United Bank Limited · PSX:UBL
United Bank — 9M 2020 Earnings Presentation
49 slides from United Bank's earnings presentation, Oct 27, 2020
Slide 1: UBL Investor Presentation Corporate Briefing Session
UBL Investor Presentation Corporate Briefing Session For the Nine Months Ended Sep 30, 2020 October 27, 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
Slide 2: Table of Contents
Table of Contents 1 Overview of Performance for 9M’20 2 Our Segments are poised to grow as economy opens up 3 Financial Summaries 4 A Historical Perspective - 6 Years Review 5 Quarterly Trends 2
Slide 3: Overview of Performance for 9M'20
Overview of Performance for 9M’20 3
Slide 4: The Big Picture so far on Macros – UBL Delivers consistent ROE
The Big Picture so far on Macros – UBL Delivers consistent ROE Economy signals signs of stability… Market deposits grow by 12.7% in 9M’20 at Rs. 16.5 tln Currency in Circulation at 6.15 tln, at Sep’20, up 14% since Dec’19 Market Advances down 1.6% since Dec’19, at Rs. 8.0 tln Inflation at 9.
Slide 5: Balance Sheet Review - Deposit led build up supports core earnings
Balance Sheet Review - Deposit led build up supports core earnings Rs in bln Var % Deposits Performance - Led by Branch Banking Group Balance Sheet Sep'20 vs Sep'20 Jun'20 Dec'19 Avg Dom deposits at Rs 1.2 tln, up 14% YoY - inc vols of Rs 154 bln Dec'19 Advances 538 585 636 -15.4% Avg Domestic c
Slide 6: 9M'20 Results - Overall revenues up with strong positioning in Investments
9M’20 Results - Overall revenues up with strong positioning in Investments Revenue Performance – better margins Rs in bln Rs in bln Income Statement Var % Var % Domestic NII (over 73% of Bank’s revenue) up 35% YoY 9M'20 9M'19 Q3'20 Q2'20 Bank NIMs improved to 4.9% in 9M’20 from 4.2% in 9M’19 Int
Slide 7: Key Highlights Capital Base strengthens with conservation and de-risking
Key Highlights Capital Base strengthens with conservation and de-risking Capital Adequacy Ratio (%) Risk Weighted Assets 3.8% 147 147 22.8% 18.9% 49 Dec'19: 62 Sep'20: 556 5.6% Rs 837 bln 642 Rs 765 bln 4.0% 1.3% 1.2% Credit Market Operational Credit Market Operational Risk Weighted Assets Concentra
Slide 8: Key Ratios for the quarter – NIM compression but with controlled expense base
Key Ratios for the quarter – NIM compression but with controlled expense base Gross Revenues Cost to Income Ratio Net Interest Margins Rs in bln -56 bps Rs in bln -11% 5.3% 26.0 48.7% 4.6% 4.7% 22.0 23.2 3.9% 20.6 4.3 43.0% 42.6% 4.7 4.1 5.2 37.2% 21.8 19.1 21.8 19.1 15.4 17.3 15.4 17.3 Q3'19 Q1'20
Slide 9: Drivers for earnings – core KPIs review for 9M'20 vs 9M'19
Drivers for earnings – core KPIs review for 9M’20 vs 9M’19 Act YTD Act YTD Key Metric YoY Delta FY Act'19 Sep'20 Sep'19 BUSINESS VOLUMES AND REVENUE DRIVERS 1 Average Current Account Growth – YoY 10.5% 9.5% 0.9% 8.0% 2 NTB run rate - C/A per branch per day 1.6 1.4 0.2 1.6 3 Aggregate number of NTB C
Slide 10: Summary of Results for the nine months ended September 2020
Summary of Results for the nine months ended September 2020 Act YTD Act YTD Key Metric YoY Delta FY Act'19 Sep'20 Sep'19 RETURN ON EQUITY 1 Profit Before Tax - Rs in bln 26.4 26.3 1% 34.2 2 PAT - Rs in bln 16.1 14.4 12% 19.1 3 RoE 14.5% 13.8% 0.8% 13.8% 4 EPS 13.13 11.77 1.36 15.63 5 Capital Adequac
