United Bank For Africa Plc · NSENG:UBA
United Bank For Africa — FY2008 Earnings Presentation
56 slides from United Bank For Africa's earnings presentation, Dec 10, 2008
Slide 1: 2008 Annual Results Investor Briefing
2008 Annual Results Investor Briefing Victor Osadolor Executive Director/Group Chief Finance Officer 10-12 December 2008
Slide 2: Forward looking statements & restatement of prior years
Forward looking statements & restatement of prior years Presentation and subsequent discussion may contain certain forward-looking statements with respect to the financial condition, results of operations and business of the Group. These forward-looking statements represent the Group’s expectations
Slide 3: Outline
Outline Financial highlights 2008 operating environment Detailed financial analysis Outlook for 2009 Q&A www.ubagroup.com 3
Slide 4: 2008 financials at a glance
2008 financials at a glance 2008 2007 % PARAMETERS ACTUAL ACTUAL GROWTH GROSS EARNINGS 170 109 55% PBT & EXCEPTIONAL ITEMS 57 31 82% BALANCE SHEET SIZE 2,290 1,642 39% ASSETS 1,673 1,191 40% DEPOSITS 1,333 906 47% HEADLINE EPS 3.11 2.61 19% DIVIDEND N1.37 N1.20 SCRIP ISSUE 1/2 & 1/4 1/5 ROE 22.6% 19
Slide 5: Strong performance against forecast
Strong performance against forecast 2008 Forecast % PARAMETERS N'Bn N'Bn Change GROSS EARNINGS 170 180 -6 PBT & EXCEPTIONAL ITEMS 57 60 -5 ASSETS 1,673 1,750 -4 DEPOSITS 1,333 1,500 -11 ROE (%) 22.6 25 www.ubagroup.com 5
Slide 6: Outline
Outline Financial highlights 2008 operating environment Global Local UBA Detailed financial analysis Outlook for 2009 Q&A www.ubagroup.com 6
Slide 7: Oil price peak & crash
Oil price peak & crash Peaked at $147 on 11 July 2008 Now down by 71% $43pb Triggered economic crises for some and joy for others www.ubagroup.com 7
Slide 8: Inflation rose to record levels
Inflation rose to record levels Increases fuelled by rising commodity prices www.ubagroup.com 8
Slide 9: Global financial crisis
Global financial crisis www.ubagroup.com 9
Slide 10: Systemic spread
Systemic spread www.ubagroup.com 10
Slide 11: Bank write-offs
Bank write-offs www.ubagroup.com 11
Slide 12: Global stock market meltdown
Global stock market meltdown 25,000 20,000 15,000 Aug-07 10,000 Aug-08 5,000 - DOW NASDAQ FTSE - NIKKEI HANG CAC 40 XETRA S & P 500 JONES 100 INDEX SENG DAX www.ubagroup.com 12
Slide 13: Recession
Recession Economic Growth Index 14.00 2007 12.00 2008 10.00 8.00 6.00 4.00 2.00 - North Asia & Middle Sub USA China India Nigeria America Australia East & Sahara North Africa Africa www.ubagroup.com 13
Slide 14: Outline
Outline Financial highlights 2008 operating environment Global Local UBA Detailed financial analysis Outlook for 2009 Q&A www.ubagroup.com 14
Slide 15: Nigerian economy in 2008
Nigerian economy in 2008 Upsurge in inflation rate NIBOR & CPI (%) (food prices, scrabble 20 for deposits) 16 NIBOR 12 Escalating interest rates, CPI thinner margins/ 8 income for operators 4 0 Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Liquidity squeeze 07 07 07 07 08 08
Slide 16: Nigerian economy in 2008
Nigerian economy in 2008 Strong oil prices in Q1 and Q2; took a dive thereafter FX reserves currently at $57b under threat FGN revenues already dwindling Surge in FX Outflow and decrease in inflow giving rise to Naira depreciation Exposures to downstream oil sector under significant pressu
Slide 17: Outline
Outline Financial highlights 2008 operating environment Global Local UBA Detailed financial analysis Outlook for 2009 Q&A www.ubagroup.com 17
