United Bank Limited · PSX:UBL
United Bank — FY2021 Earnings Presentation
63 slides from United Bank's earnings presentation, February 2022
Slide 1: Investor Presentation FY'2021: Performance Highlights and Business Outlook
United Bank Limited Investor Presentation FY’2021 Performance Highlights and Business Outlook Speakers: Mr. Shazad G. 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 UBL’s Profile – leading franchise in Pakistan, awarded Best Digital Bank in 2021 2 2021 has been a year of earnings rebound with 52% growth in profits 3 Maximizing shareholders returns with stable dividend payouts since last many years 4 One of the best and most efficient branch
Slide 3: UBL's Profile – leading franchise in Pakistan, awarded Best Digital Bank in 2021
UBL’s Profile – leading franchise in Pakistan, awarded Best Digital Bank in 2021 Our Sponsors, awards & recognitions, our views on ESG 3
Slide 4: UBL - A dominant Pakistani brand with a market leading position
UBL - A dominant Pakistani brand with a market leading position across the financial sector Our History Our Current Positioning – December 2021 Second largest private sector bank in Pakistan with 1959 - UBL set up with first branch in Karachi 1,339 domestic branches Market share of 8.3%, 10 mill
Slide 5: UBL Remains in the Forefront with Market Recognition
UBL Remains in the Forefront with Market Recognition UBL “Firsts” – Initiatives to stay ahead of the market Market recognition and awards ‘Best Mobile App’ and ‘Best Emerging Technology’ – Pakistan Digital Award 2021. First Commercial Bank in Pakistan to launch Branchless Banking (UBL Declared
Slide 6: Digital Banking Group – Focus on growing digital payment services
Digital Banking Group – Focus on growing digital payment services across wider target market Active Customers (90 days) up +75% YoY Transacting Customers up 78% (Dec’21 vs Dec’20) Active Customers ( '000s) +75% 906 ( '000s) +78% 593 614 566 578 540 552 518 500 517 474 475 479 491 345 Dec'20 Dec'21 D
Slide 7: We are embedding ESG into UBL's Strategy
We are embedding ESG into UBL’s Strategy…. Some key themes Environmental Social Governance UBL recognizes its obligation to continuously Building more Transparent Governance improve its processes, systems, products and Creating Institutional Trust services in order to create value for the The earth
Slide 8: 2021 has been a year of earnings rebound with 52% growth in profits
2021 has been a year of earnings rebound with 52% growth in profits Overview of Performance in the current year 8
Slide 9: Overview of operating environment this year
Overview of operating environment this year… banking sector repositioning towards strong recovery Risks and opportunities surrounding core segments… 1 Rate Regime Interest Rate remained low throughout the year Inflation 2 CPI levels remained elevated – impacting cost base Investment Strategy 3 Marke
Slide 10: The Big Picture on Macros – UBL delivers strong results
The Big Picture on Macros – UBL delivers strong results with improving EPS and CAR levels Economy impacted by rising inflation, power tariff hikes and pressure on currency Growth outlook improves as activity gradually recovering to pre-COVID levels Current account deficit to remain high, USD 9.1
Slide 11: Balance Sheet Review – Growth in Deposit Market Share Builds Core Earnings
Balance Sheet Review – Growth in Deposit Market Share Builds Core Earnings Rs in bln Deposits Performance - Led by Branch Banking Group Balance Sheet Var % Dec'21 Dec'20 Avg Dom deposits at Rs 1.5 tln, up 19% YoY – inc vol of Rs 242 bln Advances 646 530 21.9% Avg Domestic current accounts up 18%
Slide 12: 2021 Results - Growth supported by strong NFI with cost control
2021 Results - Growth supported by strong NFI with cost control and provision reversals…... Rs in bln Rs in bln Revenue Performance – stable margins building up momentum Income Statement Var % Var % FY'21 FY'20 Q4'21 Q3'21 Bank NIMs at 3.8% in FY’21 (FY’20: 4.8%), restricted by lower rates Interes
