Union Bank Of India Limited · NSE:UNIONBANK
Union Bank Of India — FY2009 Earnings Presentation
58 slides from Union Bank Of India's earnings presentation, May 7, 2009
Slide 1: Financial Results Q4-09 & FY 2009
Financial Results Q4-09 & FY 2009 7th May, 2009
Slide 2: Highlights of Business Growth
HIGHLIGHTS OF BUSINESS GROWTH Total Business increased from Rs.179737 Cr. to Rs 236968 Cr. an increase of 31.84 % Total Deposits increased by an impressive from Rs.103859 to Rs. 138703 crs an increase of 33.55%. Core Deposits grew from Rs.85739 Cr.to Rs.124103 Cr. an impressive growth of 44.75% Gros
Slide 3: Performance vis-à-vis guidance for FY09
Performance vis-à-vis guidance for FY09 The Bank aims to reach a business mix of Rs 220000 crore by the end of March 2009, a growth of approx. 22%. Of this, Rs 127500 crore will be Deposits (growth of 23%YoY) and Rs 92500 crore will be Advances (growth of 22%YoY). The Bank outperformed its guidanc
Slide 4: Performance vis-à-vis guidance for FY09
Performance vis-à-vis guidance for FY09 Containing Cost of funds will be central to the strategy of the Bank during the year. Average Savings portfolio grew by 20%, the growth almost doubling from Rs 2400 crs to Rs 4500 crs. 33 lac new savings account added during the year. 85000 Current accounts
Slide 5: Yearly Results
Financial Results – FY 2009 Yearly Results 5
Slide 6: Operating Profits (YoY)
Operating Profits (YoY) 2 8 .15% 3082 3200 R – CAG Growth 19.46% • The bank has been 2800 2580 Growth 28.94% making continuous 2400 Growth 36.49% 2001 growth under 2000 Operating Profit. 1600 1466 3 The Operating Profit has grown at 1200 a CAGR of 28.15% 800 since 2006. 400 Mar-06 Mar 07 Mar 08 Mar-
Slide 7: Provisions as on 31.3.09 (YoY)
Provisions as on 31.3.09 (YoY) (Rs.in crore) Mar’08 Mar’09 Taxation 477 618 NPA (excluding adhoc provision for 585 546 Standard Assets) Standard Assets 80 80 Depreciation on Investment 30 -39 On Shifting of Securities 48 14 Others ( Frauds / Restructured Adv.Etc.) -27 136 Total 1193 1355 7
Slide 8: Net Profits (YoY)
Net Profits (YoY) 1727 1800 8% Growth 24.51% 1600 R – 36.9 • The bank has been AG making continuous C 1387 1400 Growth 64.14% steady growth under 1200 Net Profit. The Net 1000 Growth 25.19% 845 Profit has grown at a 800 675 CAGR of 36.98% since 2006. Net Profit growth 600 has been more than 400 150%
Slide 9: Net Interest Income (YoY)
Net Interest Income (YoY) 4200 3813 3800 33.65% 3400 2790 2.25% 2853 • NII increased to 3000 2600 2375 17.47% Rs.3813 crs in 2200 FY 09 from Rs. 2853 crs, a 3 1800 1400 1000 growth of 600 33.65%. 200 Mar 06 Mar 07 Mar-08 Mar-09 Net Interest Income 9
Slide 10: Net Interest Margin (NIM) [YoY]
Net Interest Margin (NIM) [YoY] 10 8.78 8.08 8.35 7.49 8 5.76 5.96 6 5.03 4.46 4 3.03 3.05 3.24 3.45 3.4 2.93 2.59 2.82 2 0 Mar-06 Mar-07 Mar-08 Mar-09 Yield on Funds Cost of funds Spread NIM Cost of Funds stood at 5.96%. Yield on funds improved to 8.78% Spread improved from 2.59% to 2.82%. Net Inte
Slide 11: Non-Interest Income - YoY Comparison
Non-Interest Income- YoY Comparison (Rs.in crore) Mar’06 Mar’07 Mar’08 Mar’09 Growth % Core Fee based Income 307 387 633 818 29.22 Treasury Income 154 199 510 517 1.37 W/w (Profit on Sale of Investment) 95 109 (377) (321) -14.85 ( Forex Income) 59 90 (133) (196) 47.36 Recovery in Written-Off 33 101
Slide 12: Major Components – Non Interest Income (fee based)