Slide 18: Increased Business Capacity
Increased Business Capacity 2007 2008 Retail branches and outlets in Nigeria 583 613 Presence in Africa 4 8 Outlets Number of branches in the rest of Africa 7 54 Presence in the rest of the world 3 4 Microfinance branches 0 8 Red shops - Dedicated moneygram services 0 1 FXMart 0 6 Automated Teller M
Slide 19: Expanding African operations
Expanding African operations Nigeria Now operating in Burkina Faso Tchad 7 other African countries Senegal Uganda Regulatory Gambia approvals Sierra Leone obtained to Liberia Kenya operate in 6 other Tanzania countries Cote d’Ivoire Ghana Zambia 54 branches & 76 Cameroun ATMS >200,000 custom
Slide 20: Operating highlights
Operating highlights Acquisition of UBA Capital (Europe) Taking advantage of market downturn to selectively hire in UK and other key markets Strengthen risk management oversight in NYB UBA Capital (Europe) UBA New York branch www.ubagroup.com 20
Slide 21: 2008 milestones
2008 milestones Alliances: Software UBA GIS sub-custodian for Bank of implementation/initiatives: New York Mellon in Nigeria Sungard BancWare for Shelter Afrique for provision of integrated treasury housing management IATA BSP VTN technology Arsenal FC in cards Anti-money launderin
Slide 22: Retail market leader
Retail market leader Market share Market size Market position Cards issued >30% 26.3m 1 Cards transaction volume >24% N659m in 2008 1 ATMs >20% 6,253 1 Active POS terminals >33% 2,212 1 Web acquired >47% N8.8 billion in 2008 1 transactions value Source: Interswitch at end of September 2008 www.ubagr
Slide 23: Outline
Outline Financial highlights 2008 operating environment Detailed financial analysis Earnings Balance sheet Efficiency Risk management Outlook for 2009 Q&A www.ubagroup.com 23
Slide 24: Growing market share
Growing market share Gross earnings (N billion) 200 Gross earnings is 169.6 a proxy for 150 market share in 109.5 Nigeria 100 90.4 55% increase in 2008 50 68% CAGR since 0 2006 18m 2006 12m 2007 12m 2008 Increase far in excess of GDP growth assuring sustainable Note: 2006 FY was 18 months sh
Slide 25: Delivering underlying earnings growth
Delivering underlying earnings growth Profit before tax & exceptional items (N billion) 60 56.8 Profit before tax & exceptional 40 items reflects 31.2 underlying profitability of 20 ongoing business 12.8 82% increase in 0 2008 18m 2006 12m 2007 12m 2008 158% CAGR since 2006 Note: 2006 FY was 1
Slide 26: Strong return for shareholders
Strong return for shareholders Profit after tax (N billion) 50 90% increase in 40.8 2008 40 130% CAGR 30 since 2006 21.4 20 This is after impact 11.6 of: 10 N1.8b OCC fine 0 18m 2006 12m 2007 12m 2008 N7.0b accelerated amortisation of special assets Note: 2006 FY was 18 months www.ubagroup.c
Slide 27: Rapid EPS growth
Rapid EPS growth Earnings per share & dividends per share (N) 3.50 Headline EPS Underlying EPS DPS 3.11 Headline EPS up 3.00 19% in 2008 2.61 2.50 2.37 Underlying EPS up 1.87 48% in 2008 2.00 1.60 Underlying EPS 1.50 1.37 1.20 85% CAGR since 1.04 1.00 1.00 2006 0.50 DPS up 14% 0.00 18m 2006
Slide 28: Increasing ROE
Increasing ROE Return on equity (%) 40% Historical 34.3% industry-leading 35% ROE 30% Short-term 25% 22.6% impact of 2007 19.8% capital raising 20% ROE up 2.8% in 15% 2008 10% Targeting 25% in 2009 Note: ROE calculated on simple average equity for the period www.ubagroup.com 28
Slide 29: Making asset base work harder
