 2.7 bl
Slide 20: Core Business Segments Digital Banking Group
Core Business Segments Digital Banking Group Digital App Registrations Transacting Customers Trend (‘000s) No of Accounts ( '000s) PRE COVID POST COVID 33.8% 1,379 345 345 315 321 303 293 274 268 1,031 248 204 169 176 Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 Jul'20 Aug'20 Sep'20 Oct'20 Nov'20 Dec'2
Slide 21: Core Business Segments Treasury and Capital Markets
Core Business Segments Treasury and Capital Markets Domestic Portfolio Concentration Dec’20 MTM Surplus / Deficit Yield on Investments MTM Surplus / (Deficit) - 10.2% 9.8% Dec'19 Dec'20 Rs in mln GoP Securities 7.6% Rs. 938 bln PIBs - Fixed (8,446) 334 Listed Shares PIBs - Floaters 1,772 (2,569) Rs.
Slide 22: Core Business Segments UBL International
Core Business Segments UBL International Performing Advances - PE Non Performing Loans USD i n mln USD i n mln Deposits averaged USD 1.4 bln for 2020 (2019: USD 1.7 bln) 8% -28% 360 Cost of deposits reduced from 2.2% in 2019 to 1.6% in 2020 343 340 319 320 De-risking within International - BS
Slide 23: Financial Summaries
Financial Summaries where YOU come first
Slide 24: Income Statement Domestic
Income Statement Domestic Rs in bln Rs in bln Description Var % Var % 2020 2019 Q4'20 Q3'20 Interest Earned 140.0 138.7 1% 28.3 31.6 -10% Interest Expensed (72.7) (85.7) 15% (13.5) (14.4) 6% Net Interest Income 67.2 53.0 27% 14.9 17.3 -14% Non Interest Income 14.3 18.6 -23% 3.7 2.9 25% Total Revenue
Slide 25: Financial Summaries Deposits – Reduction in cost of deposits in 2020
Financial Summaries Deposits – Reduction in cost of deposits in 2020 Period End Average Cost of Deposits Rs in bln Dec'20 Dec'19 FY'20 FY'19 Var % FY'20 FY'19 Current deposits 615 520 538 474 13.4% 0.0% 0.0% Saving deposits 596 505 544 474 14.8% 7.1% 9.5% CASA 1,211 1,025 1,082 948 14.1% 3.6% 4.8% T
Slide 26: Financial Summaries Net Advances
Financial Summaries Net Advances DOM advances yield at 10.2% in 2020 (2019: 12.0%) – repricing in line with benchmark rate Rs in bln Description Var % Dec'20 Dec'19 Corporate Bank 301 359 -16% Commodity 59 66 -11% SME 18 23 -25% Consumer 18 17 4% Others 38 33 16% Total Domestic 433 500 -13% Internat
Slide 27: Financial Summaries Non Fund Income
Financial Summaries Non Fund Income Rs in mln Rs in mln Description Var % Var % 2020 2019 Q4'20 Q3'20 Fee, commission and brokerage income 9,392 11,470 -18% 2,808 2,250 25% Dividend income 1,262 1,531 -18% 364 113 223% Income from dealing in foreign currencies 3,322 4,001 -17% 674 660 2% Gain / (los
Slide 28: Financial Summaries Fee, Commission and Brokerage
Financial Summaries Fee, Commission and Brokerage Rs in mln Description Var % 2020 2019 Branch banking customer fees 1,245 1,638 -24% Consumer finance related fees 855 915 -7% Card related fees (debit and credit cards) 1,555 1,611 -3% Investment banking fees 281 304 -7% Financial Institution rebate
Slide 29: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % 2020 2019 Total compensation expenses 13,114 11,823 -11% Rent and taxes 916 635 -44% Utilities cost 1,422 1,700 16% Security 957 930 -3% Depreciation 779 751 -4% Depreciation - Right of Use Assets 1,513 1,959 23% Others 320 369
Slide 30: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % 2020 2019 Legal and professional charges 216 715 70% Outsourced service costs including sales commission 2,607 3,424 24% Banking service charges 1,499 1,553 3% Cash transportation and sorting charges 778 788 1% Depreciation 1,36
Slide 31: Financial Summaries Consolidated Income Statement
Financial Summaries Consolidated Income Statement Rs in bln Rs in bln Description Var % Var % 2020 2019 Q4'20 Q3'20 Interest Earned 156.1 157.3 -0.8% 32.1 35.6 -9.7% Interest Expensed (79.0) (93.9) 15.9% (14.8) (15.9) 7.2% Net Interest Income 77.1 63.3 21.7% 17.3 19.7 -11.7% Non Interest Income 19.3
Slide 32: Financial Summaries Consolidated Balance Sheet
Financial Summaries Consolidated Balance Sheet Rs in bln Description Var % Dec'20 Dec'19 Advances 612 695 -11.9% Investments 1,168 874 33.5% Lendings to Financial Institutions 22 22 2.4% Others 400 432 -7.4% Total Assets 2,202 2,023 8.9% Deposits 1,764 1,558 13.2% Borrowings 132 170 -22.6% Subordina