Slide 13: Building sustainable fee base with diversification is key
Building sustainable fee base with diversification is key - strong results in 2021 as business is picking up 1 2 3 4 Strategic Focus on NFI with strict Culture of Cross Selling and Deepening and entering markets, monitoring across all business Building a trade ecosystem Actions lines collaboration s
Slide 14: Major NFI lines reflect improving momentum
Major NFI lines reflect improving momentum as businesses rebuild to pre-covid levels Penetration across CIBG Customer Base with USD 6.5 bln in Trade Volumes, up 82% YoY Bancassurance – gaining strong momentum across major clusters USD in mln Rs in mln 1.5b 647 623 530 1.6b 6,000 600 530 509 411 397
Slide 15: Maximizing shareholders returns with stable dividend payouts
Maximizing shareholders returns with stable dividend payouts since last many years ROE, Share Price & Capital Adequacy Ratios 15
Slide 16: Strong Dividend Payouts maintained while UBL repositions
Strong Dividend Payouts maintained while UBL repositions to achieve larger aspirations 320 Trends - KSE 100 Index and UBL’s share price 55 Equity and Book Values Max Price in 2021: Rs. 143.89 Cons. Equity Dec’21 - Rs. 228 bln Rs in bln Price as at 25-Feb'22: Rs. 148.92 50 Cons. Book value Dec’21 - R
Slide 17: Key Ratios for the quarter – ROE in 20% range in Q4'21
Key Ratios for the quarter – ROE in 20% range in Q4’21 with steady buildup in revenue Gross Revenues Cost to Income Ratio Net Interest Margins Rs in bln Rs in bln 26.0 52.9% 23.9 24.5 24.2 23.2 22.6 43.5% 47.8% 22.0 4.3 20.8 43.0% 42.6% 43.3% 45.0% 4.6% 5.3% 4.7% +22 bps 4.1 5.6 5.9 6.1 37.2% 4.1% 3
Slide 18: UBL poised for growth - Capital Base strengthens
UBL poised for growth - Capital Base strengthens with conservation Capital Adequacy Ratio Risk Weighted Assets -289 bps 158 167 24.4% 21.5% Dec'20: 76 Dec'21: 6.1% 54 622 Rs 745 bln 533 Rs 865 bln 5.3% 1.3% 1.1% Credit Market Operational Credit Market Operational 17.0% 15.1% UBL seeks to maintain
Slide 19: One of the best and most efficient branch networks in Pakistan
One of the best and most efficient branch networks in Pakistan Overview of Branch Banking Group “We strive to maintain an optimal deposits mix with focus on new to bank client acquisitions and relationship deepening” 19
Slide 20: Branch Banking remains corner stone of UBL franchise
Branch Banking remains corner stone of UBL franchise – Business records highest growth levels in 2021 Our Stronger compliance, Better people Upskill and retain quality Empowerment and Improve Branch profitability Strategic engagement talent accountability with cost synergies conduct and control envi
Slide 21: Branch Banking Overview
Branch Banking Overview A premier Retail Bank operation with deep penetration across banking flows Branch Banking Segments Products Distribution Channels Islamic Liabilities Branches Bank Home Priority Banking ATMs Remitta nces Digital Wealth Bancassurance Management QR Code Consumer Bank Cash Manag
Slide 22: Deposits and Branch Banking
Deposits and Branch Banking With our vast scale and presence, we remain systematically important Global Branch Network No. of deposit accounts (000’s) 1,379 1,379 1,376 6,191 6,634 1,370 5,289 5,696 With a Avg market share of 1,359 4,394 4,859 1,349 8.3%, we reach over 6 million customers 2016 2017
Slide 23: Branch Banking – Other Businesses
Branch Banking – Other Businesses Diversification within the business continues to grow earnings Market leader with over 20% market share Our global coverage targets Pakistanis through the unique ‘Tezraftaar’ proposition Home Remittances Volumes growth continues to outpace the market – despite c
Slide 24: Strong asset quality with diversification within loan book