Making asset base work harder Return on average assets (%) 4% 3% 2.9% ROA +0.8% in 2008 2.0% 2.1% 2% Reduced NEAs Increased NIM 1% ratio 0% GSS initiative 18m 2006 12m 2007 12m 2008 Increased Staff productivity through higher sales/non-sales staff ratio Note: ROA calculated on simple avera
Slide 30: Outline
Outline Financial highlights 2008 operating environment Detailed financial analysis Earnings Balance sheet Efficiency Risk management Outlook for 2009 Q&A www.ubagroup.com 30
Slide 31: Asset growth
Asset growth Total assets + contingents (N billion) 2,500 2,290 2,000 1,642 39% increase in 1,500 2008 1,051 1,000 48% CAGR since 2006 500 30 Sep 06 30 Sep 07 30 Sep 08 www.ubagroup.com 31
Slide 32: Growth in corporate & retail lending
Growth in corporate & retail lending Net loans by type (N billion) 500 Loans up 40% in Retail Commercial 448 2008 & Corporate 400 102% CAGR since 2006 320 277 300 Growth in both corporate and 195 200 retail lending 110 Exposure under 100 margin lending 67 170 125 10% with 128% 43 0 LTV Sep-0
Slide 33: Well diversified loan book
Well diversified loan book Net loans by industry segment Net loans by market Personal & Professional 27% Oil & Gas 15% Nigeria (93%) Banking/Financial Services 10% Real Estate 10% Manufacturing 19% General Commerce 12% Telecommunications 4% Other 3% Other (1%) Total 100% Burkina Faso (6%) www.ubagro
Slide 34: Strong deposit growth
Strong deposit growth Deposits (N billion) 1,500 Deposit growth 1,333 slowed in 3Q due to equity market activity 1,000 906 and competition for 763 deposits amongst banks 500 30 Sep 06 30 Sep 07 30 Sep 08 47% growth for 2008 following strong 4Q 32% CAGR since 2006 www.ubagroup.com 34
Slide 35: Focus on low-cost deposit mix
Focus on low-cost deposit mix Deposits by class Deposits by geography Nigeria (93%) Time (27%) Demand (62%) Savings (11%) Other (7%) Average cost of funds under 4% www.ubagroup.com 35
Slide 36: Outline
Outline Financial highlights 2008 operating environment Detailed financial analysis Earnings Balance sheet Efficiency Risk management Outlook for 2009 Q&A www.ubagroup.com 36
Slide 37: Increasing net interest income
Increasing net interest income Net interest margin (N billion) & NIM/average interest earning assets (%) 100 10% NIM up 67% in NIM NIM/average interest 2008 earning assets 75.4 8% 75 6.0% 92% CAGR 45.1 6% since 2006 50 5.9% Short-term 30.7 4% 4.9% 25 impact on 2% NIM% of 2007 0 0% capital rais
Slide 38: Improving asset quality
Improving asset quality NPL ratio¹ Gross loans by security type 12.6% Otherwise secured 4.4% 3.5% (77%) 2006 2007 2008 Coverage ratio² Gross coverage Net coverage Secured 127.7% against real 102.2% 108.6% estate (21%) Unsecured 81.5% 86.9% (2%) 65.2% 2006 2007 2008 Notes: 1 NPL ratio defined as tota
Slide 39: Growth in fee income
Growth in fee income Non-interest income (N billion) 60 52.9 48% increase in non-interest 40 35.7 income in 2008 32.8 56% CAGR since 20 2006 Largest source of fee income 0 remains COT 18m 2006 12m 2007 12m 2008 Notes: 1 2006 FY was 18 months www.ubagroup.com 39
Slide 40: Leveraging economies of scale
Leveraging economies of scale Cost-to-income ratio (%) 80% 77.9% 4.8% reduction 70% in 2008 Budget 59.6% discipline 60% Strong MIS 54.8% Group Shared 50% Services project 18m 2006 12m 2007 12m 2008 target 50% by 2011 Note: Cost/Income ratio calculated as Operating expenses /(Net interest inc
Slide 41: Outline
Outline Financial highlights 2008 operating environment Detailed financial analysis Earnings Balance sheet Efficiency Risk management Outlook for 2009 Q&A www.ubagroup.com 41
