United Bank Limited · PSX:UBL
United Bank — H1 2018 Earnings Presentation
42 slides from United Bank's earnings presentation, Aug 3, 2018
Slide 1: Performance Highlights – H1 2018 Investor Relations Conference Call
Performance Highlights – H1 2018 Investor Relations Conference Call August 3rd, 2018 Speakers: Mr. Aameer Karachiwalla - Chief Financial Officer UBLArif Mr. Performance Saifie, FCA,Overview – H1 2018 CFA - Financial Controller and Head of Investor Relations Investor Relations Release
Slide 2: Table of Contents
Table of Contents PAGE Key Highlights 3 Execution and Delivery 8 Growth at a Glance 27 Quarterly Trend Analysis 31 UBL Performance Overview – H1 2018
Slide 3: Key Performance Highlights
Key Performance Highlights UBL Standalone Results PBT before extraordinary items at Rs. 19.0 bln, down 17% vs. H1’17 PBT at Rs. 10.6 bln, down 54% vs. H1’17 Major downsides impacting results in H1’18: Rs 8.4 bln recorded as pension liability (Q1’18: Rs 6.4 bln; Q2’18: Rs 2.0 bln) – Refer detai
Slide 4: Avg. Total Assets of Rs 1.82 tln in H1'18, a growth of 13%
Avg. Total Assets of Rs 1.82 tln in H1’18, a growth of 13% over H1’17 Branch Banking builds deposit base in cost efficient manner 277,000 NTB current accounts mobilized in H1’18 (H1’17: 240,000) Growth led by current deposits – average growth of 17%, incremental vol. of Rs. 62 bln Domestic CAS
Slide 5: Overall revenues grow by 5% YoY to Rs 42.3 bln in H1'18
Overall revenues grow by 5% YoY to Rs 42.3 bln in H1’18 - Domestic up 9% to Rs 37.0 bln Net Interest Income of Rs. 28.1 bln in H1’18 (H1’17: Rs. 28.0 bln) Average earning assets grew by Rs 201 bln YoY to Rs 1,552 bln in H1’18 Average 3 months KIBOR up from 6.1% in H1’17 to 6.4% in H1’18 Domest
Slide 6: Overall NFI closed at Rs 14.3 bln in H1'18, a 16% growth
Overall NFI closed at Rs 14.3 bln in H1’18, a 16% growth over H1’17 1 Fee income stood at Rs 6.7 bln, up 14% from H1’17 Domestic fees grew by 30% YoY to reach Rs 5.8 bln in H1’18:– Home remittances revenues grew by 29% - market share up to 30% (H1’17: 25%) Trade commissions growth of 15% to re
Slide 7: Strong recoveries in Domestic, coverage buildup in International
Strong recoveries in Domestic, coverage buildup in International Net provision charge of Rs. 4.5 bln in H1’18 vs. net reversal of Rs. 0.5 bln in H1’17 DOM net provision reversal of Rs 544 mln in H1’18 (H1’17: Rs 1.17 bln reversal) DOM asset quality stood at 5.2% at the end of Jun’18 (Dec’17: 6.2
Slide 8: Execution and Delivery
Execution and Delivery UBL Performance Overview – H1 2018 8
Slide 9: Consistent earnings performance throughout the years
Consistent earnings performance throughout the years Trends - KSE 100 Index and UBL’s share price Equity and Book Values 300 55 Max H1'18: Rs. 215.16 29 Jun’18: Rs. 168.98 280 Rs in bln Cons. Equity Jun’18 - Rs. 167 bln 02 Aug'18: Rs. 165.17 260 50 Cons. Book value Jun’18 - Rs. 136 per share 240 152
Slide 10: Income Statement - Standalone
Income Statement - Standalone Rs in bln Rs in bln H1'18 H1'17 Var % Q2'18 Q1'18 Var % Interest Earned 54.2 49.7 9.0% 26.0 28.1 -7.6% Interest Expensed (26.1) (21.7) -20.5% (11.8) (14.3) 17.3% Net Interest Income 28.1 28.0 0.1% 14.2 13.9 2.5% Non Interest Income 14.3 12.3 15.7% 7.0 7.3 -4.6% Total Re
