United Bank Limited · PSX:UBL
United Bank — H1 2017 Earnings Presentation
37 slides from United Bank's earnings presentation, Jul 31, 2017
Slide 1: Performance Highlights – H1'2017
Performance Highlights – H1’ 2017 | Investor Relations Conference Call July 31st, 2017 Speakers: Mr. Aameer Karachiwalla - Chief Financial Officer Mr. Arif Saifie, CFA - Financial Controller and Head of Investor Relations UBL Performance Overview – H1’17 Investor Relations Release
Slide 2: Table of Contents
Table of Contents PAGE Key Highlights 3 Execution and Delivery 7 Key Ratios 24 Quarterly Trend Analysis 26 UBL Performance Overview – H1’17
Slide 3: Key Performance Highlights
Key Performance Highlights Standalone Results Profit before tax closes at Rs. 23.0 bln (H1’16: Rs. 24.8 bln) Profit after tax closes at Rs. 13.2 bln (H1’16: Rs. 14.3 bln) Return on equity (RoE) of 22.4% in H1’17 (H1’16: 26.5%) Average balance sheet expansion of 10% in H1’17 vs H1’16 Deposi
Slide 4: Revenue fall in H1'17 mainly on account of higher markup expense and lower NFI
Revenue fall in H1’17 mainly on account of higher markup expense and lower NFI Net interest income 4% lower than H1’16, closes at Rs. 28.0 bln Overall cost of deposits reduced to close at 2.6% in H1’17 (H1’16: 2.7%) Domestic cost of deposits at 2.75% in HI’17 (H1’16: 2.90%) International cost
Slide 5: Recoveries lead to provision reversals, effective management restricts expense growth
Recoveries lead to provision reversals, effective management restricts expense growth Net provision reversal of Rs. 0.46 bln in H1’17 vs charge of Rs. 1.68 bln in H1’16 Strong cash recoveries within both domestic and international operations Overall NPLs closed at Rs. 43.5 bln at Jun’17 (Dec’16:
Slide 6: 17% growth in balance sheet size over Dec'16
17% growth in balance sheet size over Dec’16 Growth in core deposits drives balance sheet expansion The Bank’s domestic deposits crossed a landmark to reach Rs. 1.02 trillion at Jun’17 end (Dec’16: Rs. 946 billion) Domestic current account portfolio grew by 16% over Dec’16, with average current
Slide 7: Execution and Delivery
Execution and Delivery UBL Performance Overview – H1’17 7
Slide 8: 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 Max H1'17:Rs. 275.38 30 Jun’17: Rs. 235.52 55.00 Rs in bln Cons . Equity Jun’17 - Rs. 167 bln 280 28 Jul'17: Rs. 209.78 50.00 Cons . Book value Jun’17 - Rs. 136 per s hare 260
Slide 9: Income Statement - Standalone
Income Statement - Standalone Rs in bln Rs in bln H1'17 H1'16 Var % Q2'17 Q1'17 Var % Interest Earned 49.7 49.5 0.3% 25.8 23.9 8.0% Interest Expensed (21.7) (20.2) -7.3% (11.5) (10.2) -12.9% Net Interest Income 28.0 29.3 -4.5% 14.3 13.7 4.3% Non Interest Income 12.3 14.0 -11.5% 6.1 6.3 -3.3% Total R
Slide 10: Balance Sheet - Standalone
Balance Sheet - Standalone Rs in bln Jun'17 Dec'16 Var % Advances 565 510 10.7% Investments 1,000 807 23.9% Lendings to Financial Institutions 36 34 5.9% Others 251 227 10.8% Total Assets 1,852 1,578 17.4% Deposits 1,256 1,180 6.4% Borrowings 390 202 93.7% Others 52 44 18.1% Total Liabilities 1,699
Slide 11: Income Statement - Consolidated
Income Statement - Consolidated Rs in bln Rs in bln H1'17 H1'16 Var % Q2'17 Q1'17 Var % Interest Earned 51.3 51.4 -0.1% 26.6 24.7 8.0% Interest Expensed (22.5) (21.0) -7.0% (11.9) (10.6) -12.7% Net Interest Income 28.8 30.4 -5.1% 14.7 14.1 4.5% Non Interest Income 13.6 15.3 -11.4% 6.4 7.2 -10.9% Tot
