United Bank For Africa Plc · NSENG:UBA
United Bank For Africa — H1 2010 Earnings Presentation
58 slides from United Bank For Africa's earnings presentation, Jul 21, 2010
Slide 1: Investor/Analyst Briefing
Investor/Analyst Briefing FOR THE HALF YEAR ENDED 30TH JUNE 2010 By United Bank for Africa (UBA) PLC July 21, 2010 1
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: Important Disclosures
IMPORTANT DISCLOSURES • This presentation reviews results for Half Year ended June 2010 • The comparable period is June 2009 for P&L and December 2009 for Balance Sheet items • June 2009 figures are derived from 6-mths (January – June) results for P&L only • FY means “Full Year” • 1Q, 2Q, 3Q, 4Q and
Slide 4: Outline
OUTLINE • REVIEW OF OPERATING ENVIRONMENT • ANALYSIS OF HALF YEAR FINANCIAL RESULTS • FINANCIAL HIGHLIGHTS • KEY FACTORS THAT IMPACTED HALF YEAR RESULTS • REVENUE ANALYSIS • PROFITABILITY • BALANCE SHEET ANALYSIS • EFFICIENCY • LIQUIDITY AND ASSET QUALITY • OUTLOOK • Q&A 4
Slide 5: Review of Operating Environment
REVIEW OF OPERATING ENVIRONMENT 5
Slide 6: Review of Global Economy
REVIEW OF GLOBAL ECONOMY 6
Slide 7: Gradual Recovery Seen So Far in 2010
GRADUAL RECOVERY SEEN SO FAR IN 2010 11.9% First Quarter 2010 GDP Growth 7.2% 4.6% 4.9% 3.2% 0.2% 0.3% Euro Area UK USA South Japan Nigeria China Africa • Global economy rebounding • Strongest 1Q10 growth recorded in Asia: China (11.9%), Taiwan (12.2%) • Nigeria also strong at 7.2%, but with some fu
Slide 8: Unemployment Abates
UNEMPLOYMENT ABATES • Global unemployment reducing • More jobs created in the US • Over 400,000 in May-10 • Unemployment stabilizes in Euro Area 8
Slide 9: Global Trade Recovers Strongly
GLOBAL TRADE RECOVERS STRONGLY World Trade Organization projects global trade to rise by 9.5% in 2010 9
Slide 10: Commodity Prices Firm Up in 2010
COMMODITY PRICES FIRM UP IN 2010 Percentage Change in Commodity Prices (Mar-2010) 10
Slide 11: Equity Markets Improve
EQUITY MARKETS IMPROVE Selected Stock Market Indices Country Index Jun-10 Dec-09 YTD Chg (%) Colombia CSE All Share 4,612 3,386 36.2% Indonesia JSX Composite 2,914 2,534 15.0% India BSE 500 7,092 6,842 3.7% Saudi Arabia TASI 6,094 6,122 -0.5% Argentina Composite Index 123,884 126,570 -2.1% Germany C
Slide 12: World Stock Markets Recovered $21Tr Since 2009
WORLD STOCK MARKETS RECOVERED $21TR SINCE 2009 WORLD STOCK MARKET CAPITALIZATION JANUARY 1996 – JUNE 2010 12
Slide 13: Review of African Economy
REVIEW OF AFRICAN ECONOMY 13
Slide 14: GDP in Africa Economies Trends Up
GDP IN AFRICA ECONOMIES TRENDS UP 14
Slide 15: Crude Output Stabilizes...
CRUDE OUTPUT STABILIZES... Graph 13. Crude Oil Production £1,000 barrel | day) 200
Slide 16: ...As Oil Price Hovered Around $75/Barrel
…AS OIL PRICE HOVERED AROUND $75/BARREL 16
Slide 17: Consumer Prices Unsettled
CONSUMER PRICES UNSETTLED 17
Slide 18: But External Reserves Are Stabilizing
BUT EXTERNAL RESERVES ARE STABILIZING 18
Slide 19: Review of Nigerian Economy
REVIEW OF NIGERIAN ECONOMY 19
Slide 20: Key Highlights
KEY HIGHLIGHTS • Aggregate economy shows resilience – GDP in excess of 7% in the last few quarters • MPR held firm at 6%: asymmetric corridor now +2% and -5% • Although inflation rate remains in the double digit (12.3% in Mar-10 and 11% in May-10), the trend is downward. • Naira has remained fairly
Slide 21: Strong GDP Growth (QoQ)
STRONG GDP GROWTH (QOQ) CBN’s Monetary Policy Committee estimates an output growth of 7.2% in 2nd Qtr 21
Slide 22: Driven Mainly by Non-Oil
DRIVEN MAINLY BY NON-OIL | 10.00 5 Growth Rate (3)
Slide 23: Surge in Oil Production
SURGE IN OIL PRODUCTION …Success of the amnesty deal 23
Slide 24: Financial Services Grow...
