United Bank Limited · PSX:UBL
United Bank — 9M 2021 Earnings Presentation
51 slides from United Bank's earnings presentation, Oct 22, 2021
Slide 1: UBL Results 9M 2021 Performance Highlights
UBL Results 9M 2021 Performance Highlights Investor Relations Conference Call October 22, 2021 Speakers: 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 Executive Summary 2 Core Business Segment Performance & Key Highlights 3 Financial Summaries for BS and P&L 4 Consolidated Results for 9M’21 5 A Historical Perspective - 6 Years Review 6 Quarterly Trends 2
Slide 3: Executive Summary
Executive Summary where YOU come first
Slide 4: Key Drivers of performance as UBL records strong growth in PBT in 9M'21
Key Drivers of performance as UBL records strong growth of 49% in PBT in 9M’21 Re Positioning across the market with strong bottom line Segments in focus – reinvesting in core The Big Picture on Macros and Overview of operating Branch Banking remains corner stone of UBL franchise – 1 environment thi
Slide 5: 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 2.3
Slide 6: 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 7: 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% Sep’21 Dec’20 ▪ Avg Dom deposits at Rs 1.5 tln, up 21% YoY – inc vol of Rs 255 bln Advances 567 530 6.9% Investments 1,565 1,129 38.6% ▪ Avg Dome
Slide 8: 9M'21 Results - Growth supported by strong NFI with cost control
9M’21 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 Standalone P&L Var% Var% 9M’21 9M’20 Q3’21 Q2’21 ▪ Bank NII levels expand by 2% QoQ ▪ Bank NIMs remain at 3.8% in 9M’21 (9M’20: 5.0%)
Slide 9: UBL poised for growth - Capital Base strengthens with conservation
UBL poised for growth - Capital Base strengthens with conservation Capital Adequacy Ratio Risk Weighted Assets -154 bps 158 158 24.4% 22.9% Dec'20: 68 Sep'21: 6.1% 54 573 5.6% Rs 745 bln 533 Rs 799 bln 1.3% 1.2% Credit Market Operational Credit Market Operational 17.0% 16.0% ▪ UBL seeks to maintain
Slide 10: Key Ratios for the quarter – ROE in 20% range in Q3'21
Key Ratios for the quarter – ROE in 20% range in Q3’21 with steady buildup in revenue Gross Revenues Cost to Income Ratio Net Interest Margins Rs in bln 2.4% Rs in bln 52.9% -45 bps 26.0 43.5% 22.0 23.2 20.8 22.6 23.9 24.5 43.0% 42.6% 43.3% 45.0% 4.6% 5.3% 4.7% 4.3 37.2% 4.1% 3.9% 3.9% 4.1 5.6 5.9 3
Slide 11: 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. 143.68 Rs in bln Cons. Equity Sep’21 - Rs. 210 bln Price as at 21-Oct'21: Rs. 140.12 270 50 Cons. Book value Sep’21
Slide 12: Key Drivers of Performance and Strategic Priorities
Key Drivers of Performance and Strategic Priorities Key Drivers of Performance Strategic Priorities Strong Deposits Growth Estate: Improve Branch profitability with cost 1 Domestic Average Deposits growth of 21% lead by build up 1 in CASA - one of the lowest Cost of Deposits synergies Prudent Asset
Slide 13: Core Business Segment Performance & Key Highlights
Core Business Segment Performance & Key Highlights 13
Slide 14: Branch Banking remains corner stone of UBL franchise
Branch Banking remains corner stone of UBL franchise – Business records highest growth levels in 2021 Stronger compliance, Strategic People Upskill and retain quality Empowerment and Improve Branch profitability conduct and control engagement talent accountability with cost synergies Actions environ
Slide 15: Cost of Deposits down to 3.5% in 9M'21 – Driven by aggressive CASA buildup
Cost of Deposits down by 129 bps to 3.5% in 9M’21 – Driven by aggressive CASA buildup Period End Average Cost of Deposits Rs in bln Sep'21 Dec'20 9M'21 9M'20 Var % 9M'21 9M'20 Current deposits 712 614 628 525 19.6% 0.0% 0.0% Saving deposits 681 596 651 535 21.7% 5.6% 7.8% CASA 1,393 1,210 1,279 1,06
Slide 16: 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) Sep'21 Dec'20 12.1% Corporate Bank 308 301 3% Commodity 53 59 -9% 8.7% SME 19 18 7% Consumer 19 18 6% Others 57 38 50% Total D