Slide 33: 6 Year Performance Review
6 year Performance Review where YOU come first
Slide 34: 6 Year Financial Summary
6 Year Financial Summary Rs. in mlns 2020 2019 2018 2017 2016 2015 Assets Cash and balances with treasury and other banks 264,727 256,591 206,813 177,099 146,428 128,870 Lending to financial institutions 19,959 20,183 33,942 10,868 25,711 24,095 Investments- gross 1,138,018 849,441 792,857 1,095,555
Slide 35: 6 Year Financial Summary
6 Year Financial Summary Rs. in mlns 2020 2019 2018 2017 2016 2015 Markup / return / interest earned 152,003 153,676 113,198 107,206 98,219 94,353 Markup / return / interest expensed (77,044) (91,902) (56,964) (50,781) (41,177) (38,511) Net Markup / Interest income 74,959 61,774 56,234 56,425 57,042
Slide 36: 6 Year Financial Summary
6 Year Financial Summary Description 2020 2019 2018 2017 2016 2015 Key Financial Ratios Return on equity (RoE) 13.9% 13.8% 11.6% 20.6% 24.9% 25.7% Return on assets (RoA) 1.1% 1.0% 0.8% 1.4% 1.8% 2.0% Profit before tax ratio 37.1% 41.0% 30.7% 50.8% 57.1% 54.2% Advances to deposits ratio (ADR) - gross
Slide 37: Quarterly Trends
Quarterly Trends Gi where YOU come first
Slide 38: Quarterly Trends Profit before Tax
Quarterly Trends Profit before Tax Rs in bln 13.5 +23% 11.8 11.3 10.9 11.2 10.8 11.2 +8% 10.2 10.4 +6% 10.4 9.9 9.2 8.8 +1% 8.8 8.5 8.4 8.3 8.4 7.9 7.6 7.7 -4% 6.5 5.9 -6% -4% -26% 4.1 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q
Slide 39: Quarterly Trends Profit after Tax
Quarterly Trends Profit after Tax Rs in bln 7.3 7.3 7.1 7.0 7.0 +25% 6.5 6.5 6.4 6.3 6.3 6.0 5.9 +29% 5.6 5.5 +7% +3% 5.4 5.1 4.9 4.7 4.8 4.7 4.2 -10% -3% -26% 3.6 3.5 -24% 2.6 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'
Slide 40: Quarterly Trends Deposits
Quarterly Trends Deposits Rs in bln +4% +6% 0% +2% 1,640 +8% +3% 1,589 1,581 1,256 1,467 1,493 1,419 1,366 1,344 1,142 1,147 1,070 1256 1254 1,051 -2% 1167 1183 -2% 1142 1147 1051 1070 992 994 945 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q
Slide 41: Quarterly Trends Net Advances
Quarterly Trends Net Advances Rs in bln 716 675 673 +1% +2% 642 636 627 636 626 623 -11% 585 565 567 624 -3% -2% -6% 538 530 509 519 496 498 -8% -1% 459 455 447 420 430 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20
Slide 42: Quarterly Trends Revenue
Quarterly Trends Revenue Rs in bln +18% 26.0 +14% +5% 21.9 22.4 +1% 22.0 21.3 21.2 21.2 23.2 20.6 20.9 20.8 20.3 20.4 20.3 20.0 -11% 19.5 20.0 19.0 19.6 19.3 19.2 -10% 18.6 -8% 18.1 17.9 -2% Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q
Slide 43: Quarterly Trends Net Interest Income
Quarterly Trends Net Interest Income Rs in bln +26% 21.8 +6% 19.1 +6% 17.3 +4% +1% 16.4 -12% 16.7 +2% 15.7 15.3 15.4 14.7 14.7 -12% 14.2 13.9 14.0 13.7 14.3 14.2 14.2 13.9 14.2 13.8 14.4 13.6 13.7 13.1 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1
Slide 44: Quarterly Trends Non Fund Income
Quarterly Trends Non Fund Income Rs in bln 8.4 +44% 7.3 7.2 7.0 6.2 6.2 6.3 6.1 6.0 5.6 5.7 5.2 5.2 +5% 5.1 4.8 5.0 4.8 4.7 4.5 -28% 4.5 4.3 -12% 4.1 4.1 3.8 -14% -9% -4% -1% Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20
Slide 45: Quarterly Trends Provision Charge
Quarterly Trends Provision Charge Rs in bln +55% 5.7 5.5 5.5 +114% -5% +140% 3.7 3.2 2.9 2.6 2.0 2.1 1.9 2.1 1.7 1.9 1.3 1.3 0.8 0.7 0.9 -34% -66% 0.6 -17% 0.3 -76% 0.1 -0.3 -0.3 -0.5 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4
Slide 46: Quarterly Trends Administrative Expenses
Quarterly Trends Administrative Expenses Rs in bln +9% +11% +15% 11.0 11.0 10.7 +2% 10.3 +2% 9.9 10.0 9.6 9.7 9.2 9.0 -2% 9.9 8.8 8.8 8.7 9.5 8.6 8.4 8.5 8.2 -14% 7.8 -16% 7.6 7.3 7.4 7.4 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'1
Slide 47: Important Information
Important Information The information contained herein reflects our latest business statement as at December 31, 2020. Except the historical information contained herein, statements in this Release which contain words or phrases such as ‘will’, ‘would’, ‘indicating’ expected to’ etc., and similar ex
Slide 48: Thank You
Thank You