United Bank For Africa Plc · NSENG:UBA
United Bank For Africa — Merrill Lynch EEMEA Banks Investor Forum 2008
50 slides from United Bank For Africa's conference presentation, Sep 11, 2008
Slide 1: Building Africa's global bank
Building Africa’s global bank Victor Osadolor – Group Chief Finance Officer Merrill Lynch EEMEA Banks Investor Forum 10-11 September 2008
Slide 2: Forward looking statements
Forward looking statements Presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Group. These forward-looking statements represent the Group’s expectations or beliefs concerning future
Slide 3: Key messages
Key messages Market leader in Nigeria Focus on earnings growth Careful cost control Best-in-class risk management Asset growth in challenging conditions Clear growth strategy www.ubagroup.com 3
Slide 4: Key ratios
Key ratios 12m2007 9m2008 NIM/Average Interest Earning Assets 4.9% 6.4% Return on average Assets 2.1% 3.3% Return on average Equity 20% 22% Cost to Income ratio 62% 59% NPL/Gross Loans 4.4% 2.9% Loans/Assets 27% 40% Loans/Deposits 35% 54% Capital Adequacy ratio 22% 21% www.ubagroup.c
Slide 5: Focus on shareholder returns
Focus on shareholder returns
Slide 6: Rapid underlying EPS growth
Rapid underlying EPS growth Earnings per share & dividends per share (N) 2.50 EPS DPS 2.23 2.00 1.67 1.60 95% CAGR in underlying 1.50 EPS since 2006 despite 1.20 1.04 major capital raising 1.00 0.80 @40% growth in EPS in 0.56 2008 0.50 0.17 2008 final dividend has 0.00 not yet been declared 18
Slide 7: Increasing ROE
Increasing ROE Return on equity (%) 40% 35% 30% 34.3% Historical industry- 25% leading ROE +2 % Short-term impact of 20% 21.8% 2007 capital raising 19.8% 15% 10% 18m 2006 12m 2007 9m 2008 Note: ROE calculated on simple average equity for the period www.ubagroup.com 7
Slide 8: UBA provides value relative to sector
UBA provides value relative to sector Price/Earnings ratio (2008E) 25 20 Lowest current year PE ratio of Nigerian peers 15 PE < 10 also presents 10 value compared to emerging markets 5 banks 0 UBA OCB FBN ICB UBN ZBL PHB GTB Access Source: Renaissance Capital estimates as at 8 August 2008 www.ub
Slide 9: UBA provides value relative to sector
UBA provides value relative to sector Price/Earnings ratio (2009E) 20 PE = 6.5 for 2009 15 earnings 10 5 0 UBA OCB FBN ICB UBN ZBL PHB GTB Access Source: Renaissance Capital estimates as at 8 August 2008 www.ubagroup.com 9
Slide 10: Overview of UBA Group
Overview of UBA Group
Slide 11: Group structure
Group structure 6 strategic business units & 3 strategic support units Board Of Directors Board Audit Committee GMD/CEO Group Executive Office Group Internal Audit CEO ED DMD DMD CEO CEO Retail Products & Group Group Group Nigeria Nigeria UBA UBA Capital Financial Segment CFO CRO COO North South Int
Slide 12: Largest Nigerian distribution network
Largest Nigerian distribution network 3 distinct branch networks: myUBA, UBA Prestige & UBA Microfinance 621 operational branches 1,205 ATMs in Nigeria 855 active POS machines >6.5 million customer accounts 72% deposit conversion from P&A 5,081 employees in Nigeria Note: All operationa
Slide 13: Nigerian market leader
Nigerian market leader Market share Market size Market position Cards volume >30% 24.4 million 1 ATMs >20% 5,894 1 POS terminals >30% 2,746 1 Web acquired >40% N625 million 1 transactions value Card usage >30% 15,046 1 on mobile channels Source: Interswitch at end of July 2008 www.ubagroup.com 13
Slide 14: Expanding international operations
Expanding international operations Nigeria Burkina Faso Tchad Senegal Uganda Dubai Gambia Sierra Leone Liberia Kenya India Tanzania Cote d’Ivoire Ghana Zambia Cameroun China Gabon UBA Capital Europe South Africa UBA New York branch Operational Regulatory approval www.ubagroup.com 14
Slide 15: Track record of earnings growth
Track record of earnings growth
Slide 16: Focus on delivering earnings growth
Focus on delivering earnings growth Gross earnings and profit before tax & exceptionals (N billion) 150 120.3 109.5 100 90.4 75% CAGR in gross earnings 50 163% CAGR in PBT&X 29.5 34.9 12.8 0 18m 2006 12m 2007 9m 2008 Gross earnings PBT&X Note: 2006 FY was 18 months. 9 months to June 2008 are una
Slide 17: Consistent income growth
Consistent income growth Gross earnings (N billion) 150 125 Consistent QoQ growth 100 60 % Gross earnings +60% for 120.3 9 months of 2008 75 Capital raising and 50 75.3 expanding operations in 2H07 facilitated 25 34.3 39.0 39.1 42.2 quantum leap in 22.1 24.8 28.4 performance 0 Dec-06 Mar-07 Ju
