United Bank For Africa Plc · NSENG:UBA
United Bank For Africa — H1 2011 Earnings Presentation
31 slides from United Bank For Africa's earnings presentation, 2011
Slide 1: UBA Plc first half 2011 results presentation
UBA Plc first half 2011 results presentation United Bank for Africa Plc
Slide 2: Agenda
Financial highlights Developments in the operating environment Analysis of the income statement Inherent potential in subsidiaries Analysis of financial position Summary and conclusions Questions UBA Plc first half 2011 results presentation 2 United Bank for Africa Plc
Slide 3: Financial highlights
N’ million 30-Jun-11 30-Jun-10 % Change Net Interest Income 35,127 37,801 -7.1% Other Income 30,340 25,928 +17.0% Operating Income 65,467 63,729 +2.7% Operating Expenses (50,551) (51,771) -2.4% Profit Before Tax 10,111 8,636 +17.1% Group Profit After Tax 8,218 4,319 +90.3% Cost-to-Income Ratio 77% 8
Slide 4: Developments in the operating environment
UBA Plc first half 2011 results presentation 4 United Bank for Africa Plc
Slide 5: Key Macro Indicators
Key Macro Indicators Indicator 2011 FY10 Comments GDP Growth (%) • Strong Q2-2011 growth over Q1-2010 GDP levels (Provisional for June 7.93 7.85 • Increased government spending and growth in Agriculture output 2011) • Strong crude oil prices and stable output. Inflation (%) • Decline in food inflati
Slide 6: Sustained growth in Nigeria's economy
Sustained growth in Nigeria’s economy with robust oil prices and increased government spending. Provisional 2Q-2011 GDP growth was 7.93%. Strong crude oil prices, as disturbances in the Middle East/North Africa persist. Brent Crude is recently trading at $118/barrel. Inflation rate has been volatile
Slide 7: CBN further tightened banks' capacity to lend
CBN further tightened banks’ capacity to lend: Increased MPR to 8% in May; from 7.5% in March and 6.5% in January 2011. Doubled Cash Reserve Ratio (CRR) to 4%, effective June 8 2011. Liquidity squeeze causes hike in interest rates (interbank rates range between 6.25% and 10.25%) Further rise in inte
Slide 8: Analysis of the income statement
UBA Plc first half 2011 results presentation 8 United Bank for Africa Plc
Slide 9: Income statement summary
N’ million 1H-2011 1H-2010 % Change Gross earnings 87,663 93,656 -6.4% Net interest income 35,127 37,801 -7.1% Other income 30,340 25,928 +17.1% Operating income 65,467 63,729 +2.7% Operating expenses (50,551) (51,771) -2.4% Net diminution in assets (4,941) 321 +1,639% Exceptional items - (3,520) -1
Slide 10: Impact of loan growth on interest income not apparent in 1H11
Revenue mix (N’bn), by class Revenue mix, by geography (%) 25.9 12% 30.3 Excl-Nigeria 17% Nigeria 67.7 88% 57.3 83% 1H10 1H11 1H10 1H11 Fee Based Income Fund Based Income Impact of loan growth on interest Revenue distribution, by product income not apparent in 1H11, as bulk Comm/chgs placements 4% o
Slide 11: Gross earnings stronger in second quarter
Stronger Revenues in 2Q11, (N’bn) Fund-based revenues, by products (N’bn) 39.8 47.2 1H10 1H11 40.5 30.3 19.8 23.2 16.6 13.7 8.1 3.8 placemts Tbills Loans/adv 1Q11 2Q11 Gross revenues Fee-based revenues Gross earnings stronger in second quarter… Fee-based revenues, by type (N’bn) On the back of growt
Slide 12: Net interest margins slipped to 4.6%
Yields and margins reflect fund-based incomes Sources of fee-based income 15% 12.0% 10.2% Fees 10% 32% 9.1% 8.5% 5.7% 5% 4.6% Forex 22% 1H10 1H11 0% Yield on Yield on Net Interest liquid assets loans Margins Sources of fund-based income Net interest margins slipped to 4.6% due to distortion in yield
Slide 13: Banking income expands; cost/income ratio declines
Growth in operating income (N’bn) Geographical split of operating income 13% 19% 63.7 65.5 87% 81% 1H10 1H10 1H11 1H11 Excl-Nigeria Nigeria OPEX, Cost/Income ratio decline Banking income (operating income) expands. Helped by growth in fee incomes Cost/income ratio and lower cost of funds. 51.8 50.6
Slide 14: Inherent potential in subsidiaries
UBA Plc first half 2011 results presentation 14 United Bank for Africa Plc
Slide 15: Positive story for UBA's African subsidiaries
Positive story for UBA’s African subsidiaries so far; Income statement analysis, UBA Africa Strong revenue growth of 41% N'million 1H10 1H11 % Chg Profit reported in 1H11 Gross earnings 10,475 14,754 41% Loans, deposits, equity and assets all grew in the Net interest income 3,476 6,019 73% last six
Slide 16: Non-bank subsidiaries continue to add value
