United Bank Limited · PSX:UBL
United Bank — Q1 2022 Earnings Presentation
59 slides from United Bank's earnings presentation, Mar 1, 2022
Slide 1: United Bank Limited Investor Presentation Q1 2022
United Bank Limited Investor Presentation Q1 2022 Performance Highlights and Business Outlook 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 UBL’s Profile – leading franchise in Pakistan, awarded Best Digital Bank in 2021 2 Strong results in first quarter of 2022 with 30% YoY growth in profits 3 Maximizing shareholders returns with growing dividend payouts 4 One of the largest branch networks serving all across Pakist
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 – March 2022 Second largest private sector bank in Pakistan with 1959 - UBL set up with first branch in Karachi 1,338 domestic branches Market share of 7.6%, 10 million
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 – penetration levels continue to improve
Digital Banking – penetration levels continue to improve as our award winning app gains further ground App Registrations up +28% YoY Transacting Customers up 37% (Mar’22 vs Mar’21) Registered Customers # in mln +28% ( '000s) +37% YoY 2.2 1.7 643 655 614 628 578 593 552 566 517 540 474 475 479 491 50
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: Strong results in first quarter of 2022 with 30% YoY growth in profits
Strong results in first quarter of 2022 with 30% YoY 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 to capitalize on rising rate scenario Risks and opportunities surrounding core segments… 1 Rate Regime Interest Rate on rising trend but may impact economic growth levels Inflation 2 CPI levels remain high – impacting cost of business Inves
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 impacted by current Geopolitical situation Current account deficit to remain high, USD 12.1 bln in 8MFY’22 (S
Slide 11: Balance Sheet Review – Growth in Deposits Builds Core Earnings
Balance Sheet Review – Growth in Deposits Builds Core Earnings Rs in bln Deposits Performance - Led by Branch Banking Group Balance Sheet Var % Mar'22 Dec'21 Avg Dom deposits at Rs 1.5 tln, up 8% YoY – inc vol of Rs 110 bln Advances 656 646 1% Avg Domestic current accounts up 11% YoY, savings up
Slide 12: Q1'22 Results – higher revenues support earnings
Q1’22 Results – higher revenues support earnings with growth of 24% in PBT vs Q4’21 Rs in bln Rs in bln Revenue Performance – stable margins building up momentum Income Statement Var % Var % Q1'22 Q1'21 Q4'21 Bank NIMs at 4.3% in Q1’22 (Q1’21: 4.0%) Interest Earned 48.0 31.8 51% 38.9 23% Banca c
Slide 13: Building sustainable fee base with diversification is key
Building sustainable fee base with diversification is key - strong results in 2022 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 – diversification from large businesses benefits earnings profile Penetration across CIBG Customer Base with USD 1.6 bln in Trade Volumes, up 10% YoY Bancassurance – gaining strong momentum across major clusters Rs in mln USD in mln 4,000 450 388 479m 513 4
Slide 15: Maximizing shareholders returns with growing dividend payouts
Maximizing shareholders returns with growing dividend payouts ROE, Share Price & Capital Adequacy Ratios 15
Slide 16: Strong Dividend Payouts maintained
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 2022: Rs. 149.81 Cons. Equity Mar’22 - Rs. 227 bln Rs in bln Price as at 21- Apr'22: Rs. 141.35 50 Cons. Book value Dec’21 -
Slide 17: Key Ratios for the quarter – ROE at 23% in Q1'22
Key Ratios for the quarter – ROE at 23% in Q1’22 with steady buildup in revenue Gross Revenues Cost to Income Ratio Net Interest Margins Rs in bln 28.3 Rs in bln +63 bps 22.6 23.9 24.5 24.2 4.3% 47.8% 3.9% 3.9% 6.8 43.5% 43.3% 45.0% 41.5% 3.5% 3.7% 5.6 5.9 6.1 5.8 18.6 21.5 18.2 18.6 21.5 16.9 18.2
Slide 18: UBL poised for growth - Capital Base strengthens
UBL poised for growth - Capital Base strengthens with conservation Capital Adequacy Ratio Risk Weighted Assets +20 bps 167 167 21.5% 21.7% 76 Dec'21: Mar'22: 622 68 5.3% Rs 865 bln Rs 873 bln 638 5.3% 1.1% 1.1% Credit Market Operational Credit Market Operational 15.1% 15.3% UBL seeks to maintain a