Slide 12: Balance Sheet - Consolidated
Balance Sheet - Consolidated Rs in bln Jun'17 Dec'16 Var % Advances 601 538 11.8% Investments 1,036 838 23.6% Lendings to Financial Institutions 38 35 5.8% Others 274 250 9.5% Total Assets 1,948 1,662 17.2% Deposits 1,328 1,246 6.6% Borrowings 400 206 94.3% Others 54 46 16.5% Total Liabilities 1,782
Slide 13: Deposits performance - Focus remains on growing low cost deposits
Deposits performance - Focus remains on growing low cost deposits Deposits - Bank Jun'17 Dec'16 PE CoF % PE CoF % Domestic deposits - Rs in bln 1,021 2.8% 946 2.9% International deposits - Rs in bln 235 2.2% 234 2.0% Total Bank - Rs in bln 1,256 2.6% 1,180 2.7% International - USD in mln 2,238 2.2%
Slide 14: Advances portfolio up 11% over Dec'16
Advances portfolio up 11% over Dec’16 Net Advances Rs in bln Jun'17 Dec'16 Var % Corporate Bank 278 236 18% Commodity 61 53 14% Commercial 28 28 0% Consumer 10 9 7% Others 16 15 4% Total Domestic 392 342 15% International 173 168 3% Bank 565 510 11% International USD mln 1,647 1,608 2% Dec'16 236 53
Slide 15: International Advances - Corporate advances remains the largest component
International Advances - Corporate advances remains the largest component By Geography By Business - UAE Bahrain, Qatar, 11% Yemen, 2% NewYork, 13% 5% Corporate, EPZ, 0% 69% Others, 27% UAE, 69% Consumer, 4% Others, 2% Personal loan, 2% Abu Dhabi, 24% Sharjah, 3% Dubai, 73% Baitna, 96% UBL Performan
Slide 16: Concentration of Advances as at December 31, 2016 - Standalone
Concentration of Advances as at December 31, 2016 - Standalone Energy Sector Others 19% 23% Airline Agribusiness 2% 10% Contractors 1% Pharmaceuticals 2% Telecom Individuals 3% 8% Financial 7% Construction Food industries 5% 4% Wholesale traders Textile 4% 12% UBL Performance Overview – H1’17 16
Slide 17: Diversified investment portfolio with strong market risk management
Diversified investment portfolio with strong market risk management Portfolio concentrated in long terms treasury bonds Investments’ yields Total 1,000 11.1% Rs in bln 41 2 44 31 Total 807 17 43 10.4% 10.4% 5 36 29 16 8.9% 606 8.2% 2013 2014 2015 2016 H1'17 571 Non Funded revenue streams continue to
Slide 18: Our international outreach - serving in 4 continents under the single UBL brand
Our international outreach - serving in 4 continents under the single “UBL” brand ASSOCIATED COMPANIES 3 OVERSEAS BRANCHES 18 PAKISTAN BRANCHES 1,345 SUBSIDIARIES 4 Asset mix by region - 2016 Domestic Operations 76.4% International Operations 23.6% Middle East 17.5% USA 0.7% Europe 5.0% Africa 0.3%
Slide 19: 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 Awarded “Innovation Award” at the Mastercard Innovation Banking (UBL OMNI) Forum for ‘Launch of UBL MasterPass QR’ Declared the
Slide 20: Review of Non Interest Income & Administrative Expenses
Review of Non Interest Income & Administrative Expenses UBL Performance Overview – H1’17 20
Slide 21: Non Fund Income Standalone Results
Non Fund Income Standalone Results Rs in mln H1'17 H1'16 Var % Fee, commission and brokerage income 5,908 6,386 -7% Dividend income 1,292 1,516 -15% Income from dealing in foreign currencies 822 977 -16% Gain / (loss) on sale of securities 3,836 4,518 -15% Other income 488 557 -12% Total Non Fund In
Slide 22: Fees and Commissions performance Standalone Results