FINANCIAL SERVICES GROW… …In spite of decline in average term deposit rates in 1Q10 24
Slide 25: Inflation Rates Reduced in May 2010
INFLATION RATES REDUCED IN MAY 2010 16% 12.3% 12.5% 12.0% 12% 11.6% 11.2% 11.0% 11.0% 8% 4% 0% May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 …In spite of decline in average term deposit rates in 1Q10 25
Slide 26: Naira's Value to the USD Hits 3-Month High of N149.9
NAIRA’S VALUE TO THE USD HITS 3-MTH HIGH OF N149.9 26
Slide 27: But Nigerian Equities Underperform Regional Peers
BUT NIGERIAN EQUITIES UNDERPERFORM REGIONAL PEERS 27
Slide 28: Review of Banking Industry
REVIEW OF BANKING INDUSTRY 28
Slide 29: Recent Developments
RECENT DEVELOPMENTS • Revised prudential guidelines released with effect from 1st July 2010 • Four international banks bid for CBN managed banks • Bid results to be released in September 2010 • Recapitalization deadlines for pardoned banks extended till Sep-2010 • Capital base for mortgage banks inc
Slide 30: Analysis of Half Year 2010 Results
ANALYSIS OF HALF YEAR 2010 RESULTS 30
Slide 31: Financial Highlights
FINANCIAL HIGHLIGHTS PARAMETERS 6MTHS (JUN-10) 6MTHS (JUN-09) % Change ACTUAL (N'BN) ACTUAL (N'BN) FY09/FY08 GROSS EARNINGS 93.7 109.0 -14% PROFITS B/F TAX & EX ITEMS 12.2 2.6 370% EXCEPTIONAL ITEMS (3.5) (2.4) 44% PBT AFTER EX ITEMS 8.6 0.1 6297% 30-Jun-10 31-Dec-09 % Change BALANCE SHEET SIZE 2,50
Slide 32: Key Factors That Impacted Half Year Results
KEY FACTORS THAT IMPACTED HALF YEAR RESULTS The economic situations in the industry is improving and lending portfolio is gradually growing. However, some unfavourable macro factor remains: •Excessive liquidity in the system prevails leading to very low rates on securities - • Bonds fell from btw 9
Slide 33: Revenues Analysis
REVENUES ANALYSIS 33
Slide 34: Revenue Trend
REVENUE TREND Revenues (N’bn) Qtrly Revenue Streams Returning (N’bn) 109 48 48 46 93.7 26.9 38 25.9 82.1 67.7 1H09 1H10 4Q09 5Q09 1Q10 2Q10 Fee Based Income Fund Based Income Presentation of Group Performance Qtrly Fee Based Income Improves (N’bn) • Gross Earnings dropped by 14% to N94bn compared to
Slide 35: Revenue Mix
REVENUE MIX Revenue Mix, By Geography • Contributions from Excl-Nigeria operations Excl-Nigeria Nigeria now 11.5% (10% in FY09) as results from 10% 11.5% our diversification outside Nigeria gather steams • Operations outside Nigeria driven largely 90% 88.5% by B/Faso, New York and Ghana • 68% of exc
Slide 36: Profitability
PROFITABILITY 36
Slide 37: Profits Analysis
PROFITS ANALYSIS Operating Income (N’bn) Strong Growth in PBT (N’bn) 69.9 14.0 63.7 12.2 8.6 7.0 2.6 0.1 0.0 1H09 1H10 1H09 1H10 Before EI After EI Presentation of Group Performance Breakdown of Operating Income • Operating income slightly down but Commisio efficiency improved ns/Chgs Others Forex 1
Slide 38: Balance Sheet Analysis
BALANCE SHEET ANALYSIS 38
Slide 39: Total Asset and Contingents
TOTAL ASSET AND CONTINGENTS Growth in Balance Sheet Size (N’trn) Growth in Total Assets (N’trn) 2.50 1.67 1.55 2.24 FY09 1H10 FY09 1H10 Presentation of Group Performance Total Assets Grow in Other Africa Subs (N’bn) • Balance sheet items improving 174 176 • Total assets + contingents up 12% • Major
Slide 40: Deposit Base
DEPOSIT BASE Stable Deposits (N’trn) Qtrly Trend in Group Deposits (N’trn) 1.36 1.36 1.25 1.25 1.25 1.15 FY09 1H10 3Q09 4Q09 FY09 1H10 Presentation of Group Performance Qtrly Trend in UBA Africa Deposits (N’bn) • Stable deposits base 136 134 120 125 • Consistent growth QoQ through 2009, to N1.36trn
Slide 41: Deposit Mix
DEPOSIT MIX Deposit Mix, By Type Deposit Mix, By Geography FCY Excl-Nigeria Nigeria 13% (16% in FY09) 11% 10% Demand Time 44% (41% in FY09) 29% (29% in FY09) Savings 89% 90% 14% (14% in FY09) FY09 1H10 Deposit Mix, By Class Presentation of Group Performance • Low cost deposit account for 71% of tota
Slide 42: Group Lending
GROUP LENDING Net Loans (N’bn) Net Loans, Qtrly Trend (N’bn) 664 664 607 607 590 545 FY09 1H10 4Q09 5Q09 1Q10 1H10 Presentation of Group Performance Qtrly Trend in Loans, UBA Africa (N’bn) • Loan book grew (+9.4% since Dec- 58 58 09) significantly due to lending to 50 49 high end corporate names • L
Slide 43: Analysis of Lending Portfolio
ANALYSIS OF LENDING PORTFOLIO DISTRIBUTION OF LOANS: By Sector Loans, By Class Public Sector 7% Sector Loan (N'bn) Proportion Oil & Gas 141.54 19.8% Financial Istitutions 15% Commercial Personal & Professional 121.17 17.0% 8% Fin Institutions 104.79 14.7% Retail & Corporate Telecoms 60.83 8.5% 50% C
Slide 44: Efficiency
EFFICIENCY 44
Slide 45: Quality of Earning Assets...
