United Bank Limited · PSX:UBL
United Bank — FY2018 Earnings Presentation
40 slides from United Bank's earnings presentation, Feb 21, 2019
Slide 1: Performance Highlights – FY 2018 Investor Relations Conference Call
Performance Highlights – FY 2018 Investor Relations Conference Call February 21st, 2019 Speakers: Mr. Aameer Karachiwalla - Chief Financial Officer UBLArif Mr. Performance Saifie, FCA,Overview – FY 2018 CFA - Financial Controller and Head of Investor Relations Investor Relations Release
Slide 2: Table of Contents
Table of Contents PAGE Key Highlights 3 Execution and Delivery 7 Growth at a Glance 25 Quarterly Trend Analysis 29 UBL Performance Overview – FY 2018
Slide 3: Key Performance Highlights
Key Performance Highlights UBL Standalone Results PBT before extraordinary items at Rs. 31.6 bln, down 21% vs. FY’17 PBT at Rs. 25.0 bln, down 37% vs. FY’17 Major upsides building core earnings in FY’18: Average domestic current deposits at Rs. 454 bln, up 15% vs. FY’17 Average CASA for the
Slide 4: Avg. Total Assets of Rs. 1.80 tln in FY'18, growth of 3%
Avg. Total Assets of Rs. 1.80 tln in FY’18, a growth of 3% over FY’17 Branch Banking builds deposit base in cost efficient manner Net Interest Income of Rs. 56.2 bln in FY’18 (FY’17: Rs. 56.4 bln) 586,000 NTB current accounts mobilized in FY’18 (FY’17: 586,000) Growth led by current deposits –
Slide 5: Overall NFI closed at Rs. 25.1 bln in FY'18, 13% growth
Overall NFI closed at Rs. 25.1 bln in FY’18, a 13% growth over FY’17 1 Fee income stood at Rs. 13.9 bln, up 10% from FY’17 Domestic fees grew by 20% YoY to reach Rs. 11.9 bln in FY’18:– Branch banking customer fees up by 14% to reach Rs. 1.6 bln (FY’17: Rs. 1.4 bln Debit & Credit Cards fees up
Slide 6: Provisions and Loan Losses
Provisions and Loan Losses Net provision charge of Rs. 12.9 bln in FY’18 vs. Rs. 2.4 bln in FY’17 DOM net provision charge of Rs. 1.7 bln in FY’18 (FY’17: net reversal of Rs. 2.3 bln) DOM asset quality stood at 4.9% at the end of Dec’18 (Dec’17: 6.0%) International provisions of USD 91.9 mln t
Slide 7: Execution and Delivery
Execution and Delivery UBL Performance Overview – FY 2018 7
Slide 8: Consistent earnings performance throughout the years
Consistent earnings performance throughout the years Trends - KSE 100 Index and UBL’s share price Equity and Book Values 300 55 Max 2018: Rs. 215.16 31 Dec’18: Rs. 122.64 280 20 Feb'19: Rs. 157.47 50 Rs in bln Cons. Equity Dec’18 - Rs. 168 bln 260 Cons. Book value Dec’18 - Rs. 138 per share 240 45 1
Slide 9: Income Statement - Standalone
Income Statement - Standalone Rs in bln Rs in bln FY'18 FY'17 Var % Q4'18 Q3'18 Var % Interest Earned 113.2 107.2 5.6% 29.3 29.7 -1.4% Interest Expensed (57.0) (50.8) -12.2% (15.0) (15.9) 5.8% Net Interest Income 56.2 56.4 -0.3% 14.4 13.8 3.8% Non Interest Income 25.1 22.2 13.1% 5.7 5.1 10.1% Total
Slide 10: Income Statement - Domestic
Income Statement - Domestic Rs in bln Rs in bln FY'18 FY'17 Var % Q4'18 Q3'18 Var % Interest Earned 98.4 93.2 5.6% 25.4 25.9 -1.9% Interest Expensed (50.7) (45.2) -12.1% (13.3) (14.3) 6.9% Net Interest Income 47.7 48.0 -0.5% 12.1 11.6 4.4% Non Interest Income 23.0 19.0 21.0% 5.6 4.4 28.6% Total Reve
Slide 11: Balance Sheet - Standalone
Balance Sheet - Standalone Rs in bln Dec'18 Dec'17 Var % Advances 716 627 14.1% Investments 786 1,092 -28.0% Lendings to Financial Institutions 34 11 212.3% Others 353 303 16.6% Total Assets 1,890 2,033 -7.1% Deposits 1,366 1,273 7.3% Borrowings 268 513 -47.7% Subordinated Debts 9 - 100.0% Others 95
Slide 12: Income Statement - Consolidated
Income Statement - Consolidated Rs in bln Rs in bln FY'18 FY'17 Var % Q4'18 Q3'18 Var % Interest Earned 117.4 110.6 6.1% 30.4 30.8 -1.5% Interest Expensed (59.1) (52.5) -12.6% (15.6) (16.5) 5.4% Net Interest Income 58.2 58.1 0.3% 14.8 14.4 3.0% Non Interest Income 27.3 24.8 10.5% 6.1 5.8 6.4% Total
Slide 13: Balance Sheet - Consolidated