Major Components – Non Interest Income (fee based) YoY Comparison (Rs.in crore) Mar’08 Mar’09 Growth % Comm. On L/Cs and L/Gs Issued 128 168 31.25 (Inland) Processing Charges 87 215 147.13 Exchange on Inland Remittances 80 54 -32.5 Income from Foreign Exchange 261 339 29.89 Business Comm on Govt. Bu
Slide 13: Non-Interest Expenditure - YoY Comparison
Non-Interest Expenditure- YoY Comparison (Rs.in crore) Mar’06 Mar’07 Mar’08 Mar’09 Growth % Staff Expenses 867 874 845 1152 36.34 Other Operating 535 602 748 1062 41.98 Expenses Total 1402 1476 1593 2214 38.99 Staff Expenses have increased from Rs.845 crore to Rs. 1152 crore due to increase in pensi
Slide 14: Q409 financials
Financial Results – FY 2009 Q409 financials 14
Slide 15: Operating Profits (Quarterly)
Operating Profits (Quarterly) 1000 2.69% 912 891 15.88% 758 • Operating Profit for the 800 quarter ended March 600 82.85% 2009 has increased 420 marginally mainly due to 400 substantial rise in provision for staff 200 expenses such as 0 Pension liability, Wage MAR-06 MAR-07 MAR-08 Mar-09 arrears etc
Slide 16: Provisions as on 31.03.2009 (Quarterly)
Provisions as on 31.03.2009 (Quarterly) (Rs.in crore) Mar 07 Mar 08 Mar 09 (Q) (Q) (Q) Taxation 214 17 163 NPA 158 235 277 Standard Assets 92 21 -7 Depreciation on Investment 78 110 -33 Others ( Frauds / Restructured -12 -13 46 Adv.Etc.) Total 530 370 446 16
Slide 17: Net Profits (Quarterly)
Net Profits (Quarterly) 600 553 521 -10.56% • Net Profit for the quarter 500 466 ended March 2009 has reduced 45.64% mainly due to higher provisions 400 379 of Rs. 446 crore as against Rs 370 crs, substantial employee 300 128.51% benefits write-backs of Rs 142 228 crs in Q408, whereas 200 145 57.24%
Slide 18: Net Interest Income (Quarterly)
Net Interest Income (Quarterly) 1000 926 842 • NII increased to -8.31% 19.95% 772 800 40.80% Rs. 926 crs in 598 600 Q4 09 from Rs. 772 crs, a growth 3 400 of 19.95% 200 Mar 06 Mar 07 Mar-08 Mar-09 Net Interest Income 18
Slide 19: Non-Interest Income - Quarterly Comparison
Non-Interest Income- Quarterly Comparison (Rs.in crore) Mar’07 Mar’08 Mar’09 Growth (Q4) (Q4) (Q4) % Core Income 192 244 298 22.14 Profit on sale of 13 67 227 238.81 Investments Recovery in Written-Off 37 62 35 -43.54 accounts TOTAL 242 373 560 50.14 19
Slide 20: Net Interest Margin (NIM) [Quarterly]
Net Interest Margin (NIM) [Quarterly] 10 9.31 8.75 8.84 8.16 8 6.1 6.35 5.6 5.74 6 3.68 4 3.013.52 3.21 2.56 2.8 2.92 2.49 2 0 Jun-08 Sept-08 Dec-08 Mar-09 Yield on Funds Cost of funds Spread NIM 20
Slide 21: Deposits
Deposits 138703 Total Deposits grew by 1 4 0 0 0 0 124103 33.55% to Rs.138703 crs. 1 2 0 0 0 0 33.55% The Bank’s core deposits 103859 grew by a robust 44.75% to 1 0 0 0 0 0 44.75% 85180 21.93% 85739 Rs.124103 crs. 8 0 0 0 0 Demand deposits (CASA) 74094 14.96% 66676 55562 28.59% improved by 15.21% to
Slide 22: Above average growth rate FY09
Bank’s marketing transformation has yielded handsome results – Deposit and Advances growth above industry. Exceptionally high growth Above average 35 in Term Deposits 29 growth rate FY09 30 40 25 34 20 35 20 17 30 30 15 25 10 19 % 20 17 5 15 0 Term Dep. Avg SB Bal CA Avg bal 10 • Accretion in Saving
Slide 23: Core Deposit Growth
Core Deposit Growth (Rs.in crore) Mar 08 Mar 09 Growth % Core Deposits 85739 124103 44.75 Wholesale Deposits 18120 14600 -19.43 CASA Deposits 36204 41711 15.21 Deposit Clientele (Mn.) 19.50 23.60 +4.10 Mn 23