Slide 11: Key Highlights 9M'20 Balance Sheet core positions
Key Highlights 9M’20 Balance Sheet core positions Bank Level Deposits 19% Current 45% Saving Rs 1.6 tln Term 36% PBT Rs. 26.4 bln RoE 14.5% Net Advances Investments 18% T-Bills 19% CAR 22.8% 27% Fixed PIBs Domestic Rs 538 bln Rs 1.1 tln Floaters PIBs International 29% Others 82% 25% 11
Slide 12: Market Information – Build up in Book Value
Market Information – Build up in 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 Sep’20 - Rs. 202 bln Price as at 30-Sep'20: Rs. 115.11 270 50 Cons. Book value Sep’20 - Rs. 165 per share 169 179 45 152 159 151
Slide 13: 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 14: Our Global Presence - Pakistan business dominates performance
Our Global Presence - Pakistan business dominates performance Globally over 20% of the asset base is overseas PAKISTAN BRANCHES 1,363 OVERSEAS BRANCHES Asset mix by region Sep'20 2019 14 Domestic Operations 79.1% 77.9% SUBSIDIARIES International Operations 20.9% 22.1% 4 Middle East 13.8% 15.1% Europ
Slide 15: Key Conclusions and strategic priorities
Key Conclusions and strategic priorities 1 UBL shall continue to play a prominent role in the economic recovery of the Country 2 As COVID impacts businesses – we strive to ensure continuous service across channels 3 Domestic business is the cornerstone of our franchise, led by the Branch Banking Gro
Slide 16: Our Segments are poised to grow as economy opens up
Our Segments are poised to grow as economy opens up 16
Slide 17: 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 18: Q3 Vs Q2 Reflects Strong Momentum as Economy Recovers
Q3 Vs Q2 Reflects Strong Momentum as Economy Recovers Balance Sheet Volumes Avg C/A Rs 563 bln C/A NTB 168K CoD 3.5% 7% 62% 1.2% Corporate Deposits Rs 49 bln Autos 1,478 Units Credit Cards Rs 2 bln 3% 11 x 2% NFI Streams rebound as markets open Home Remitt. Rs 429 mln Debit Card Fees Rs 334 mln Trad
Slide 19: Core Business Segments Branch Banking Group
Core Business Segments Branch Banking Group Deposit Market Share Total Customers – 10.4 mln 399 K new C/A opened 8.2% at Sep’20 (Dec’19: 8.3%) Branch Banking - 5.5 mln Current Account NTB Run Rate Domestic Deposits - PE Rs in bln Per Branch Per Day - 1.6 in 9M’20 11.0% Omni Accounts - 3.6 mln (9M’19
Slide 20: Core Business Segments Corporate Banking Group
Core Business Segments Corporate Banking Group Average Performing Advances Rs in bln 424 406 60 66 63 59 301 281 9M'19 9M'20 Advances General Commodity Refinance and Others Total Yield on Advances (General + Commodity) Trade Volumes 12.6% -45% 11.9% 9M'19 9M'20 Imports Imports USD 3.5 bln USD 1.8 bl
Slide 21: Core Business Segments Digital Banking Group
Core Business Segments Digital Banking Group Digital App Registrations Transacting Customers Trend (‘000s) No of Accounts ( '000s) PRE COVID POST COVID 21.5% 315 303 293 1,253 274 268 248 1,031 204 169 176 Jan'20 Feb'20 Mar'20 Apr'20 May'20 Jun'20 Jul'20 Aug'20 Sep'20 Dec'19 Sep'20 Greater Transacti
Slide 22: Core Business Segments Treasury and Capital Markets
Core Business Segments Treasury and Capital Markets Domestic Portfolio Concentration Sep’20 MTM Surplus / Deficit Yield on Investments MTM Surplus / (Deficit) - 10.2% 9.9% 10.4% Dec'19 Sep'20 GoP Securities Rs in mln Rs. 938 bln PIBs - Fixed (8,446) (975) 7.6% Listed Shares PIBs - Floaters 1,772 (83
