United Bank For Africa Plc · NSENG:UBA
United Bank For Africa — 9M 2009 Earnings Presentation
46 slides from United Bank For Africa's earnings presentation, Aug 7, 2009
Slide 1: 2008/09 Third Qtr Results Investor Briefing
2008/09 Third Qtr Results Investor Briefing Victor Osadolor Executive Director/Group CFO UBA PLC August 7, 2009
Slide 2: 3Q-Jun 2009 financials at a glance
3Q-Jun 2009 financials at a glance Jun-09 Jun-08 % PARAMETERS ACTUAL (N’ bn) ACTUAL (N’ bn) GROWTH GROSS EARNINGS 160.6 120.3 34% PBT & EXCEPTIONAL ITEMS 33.7 34.9 -3% EXCEPTIONAL ITEMS 21.3 1.7 1123% PROFIT BEFORE TAX 12.4 33.1 -63% BALANCE SHEET SIZE 1,979 1,586 25% TOTAL ASSETS 1,452 1,146 27% DE
Slide 3: Outline
Outline Executive Summary Detailed Analysis of results Key milestones Operating environment Outlook for the remaining quarters Q&A www.ubagroup.com 3
Slide 4: Executive Summary: Overview of 3Q09 performance
Executive Summary 1) UBA – Overview of 3Q09 performance Steady Growth in market share 46% CAGR in Gross Earnings 35% CAGR in Balance Sheet; Industry leader 31% CAGR in Deposits; Industry leader 12% YoY growth in branches. Current levels: 694 branches 32% YoY growth in ATMs to 1,592 6%
Slide 5: Executive Summary: Funding mix, capital adequacy, liquidity
Executive Summary Stable Funding mix and Robust capital adequacy Low cost funds steady at 61% Capital Adequacy Ratio (CAR) of 19.3; 9% above regulatory minimum Strong liquidity Liquid asset/total asset at 34% Liquidity Ratio of 41% (16% buffer on regulatory minimum) Huge net placer of
Slide 6: Executive Summary: Key Milestones within the Quarter
Executive Summary 2) Key Milestones with the Quarter Major deals/Pan African aspirations Received $150m, 5-year trade finance facility from AfDB Received $200m, 3-year clean line from Standchart Led a $265mn upstream financing deal for Exxon Mobil/NNPC Led an N18.5bn Bond for Imo State gov
Slide 7: Executive Summary: Operating environment
Executive Summary 3) Operating environment Local Fitch affirms Nigeria’s BB- rating with stable outlook – July’09 External reserves at $43.2bn as CBN pursues measures to strengthen it GDP growth at 4.85% as inflation rate eases to 11.2% New CBN Governor appointed •Pursues Risk Management, Re
Slide 8: Outline
Outline Executive Summary Detailed Analysis of results Growth in market share Profitability Efficiency Balance Sheet Growth Risk management – Capital Adequacy, Liquidity & Asset Quality Key Milestones Operating environment Outlook for the remaining quarters Q&A www.ubagroup.com
Slide 9: Growth in market share – Gross Income
Growth in market share – Gross Income YoY Gross Earnings 2007 – 09 (N’ bn) Quarterly Gross Earnings (N’ bn) 180 f4 6% 160.6 57.2 Ro 60 49.3 51.7 51.7 CAG 120.3 39.0 39.1 42.1 120 40 75.2 20 60 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 0 3Q07 3Q08 3Q09 Composition of Gross Earnings 46% CAGR in Gross Ear
Slide 10: Growth in market share – Balance Sheet
Growth in market share – Balance Sheet Strong Balance Sheet Size (N’trillion) Net Loans (N’billion) 4% f 35. 3% AG R o 1.98 600 f 28. 535 C o 2 1.59 GR CA 455 1.08 400 325 1 0 200 3Q07 3Q08 3Q09 3Q07 3Q08 3Q09 Solid Deposit Base (N’trillion) Strong balance sheet evolution 2 Wider network in Nige
