United Bank Limited · PSX:UBL
United Bank — H1 2020 Earnings Presentation
46 slides from United Bank's earnings presentation, Aug 7, 2020
Slide 1: UBL Performance Highlights H1 2020
UBL Performance Highlights H1 2020 Investor Relations Conference Call August 07, 2020 Speakers: Speakers: Mr. Shazad Dada - President & CEO Mr. Aameer Karachiwalla - Chief Financial Officer Mr. Aameer Karachiwalla - Chief Financial Officer Mr. Arif Saifie, FCA, CFA - Financial Controller and Head of
Slide 2: Our Agenda
Our Agenda 1 Key Highlights of earnings rebound in H1’20 2 Our Segments maintain momentum…poised to grow as economy opens up 3 Financial Summaries and performance review 2
Slide 3: Key Highlights of earnings rebound in H1'20
Key Highlights of earnings rebound in H1’20 3
Slide 4: Key Highlights H1'20 vs H1'19 Performance Overview
Key Highlights H1’20 vs H1’19 Performance Overview 1 Standalone PAT of Rs. 11.4 bln, up 19% over H1’19, Q2’20 vs Q1’20 growth of 25% 2 PBT stood at Rs 18.8 bln, up 4% vs H1’19, strong growth of 23% Q2’20 vs Q1’20 3 Domestic PBT reported at Rs 24.9 bln up 42% vs H1’19 - growth of 31% Q2’20 vs Q1’20 4
Slide 5: Our Global Presence - Pakistan business dominates performance
Our Global Presence - Pakistan business dominates performance Globally over 21% of the asset base is overseas PAKISTAN BRANCHES 1,363 OVERSEAS BRANCHES Asset mix by region Jun'20 2019 14 Domestic Operations 78.8% 77.9% SUBSIDIARIES International Operations 21.2% 22.1% 4 Middle East 14.2% 15.1% Europ
Slide 6: Key Highlights H1'20 Balance Sheet core positions
Key Highlights H1’20 Balance Sheet core positions Bank Level Deposits 20% Current 45% Saving Rs 1.6 tln Term 35% PBT Rs. 18.8 bln RoE 15.7% Net Advances Investments 19% T-Bills 19% CAR 21.1% 33% Fixed PIBs Domestic Rs 585 bln Rs 1.0 tln International Floaters PIBs 19% Others 81% 29% 6
Slide 7: Balance Sheet Review - Deposit led build up support core earnings
Balance Sheet Review - Deposit led build up support core earnings Rs in bln Deposits Performance - Led by Branch Banking Group Balance Sheet Var % Jun'20 Dec'19 Avg Dom deposits up 11% YoY - incremental vols of Rs 123 bln Advances 585 636 -8.1% Avg Domestic current accounts up 7% YoY, savings up
Slide 8: H1'20 Results - Overall revenues up with strong positioning in treasuries
H1’20 Results - Overall revenues up with strong positioning in treasuries Rs in bln Rs in bln Dom interest earning assets averaged Rs. 1.4 tln H1’20, up 16% YoY Income Statement Var % Var % Bank NIMs improved to 5.0% in H1’20 from 4.3% in H1’19 H1'20 H1'19 Q2'20 Q1'20 Interest Earned 86.3 66.6 2
Slide 9: Higher Provisions with further reserving in GCC
Higher Provisions with further reserving in GCC Net Provision Charge of Rs 9.4 bln in H1’20 vs Rs. 4.4 bln in H1’20 Bank NPLs at Rs. 87.4 bln at Jun’20 (Dec’19: Rs. 76.6 bln) Bank level asset quality at 13.2% (Dec’19: 10.9%) Bank level specific coverage at 80.3% (Dec’19: 82.5%) DOM total pro
Slide 10: Key Ratios for the quarter - revenue growth with controlled expense base
Key Ratios for the quarter - revenue growth with controlled expense base Gross Revenues Cost to Income Ratio Net Interest Margins 18% 69 bps Rs in bln Rs in bln 52.6% 5.3% 26.0 4.5% 4.6% 22.4 20.9 22.0 4.3% 45.7% 4.3 43.0% 7.2 4.5 4.7 37.2% 21.8 21.8 15.3 16.4 17.3 15.3 16.4 17.3 Q2'19 Q4'19 Q1'20 Q
Slide 11: Core Capital strengthens with conservation and de-risking