Strong asset quality with diversification within loan book – maintaining spreads Corporate and Investment Banking “CIBG continues to expand relationships within the public and private sectors through RWA efficient credit expansion.” 24
Slide 25: CIBG Overview
CIBG Overview Building on our upscale positioning A key strategic partner to the top tier corporate and institutional clientele Corporate Banking Complete menu of services including core lending, trade finance, remittances Group (CBG) Target quality credit through selective loan growth across di
Slide 26: CIBG Performance (2016 to 2021)
CIBG Performance (2016 to 2021) Loan book driven by Corporate Bank - focus on quality credit and diversification Domestic Loans Growth Domestic Loan Composition Dom + Int Credit Concentration by Sector (Dec’21) 545 500 520 Rs in bln 441 433 18% 342 CIBG 16% SME, Consumer 22% 82% 2016 2017 2018 2019
Slide 27: Advances Portfolio - buildup in quality assets remain top priority
Advances Portfolio - buildup in quality assets remain top priority with improving overall relationship yields Rs in bln Advances by Segment Var % Yield on Advances (General) Dec'21 Dec'20 12.1% Corporate Bank 364 301 21% 9.8% Commodity 55 59 -7% SME 21 18 19% Consumer 19 18 7% Others 61 38 59% Total
Slide 28: Islamic Banking – building a stronger proposition and wider network
Islamic Banking – we are building up a stronger proposition and wider network Average Deposits and CoD Key Performance Highlights 2021 vs 2020 Rs in bln 4.2% 3.8% 3.9% 3.8% 4.0% 3.6% 3.7% 3.7% 3.4% 2.7% 2.8% 2.5% 3.2% 11% UBL Branches are now Islamic 123 129 120 123 128 134 125 48 Branches conve
Slide 29: Treasury – investment book well positioned for higher rate regime
Treasury – investment book well positioned for higher rate regime next year “Treasury and Capital Markets remains a strong results driver through effective balance sheet management and proactive trading strategy”. 29
Slide 30: An Overview of the TCM Group
An Overview of the TCM Group Major player in Pakistani financial markets given balance sheet size and market position Leading primary dealer in the GoP debt market Money Market and ALM Key market maker of GoP debt securities in the secondary market Strategic buildup of long-term fixed and floa
Slide 31: Well Diversified Investment Portfolio with stable yields
Well Diversified Investment Portfolio with stable yields MTM Surplus / Deficit Yield on Investments Over 90% of Investments in Govt. Securities MTM Surplus / (Deficit) - 10.2% Dec'20 Dec'21 9.8% Rs in mln 7.9% PIBs - Fixed 334 (957) Bai Moajjal T-Bills Rs. 21 bln Rs. 532 bln PIBs - Floaters (2,569)
Slide 32: International business is showing signs of resilience
International business is showing signs of resilience and stable returns “Our focus is on consolidating the International franchise through maximizing capital efficiencies and re-energizing the Retail Engine”. 32
Slide 33: Our Strategy - De-risk and Consolidate International
Our Strategy - De-risk and Consolidate International Liquidity deployment primarily in zero / low risk weighted bonds – mainly sovereigns New lending to top corporates or fully collateralized commercial / SMEs Active risk vigilance to prevent future portfolio deterioration, aggressive recovery focus
Slide 34: International - capital gains support earnings
International - capital gains support earnings as we evolve leaner business model Performing Advances - PE Non Performing Loans Key Performance Highlights YTD Dec’21 vs YTD Dec’20 USD in mln USD in mln 22% -2.7% Cost of Deposits at 1.1%; down 50 bps 360 343 340 334 Avg Deposits at USD 1.30 bln,
Slide 35: Our Key Conclusions as we set ourselves a larger aspiration
Our Key Conclusions as we set ourselves a larger aspiration 35
Slide 36: Maintaining the PACE across the Organization is Key
Maintaining the PACE across the Organization is Key, as we set ourselves a larger aspiration Core Segments to gain market share Our Strategic Priorities to grow the franchise Strong Deposits Growth Estate: Improve Branch profitability with cost 1 Domestic Average Deposits growth of 19% lead by build