Slide 17: Islamic Banking – building up a stronger proposition and wider network
Islamic Banking – building up a stronger proposition and wider network Average Deposits and CoD Key Performance Highlights YTD Sep’21 vs YTD Sep’20 Rs in bln 4.2% 3.8% 3.9% 3.8% 4.0% 3.6% 3.7% 3.7% 3.4% 3.2% ▪ 11% UBL Branches are now Islamic 109 116 117 116 123 129 120 123 116 ▪ 48 Branches convert
Slide 18: Well Diversified Investment Portfolio with stable yields
Well Diversified Investment Portfolio with stable yields Over 90% of Investments in Govt. Securities MTM Surplus / Deficit Yield on Investments MTM Surplus / (Deficit) - 10.2% 10.4% Dec'20 Sep'21 9.8% Bai Moajjal T-Bills Rs in mln 7.8% Rs. 32 bln Rs. 697 bln PIBs - Fixed 334 (275) (Dec'20: Rs. 30 bl
Slide 19: 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 20: Major NFI lines reflect improving momentum as businesses rebuild
Major NFI lines reflect improving momentum as businesses rebuild to pre-covid levels Penetration across CIBG Customer Base with USD 4.9 bln in Trade Volumes, up 100% Bancassurance – gaining strong momentum across major clusters USD in mln Rs in mln 1.2b 647 1.4b 623 6,000 411 397 450 372 346 400 Rs
Slide 21: International - capital gains support earnings as we evolve leaner model
International - capital gains support earnings as we evolve leaner business model Performing Advances - PE Non Performing Loans Key Performance Highlights YTD Sep’21 vs YTD Sep’20 USD in mln USD in mln +0.5% 7% ▪ Cost of Deposits at 1.1%; down 58 bps 360 343 345 340 ▪ Avg Deposits at USD 1.30 bln, d
Slide 22: 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 111% YoY Transacting Customers up 64% ( '000s) Active Customers ( '000s) +64% +111% 891 566 540 552 500 517 474 475 479 491 423 345 Sep'20 Sep'21 Dec'20 Jan'21 Feb'21 Mar'21 Apr
Slide 23: 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 24: 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 Strengthen
Slide 25: Financial Summaries
Financial Summaries where YOU come first
Slide 26: Drivers for earnings – Core KPIs review for 9M'21 vs 9M'20
Financial Summaries Drivers for earnings – Core KPIs review for 9M’21 vs 9M’20 Key Metric 9M’21 9M’20 YoY Delta BUSINESS VOLUMES AND REVENUE DRIVERS 1 Average Current Account Growth – YoY 19.6% 10.2 +9.4% 2 NTB run rate - C/A per branch per day 1.7 1.6 +0.1 3 Aggregate number of NTB C/As in '000s 41
Slide 27: Results for the nine months period ended September 2021
Financial Summaries Results for the nine months period ended September 2021 Key Metric 9M’21 9M’20 YoY Delta RETURN ON EQUITY 1 Profit Before Tax - Rs in bln 39.3 26.4 +49% 2 PAT - Rs in bln 22.8 16.1 +42% 3 RoE 19.2% 15.7% +346 bps 4 EPS – Rs 18.6 13.1 +42% 5 Capital Adequacy Ratio 22.9% 22.8% +13
Slide 28: Financial Summaries Income Statement Domestic
Financial Summaries Income Statement Domestic Rs in bln Rs in bln Description Var % Var % 9M'21 9M'20 Q3'21 Q2'21 Interest Earned 101.0 111.6 -9% 38.5 33.3 16% Interest Expensed (53.2) (59.3) 10% (21.9) (17.0) -29% Net Interest Income 47.9 52.4 -9% 16.6 16.3 1% Non Interest Income 13.4 10.7 25% 4.8
Slide 29: Financial Summaries Non Fund Income
Financial Summaries Non Fund Income Rs in mln Rs in mln Description Var % Var % 9M'21 9M'20 Q3'21 Q2'21 Fee, commission and brokerage income 8,652 6,555 32% 2,783 3,144 -11% Dividend income 1,420 899 58% 540 627 -14% Income from dealing in foreign currencies 2,259 2,679 -16% 1,214 610 99% Gain / (lo
Slide 30: Financial Summaries Fee, Commission and Brokerage
Financial Summaries Fee, Commission and Brokerage Rs in mln Description Var % 9M'21 9M'20 Branch banking customer fees 963 921 4% Consumer finance related fees 707 614 15% Card related fees (debit and credit cards) 1,759 1,023 72% Investment banking fees 434 117 272% Financial Institution rebate / c
Slide 31: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % 9M'21 9M'20 Total compensation expenses 10,622 9,780 -9% Rent and taxes 566 407 -39% Utilities cost 1,140 1,071 -6% Security 717 719 0% Depreciation 586 577 -2% Depreciation - Right of Use Assets 1,348 1,291 -4% Others 253 217 -