Slide 11: Growth in market share – footprints
Growth in market share – footprints Largest Branch Network Strong growth in ATM Channels +12 % 694 2% 1,592 700 1600 +3 621 1,205 600 1200 500 800 3Q08 3Q09 3Q08 3Q09 Solid Customer Base ( in million) Market leader in distribution network +6% 6.9 Market share in excess of 20% 7 6.5 Easy access
Slide 12: Outline
Outline Executive Summary Detailed Analysis of results Growth in market share Profitability Efficiency Balance Sheet Risk management – Capital Adequacy, Liquidity & Asset Quality Key Milestones Operating environment Outlook for the remaining quarters Q&A www.ubagroup.com 12
Slide 13: Earnings driven Largely by fund-based Income
Earnings driven Largely by fund-based Income Fund based income drive gross earnings Fee Based income flat (N’bn) Fee- based 38.9 38.2 40 Incom e Fund- 24% based 20 (32% in 3Q08) Incom e 76% 0 (68% in 3Q08) 3Q08 3Q09 Interest & discount contribute 76% to GE Composition of fund based income Driven
Slide 14: Improving diversification of Earnings
Improving diversification of Earnings Gross Earnings by Geography Analysis of Ex-Nigeria Gross Earnings 1.6 % Others 10 0 % N/York & 11% 6% Cameroun GCI 75% n 7% 32% 50% 9 8 .4 % 8 9 .0 % 25% B/Faso Benin 28% Ghana 9% 0% 18% 3Q08 3Q09 N ige ria O ut s ide N ige ria Ex Nigeria operations are 11% of
Slide 15: Group Profitability impacted by provisions and Exc. Items
Group Profitability impacted by provisions and Exc. Items Stable PBT Before Exc Items (N’ bn) PBT After Exc Items (N’ bn) 40 34.9 33.7 w/out Exc. Items 40 34.9 33.7 19.6 20 19.6 20 12.4 0 3Q07 3Q08 3Q09 0 3Q07 3Q08 3Q09 3Q09*** Increase in provisions forces PBT to dip Exceptional Items (N’ bn) P
Slide 16: Breakdown of the Exceptional Items
Breakdown of the Exceptional Items Bulk of Exceptional Items are for Margin Loans Others Special Assets 25.8% 19.2% Conservative Risk Management Provisions on margin loans may be written back Margin Loans Market sentiments are 54.9% positive Equities market is currently undervalued Applicati
Slide 17: ML/Transcorp/VNA
ML/Transcorp/VNA Margin Loans • Current outstanding Balance: N24bn • Restructured N16bn • LTV 70% • Stock price erosion: 50% • Provision to date: N11.7bn Transcorp • Offered a loan by a consortium of Banks to procure 51% of NITEL/MTEL • FGN revoked the sale this year and has offered a refund. • Me
Slide 18: ML/Transcorp/VNA
ML/Transcorp/VNA VNA • Owned by a core foreign investor and other diverse local Institutional Investors • UBA provides banking relationship and extended two facility types to VNA in 2008. • A Bond secured by two embracer planes • and A Working Capital facility tied to daily sales, and collateralize
Slide 19: Outline
Outline Executive Summary Detailed Analysis of results Growth in market share Profitability Efficiency Balance Sheet Risk management – Capital Adequacy, Liquidity & Asset Quality Key Milestones Operating environment Outlook for the remaining quarters Q&A www.ubagroup.com 19
Slide 20: Efficiency Ratios dip..