Slide 18: Consistent profit growth
Consistent profit growth Profit before tax & exceptionals (N billion) 40 30 77% 34.9 Consistent QoQ growth 20 PBT&X +77% for 9 months 19.7 of 2008 10 13.0 9.8 10.6 11.2 6.5 7.9 5.3 0 Dec-06 Mar-07 Jun-07 9M07 Sep-07 Dec-07 Mar-08 Jun-08 9M08 Note: Quarterly results are unaudited www.ubagroup.com
Slide 19: Growth in both interest & fee income
Growth in both interest & fee income Operating income (N billion) Sundry 100 2% Transaction 85.6 24% 80.8 80 60 45.1 56% 55.9 48.6 57% Trading 9% 40 49% 27.4 Fund-based 20 44% 36.7 43% 65% 35.7 51% 28.5 0 12m 2007 9m 2007 9m 2008 Capital raising in 2007 re- weighted balance of Other income Net int
Slide 20: Core business remains Nigerian banking
Core business remains Nigerian banking Gross earnings (1H08) Profit before tax & exceptionals (1H08) Nigerian Nigerian banking banking (85%) (83%) Ex-Nigeria banking (9%) Ex-Nigeria Non-banking1 banking (6%) Non-banking1 (6%) (11%) Note 1: Non-banking operations encompass all subsidiary activities i
Slide 21: Increasing efficiency
“Increasing efficiency
Slide 22: Increasing interest margin
Increasing interest margin Net interest margin/average interest earning assets (%) 8% 6.4% Capital raising in 2007 6.0% 6% . 5%% impacted returns +1 4.9% Asset base rapidly re- 4% weighting towards higher yielding loans 2% 18m 2006 12m 2007 9m 2008 Note: Denominator calculated on simple average
Slide 23: Leveraging economies of scale
Leveraging economies of scale Cost-to-income ratio (%) 80% 75% 77.9% Negative short-term impact of merger in 70% 2006 65% Group-shared -1.7% services- project % 60% 61.7% covering entire bank 59.2% 55% Target 50% by 2011 18m 2006 12m 2007 9m 2008 Note: Cost/Income ratio calculated as Operating
Slide 24: Making asset base work harder
Making asset base work harder Return on average assets (%) 4% Strong ROA improvement 3% % + 1.2 3.3% as lending grows 2% 2.0% 2.1% 1% 0% 18m 2006 12m 2007 9m 2008 Note: ROA calculated on simple average assets for the relevant period www.ubagroup.com 24
Slide 25: Improving asset quality
Improving asset quality NPL ratio¹ Comments NPL ratio improving due to 12.6% recoveries in specific provisioning 4.4% 2.9% 2006 2007 9m 2008 Coverage ratio² 102.2% 103.6% 65.2% 2006 2007 9m 2008 Notes: 1 NPL ratio defined as non-accrual portion of overdue loans as a percentage of gross loans 2 Cov
Slide 26: Sound risk management
' \ i | \\ \\\ “Sound risk hvdliay
Slide 27: Sound capital management
Sound capital management Capital adequacy ratios 25% Tier I Tier II 21.9% 20.9% 1.6% 20% 1.4% 15.2% 15% Highly liquid position 4.1% 20.3% Regulatory minimum 10% 19.5% = 10% 5% 11.1% UBA prudential 0% guide-line = 15% 30 Sep 06 30 Sep 07 30 Jun 08 Risk-Weighted Assets (N billion) 318.8 771.4 88
Slide 28: Investment grade risk ratings
Investment grade risk ratings Short-term ratings Long-term ratings Local International Local International Fitch: F1 B Fitch: A+ B+ GCR: A1+ GCR: AA+ BB- www.ubagroup.com 28
Slide 29: Strong corporate governance framework
Strong corporate governance framework Responsible for: Accountable to: UBA BOARD Setting & approval of: Stakeholders Risk philosophy BOARD COMMITEES Regulators Risk mgt principles/policies Risk Mgt; Finance & General Purpose; Nomination & Evaluation; The community Risk appetite & toleran
Slide 30: Risk management framework
Risk management framework Enterprise-wide risk management Operating executive Audit & Investigation Risk Management Risk Control Operational focus Financial Focus Assurance Operational risk Strategic Credit risk (internal Compliance Legal Info sec risk focus Market risk control) Physical s
Slide 31: Stable capital structure
Stable capital structure Shareholders Comments 17,245m outstanding shares (after Local investors (78%) June 2008 bonus issue) Foreign institutions include IFC (1.8%) & African Development Bank (1.6%) Significant shareholders are Stanbic Nominees (10%), BGL Securities (9.4%) & First Dominion In
Slide 32: Asset growth in challenging market conditions
Asset growth in challenging market conditions
Slide 33: Growth in corporate & retail lending
Growth in corporate & retail lending Net loans by type (N billion) 500 454 Retail Corporate 400 128% CAGR in net loans 320 300 291 & advances Significant growth in 195 200 corporate lending in 3Q08 110 100 Retail lending continues 67 164 steady growth 125 43 0 Sep-06 Sep-07 Jun-08 www.ubagroup