Slide 19: One of the largest branch networks serving all across Pakistan
One of the largest branch networks serving all across 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 – growth momentum maintains ion Q1’22 Our Stronger compliance, Better people Upskill and retain quality Empowerment and Improve Branch profitability Strategic engagement talent accountability with cost synergies conduct and control environment Act
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 6,634 6,805 1,376 5,696 6,191 1,370 5,289 With a Avg market share of 1,359 4,394 4,859 1,349 1,348 7.6%, we reach over 6.5 million custom
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 Mar'22)
CIBG Performance (2016 to Mar’22) Loan book driven by Corporate Bank - focus on quality credit and diversification Domestic Loans Growth Domestic Loan Composition Dom + Int Credit Concentration by Sector Mar’22) 545 500 520 512 Rs in bln 441 433 19% 342 CIBG 13% SME, Consumer 26% 81% 9% 2016 2017 20
Slide 27: Advances Portfolio - buildup in quality assets
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) Mar'22 Dec'21 11.3% Corporate Bank 340 364 -6% Commodity 47 55 -13% 8.3% SME 11 11 -2% Consumer 19 18 7% Others 94 72 31% Tota
Slide 28: Islamic Banking – building up a stronger proposition
Islamic Banking – we are building up a stronger proposition and wider network Average Deposits and CoD Key Performance Highlights Q1’22 vs Q1’21 Rs in bln 4.2% 4.1% 3.8% 3.9% 3.8% 4.0% 3.6% 3.7% 3.7% 3.7% 3.4% 2.7% 2.8% 3.5% 3.2% 2.5% 11% UBL Branches are now Islamic 123 129 123 128 134 125 136 13
Slide 29: Treasury – investment book well positioned and repricing well in 2022
Treasury – investment book well positioned and repricing well in 2022 “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 Portfolio with pro-active trading in FX and bonds
Well Diversified Portfolio with pro-active trading in FX and bonds in the current quarter Yield on Investments Over 95% of Investments in Govt. Securities 9.8% 10.0% 7.9% T-Bills Rs. 185 bln (Dec'21: Rs. 532 bln) Sukuks Rs. 56 bln (Dec'21: Rs. 54 bln) FY'20 Q1'21 Q1'22 Fixed PIBs Rs. 332 bln Non Fun
Slide 32: International business – cautiously maintaining business scale
International business – cautiously maintaining business scale “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 Q1’22 vs Q1’21 USD in mln USD in mln +2% -1.6% Cost of Deposits at 1.1%; down 13 bps 360 334 329 Avg Deposits at USD 1.30 bln, up 1% YoY 340
Slide 35: Financial Summaries
GBL Financial Summaries where you come first
Slide 36: Financial Summaries Income Statement Domestic Q1'22
Financial Summaries Income Statement Domestic Q1’22 Rs in bln Rs in bln Description Var % Var % Q1'22 Q1'21 Q4'21 Interest Earned 45.0 29.2 54% 35.9 25% Interest Expensed (25.7) (14.2) -81% (20.1) -28% Net Interest Income 19.3 15.0 29% 15.8 22% Non Interest Income 6.2 4.0 56% 5.3 16% Total Revenue 2
Slide 37: Financial Summaries Non Fund Income
Financial Summaries Non Fund Income (Domestic, International and Bank Level) Rs in mln Description Var % Var % Q1'22 Q1'21 Q4'21 Fee, commission and brokerage income 3,467 2,698 29% 2,979 16% Dividend income 902 252 257% 613 47% Income from dealing in foreign currencies 1,172 461 154% 1,292 -9% Gain
Slide 38: Financial Summaries Fee, Commission and Brokerage
Financial Summaries Fee, Commission and Brokerage (Domestic, International and Bank Level) Rs in mln Description Var % Q1'22 Q1'21 Branch banking customer fees 473 341 39% Consumer finance related fees 268 239 12% Card related fees (debit and credit cards) 748 554 35% Investment banking fees 53 10 4
Slide 39: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses (Domestic, International and Bank Level) Rs in mln Description Var % Q1'22 Q1'21 Total compensation expenses 4,035 3,510 -15% Rent and taxes 159 133 -19% Utilities cost 338 283 -20% Security 299 238 -26% Depreciation 326 194 -67% Depreciation - Right of Us