Efficiency Ratios dip.. Net Interest Margins Cost to Income (C/I) Ratios 75% 67.2% 8% 62.0% 59.2% 6.4% 6.1% 6% 4.5% 50% 4% 2% 25% 3Q07 3Q08 3Q09 3Q07 3Q08 3Q09 Interest rate peg This has however has now been liberalized Return on average Assets Increased provisioning levels 3% 2.8% Higher pr
Slide 21: Stronger capital base
Attractive enterprise value despite a temporary drop in ROaE Return on average Equity Shareholders’ Funds (N’ billion) 3% 20% 18.8% G R of 11. 16.8% CA 208 210 185 168 9.7% 10% 140 0% 70 3Q07 3Q08 3Q09 3Q07 3Q08 3Q09 Price to Book Ratio (x) 1.50 1.17 1.30 Stronger capital base 0.86 11.3% CAGR in
Slide 22: Outline
Outline Executive Summary Detailed Analysis of results Growth in market share Profitability Efficiency Balance Sheet Risk management – Capital Adequacy, Liquidity & Asset Quality Key Milestones Operating environment Outlook for the remaining quarters Q&A www.ubagroup.com 22
Slide 23: Strong Balance Sheet….1
Strong Balance Sheet….1 Bal Sheet size (N’bn) Net Loans (N’bn) % 35.4 .3 % R of 600 f 28 2 CAG 1.98 G R o 535 1.59 CA 455 1.08 1 400 325 0 200 3Q07 3Q08 3Q09 3Q07 3Q08 3Q09 Balance Sheet Mix Loan distribution by type Other Retail (36% in 3Q08) Contingents Assets Liquid 32% 27% 4% Assets Corporate 33
Slide 24: Strong Balance Sheet….2
Strong Balance Sheet….2 Local Deposits drive funding Growing Deposit Base (N’tn) Foreign M gd Funds 2 Deposits % 1% Other Liab f 31 1.15 8% Ro 5% CAG SHF 1 0.87 14% 0.67 1 Local 3Q07 3Q08 3Q09 Deposits 72% Analysis of Deposits – By source 14% of Balance sheet funded by equity Retail Public Inst. 3
Slide 25: Cheap and improving spread in funding base
Cheap and improving spread in funding base Structure of Deposits, by type Tim e, Large distribution channels facilitate 39% access to cheap deposits. Current 694 branch network & Savings 21 to be added from countries we A/C, 61% have obtained fresh licenses Current and Savings deposits accou
Slide 26: Outline
Outline Executive Summary Detailed Analysis of results Growth in market share Profitability Efficiency Balance Sheet Evolution Risk management – Capital Adequacy, Liquidity & Asset Quality Key Milestones Operating environment Outlook for the remaining quarters Q&A www.ubagroup.
Slide 27: Liquidity and Capital Adequacy
Liquidity and Capital Adequacy Capital Adequacy Ratio LR - Liquid Assets to Total Deposits UBA-LR Regulatory-LR 21.0% 19.3% 20% 50% 42% 41% 40% 40% 12.0% 31% 25% 10% 25% 0% 0% 3Q07 3Q08 3Q09 3Q07 3Q08 3Q09 LR has a 16% buffer over Loan to Deposit Ratio regulatory minimum 60% 48.7% 52.6% 46.4% Go
Slide 28: More Conservative Risk Management posture
More Conservative Risk Management posture NPL Ratio Key Management Actions 10% 8.9% Aggressive provisioning stance on Margin Loans 5.2% despite CBN’s window of Dec’09 5% 2.9% Pursuit of convergence between local GAAP and 0% IFRS provisioning standards ahead of Dec 3Q07 3Q08 3Q09 Speedy impleme
Slide 29: Outline
Outline Executive Summary Detailed Analysis of results Key Milestones Operating environment Outlook for the remaining quarters Q&A www.ubagroup.com 29
Slide 30: Extending our Global Footprint
Extending our Global Footprint Paris Abu Dhabi USA UK Guangzhou Cayman Island z 694 branches; up from 621 Mali Benin Nigeria z 1,592 ATMs; up from 1,205 Burkina Faso Tchad z 3,713 POS Term.; up from 3,296 Cameroon Senegal Gambia Uganda z Over 200 banking products; up Guinea from 145 S. Leone Kenya L
Slide 31: Key Milestones