Fees and Commissions performance Standalone Results Rs in mln H1'17 H1'16 Var % Commission on trade 961 1,056 -9% Commission on consumer loan 325 326 0% Commission on remittance / uniremote 883 1,161 -24% Corporate service chgs/finance fee/FIG inc. 754 994 -24% General banking service charges 1,083
Slide 23: Administrative Expenses Standalone Results
Administrative Expenses Standalone Results Rs in mln H1'17 H1'16 Var % Personnel Cost 7,015 6,459 -9% Rent taxes insurance etc. 2,257 1,991 -13% Outsourced service charges 2,304 2,437 5% including sales commission Advertisement and publicity 448 363 -24% Communications 602 607 1% Depreciation / Amor
Slide 24: Key Ratios
Key Ratios UBL Performance Overview – H1’17 24
Slide 25: Key Financial Ratios Standalone Results
Key Financial Ratios Standalone Results H1'17 H1'16 Q2'17 Q1'17 Return on Equity 22.4% 26.5% 19.9% 24.9% Return on Assets 1.7% 2.0% 1.4% 1.9% Non Fund Income to Gross Revenue 30.6% 32.2% 29.8% 31.4% Cost to Revenue Ratio 42.9% 37.6% 43.2% 42.6% Jun'17 Mar'17 Dec'16 Jun'16 Advances to Deposits Ratio
Slide 26: Quarterly Trend Analysis
Quarterly Trend Analysis Bank Level - Standalone UBL Performance Overview – H1’17 26
Slide 27: Profit before tax
Profit before tax Rs in bln 13.5 +6% 11.8 10.9 11.2 11.2 +7% 11.3 10.8 10.2 9.9 10.4 9.3 8.4 8.3 7.8 8.0 7.1 6.4 5.9 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 UBL Performance Overview – H1’17 27
Slide 28: Profit after tax
Profit after tax Rs in bln 7.3 7.3 7.1 7.0 +13% 6.5 -17% 6.5 6.4 7.0 6.1 5.7 5.6 5.2 5.3 5.3 6.0 4.7 4.3 4.0 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 UBL Performance Overview – H1’17 28
Slide 29: Deposits
Deposits Rs in bln +6% +0% 1,256 1,183 1,142 1,147 1,180 1,051 1,070 992 994 945 895 847 858 866 828 752 773 703 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 UBL Performance Overview – H1’17 29
Slide 30: Net Advances
Net Advances Rs in bln 565 +13% 509 510 496 498 -2% 459 455 434 430 417 420 447 408 391 377 369 363 352 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 UBL Performance Overview – H1’17 30
Slide 31: Revenue
Revenue Rs in bln 21.9 21.3 +2% 20.3 20.4 +4% 20.0 19.3 19.5 19.2 17.6 18.6 18.1 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 UBL Performance Overview – H1’17 31
Slide 32: Net Interest Income
Net Interest Income Rs in bln 15.7 14.7 14.2 14.3 14.0 +4% 13.6 13.1 12.8 13.9 -2% 13.7 13.7 11.3 11.0 10.6 9.8 9.5 9.0 8.8 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 UBL Performance Overview – H1’17 32
Slide 33: Non Funded Income
Non Funded Income Rs in bln 8.4 6.2 6.2 6.3 -3% +21% 6.1 5.6 4.9 5.1 5.0 4.8 4.8 4.8 4.8 4.6 5.2 4.5 3.9 4.5 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 UBL Performance Overview – H1’17 33
Slide 34: Provisions
Provisions Rs in bln 2.0 1.3 0.9 0.9 0.8 0.7 0.5 0.8 0.3 0.3 -76% 0.2 0.2 0.1 -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 -0.1 -0.3 -0.3 -0.5 UBL Performance Overview – H1’17 34
Slide 35: Administrative Expenses
Administrative Expenses Rs in bln +3% 8.8 8.6 8.5 8.4 +3% 8.2 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 UBL Performance Overview – H1’17 35
Slide 36: Important Information
Important Information The information contained herein reflects our latest business statement as at June 30, 2017. 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 37: Thank You
Thank You UBL Performance Overview – H1’17 37