Slide 24: Advances
Advances & Yield on Advances Advances 100000 29.50% 98265 12 Bank registered growth of 29.50% 90000 11.06 11 YoY in advances to Rs. 98265 crs. 75878 80000 19.20% Yield on Advances improved by 70000 10.12 60000 54644 16.50% 63658 10 94 bps to 11.06% as of Mar’09. 50000 8.98 9 Within the advances segm
Slide 25: Non Fund Based Business of the Bank
Non Fund Based Business of the Bank Rs in Crs (Growth) Nature of Business March 08 March 09 % Letter of Credit 5116 5881 14.96 Letter of Guarantee 4704 8350 77.51 Other Contingent Items 52697 66967 27.08 Total 62517 81198 29.89 25
Slide 26: Top Sector Exposures
TOP SECTOR EXPOSURES Across Large & Mid Corporates, SME and Corporate Agri Business Rank Sectors Exposures (As on 31st March 2009) % Amount (Rs. in Crore) 1 Retail Advances 10.26 10092 2 Trade 9.71 9439 3 Infrastructure 8.92 8670 4 Metal & Metal Products 5.96 5790 5 Electricity 4.02 3915 6 Commercia
Slide 27: Distribution of Ratings Large & Mid Corporates
DISTRIBUTION OF RATINGS LARGE & MID CORPORATES The Bank is having a portfolio of Rs.49442 crore (No. of Accounts 340) of more than Rs. 50 crore, out of which 216 Accounts with exposure of Rs. 31806 Crore are rated. Rating of the Accounts is as under: Rating No of Borrowers Exposure % OF RATED EXPOSU
Slide 28: Composition of Retail Assets
COMPOSITION OF RETAIL ASSETS Product-wise composition of Retail assets Portfolio March 09 11.58 Housing Loans Personal Loans 10.02 Education Loans Auto Loans Other Retail 9.76 3.03 65.61 28
Slide 29: ATM Channel Migration
ATM Channel Migration 40 93% Growth 8000 126% Growth 7079 29 7000 30 6000 5000 20 15 4000 3137 3000 10 2000 0 1000 0 31.03.2008 31.03.2009 31.03.2008 31.03.2009 Card Base (In lacs) Yearly Cash Withdrawals (Rs. Crs) • Value added services such as Mobile Top-ups, Self Account transfers etc. 29
Slide 30: Cash Management Services
CASH MANAGEMENT SERVICES Turnover CMS Clients (Rs. in Crs) 900 40000 30050 30000 554 500 444 20000 12509 10000 0 100 2008 2009 2008 2009 14 12.6 11 Specialised CMS Branches 12 Target group 10 8.30 8 z Captive credit clients 6 z Govt/ Semi-Govt 4 2.58 establishments 2 1.35 z Mututal Funds, NBFCs 0 Fe
Slide 31: Investments
Investments 45000 43194 10 40000 35000 34061 Yield on investments is at 7.24% 30000 28190 which is comparable with industry average. Investments grew by 26010 7.84 8 25000 7.67 20000 6.96 7.24 26.81% to Rs.43194 crs in FY 09. 15000 10000 6 Mar-06 Mar-07 Mar-08 Mar-09 Investments Yield on Inv (Rs. In
Slide 32: Investment Duration
Investment Duration Mar 06 Mar-07 Mar-08 Mar - 09 HTM 4.68 4.24 3.78 5.27 AFS 2.66 2.08 2.98 3.11 HFT 7.51 2.65 8.37 6.28 Total 4.23 3.89 3.61 4.80 32
Slide 33: Movement of NPAs
Movement of NPAs (Rs.in crore) Mar’07 Mar’08 Mar’09 Gross NPAs - Opening 2098 1873 1657 Add : Additions 750 762 1177 Less : Deductions 975 978 911 1. Due to Write Off 320 337 366 2. Due to upgradation/ Recoveries 655 641 545 Gross NPAs 1873 1657 1923 Gross Credit 63658 75878 98265 Gross NPA as a % a
Slide 34: NPA Management
NPA MANAGEMENT GROSS NPAs NET NPAs 4.5 3.84 1.8 4 3.5 1.6 1.56 2.94 1.4 3 1.2 2.5 2.18 0.96 % 1.96 1 2 % 0.8 1.5 0.6 1 0.4 0.34 0.5 0.2 0.15 203 bps reduction in last 3 yrs 0 0 131 bps reduction in last 3 yrs 2006 2007 2008 2009 2006 2007 2008 2009 GROSS NPA % NET NPA AS % • Loan loss coverage of NP