Slide 42: Highly conservative balance sheet
Highly conservative balance sheet Loans to total assets (%) 30% 27% 27% 20% 12% Highly liquid 10% balance sheet 0% 30 Sep 06 30 Sep 07 30 Sep 08 Maintaining loan growth in line Loans to deposits (%) with deposit 40% 35% 34% growth 30% Cash is king at 20% this crucial 14% time!!! 10% 0% 30 Sep
Slide 43: Sound capital management
Sound capital management Capital adequacy ratios 25% Tier I Tier II 21.9% 22.2% 1.6% 1.3% 20% 15.2% 15% Strong liquidity 4.1% cushion 10% 20.3% 20.9% Regulatory 5% 11.1% minimum = 10% 0% 30 Sep 06 30 Sep 07 30 Sep 08 Risk-Weighted Assets (N billion) 318.8 771.4 879.0 www.ubagroup.com 43
Slide 44: Blue-chip shareholder base
Blue-chip shareholder base Shareholders Top 10 shareholders FIRST DOMINION INVESTMENT LIMITED 1,122.7 6.5% Local THE BANK OF NEW YORK MELLON 975.8 5.7% investors (74%) CONSOLIDATED TRUST FUNDS LTD 850.2 4.9% BGL SECURITIES LIMITED/MM 629.8 3.7% STH LIMITED 588.3 3.4% POSHVILLE INVESTMENTS LIMITED 51
Slide 45: Outline
Outline Financial highlights 2008 operating environment Detailed financial analysis Outlook for 2009 Q&A www.ubagroup.com 45
Slide 46: Global outlook
Global outlook Economic slowdown/recession Oil/commodity price decline Credit crunch FDI decline More stringent regulation Further financial stimulus by governments www.ubagroup.com 46
Slide 47: Nigerian outlook
Nigerian outlook Oil revenue decline Naira depreciation Reduced FX reserves Weak capital market Increase in domestic debt Limited foreign currency credit lines Reduced diaspora flows Intense competition/reduced interest margins Liquidity squeeze Risk management www.ubagroup.com 4
Slide 48: Initiatives for 2009
Initiatives for 2009 Guided consumer credit expansion Mobile banking Operations in 10-15 additional African countries Internal transformation through IT & shared services CDB partnership IFRS & Basle II compliance by end of 2009 for stronger reporting and risk mgmt systems Scan/seize m
Slide 49: 2009 financial forecasts
2009 financial forecasts 2008 2009 % PARAMETERS N'Bn N'Bn GROWTH GROSS EARNINGS 170 217 28% PBT & EXCEPTIONAL ITEMS 57 65 14% BALANCE SHEET SIZE 2,290 2,650 16% DEPOSITS 1,333 1,600 20% NPL RATIO 3.5% 3% COST/INCOME 54.80% 55% ROE 22.6% 25% www.ubagroup.com 49
Slide 50: Thank you
UBA Thank you
Slide 51: Q&A
Q&A
Slide 52: Appendices
UBA Appendices
Slide 53: Detailed earnings
Detailed earnings For the: 12 months to 31 March 18 months to 30 September 12 months to 30 September 12 months to 30 September 2004 2005 2006 2007 2008 N million N million N million N million N million Gross earnings 24,510 26,089 90,447 109,512 169,581 Interest income 15,155 14,456 57,693 73,724 11
Slide 54: Detailed financial position
Detailed financial position As at: 31 March 30 September 2004 2005 2006 2007 2008 N million N million N million N million N million Assets Cash & short-term funds 90,209 110,517 79,825 129,897 200,820 Due from other banks & financial institutions - - 391,669 449,822 574,295 Treasury bills & governme
Slide 55: Detailed cashflow
Detailed cashflow (N million) As at 31 March As at 30 September As at 30 September As at 30 September Cash flows from operating activities 2005 2006 2007 2008 Interest and commission receipts 25,644 89,093 105,767 165,750 Foreign exchange income received 445 1,354 3,657 3,926 Interest expense (3,490
Slide 56: 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
United Bank for Africa — FY2008 Earnings Presentation on 6ix