Key Highlights Core Capital strengthens with conservation and de-risking Capital Adequacy Ratio (%) Risk Weighted Assets 147 147 2.1% 21.1% 49 Dec'19: 55 Jun'20: 18.9% Rs 837 bln Rs 794 bln 591 642 5.1% 4.0% 1.2% 1.2% Credit Market Operational Credit Market Operational Risk Weighted Assets Concentra
Slide 12: Financial Summaries Income Statement Domestic
Financial Summaries Income Statement Domestic Rs in bln Rs in bln Description Var % Var % H1'20 H1'19 Q2'20 Q1'20 Interest Earned 79.9 58.9 36% 39.9 40.0 0% Interest Expensed (44.9) (33.6) -34% (20.1) (24.8) 19% Net Interest Income 34.9 25.3 38% 19.8 15.2 30% Non Interest Income 7.6 9.8 -23% 3.8 3.7
Slide 13: Our Segments maintain momentum… Poised to grow as economy opens up
Our Segments maintain momentum… Poised to grow as economy opens up 13
Slide 14: Key Highlights Drivers of performance
Key Highlights Drivers of performance 1He Strong Deposits Growth Domestic Deposits growth of 11% lead by build up in CASA - one of the lowest Cost of Deposits 2 Prudent Asset Lending Maintaining all large relationships – with focus on NFI and with efficient capital allocation Digital - The Future of
Slide 15: Core Business Segments Branch Banking Group
Core Business Segments Branch Banking Group Deposit Market Share Islamic Banking Deposits - PE 231,000 new accounts opened 8.3% at Jun’20 (Dec’19: 8.3%) Rs in bln 19.2% Domestic Deposits - PE Current Account NTB Run Rate Rs in bln 10.5% Per Branch Per Day - 1.4 in H1’20 96 81 (H1’19: 1.4) 1,344 1,21
Slide 16: Core Business Segments Corporate Banking Group
Core Business Segments Corporate Banking Group Average Performing Advances Rs in bln 428 419 62 67 62 58 304 294 H1'19 H1'20 Advances General Commodity Refinance and Others Total Yield on Advances (General + Commodity) Trade Volumes 13.4% -39% H1'19 H1'20 11.8% Imports Imports USD 1.9 bln USD 1.1 bl
Slide 17: Core Business Drivers Digital Banking Group
Core Business Drivers Digital Banking Group Digital App Registrations Transacting Customers Trend (‘000s) No of Accounts ( '000s) PRE COVID POST COVID 77% 14% 417 369 1,226 330 1,073 280 257 261 606 Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 Jun'19 Dec'19 Jun'20 Greater Transactional Shift towards Di
Slide 18: Core Business Segments Treasury and Capital Markets
Core Business Segments Treasury and Capital Markets Domestic Portfolio Concentration June’20 MTM Surplus / Deficit Yield on Investments MTM Surplus / (Deficit) - 13.4% Dec'19 Jun'20 GoP Securities Rs in mln Rs. 827 bln PIBs - Fixed (8,446) 926 11.8% Listed Shares PIBs - Floaters 1,772 (679) Rs. 11 b
Slide 19: Core Business Segments UBL International
Core Business Segments UBL International Performing Advances - PE Non Performing Loans USD i n mln USD i n mln Deposits averaged USD 1.5 bln for H1’20 (H1’19: USD 1.8 bln) 11% -24% 360 353 Cost of deposits reduced from 2.2% in H1’19 to 1.8% in H1’20 340 319 320 De-risking within International
Slide 20: Financial Summaries and Performance Review
Financial Summaries and Performance Review 20
Slide 21: Market Information – Build up Book Value
Market Information – Build up Book Value Trends - KSE 100 Index and UBL’s share price Equity and Book Values 320 55 Max Price in 2020: Rs. 181.96 Rs in bln Cons. Equity Jun’20 - Rs. 197 bln Price as at 06-Aug'20: Rs. 120.13 270 50 Cons. Book value Jun’20 - Rs. 161 per share 169 175 45 152 159 151 22
Slide 22: Financial Summaries Deposits – Sharp reduction in cost of deposits in Q2'20
Financial Summaries Deposits – Sharp reduction in cost of deposits in Q2’20 Period End Average Cost of Deposits Rs in bln Jun'20 Dec'19 H1'20 H1'19 Var % H1'20 H1'19 Current deposits 619 520 507 474 6.9% 0.0% 0.0% Saving deposits 544 505 520 463 12.5% 9.1% 8.4% CASA 1,163 1,025 1,028 937 9.7% 4.6% 4