1H10 1H11 % Chg Non-bank subsidiaries continue to Gross earnings 1,861 3,292 77% add value to the Group Operating income 1,703 2,754 62% Solid topline performance; grew Operating cost (632) (880) 39% by 77% year-on-year. Profit before tax 1,255 1,873 49% Strong profit growth of 49% Key Ratios Delive
Slide 17: Analysis of financial position
UBA Plc first half 2011 results presentation 17 United Bank for Africa Plc
Slide 18: Statement of financial position
N’ million 1H-2011 FY-2010 % Change Treasury bills 243,310 191,511 +27.0% Due from other banks 355,010 302,272 +17.4% Loans and advances 715,844 628,811 +13.8% Investment securities 397,010 384,453 +3.3% Other assets 45,709 45,449 +0.6% Property & equipment 61,948 65,200 -5.0% Total assets 1,817,831
Slide 19: Balance sheet size expands by 17%
Total assets and cont. (N’tn) Balance sheet size expands by 17%. 2.66 Driven by deposit and credit 2.27 expansion. Return on assets recover to 0.9%, in spite of 12.4% growth in asset base. FY10 1H11 Growing asset base… (N’tn) …But return on assets improve 1.62 1.82 0.9% 0% FY10 FY10 1H11 1H11 UBA Pl
Slide 20: 11.4% growth in deposits achieved
Strong deposit growth (N’bn) Excl-Nigeria deposits also growing 14% Excl-Nigeria 15% 1.27 1.41 Nigeria 86% 85% FY10 1H11 FY10 1H11 Deposit mix, by class Dom Dom 11.4% growth in deposits achieved. 20% 17% Cheaper and more stable with Demand 40% Demand demand and savings deposits Time 42% growing duri
Slide 21: Impressive loan growth in six months
Group loan book (N’bn) Loan-to-deposit ratio Loans, by type Gross loans Net loans Mortgages BACP Leases 49.6% 50.7% 6% 3% 2% 757 716 674 629 Ovedraft 25% Term loans 64% FY10 1H11 FY10 1H11 Impressive loan growth in six months (to Geographical split of net loans Jun-11), leading to increased loan to
Slide 22: Sector distribution of gross loans
Sector Distribution of Gross loans (N’mn) Sustained growth in selected sectors (N’bn) SECTOR Exposure (N'mn) % exposure Oil and gas 131,701 17.4% 132 Financial institutions 115,046 15.2% Consumer/retail 114,509 15.1% 111 74 46 Telecommunications 74,276 9.8% 111 58 Manufacturing 62,129 8.2% 42 9 Jun-
Slide 23: Non-performing loans and NPL coverage
Non-performing loans NPL coverage in 1H11 Uncovered NPL Covered NPL 7.1% 23.8% 48.8% NPL ratio 82.1 59.4 92.9% NPL 76.2% 45.3 51.2% FY10 1H11 1H11adj FY10 1H11 1H11adj NPL ratio now 10.8%; coverage ratio down to Sector distribution of NPLs 51.2% also. Fin. Inst. Gen. comm Recently classified loans (
Slide 24: Improving liquidity and good capital adequacy
Liquidity Ratio (LR) Funding mix 5% 5% 5% 11% 7% 10% 42% 39% 78% 78% FY10 1H11 FY10 1H11 Borrowings Other liabilities Equity Deposits Capital Adequacy Ratio (CAR) Improving liquidity and good capital adequacy. 18.2% Both in excess of regulatory 17.0% thresholds. Stable funding mix… …deposits still t
Slide 25: Summary and conclusions
UBA Plc first half 2011 results presentation 25 United Bank for Africa Plc
Slide 26: Presence and business model, strategic thrust, ratings
Presence and business model Strategic Thrust • Operations in 19 African countries (including • Dominance in Nigeria. Nigeria) and 3 global financial centres. Plan to commence operations in Mali and Angola. • Leading bank in Africa (to rank 6th in market share). • 8 non-bank subsidiaries; Over 12,000
Slide 27: Business focus
Business focus Access to high growth African Access the top echelon markets Entrench corporate of the middle markets lending strategy through product cross- selling Service Sustain retail banking Continue to provide Balance Integrated quality and sheet employee strategy new product offerings optimiz
Slide 28: Strategic priorities
Maintain solid capital position that will align with our growth aspirations. Build a low-cost banking model. Pursue quality and diversified earnings base. Put the customer at the center of all business activities. Entrench its core values; humility, empathy, integrity and resilience. Implement utmos
Slide 29: Equity growth, return on equity and price-to-book
Growing equity base (N’bn) Undervalued on Price-to-book basis 179 187 1.51 0.91 FY10 1H11 UBA's P/B Peer avg. P/B Total equity grew over the period. Return on equity recovers Driven by retained earnings. Strong recovery in RoEs – annualized RoE of 8.9% in line with management 8.9% projections for FY
Slide 30: Questions
UBA Plc first half 2011 results presentation 30 United Bank for Africa Plc
Slide 31: Thank you
UBA Plc first half 2011 results presentation 31 United Bank for Africa Plc
United Bank for Africa — H1 2011 Earnings Presentation on 6ix