Slide 23: 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 9M’20 (9M’19: USD 1.8 bln) 9% -32% 360 348 Cost of deposits reduced from 1.7% in 9M’19 to 2.2% in 9M’20 340 319 320 De-risking within International -
Slide 24: Financial Summaries
Financial Summaries where YOU come first
Slide 25: Income Statement Domestic
Income Statement Domestic Rs in bln Rs in bln Description Var % Var % 9M'20 9M'19 Q3'20 Q2'20 Interest Earned 111.6 100.7 11% 31.6 39.9 -21% Interest Expensed (59.3) (62.0) 4% (14.4) (20.1) 29% Net Interest Income 52.4 38.7 35% 17.3 19.8 -13% Non Interest Income 10.7 14.8 -28% 2.9 3.9 -25% Total Rev
Slide 26: Financial Summaries Deposits – Reduction in cost of deposits in Q3'20
Financial Summaries Deposits – Reduction in cost of deposits in Q3’20 Period End Average Cost of Deposits Rs in bln Sep'20 Dec'19 9M'20 9M'19 Var % 9M'20 9M'19 Current deposits 606 520 526 476 10.5% 0.0% 0.0% Saving deposits 554 505 535 469 14.1% 7.8% 9.1% CASA 1,161 1,025 1,061 945 12.3% 3.9% 4.5%
Slide 27: Financial Summaries Net Advances
Financial Summaries Net Advances DOM advances yield up to 11.0% 9M’20 (9M’19: 11.6%) – repricing in line with benchmark rate Rs in bln Description Var % Sep'20 Dec'19 Corporate Bank 315 373 -15% Commodity 64 66 -3% Small Enterprises 9 10 -11% Consumer 17 17 -3% Others 36 33 10% Total Domestic 442 50
Slide 28: Financial Summaries Non Fund Income
Financial Summaries Non Fund Income Rs in mln Rs in mln Description Var % Var % 9M'20 9M'19 Q3'20 Q2'20 Fee, commission and brokerage income 6,447 8,722 -26% 2,204 1,802 22% Dividend income 899 911 -1% 113 399 -72% Income from dealing in foreign currencies 2,648 3,015 -12% 660 1,126 -41% Gain / (los
Slide 29: Financial Summaries Fee, Commission and Brokerage
Financial Summaries Fee, Commission and Brokerage Rs in mln Description Var % 9M'20 9M'19 Branch banking customer fees 908 1,209 -25% Consumer finance related fees 614 707 -13% Card related fees (debit and credit cards) 1,019 1,211 -16% Investment banking fees 117 237 -51% Financial Institution reba
Slide 30: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % 9M'20 9M'19 Total compensation expenses 9,780 8,886 -10% Rent and taxes 586 106 -455% Utilities cost 1,071 1,222 12% Security 719 668 -8% Depreciation 577 554 -4% Depreciation - Right of Use Assets 1,291 1,672 23% Others 217 293
Slide 31: Financial Summaries Administrative Expenses
Financial Summaries Administrative Expenses Rs in mln Description Var % 9M'20 9M'19 Legal and professional charges 125 162 23% Outsourced service costs including sales commission 1,803 2,513 28% Banking service charges 1,052 1,128 7% Cash transportation and sorting charges 573 612 6% Depreciation 1,
Slide 32: Financial Summaries Consolidated Income Statement
Financial Summaries Consolidated Income Statement Rs in bln Rs in bln Description Var % Var % 9M'20 9M'20 Q3'20 Q2'20 Interest Earned 123.9 114.6 8.1% 35.6 44.0 -19.0% Interest Expensed (64.2) (68.2) 5.8% (15.9) (21.7) 26.5% Net Interest Income 59.7 46.5 28.6% 19.7 22.3 -11.8% Non Interest Income 14
Slide 33: Financial Summaries Consolidated Balance Sheet