Key milestones Fir l s S e nega De t Cas po in sit h/Ch e n ced 3.1b n Wi AT equ om m ets – N 3 mn th Ms la e o n c s s 4 fea stro rati A N 9 tal e– tur n un Op e To osit Bas 1 .74b n es g se cur che d e p N D Assets – it y et N anches br 4 TMs 5 A 1 Key Milestones $1 Fin 50m Fa anc
Slide 32: Outline
Outline Executive Summary Detailed Analysis of results Review of UBA Operating environment Local Global Outlook for the remaining quarters Q&A www.ubagroup.com 32
Slide 33: Overview of Nigerian economy..1
Overview of Nigerian economy..1 • Fitch affirms Nigeria’s rating at BB- with Key Macro-Economic Variables 2009 2008 stable outlook GDP Grow th (Mar-09) 4.85% 6.60% • Foreign reserves at $43.2bn- July 7 report Inflation Rate (Jun-09) 11.2% 12.4% Monetary Policy Rate (Jul-09) 6.0% 10.3% • 1st Qtr GDP
Slide 34: Overview of Nigerian economy…2
Overview of Nigerian economy…2 • New CBN Governor appointed • Promises to strengthen regulation, risk mgt Change in Monetary Policy Rate (MPR) and reporting 12.0% 10.25% 9.75% 9.75% 9.75% • Releases over 15 circulars on liquidity, 8.00% Credit, FX matters etc 8.0% • Cuts MPR to 6% but to hover withi
Slide 35: Outline
Outline Executive Summary Detailed Analysis of results Review of UBA Operating environment Local Economy Global Economy Outlook for the remaining quarters Q&A www.ubagroup.com 35
Slide 36: Positive outlook for oil prices
Positive outlook for oil prices Strong recovery in Brent crude price (US$/bbl) 150 -54% • Oil price has recovered 100 by 102% in the last 6mths 68.11 • Sustained growth in Asia should keep oil demand 50 +102% strong 33.73 0 Jul-04 Mar-05 Nov-05 Jul-06 Mar-07 Nov-07 Jul-08 Mar-09 Source: eia www.ubag
Slide 37: Confidence level rebounds and slow rate of job losses
Confidence level rebounds and slow rate of job losses Confidence level Rate of job losses • Confidence hits rebounds but • Monthly rate of job losses slows in remains volatile and indeterminate the US to 345,000 in May-09 (780,000 in Jan-09) www.ubagroup.com 37
Slide 38: Stable capital flows to Africa
Stable capital flows to Africa Steady Capital Flows to Africa (US$’Billion) • IMF forecasts Positive net flow into Africa in 2009/10 • This suggests the region has good potential • Nigeria has received $1.5bn from the World Bank for infrastructure and budgetary support • This should boost local capa
Slide 39: Global Equities recover from March Lows
Global Equities recover from March Lows Global Dow Index • Equity markets gained 57% since mid March 2009 • Corporate releases looking up • Impacting investor demand Source: WSJ www.ubagroup.com 39
Slide 40: Outline
Outline Executive Summary Detailed Analysis of results Review of UBA Operating environment Outlook for the remaining quarters Q&A www.ubagroup.com 40
Slide 41: Overall outlook for the next quarter
Overall outlook for the next quarter Global output to continue its rebound IMF projects 1.4% decline in 2009 and a 2.5% growth in 2010 Fitch rating to reinforce confidence in Nigeria Nigeria’s GDP growth to hover around 4.5% Oil price to remain strong (at btw $60-$70) on the back of sustai
Slide 42: Conclusion
Conclusion UBA’s performance remain solid despite challenging operating environment Fitch affirmed rating of B+/Stable outlook Solid Capital Adequacy Ratio (19.3%) Growing market share; strong balance sheet and gross earnings Well diversified income stream – 11% from ex-Nigeria operations
Slide 43: Thank you
Thank you www.ubagroup.com 43
Slide 44: Q&A
Q&A www.ubagroup.com 44
Slide 45: Appendix
Appendix www.ubagroup.com 45
Slide 46: 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
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