Slide 37: Financial Summaries
GBL Financial Summaries where you come first
Slide 38: Drivers for earnings – Core KPIs review for 2021 vs 2020
Financial Summaries Drivers for earnings – Core KPIs review for 2021 vs 2020 Key Metric FY’21 FY’20 YoY Delta BUSINESS VOLUMES AND REVENUE DRIVERS 1 Average Current Account Growth – YoY 18.1% 13.3% +4.8% 2 NTB run rate - C/A per branch per day 1.8 1.8 - 3 Aggregate number of NTB C/As in '000s 564 57
Slide 39: Financial Summaries: Results for the year ended December 2021
Financial Summaries Results for the year ended December 2021 Key Metric FY’21 FY’20 YoY Delta RETURN ON EQUITY 1 Profit Before Tax - Rs in bln 52.1 34.2 +52% 2 PAT - Rs in bln 30.9 20.9 +48% 3 RoE 19.1% 13.9% +517 bps 4 EPS – Rs 25.23 17.07 +48% 5 Capital Adequacy Ratio 21.5% 24.4% -289 bps 6 Risk W
Slide 40: Income Statement Domestic 2021
Financial Summaries Income Statement Domestic 2021 Rs in bln Rs in bln Description Var % Var % FY'21 FY'20 Q4'21 Q3'21 Interest Earned 137.0 140.0 -2% 35.9 38.5 -7% Interest Expensed (73.2) (72.7) -1% (20.1) (21.9) 9% Net Interest Income 63.7 67.2 -5% 15.8 16.6 -4% Non Interest Income 18.7 14.3 30%
Slide 41: Non Fund Income (Domestic, International and Bank Level)
Financial Summaries Non Fund Income (Domestic, International and Bank Level) Rs in mln Rs in mln Description Var % Var % FY'21 FY'20 Q4'21 Q3'21 Fee, commission and brokerage income 11,630 9,392 24% 2,979 2,797 6% Dividend income 2,033 1,262 61% 613 540 13% Income from dealing in foreign currencies
Slide 42: Fee, Commission and Brokerage
Financial Summaries Fee, Commission and Brokerage (Domestic, International and Bank Level) Rs in mln Description Var % FY'21 FY'20 Branch banking customer fees 1,392 1,245 12% Consumer finance related fees 966 855 13% Card related fees (debit and credit cards) 2,484 1,555 60% Investment banking fees
Slide 43: Administrative Expenses (Domestic, International and Bank Level)
Financial Summaries Administrative Expenses (Domestic, International and Bank Level) Rs in mln Description Var % FY'21 FY'20 Total compensation expenses 14,039 13,114 -7% Rent and taxes 626 577 -9% Utilities cost 1,621 1,422 -14% Security 961 957 0% Depreciation 784 779 -1% Depreciation - Right of U
Slide 44: Administrative Expenses (Domestic, International and Bank Level)
Financial Summaries Administrative Expenses (Domestic, International and Bank Level) Rs in mln Description Var % FY'21 FY'20 Legal and professional charges 309 216 -43% Outsourced service costs including sales commission 2,909 2,607 -12% Banking service charges 2,097 1,503 -40% Cash transportation a
Slide 45: Consolidated Results 2021
Consolidated Results 2021 45
Slide 46: Consolidated Results Income Statement 2021
Consolidated Results Income Statement 2021 Rs in bln Rs in bln Description Var % FY'21 FY'20 Q4'21 Q3'21 Interest Earned 152.8 156.1 -2.1% 40.4 42.5 Interest Expensed (78.0) (79.0) 1.2% (21.4) (23.1) Net Interest Income 74.7 77.1 -3.0% 19.0 19.4 Non Interest Income 24.7 19.3 27.5% 7.0 5.8 Total Reve
Slide 47: Consolidated Results Balance Sheet December 2021
Consolidated Results Balance Sheet December 2021 Rs in bln Description Var % Dec'21 Dec'20 Advances 767 612 25.3% Investments 1,521 1,168 30.3% Lendings to Financial Institutions 52 22 135.2% Others 441 400 10.2% Total Assets 2,781 2,202 26.3% Deposits 1,886 1,764 6.9% Borrowings 565 132 328.7% Subo
Slide 48: 6 year Performance Review
GBL 6 year Performance Review where you come first
Slide 49: 6 Year Financial Summary
6 Year Financial Summary Rs. in mlns 2021 2020 2019 2018 2017 2016 Assets Cash and balances with treasury and other banks 291,300 264,727 256,591 206,813 177,099 146,428 Lending to financial institutions 51,701 19,959 20,183 33,942 10,868 25,711 Investments- gross 1,504,689 1,138,018 849,441 792,857