Slide 35: Assets Restructured during FY09
Assets Restructured during FY09 Nature of Advance No of Accts Amount (Rs in Crs) MSME W/w 28272 647.42 Micro Enterprises 20620 249.18 Small Enterprises 7571 242.91 Medium Enterprises 81 155.33 Large Enterprises 39 680.25 Others 30808 796.71 Agriculture 15987 113.71 Retail Loans 38162 721.25 Total 11
Slide 36: Restructuring – The Big Picture
Restructuring – The Big Picture Restructuring focussed only on viable accounts Initial assessment Actual of Restructuring Restructuring • 1 lac accounts • 1 lac accounts • Rs 4000 crore • Rs 2959 crore • Among the restructured accounts, those with outstanding of Rs 1 crore amounting to Rs 1650 crs a
Slide 37: Sector-Wise NPAs
Sector-Wise NPAs Sector Gross NPA Gross NPA (%) (%) 2007-08 2008-09 Agriculture 3.33 2.37 Large & Medium 2.75 2.47 Ind. Retail 4.21 3.71 Housing 4.14 3.14 SME 3.79 3.21 37
Slide 38: Delinquency Ratio
Delinquency Ratio 2006 2007 2008 2009 1.93% 1.45% 1.23% 1.59% 38
Slide 39: Cost to Income Ratio
COST TO INCOME RATIO 45 42.45 43 41 41.81 The Cost to Income ratio has gone up due to 39 investment in capacity 38.17 37 building for future growth 35 2007 2008 2009 Mar-07 Mar-08 09-Mar 39
Slide 40: Cost to Income Ratio
COST TO INCOME RATIO During the year Operating Expenses have increased by Rs. 38.98 % mainly due to exceptional items of expenditure. If the Operating expenses would have curtailed by Rs. 150 Cr., the Cost to Income Ratio would have been at 38.98% almost in line with the ratio of previous year. 40
Slide 41: The Bank has ramped up capacity building for future earnings
The Bank has ramped up capacity building for future earnings Several initiatives aggressively launched Comprehensive rebranding campaign - Capacity building 9FY09 expenditure (Rs 132 cr) Vs Rs 34 cr in FY08. to grow faster than Industry 2. Delivery Channel expansion. - Investment leads 9New Branche
Slide 42: Capacity building for future earnings – Cont'd
The Bank has ramped up capacity building for future earnings Several initiatives aggressively launched – Cont’d 5. Ongoing investment in customer value proposition 9 ATM charges made free ahead of industry 6. Continuing investment in Customer value proposition 9 24000 staff trained in various scheme
Slide 43: Improved Efficiency
IMPROVED EFFICIENCY 1000 861 900 Productivity measured by 800 699 700 Business per employee 573 600 increased from Rs. 699 500 lacs to Rs.861 lacs. 400 300 Gross Profit per employee 200 has increased from 100 Rs.10.03 lacs to Rs. 0 MAR-07 MAR-08 Mar-09 lacs.11.20 lacs BUSINESS PER EMPLOYEE 43
Slide 44: Nurturing talent – building foundations for future
The Bank is aggressively nurturing talent – building foundations for future Reskilling / Training existing staff - Reducing Average 9 In-house management executive programme (MEP) age Currrent - 47 9Tie-up with NMIMS and others – Soft skill training Projected FY10 45 Projected FY12 40 to 5000 front
Slide 45: Capital Adequacy
Capital Adequacy 14 13.27 12.80 12.51 12 11.41 •Capital Adequacy Ratio is at 13.27% as of 31.03.2009 as 10 per Basel II. 8.19 8 7.32 7.45 •Tier-I capital funds have 7.55 increased by 27.65% from 6 4.85 5.06 Rs.6106 crore as on March, 5.08 4.09 2008 to Rs.7794 crore mainly 4 due to plough back of pro
Slide 46: Distribution Channels