Financial Summaries Consolidated Balance Sheet Rs in bln Description Var % Sep'20 Dec'19 Advances 613 695 -11.9% Investments 1,133 875 29.6% Lendings to Financial Institutions 12 22 -42.7% Assets held for sale 0 0 -2.0% Others 372 432 -14.0% Total Assets 2,130 2,024 5.3% Deposits 1,689 1,558 8.4% Bo
Slide 34: 6 year Performance Review
6 year Performance Review where YOU come first
Slide 35: 6 Year Financial Summary
6 Year 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 72
Slide 36: 6 Year Financial Summary
6 Year 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 55,842
Slide 37: 6 Year Financial Summary
6 Year 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) - gross
Slide 38: Quarterly Trends
Quarterly Trends Gi where YOU come first
Slide 39: Quarterly Trends Profit before Tax
Quarterly Trends Profit before Tax Rs in bln 13.5 11.8 +23% 11.3 10.9 11.2 10.8 11.2 +8% 10.2 9.9 10.4 10.4 +6% 9.3 9.2 8.8 8.8 8.3 8.4 8.5 8.3 8.4 7.8 8.0 7.9 7.6 -4% 6.5 -4% 5.9 -6% -26% 4.1 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
Slide 40: 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 +29% 5.9 5.6 +7% 5.5 5.4 5.2 5.3 5.3 5.1 4.9 4.7 4.7 4.2 -10% -3% -26% 3.6 3.5 -24% 2.6 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 Q
Slide 41: Quarterly Trends Deposits
Quarterly Trends Deposits Rs in bln +6% +2% 0% 1,589 1581 +8% +3% 1,493 1,448 1,467 1,419 1,366 1,344 1,335 1,301 1,256 1,142 1,147 1,273 -2% 1,070 -2% 1142 1147 1,051 1051 1070 992 994 945 895 847 858 866 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 Q4'1
Slide 42: Quarterly Trends Net Advances
Quarterly Trends Net Advances Rs in bln 716 675 673 +1% +2% 627 624 636 642 626 636 623 -11% 585 565 567 -3% -2% -6% 538 519 509 496 -8% 459 455 447 498 434 420 430 408 417 377 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'
Slide 43: Quarterly Trends Revenue
Quarterly Trends Revenue Rs in bln +18% 26.0 +14% +5% 23.2 22.4 22.0 21.9 +1% 21.3 21.2 21.2 -11% 20.9 20.3 20.4 20.3 20.0 19.6 19.5 20.0 19.3 19.2 18.6 17.9 19.0 20.6 18.1 17.6 -2% -8% 16.3 15.5 14.9 Q1'14 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'
Slide 44: Quarterly Trends Net Interest Income
Quarterly Trends Net Interest Income +26% Rs in bln 21.8 19.1 +6% +6% 17.3 +1% -12% +4% 16.4 +2% 15.7 15.3 15.4 14.7 14.7 14.2 13.9 14.0 13.7 14.3 14.2 14.2 13.9 14.2 13.8 14.4 13.6 13.7 12.8 13.1 11.3 11.0 9.8 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
Slide 45: 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 5.6 5.7 -28% 5.1 5.2 5.1 5.0 5.2 +5% 5.0 4.8 4.8 4.8 4.7 4.5 4.5 4.5 4.3 -12% 4.1 3.8 -14% -9% -4% 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'
Slide 46: Quarterly Trends Provision Charge
Quarterly Trends Provision Charge +55% Rs in bln 5.7 5.5 5.5 +114% -5% +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 Q1'14 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
Slide 47: Quarterly Trends Administrative Expenses
Quarterly Trends Administrative Expenses Rs in bln +9% 11.0 10.7 +15% 10.3 +2% +2% 9.9 9.9 9.6 9.5 9.7 9.2 10.0 8.8 8.8 -2% 8.6 8.4 8.5 8.7 -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 Q2'1
Slide 48: Important Information
Important Information The information contained herein reflects our latest business statement as at September 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 e
Slide 49: Thank You
Thank You