Slide 11: Income Statement - Domestic
Income Statement - Domestic Rs in bln Rs in bln H1'18 H1'17 Var % Q2'18 Q1'18 Var % Interest Earned 47.2 42.7 10.6% 22.4 24.8 -9.5% Interest Expensed (23.1) (19.0) -22.0% (10.3) (12.9) 19.9% Net Interest Income 24.0 23.7 1.5% 12.1 11.9 1.9% Non Interest Income 13.0 10.3 26.1% 6.3 6.7 -4.8% Total Rev
Slide 12: Balance Sheet - Standalone
Balance Sheet - Standalone Rs in bln Jun'18 Dec'17 Var % Advances 675 605 11.7% Investments 800 1,092 -26.7% Lendings to Financial Institutions 42 34 24.6% Others 300 277 8.0% Total Assets 1,816 2,007 -9.5% Deposits 1,315 1,289 2.0% Borrowings 293 513 -42.8% Others 56 46 20.9% Total Liabilities 1,66
Slide 13: Income Statement - Consolidated
Income Statement - Consolidated Rs in bln Rs in bln H1'18 H1'17 Var % Q2'18 Q1'18 Var % Interest Earned 56.2 51.3 9.5% 27.1 29.1 -6.7% Interest Expensed (27.1) (22.5) -20.5% (12.3) (14.7) 16.3% Net Interest Income 29.1 28.8 0.8% 14.8 14.3 3.2% Non Interest Income 15.5 13.6 14.0% 7.3 8.2 -11.0% Total
Slide 14: Balance Sheet - Consolidated
Balance Sheet - Consolidated Rs in bln Jun'18 Dec'17 Var % Advances 716 643 11.4% Investments 840 1,125 -25.3% Lendings to Financial Institutions 44 36 21.7% Others 321 302 6.4% Total Assets 1,921 2,105 -8.8% Deposits 1,396 1,366 2.2% Borrowings 300 517 -42.0% Others 58 48 22.3% Total Liabilities 1,
Slide 15: Deposits performance - Focus remains on growing low cost deposits
Deposits performance - Focus remains on growing low cost deposits Deposits - Bank Period End Average Cost of Deposits Jun'18 Dec'17 H1'18 H1'17 H1'18 H1'17 Domestic deposits - Rs in bln 1,063 1,033 994 945 2.6% 2.8% International deposits - Rs in bln 252 256 248 228 2.2% 2.2% Total Bank - Rs in bln
Slide 16: Advances portfolio up 12% over Dec'17
Advances portfolio up 12% over Dec’17 Net Advances Rs in bln Jun'18 Dec'17 Var % Corporate Bank 351 303 16% Commodity 78 47 66% Commercial 35 35 0% Consumer 14 12 18% Others 34 34 0% Total Domestic 512 431 19% International 163 173 -6% Bank 675 605 12% International USD mln 1,342 1,569 -14% Dec'17 3
Slide 17: International Advances - Corporate advances remains the largest component
International Advances - Corporate advances remains the largest component By Geography By Business - UAE Bahrain, Qatar, 11% 14% Yemen, 0% NewYork, 0% EPZ, 0% Others, 35% Corporate, 61% UAE, 75% Consumer, 4% Personal Others, loan, 1% 1% Abu Dhabi, 30% Sharjah, 6% Dubai, 64% Baitna, 98% UBL Performan
Slide 18: Concentration of Advances as at June 30, 2018 - Standalone
Concentration of Advances as at June 30, 2018 - Standalone 2% 10% 27% 10% 1% 2% 3% 7% 6% 2% 30% Chemical & Pharma Agribusiness Textile Cement Sugar Autos & Transport Financial Electronics Power & Energy Individuals Others UBL Performance Overview – H1 2018 18
Slide 19: Diversified investment portfolio with strong market risk management
Diversified investment portfolio with strong market risk management Portfolio declines in line with reduced leveraging Investments’ yields Total 1,092 Rs in bln 11.1% 31 1 47 39 18 10.4% 10.4% Total 800 20 0 51 8.9% 42 18 542 7.8% 7.5% 2013 2014 2015 2016 2017 H1'18 450 Non Funded revenue streams co