Slide 34: Significant capacity for loan growth
Significant capacity for loan growth Assets by type (Jun 08) Net loans by type (Jun 08) T-bills + Gov. bonds (14%) Corporate (64%) Net Cash + Loans (40%) STMM (30%) Retail (36%) Other (16%) Total assets = N1,146b www.ubagroup.com 34
Slide 35: Challenging deposit-taking environment
Challenging deposit-taking environment Deposits (N billion) 1,000 Deposit growth slowed in 2008 due to equity 906 market activity 865 750 Uniform accounting 776 year-end caused intense competition for deposits & race to be 500 Sep-06 Sep-07 Jun-08 “biggest” Following withdrawal of requirement
Slide 36: Focus on improved deposit mix
Focus on improved deposit mix Deposits by class (Sep 2007) Deposits by class (Jun 2008) Time (34%) Time (26%) Demand Demand (53%) (58%) Savings (13%) Savings (16%) Choosing not to compete for expensive time-deposits www.ubagroup.com 36
Slide 37: Growth strategy
Growth strategy
Slide 38: Africa's global bank
Africa’s global bank Representation in Global presence key money centres wherever business with Africa is done globally Operational in 30 Leading bank in African region African countries by 2010 Dominant Target 25-30% leader in market share in all Nigeria businesses www.ubagroup.com 38
Slide 39: Nigerian market leadership built on key strengths
Nigerian market leadership built on key strengths Financial Financial size size && profitability profitability Dynamic Dynamic && visionary visionary Strong Strong brand brand leadership leadership equity equity team team Large Wide Wide Large && Wide Wide profitable network network profitable produ
Slide 40: Nigerian market segmentation
Nigerian market segmentation Different entities for different clientele Corporate Banking HNIs MNCs Energy Banking Prestige Banking UBA Global Markets UBA RFS Mass Local Corporates Affluent myUBA myUBA Mass Market Small & Medium Scale Businesses Individuals Businesses UBA Stockbrokers UBA Asset Mana
Slide 41: Outlook
Outlook
Slide 42: Outlook for 2009
Outlook for 2009 Reversal of uniform year-end to take some heat out of market UBA FX Mart & Microfinance Bank already launched with rest of Consumer-banking platform imminent Strategic partnership with Arsenal FC to stimulate product demand with more partnerships to follow Aggressive internati
Slide 43: Q&A
Q&A
Slide 44: Appendices
Appendices
Slide 45: Detailed earnings
Detailed earnings (N million) 12 months to 31 March 18 months to 30 September 12 months to 30 September 9 months to 30 June 2005 2006 2007 2008 Gross earnings 26,089 90,447 109,512 120,256 Interest income 14,456 57,693 73,724 Interest expense (3,490) (26,954) (28,649) Net interest income 10,966 30,7
Slide 46: Detailed financial position
Detailed financial position (N million) As at 31 March As at 30 September As at 30 September 2005 2006 2007 Assets Cash and short-term funds 110,517 471,494 570,315 Treasury bills and government bonds 59,832 207,341 157,519 Loans and advances 67,610 109,896 320,406 Other assets 4,455 35,618 44,926 I
Slide 47: Detailed cashflow
Detailed cashflow (N million) As at 31 March As at 30 September As at 30 September Cash flows from operating activities 2005 2006 2007 Interest and commission receipts 25,644 89,093 105,767 Foreign exchange income received 445 1,354 3,657 Interest expense (3,490) (26,954) (28,649) Cash payments to e
Slide 48: A positive outlook for Nigeria
A positive outlook for Nigeria Real GDP Indicators Growth in non-oil sector Real per Capita GDP Real per capita GDP growth Real GDP Growth Real non-oil GDP growth 10.7% 480 12% 9.4% 8.6% 8.0% 8.0% 7.4% 7.2% 7.0% 440 8% 6.0% 5.6% 400 4.4% 4.3% 4% 360 320 0% 2003 2004 2005 2006 2007F 2008F 2003 2004 2
Slide 49: Brief history of UBA
Brief history of UBA 1949 French & British Bank Limited (“FBB”) commences business 1961 Incorporation of UBA to take over the banking business of the FBB 1970 IPO on the NSE 1984 Establishment of NY branch 1998 GDR programme established 2004 Establishment of UBA Ghana 2005 Merger with Standard Trust
Slide 50: Consensus estimates
Consensus estimates 12m to 30 September 2008 Mean High Low N billion N billion N billion Sales 170.3 181.8 155.3 Profit before tax 51.6 63.1 37.3 Profit after tax 44.8 55.4 31.6 N N N Target share price 48.24 62.48 25.82 BVPS 10.95 11.14 10.64 EPS 2.62 3.21 1.83 DPS 1.42 1.87 0.92 Note: consensus es
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