Slide 40: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses (Domestic, International and Bank Level) Rs in mln Description Var % Q1'22 Q1'21 Legal and professional charges 66 61 -10% Outsourced service costs including sales commission 774 671 -15% Banking service charges 612 422 -45% Cash transportation and sorting
Slide 41: Consolidated Results Q1'22
Consolidated Results Q1’22 41
Slide 42: Consolidated Results Income Statement Q1'22
Consolidated Results Income Statement Q1’22 Rs in bln Description Var % Q1'22 Q1'21 Interest Earned 49.3 32.9 50% Interest Expensed (27.0) (15.4) -75% Net Interest Income 22.4 17.5 28% Non Interest Income 6.7 6.4 5% Total Revenue 29.1 23.9 22% Operating expenses (12.7) (10.8) -18% Total Expenses (13
Slide 43: Consolidated Results Balance Sheet March 2022
Consolidated Results Balance Sheet March 2022 Rs in bln Description Var % Mar'22 Dec'21 Advances 784 767 2% Investments 1,232 1,521 -19% Lendings to Financial Institutions 77 52 48% Others 387 441 -12% Total Assets 2,481 2,781 -11% Deposits 1,918 1,886 2% Borrowings 213 565 -62% Subordinated Debts 1
Slide 44: 6 year Performance Review
GBL 6 year Performance Review where you come first
Slide 45: 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 46: 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 47: 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 48: Quarterly Trends
Gai where you come first Quarterly Trends
Slide 49: Quarterly Trends Profit before Tax
Quarterly Trends Profit before Tax Rs in bln 15.8 13.5 +57% 13.7 13.5 +24% 12.8 +23% 12.2 11.8 11.3 11.2 +12% 10.8 10.4 -2% 10.4 -5% 9.2 8.8 8.4 8.8 8.5 8.4 8.3 7.9 7.6 7.7 6.5 5.9 +6% -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
Slide 50: Quarterly Trends Profit after Tax
Quarterly Trends Profit after Tax Rs in bln 9.5 +5% +17% +53% 8.1 7.6 7.8 7.3 7.3 7.4 +25% 7.0 7.0 +2% 6.4 6.3 6.3 +3% 6.0 5.9 +7% +3% 5.5 5.4 5.1 4.9 4.7 4.8 4.7 4.2 3.6 3.5 -26% 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
Slide 51: Quarterly Trends Deposits
Quarterly Trends Deposits Rs in bln +13% +1% 1,850 1,810 +6% +4% 1,751 1,775 +2% 1,640 1,637 1,589 1,581 -2% -3% 1,448 1,419 1,467 1,493 0% 1,366 1,344 0% 1,301 1,315 1,335 1,256 1,254 1,273 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
Slide 52: Quarterly Trends Net Advances
Quarterly Trends Net Advances Rs in bln 716 +1% 675673 +14% 656 646 627 624 642 626 636 623 +3% +2% 636 585 +2% 565 567 -2% 557 567 538 530 541 -6% 509 519 498 496 -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 Q1'2
Slide 53: Quarterly Trends Revenue
Quarterly Trends Revenue Rs in bln +17% 28.3 +18% 26.0 +5% +2% +5% +9% 23.9 24.2 23.2 22.6 22.4 22.0 24.5 21.9 21.3 21.2 21.2 20.6 -11% -1% 20.3 20.9 20.8 20.0 20.4 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 Q1'2
Slide 54: Quarterly Trends Net Interest Income
Quarterly Trends Net Interest Income Rs in bln +26% +19% 21.8 21.5 +8% +2% 19.1 +6% 18.6 +1% 18.2 18.1 17.3 -12% 16.4 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 Q3'1
Slide 55: Quarterly Trends Non Fund Income
Quarterly Trends Non Fund Income Rs in bln 8.4 7.3 7.2 +11% 7.0 6.8 +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 -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
Slide 56: Quarterly Trends Provision Charge / (Reversals)
Quarterly Trends Provision Charge / (Reversals) Rs in bln +55% 5.7 5.5 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% +164% 0.6 0.3 0.4 +26% 0.3 0.1 -0.3 -0.3 -0.3 -0.5 -0.5 -0.4 -225% -65% 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
Slide 57: Quarterly Trends Administrative Expenses
Quarterly Trends Administrative Expenses Rs in bln 11.7 +11% +5% +6% +5% 11.0 11.0 10.7 +2% +2% 10.3 11.5 10.3 11.0 9.9 10.0 9.9 9.6 9.7 9.2 9.5 9.0 9.9 8.8 8.8 8.7 +2% 8.4 8.5 -14% -11% 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
Slide 58: 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 58
Slide 59: Important Information
Important Information The information contained herein reflects our latest business statement as at March 31, 2022. 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 expre