Slide 20: Our international outreach - serving in 4 continents under single UBL brand
Our international outreach - serving in 4 continents under the single “UBL” brand ASSOCIATED COMPANIES OVERSEAS BRANCHES 3 20 PAKISTAN BRANCHES 1,361 SUBSIDIARIES 4 Asset mix by region 2017 2016 Domestic Operations 79.9% 76.4% International Operations 20.1% 23.6% Middle East 14.8% 17.5% USA 0.2% 0.7
Slide 21: UBL Innovation and Awards
UBL Innovation and Awards UBL “Firsts” – Initiatives to stay ahead of the market Market recognition and awards First Commercial Bank in Pakistan to launch Branchless “Best Bank” in the first ever Pakistan Banking Awards 2016 Banking (UBL OMNI) “Best Bank for Corporate Finance and Capital Marke
Slide 22: Update on Pension Estimated Cost
Update on Pension Estimated Cost March 2018 June 2018 Rupees in Million Headcount Estimated Headcount Estimated Cost Cost Minimum For Commuted - Pension not restored Rs 4,000 Rs 8,000 Minimum For Commuted - Pension restored Rs 8,000 Rs 8,000 Pensioners - Status verified 1,896 1,906 2,801 3,128 Pensi
Slide 23: Review of Non Interest Income & Administrative Expenses
Review of Non Interest Income & Administrative Expenses UBL Performance Overview – H1 2018 23
Slide 24: Non Fund Income Standalone Results
Non Fund Income Standalone Results Rs in mln H1'18 H1'17 Var % Fee, commission and brokerage income 5,753 4,433 30% Dividend income 1,152 1,285 -10% Income from dealing in foreign currencies 1,389 563 147% Gain / (loss) on sale of securities 4,350 3,611 20% Other income 360 419 -14% Domestic Total 1
Slide 25: Fees and Commissions performance
Fees and Commissions performance Standalone Results Rs in mln H1'18 H1'17 Var % OMNI fee & commissions 994 910 9% Commission on trade 489 427 15% Corporate service charges/ Facility fee 109 113 -3% Corporate finance fee 413 47 783% FIG commission 127 50 157% Commission on ATM/ Debit cards 764 564 35
Slide 26: Administrative Expenses Standalone Results
Administrative Expenses Standalone Results Rs in mln H1'18 H1'17 Var % Salaries, allowances & Staff fund 5,702 5,311 -7% charges Rent taxes insurance etc. 1,908 1,904 0% Outsourced service charges 2,137 2,011 -6% including sales commission Advertisement and publicity 325 429 24% Communications 580 4
Slide 27: Growth at a Glance
Growth at a Glance UBL Performance Overview – H1 2018 27
Slide 28: Balance Sheet
Balance Sheet Rs. in mlns 2017 2016 2015 2014 2013 2012 Assets Cash and balances with treasury and other banks 177,099 146,428 128,870 87,573 114,388 109,396 Lending to financial institutions 33,664 34,168 24,095 21,872 28,835 21,953 Investments- gross 1,095,555 808,959 721,651 499,060 425,253 351,0
Slide 29: Profit & Loss
Profit & Loss Rs. in mlns 2017 2016 2015 2014 2013 2012 Markup / return / interest earned 107,206 98,219 94,353 82,735 72,846 73,507 Markup / return / interest expensed (50,781) (41,177) (38,511) (37,769) (34,910) (34,948) Net Markup / Interest income 56,425 57,042 55,842 44,967 37,936 38,560 Fee, c
Slide 30: Key Financial Ratios & Share Information
Key Financial Ratios & Share Information 2017 2016 2015 2014 2013 2012 Key Financial Ratios Return on equity (RoE) 20.8% 24.9% 25.7% 23.9% 22.3% 23.8% Return on assets (RoA) 1.4% 1.9% 2.0% 2.1% 2.0% 2.1% Profit before tax ratio 51.1% 57.1% 54.2% 52.0% 49.6% 48.2% Return on capital employed (RoCE) 20