Slide 32: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % 9M'21 9M'20 Legal and professional charges 244 125 -95% Outsourced service costs including sales commission 2,080 1,803 -15% Banking service charges 1,407 1,055 -33% Cash transportation and sorting charges 599 573 -5% Depreciati
Slide 33: Consolidated Results 9M'21
Consolidated Results 9M’21 33
Slide 34: Consolidated Results Income Statement
Consolidated Results Income Statement Rs in bln Rs in bln Description Var % Var % 9M'21 9M'20 Q3'21 Q2'21 Interest Earned 112.3 123.9 -9.4% 42.5 36.9 15.3% Interest Expensed (56.6) (64.2) 11.8% (23.1) (18.0) -28.2% Net Interest Income 55.7 59.7 -6.7% 19.4 18.8 3.0% Non Interest Income 17.7 14.4 22.7
Slide 35: Consolidated Results Balance Sheet
Consolidated Results Balance Sheet Rs in bln Description Var % Sep.'21 Dec'20 Advances 679 612 10.9% Investments 1,587 1,168 35.9% Lendings to Financial Institutions 38 22 71.7% Others 377 400 -5.8% Total Assets 2,680 2,202 21.7% Deposits 1,943 1,764 10.1% Borrowings 417 132 216.6% Subordinated Debt
Slide 36: 6 year Performance Review
6 year Performance Review where YOU come first
Slide 37: 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 38: 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 39: 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 40: Quarterly Trends
Quarterly Trends Gi where YOU come first
Slide 41: Quarterly Trends Profit before Tax
Quarterly Trends Profit before Tax Rs in bln 13.5 +57% 13.7 13.5 11.8 +23% 12.2 11.3 11.2 +12% -2% 10.8 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 -26% +1% 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 Q
Slide 42: Quarterly Trends Profit after Tax
Quarterly Trends Profit after Tax Rs in bln +53% 7.8 7.6 7.3 7.3 7.4 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 Q2'21 Q
Slide 43: Quarterly Trends Deposits
Quarterly Trends Deposits Rs in bln +13% 1,850 0% 1,810 +4% +6% 0% +2% 1,640 1,637 1,589 1,581 -2% 1,493 1,448 1,419 1,467 1,366 1,344 1,273 1,301 1,315 1,335 1,256 1,254 1,183 1,142 1,147 1,167 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 Q3'19 Q4'19 Q
Slide 44: Quarterly Trends Net Advances
Quarterly Trends Net Advances Rs in bln 716 675 673 627 642 626 636 624 623 +2% 636 585 +2% +3% 565 567 -2% 557 567 538 530 541 509 519 -6% 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 Q3'21 44
Slide 45: Quarterly Trends Revenue
Quarterly Trends Revenue Rs in bln +18% 26.0 +5% +2% +9% +5% 23.9 23.2 22.6 22.4 22.0 24.5 21.9 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 Q3'20 Q4'20
Slide 46: Quarterly Trends Net Interest Income
Quarterly Trends Net Interest Income Rs in bln +26% 21.8 +8% +2% +6% 19.1 18.6 +1% 18.2 17.3 16.4 -12% 16.7 16.9 15.7 15.4 15.3 14.3 14.4 14.7 -12% 14.0 14.2 14.2 14.2 13.6 13.7 13.7 13.9 13.8 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 47: Quarterly Trends Non Fund Income
Quarterly Trends Non Fund Income Rs in bln 8.4 7.3 7.2 7.0 6.3 +42% +4% 6.1 6.0 5.8 5.6 5.7 5.6 5.9 5.2 5.1 5.2 +5% 5.0 -2% 4.7 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 Q2'21 Q3'2
Slide 48: Quarterly Trends Provision Charge
Quarterly Trends Provision Charge 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% 0.1 -0.3 -0.3 -0.3 -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 Q1'20 Q2'20 Q3'20 Q4'20 Q1'
Slide 49: Quarterly Trends Administrative Expenses
Quarterly Trends Administrative Expenses Rs in bln +11% +6% 11.0 11.0 +5% 10.7 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 -11% 8.4 -14% 8.2 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 Q3'20 Q4'20
Slide 50: Important Information
Important Information The information contained herein reflects our latest business statement as at September 30, 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 e
Slide 51: Thank You
Thank You