QUALITY OF EARNING ASSETS… Yield on Earning Assets • Drop in yield on earning assets reflects the 11.1% excessive liquidity in the system that has 9.6% significantly affected yields across all asset types. • NIMs stable around 7%; decline in interest yields almost equal to decline in costs • While t
Slide 46: Cost Analysis
COST ANALYSIS Staff Cost reducing Cost Income Ratio (Group) Opex Staff Costs 81.2% 69.8% 68.2% 66.2% 31.8% 33.8% 1H09 1H10 1H09 1H10 Presentation of Group Performance • Staff costs to total costs stable Ratio of Africa’s Cost to Group Cost 16.6% • While the cost to income ratio increased to 14.6% 81
Slide 47: Liquidity & Asset Quality
LIQUIDITY & ASSET QUALITY 47
Slide 48: Liquidity
LIQUIDITY Liquid Assets Liquidity Ratio 45% 41% CBN Cash/ST Balances Funds 2% 13% Treasury Bills 10% Interbank Plcmts 75% FY09 1H10 Presentation of Group Performance Loan to Deposit Ratio • Highly liquid balance sheet 48.7% 49% • Liquidity Ratio stood at 41% • 16% above regulatory threshold of 25% •
Slide 49: Funding and Capital Adequacy
FUNDING AND CAPITAL ADEQUACY Shareholders’ Funds (N’bn) Stable Capital Adequacy Ratio 187 189 16.3% 15.1% FY09 1H10 FY09 1H10 Presentation of Group Performance Funding Mix • Owners’ equity up to N189bn Other SHF • Capital Adequacy Ratio (CAR) strong at 11% Liabilities 15.1% in 1H10. Still above the
Slide 50: Outlook
OUTLOOK 50
Slide 51: Outlook for the Operating Environment
OUTLOOK FOR THE OPERATING ENVIRONMENT • Global GDP growth projected at 4.2%; SSA to grow by 4.7% and Nigeria to expand by 7.0% - IMF • Lending and capital flows to improve globally • Oil price to average $75-80 per barrel for the rest of 2010 • Power generation to improve – NNPC/PHCN sign gas supply
Slide 52: Outlook for UBA
OUTLOOK FOR UBA • Consolidate on the strong corporate governance and risk management standards across the group • Group-wide strategy to be sustained despite CEO transition • Sustain strong Liquidity and Capital Adequacy • Capital raising to provide cushion • Regular ICAAP/Stress tests • Adopt asser
Slide 53: Thank You
THANK YOU 53
Slide 54: Q&A
Q&A 54
Slide 55: Appendix
APPENDIX 55
Slide 56: Consolidated Profit and Loss Account
Consolidated Profit and Loss Account For the Period Ended 30 June 2010 6 months to 6 months to 30 June 30 June 2010 2009 N'million N'million Gross earnings 93,656 108,986 Interest and similiar income 67,728 82,094 Interest and similar expense (29,927) (39,081) Net interest income 37,801 43,013 Other
Slide 57: Consolidated Balance Sheet
Consolidated Balance Sheet As at 30 June 2010 30 June 31 December 2010 2009 N'million N'million Assets Cash and balances with central banks 80,777 68,225 Treasury bills 57,520 42,035 Due from other banks 406,920 470,195 Loans and advances to customers 664,204 606,616 Investment securities 264,430 18
Slide 58: 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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