DISTRIBUTION CHANNELS • The Bank added 197 branches on a net basis which includes conversion of 51 BRANCH MIX Ext. counters to branches. Including Hong Kong branch • 644 ATMs were added in FY 09 • The Bank proposes to add 500 new 564 762 branches in FY10. SERVICE OUTLETS 607 Mar’06 Mar’07 Mar’08 Mar
Slide 47: Shareholding Pattern (31st March, 2009)
Shareholding Pattern (31st March, 2009) 14.12 • Share Capital Rs 505.12 crore 14.53 •No. of Shares 505.12 million • Net worth Rs 6964 crore 55.43 • B. V. per share Rs 137.87 15.92 •Return on Equity (annualised): 24.79% Govt. of India Banks, Fis, Ins. Cos. Others FIIs and Foreign Mutual Funds Union B
Slide 48: Increasing Shareholders' Value
INCREASING SHAREHOLDERS’ VALUE MAR MAR MAR MAR 2006 2007 2008 2009 The Bank is EPS (Rs.) 14.58 16.74 27.46 34.18 consistently returning profits BOOK VALUE 80.77 93.60 111.19 137.87 year after year (Rs.) giving value RETURN ON 16.55 17.88 24.70 24.79 added returns to EQUITY (%) Shareholders RETURN ON
Slide 49: Movement of Share Price vis-a-vis Bankex and Sensex
MOVEMENT OF SHARE PRICE OF UNION BANK VIS-A-VIS BANKEX AND SENSEX MAR MAR YoY MAR YoY Growth% Growth% 2007 2008 2009 SHARE PRICE 104 141 35.71 147 4.33 UNION BANK BANKEX 6542 7718 17.97 4490 - 41.82 SENSEX 13072 15644 19.68 9708 - 37.94 Bank’s share price has outperformed the Bankex & Sensex during
Slide 50: Major highlights of last quarter
Major highlights of last quarter 50
Slide 51: Major Highlights
Major Highlights The Bank won a Special citation at FIIA Awards 2009, Singapore for its 100% Core Banking achievement through in-house efforts. After networking all its branches under CBS, the Bank has commenced networking of its sponsored RRBs under CBS. Bank has pioneered this initiative among
Slide 52: Major Highlights
Major Highlights The Bank has implemented Loan Automation Solution for its Retail, MSME and Corporate asset portfolios. The solution is expected to significantly streamline Turn- around-Time(TAT) in sanction of credit facilities, enhance customer experience and support key requirements like Monito
Slide 53: CSR Initiatives
CSR Initiatives The Bank signed an MOU with Madras School of Economics, Chennai to establish a Special Chair in the Bank’s name to be named “UNION BANK CHAIR FOR EXCELLENCE IN BANKING” for conducting academic research in banking and Industry oriented dissemination. The Bank also set up a research
Slide 54: Financial Inclusion
Financial Inclusion The Bank has frontrunner in leveraging technology to touch the lives of urban poor, migrant labourers and rural poor. The Bank has made investments to set up a viable Business Correspondent / Business Facilitator model to disseminate user friendly products such as No frills s
Slide 55: Road Ahead
)) Union Bank ROAD AHEAD
Slide 56: Road Ahead
ROAD AHEAD The Bank aims to reach a business mix of Rs 293000 crore by the end of March 2010, a growth of approx. 23%. Of this, Rs 170000 crore will be Deposits (growth of 23%YoY) and Rs 123000 crore will be Advances (growth of 25%YoY). Bank will strive to reach CASA to 35% by March 2012. Gros
Slide 57: Disclaimer
Disclaimer Except for the historical information contained herein, statements in this presentation which contain words or phrases such as “is”, “aims”, ‘will’, ‘would’, ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute ‘forward-looking stateme
Slide 58: Thank you
Thank you Your dreams are not yours alone