Slide 23: Financial Summaries Net Advances
Financial Summaries Net Advances DOM advances yield up to 12.3% H1’20 (H1’19: 11.0%) – repricing in line with benchmark rate Rs in bln Description Var % Jun'20 Dec'19 Corporate Bank 340 373 -9% Commodity 61 66 -8% Small Enterprises 9 10 -11% Consumer 16 17 -9% Others 47 33 41% Total Domestic 472 500
Slide 24: Financial Summaries Non Fund Income
Financial Summaries Non Fund Income Rs in mln Rs in mln Description Var % Var % H1'20 H1'19 Q2'20 Q1'20 Fee, commission and brokerage income 4,242 5,777 -27% 1,802 2,440 -26% Dividend income 786 766 3% 399 387 3% Income from dealing in foreign currencies 1,989 1,963 1% 1,126 863 30% Gain / (loss) on
Slide 25: Financial Summaries Fee, Commission and Brokerage
Financial Summaries Fee, Commission and Brokerage Rs in mln Description Var % H1'20 H1'19 Branch banking customer fees 608 819 -26% Consumer finance related fees 409 425 -4% Card related fees (debit and credit cards) 673 811 -17% Investment banking fees 71 110 -35% Financial Institution rebate / com
Slide 26: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % H1'20 H1'19 Total compensation expenses 6,676 5,807 -15% Rent and taxes 271 200 -36% Utilities cost 592 692 14% Security 481 447 -8% Depreciation 378 363 -4% Depreciation - Right of Use Assets 904 948 5% Others 152 224 32% Prope
Slide 27: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % H1'20 H1'19 Legal and professional charges 75 98 23% Outsourced service costs including sales commission 1,187 1,699 30% Banking service charges 674 696 3% Cash transportation and sorting charges 361 462 22% Depreciation 564 543
Slide 28: Financial Summaries Consolidated Income Statement
Financial Summaries Consolidated Income Statement Rs in bln Rs in bln Description Var % Var % H1'20 H1'19 Q2'20 Q1'20 Interest Earned 88.3 68.2 29.5% 44.0 44.4 -0.9% Interest Expensed (48.3) (37.7) -28.2% (21.7) (26.6) 18.4% Net Interest Income 40.1 30.6 31.0% 22.3 17.8 25.2% Non Interest Income 9.7
Slide 29: Financial Summaries Consolidated Balance Sheet
Financial Summaries Consolidated Balance Sheet Rs in bln Description Var % Jun'20 Dec'19 Advances 648 695 -6.7% Investments 1,055 875 20.6% Lendings to Financial Institutions 13 22 -40.8% Assets held for sale 0 0 3.9% Others 437 432 1.1% Total Assets 2,153 2,024 6.4% Deposits 1,693 1,558 8.7% Borrow
Slide 30: Our Investment, focus and results in the last 6 years
Our Investment, focus and results in the last 6 years 30
Slide 31: Six Years Financial Summary
Six Years Financial Summary Rs. in mlns 2019 2018 2017 2016 2015 2014 Assets Cash and balances with treasury and other banks 256,591 206,813 177,099 146,428 128,870 87,573 Lending to financial institutions 20,247 33,942 10,868 25,711 24,095 21,872 Investments- gross 849,441 792,857 1,095,555 808,959
Slide 32: Six Years Financial Summary
Six Years Financial Summary Rs. in mlns 2019 2018 2017 2016 2015 2014 Markup / return / interest earned 153,676 113,198 107,206 98,219 94,353 82,735 Markup / return / interest expensed (91,902) (56,964) (50,781) (41,177) (38,511) (37,769) Net Markup / Interest income 61,774 56,234 56,425 57,042 55,8
Slide 33: Six Years Financial Summary
Six Years Financial Summary Description 2019 2018 2017 2016 2015 2014 Key Financial Ratios Return on equity (RoE) 13.8% 11.6% 20.6% 24.9% 25.7% 23.9% Return on assets (RoA) 1.0% 0.8% 1.4% 1.8% 2.0% 2.1% Profit before tax ratio 41.0% 30.7% 50.8% 57.1% 54.2% 52.0% Advances to deposits ratio (ADR) - gr