Slide 50: 6 Year Financial Summary
6 Year Financial Summary Rs. in mlns 2021 2020 2019 2018 2017 2016 Markup / return / interest earned 147,974 152,003 153,676 113,198 107,206 98,219 Markup / return / interest expensed (76,216) (77,044) (91,902) (56,964) (50,781) (41,177) Net Markup / Interest income 71,759 74,959 61,774 56,234 56,42
Slide 51: 6 Year Financial Summary
6 Year Financial Summary Description 2021 2020 2019 2018 2017 2016 Key Financial Ratios Return on equity (RoE) 19.1% 13.9% 13.8% 11.6% 20.6% 24.9% Return on assets (RoA) 1.3% 1.1% 1.0% 0.8% 1.4% 1.8% Profit before tax ratio 54.8% 37.1% 41.0% 30.7% 50.8% 57.1% Advances to deposits ratio (ADR) - gross
Slide 52: Quarterly Trends
Gai where you come first Quarterly Trends
Slide 53: Quarterly Trends Profit before Tax
Quarterly Trends Profit before Tax Rs in bln 13.5 13.7 13.5 +57% 12.8 11.8 +23% 12.2 +12% 11.3 11.2 -2% 10.8 -5% 10.4 10.4 9.2 8.8 8.4 8.8 8.5 8.4 8.3 7.9 7.6 7.7 6.5 +6% 5.9 +1% -26% 4.1 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 Q3'2
Slide 54: Quarterly Trends Profit after Tax
Quarterly Trends Profit after Tax Rs in bln 8.1 +53% 7.8 7.6 7.3 7.3 7.4 +5% 7.0 7.0 +25% +3% +2% 6.4 6.3 6.3 6.0 5.9 5.5 5.4 +7% +3% 5.1 4.9 4.7 4.8 4.7 4.2 -26% 3.6 3.5 2.6 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 Q3'20 Q4'20 Q1'21
Slide 55: Quarterly Trends Deposits
Quarterly Trends Deposits Rs in bln +13% 1,850 0% 1,810 0% +4% 1,751 +6% +2% 1,640 1,637 1,589 1,581 -2% -3% 1,448 1,419 1,467 1,493 1,366 1,344 1,315 1,335 1,256 1,254 1,273 1,301 1,142 1,147 1,167 1,183 1,070.1 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'
Slide 56: Quarterly Trends Net Advances
Quarterly Trends Net Advances Rs in bln 716 675 673 +14% 642 636 646 627 624 626 623 +3% +2% 636 585 +2% 565 567 -2% 557 567 538 530 541 -6% 509 519 496 498 -8% -1% 447 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 Q3'20 Q4'20 Q1'21 Q2'21
Slide 57: Quarterly Trends Revenue
Quarterly Trends Revenue Rs in bln +18% 26.0 +5% +2% +9% 23.9 24.2 +5% 23.2 22.6 22.4 22.0 24.5 21.9 -1% 21.3 21.2 21.2 20.6 -11% 20.9 20.8 20.0 20.4 20.3 20.0 19.6 19.2 19.0 -10% 18.1 17.9 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 Q3
Slide 58: Quarterly Trends Net Interest Income
Quarterly Trends Net Interest Income Rs in bln +26% 21.8 +8% +2% 19.1 +6% 18.6 +1% 18.2 18.1 17.3 16.4 -12% 16.7 16.9 15.7 -3% 15.3 15.4 14.7 -12% 14.0 13.7 14.3 14.2 14.2 13.9 14.2 13.8 14.4 13.6 13.7 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 59: Quarterly Trends Non Fund Income
Quarterly Trends Non Fund Income Rs in bln 8.4 7.3 7.2 7.0 +4% 6.3 +42% +4% 6.1 6.0 6.1 5.8 5.6 5.7 5.6 5.9 5.2 5.1 5.2 +5% 5.0 4.7 -2% 4.5 4.5 4.3 4.1 4.1 3.8 -9% -4% -1% 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 Q3'20 Q4'20 Q1'21 Q2
Slide 60: Quarterly Trends Provision Charge / (Reversals)
Quarterly Trends Provision Charge / (Reversals) Rs in bln +55% -5% 5.7 5.5 5.5 +114% 3.7 2.9 3.2 2.6 2.0 2.1 1.9 2.1 1.7 1.9 1.3 -66% -81% 0.6 0.3 0.4 +26% -65% 0.1 -0.3 -0.3 -0.3 -0.5 -0.5 -0.4 -225% 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 61: Quarterly Trends Administrative Expenses
Quarterly Trends Administrative Expenses Rs in bln +11% +5% +6% 11.0 11.0 +5% 10.7 11.5 10.3 +2% 10.3 10.0 11.0 9.9 9.9 9.6 9.7 9.2 9.5 9.9 8.8 8.8 9.0 +2% 8.5 8.7 8.4 -11% 8.2 -14% 7.8 7.4 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 Q3
Slide 62: For any queries please contact
For any queries please contact: Aameer Karachiwalla Chief Financial Officer Email: aameer.karachiwalla@ubl.com.pk Phone: +92-21-990332152 Arif Akmal Saifie, CFA, FCA Financial Controller and Head of Investor Relations Email: arif.saifie@ubl.com.pk Phone: +92-21-990332971 62
Slide 63: Important Information
Important Information The information contained herein reflects our latest business statement as at December 31, 2021. 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