Slide 31: Quarterly Trend Analysis
Quarterly Trend Analysis Bank Level - Standalone UBL Performance Overview – H1 2018 31
Slide 32: Profit before tax
Profit before tax Rs in bln 13.5 +6% +7% 11.8 10.9 11.2 11.3 10.8 11.2 10.2 9.9 10.4 9.3 -29% +4% 8.4 8.3 8.8 7.8 8.0 7.1 8.4 6.4 6.5 5.9 -54% +61% 4.1 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 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 UBL Performance
Slide 33: Profit after tax
Profit after tax Rs in bln 7.3 +13% 7.1 7.3 7.0 6.5 -17% 6.5 6.4 6.1 7.0 +8% 6.3 5.7 6.0 5.6 5.2 5.3 5.3 -2% 5.9 4.7 4.3 -58% +37% 4.0 3.6 2.6 Q1'13Q2'13Q3'13Q4'13Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18 UBL Performance Overview – H1 2018 33
Slide 34: Deposits
Deposits Rs in bln +1% +3% +1% +6% -0% 1,315 1,289 1,301 +0% 1,256 1,254 1,183 1,142 1,1471,180 1,051 1,070 992 994 945 895 858 866 828 847 752 773 703 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 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 UBL Performance
Slide 35: Net Advances
Net Advances Rs in bln +8% 675 +3% 624 +7% 605 +0% 565 567 +13% 509 510 496 498 459 455 -2% 434 430 417 420 408 447 391 377 363 369 352 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 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 UBL Performance Overview – H1 20
Slide 36: Revenue
Revenue Rs in bln 21.9 +0% +4% 21.2 21.2 21.3 +2% 20.3 +4% 20.4 20.3 20.0 19.3 19.5 19.2 -12% +13% 17.6 18.6 18.1 17.9 16.3 15.4 14.9 13.8 14.1 15.5 12.6 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 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 UBL Performanc
Slide 37: Net Interest Income
Net Interest Income Rs in bln 15.7 +2% 14.7 +4% 14.2 14.3 +1% 14.2 14.2 14.0 13.6 13.1 -1% 12.8 14.2 13.9 -2% 13.7 -3% 13.9 13.7 11.3 11.0 10.6 9.8 9.5 9.0 8.8 Q1'13 Q2'13Q3'13 Q4'13 Q1'14Q2'14 Q3'14 Q4'14Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16Q4'16 Q1'17 Q2'17Q3'17 Q4'17 Q1'18 Q2'18 UBL Performan
Slide 38: Non Funded Income
Non Funded Income Rs in bln 8.4 7.3 -5% 7.0 6.2 6.2 6.3 -3% +21% +21% 6.1 6.0 5.6 4.8 4.9 5.1 5.0 4.8 4.8 4.8 5.2 +60% 4.6 4.5 3.9 4.5 -38% 3.8 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 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 UBL Performance Overview
Slide 39: Provisions
Provisions Rs in bln 2.6 +37% 2.1 2.0 -8% 1.9 +260% 1.3 0.9 0.9 0.8 0.7 0.5 0.6 0.8 0.3 0.3 -76% 0.2 0.2 0.1 +207% -0.1 -777% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 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 -0.1 -0.3 -0.3 -0.5 UBL Performance Overvi
Slide 40: Administrative Expenses
Administrative Expenses Rs in bln 9.9 +5% +14% -0% 9.2 +3% +3% 8.8 8.8 8.6 8.4 8.5 -6% 8.2 8.7 8.0 7.8 7.6 7.3 7.4 7.4 7.2 7.1 6.9 6.9 6.5 6.5 6.2 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 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 UBL Performance Overv
Slide 41: Important Information
Important Information The information contained herein reflects our latest business statement as at June 30, 2018. 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 expres
Slide 42: Thank You
Thank You UBL Performance Overview – H1 2018 42