Slide 34: Recognition and Awards
Recognition and Awards UBL “Firsts” – Initiatives to stay ahead of the market Market recognition and awards First Commercial Bank in Pakistan to launch Branchless Banking (UBL OMNI) Declared ‘Best Digital Bank in Pakistan for 2020’ by Asiamoney Declared ‘Bank of the Year 2018 – Pakistan’ by Th
Slide 35: Quarterly Trends
Quarterly Trends 35
Slide 36: Quarterly Trends Profit before Tax
Quarterly Trends Profit before Tax Rs in bln 13.5 11.8 +10% 10.9 11.2 11.3 10.8 10.4 11.2 10.2 9.9 +8% 10.4 +6% 9.3 9.2 8.8 8.3 8.4 8.8 8.5 8.3 7.9 8.4 7.8 8.0 -4% 6.5 5.9 -6% -4% 4.1 Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18Q1'19Q2'19Q3'19Q
Slide 37: Quarterly Trends Profit after Tax
Quarterly Trends Profit after Tax Rs in bln 7.3 7.3 7.1 7.0 7.0 +13% 6.5 6.5 6.4 6.3 6.3 6.1 6.0 5.9 +29% +7% 5.6 5.5 5.2 5.3 5.3 5.4 5.1 4.9 4.7 4.2 -10% -3% 3.6 3.5 -24% 2.6 Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16 Q2'16Q3'16 Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18 Q1'19Q2'19 Q3'19Q4'19
Slide 38: Quarterly Trends Deposits
Quarterly Trends Deposits Rs in bln +6% +3% +2% 1,589 +8% 1,448 1,467 1,493 1,419 1,366 1,344 1,335 1,301 1,256 -2% 1,142 1,147 1,273 1,070 -2% 1142 1147 1,051 1051 1070 992 994 945 895 847 858 866 Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18Q1
Slide 39: Quarterly Trends Net Advances
Quarterly Trends Net Advances Rs in bln 716 675 673 +1% +2% 636 642 636 623 627 624 626 -11% -3% -2% 585 565 567 -6% 519 509 496 459 455 447 498 434 430 417 420 408 377 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 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19
Slide 40: Quarterly Trends Revenue
Quarterly Trends Revenue Rs in bln +18% 26.0 +5% +14% 22.4 22.0 21.9 +1% 21.3 21.2 21.2 20.9 20.3 20.4 20.3 19.5 20.0 20.0 19.6 19.3 19.2 18.6 17.9 19.0 20.6 18.1 17.6 -2% -8% 16.3 15.5 14.9 Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18Q1'19Q2'1
Slide 41: Quarterly Trends Net Interest Income
Quarterly Trends Net Interest Income Rs in bln +26% 21.8 +6% +6% 17.3 +4% +1% 16.4 15.7 +2% 15.3 15.4 14.7 14.3 14.2 14.2 13.9 14.2 14.4 14.7 14.2 13.9 13.6 13.7 14.0 13.7 13.8 12.8 13.1 11.3 11.0 9.8 Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'1
Slide 42: Quarterly Trends Non Fund Income
Quarterly Trends Non Fund Income Rs in bln 8.4 +44% 7.3 7.2 7.0 6.2 6.2 6.3 6.1 6.0 -28% 5.6 5.7 5.1 5.0 5.2 5.1 5.0 +5% 5.2 4.8 4.8 4.8 4.7 4.5 4.5 4.5 -12% 4.3 3.8 -14% -9% Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18Q1'19Q2'19Q3'19Q4'19Q1'20
Slide 43: Quarterly Trends Provision Charge
Quarterly Trends Provision Charge Rs in bln +84% 5.7 5.5 +114% +140% 3.7 3.2 2.9 2.6 2.0 2.1 1.9 2.1 1.3 1.7 1.3 0.9 0.8 0.7 0.9 -34% 0.6 -17% 0.2 0.2 0.3 -76% -0.1 0.1 -0.3 -0.3 -0.5 Q1'14Q2'14Q3'14Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17Q3'17Q4'17Q1'18Q2'18Q3'18Q4'18Q1'19Q2'19Q3'19Q
Slide 44: Quarterly Trends Administrative Expenses
Quarterly Trends Administrative Expenses Rs in bln +9% +15% 11.0 10.7 10.3 +2% 9.9 9.5 9.7 9.6 9.2 10.0 8.8 8.8 8.7 8.6 8.4 8.5 -2% -14% 8.2 9.0 8.0 7.8 -16% 7.6 7.3 7.4 7.4 7.2 7.1 6.9 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 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18
Slide 45: Important Information
Important Information The information contained herein reflects our latest business statement as at June 30, 2020. 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 46: Thank You
Thank You