Balance Sheet - Consolidated Rs in bln Dec'18 Dec'17 Var % Advances 755 665 13.4% Investments 831 1,125 -26.1% Lendings to Financial Institutions 35 13 169.9% Others 381 328 16.4% Total Assets 2,002 2,131 -6.0% Deposits 1,448 1,350 7.3% Borrowings 280 517 -45.9% Subordinated Loans 9 - 100.0% Others
Slide 14: Deposits performance - Focus remains on growing low cost deposits
Deposits performance - Focus remains on growing low cost deposits Deposits - Bank Period End Average Cost of Deposits Dec'18 Dec'17 FY'18 FY'17 FY'18 FY'17 Domestic deposits - Rs in bln 1,106 1,016 1,017 969 3.0% 2.7% International deposits - Rs in bln 260 256 254 235 2.2% 2.2% Total Bank - Rs in bl
Slide 15: Advances portfolio up 14% over Dec'17
Advances portfolio up 14% over Dec’17 Net Advances Rs in bln Dec'18 Dec'17 Var % Corporate Bank 374 303 23% Commodity 68 47 45% Commercial 43 35 20% Consumer 16 12 34% Others 44 43 2% Total Domestic 545 441 24% International 171 187 -8% Bank 716 627 14% International USD mln 1,232 1,691 -27% Dec'17
Slide 16: International Advances - Corporate advances remains the largest component
International Advances - Corporate advances remains the largest component By Geography By Business - UAE Bahrain, Qatar, 11% 14% Yemen, 0% NewYork, 0% EPZ, 0% Corporate, 66% Others, 30% UAE, 75% Consumer, 4% Personal Others, loan, 1% 1% Abu Dhabi, 29% Sharjah, 6% Baitna, Dubai, 65% 98% UBL Performan
Slide 17: Concentration of Advances as at December 31, 2018 - Standalone
Concentration of Advances as at December 31, 2018 - Standalone 2%2% 10% 1% 1% 2% 38% 9% 2% 4% 29% Chemical & Pharma Agribusiness Textile Cement Sugar Autos & Transport Financial Electronics Power & Energy Individuals Others UBL Performance Overview – FY 2018 17
Slide 18: Diversified investment portfolio with strong market risk management
Diversified investment portfolio with strong market risk management Portfolio declines in line with reduced leveraging Investments’ yields Total 1,092 Rs in bln 11.1% 24 48 40 Total 786 18 10.4% 10.4% 34 8.9% 57 41 548 7.6% 17 7.8% 2013 2014 2015 2016 2017 2018 396 Non Funded revenue streams continu
Slide 19: Our international outreach - serving in 4 continents under the single UBL brand
Our international outreach - serving in 4 continents under the single “UBL” brand ASSOCIATED COMPANIES OVERSEAS BRANCHES 3 17 PAKISTAN BRANCHES 1,362 SUBSIDIARIES 4 Asset mix by region 2018 2017 Domestic Operations 77.3% 79.9% International Operations 22.7% 20.1% Middle East 16.4% 14.9% USA 0.1% 0.3
Slide 20: UBL Innovation and Awards
UBL Innovation and Awards UBL “Firsts” – Initiatives to stay ahead of the market Market recognition and awards Declared ‘Bank of the Year 2018 – Pakistan’ by The Banker, an First Commercial Bank in Pakistan to launch Branchless affiliate of the Financial Times UK. Banking (UBL OMNI) “Best Bank
Slide 21: Review of Non Interest Income & Administrative Expenses
Review of Non Interest Income & Administrative Expenses UBL Performance Overview – FY 2018 21
Slide 22: Non Fund Income Standalone Results
Non Fund Income Standalone Results Rs in mln FY'18 FY'17 Var % Fee, commission and brokerage income 11,926 9,957 20% Dividend income 2,079 2,354 -12% Income from dealing in foreign currencies 3,633 1,768 105% Gain / (loss) on sale of securities 4,518 4,174 8% Other income 869 783 11% Domestic Total
Slide 23: Fees and Commissions performance Standalone Results
Fees and Commissions performance Standalone Results Rs in mln FY'18 FY'18 Var % Branch banking customer fees 1,556 1,362 14% Consumer finance related fees 812 693 17% Card related fees (debit and credit cards) 1,590 1,253 27% Investment banking fees 704 600 17% Financial Institution rebate / commiss
Slide 24: Administrative Expenses Standalone Results
Administrative Expenses Standalone Results Rs in mln FY'18 FY'18 Var % Total compensation expenses 11,609 10,531 -10% Rent and taxes 2,452 2,070 -18% Utilities cost 1,562 1,469 -6% Security 1,081 1,190 9% Depreciation 643 537 -20% Others 572 605 6% Property expenses 6,311 5,872 -7% Hardware & Softwa
Slide 25: Growth at a Glance
Growth at a Glance UBL Performance Overview – FY 2018 25
Slide 26: Balance Sheet
Balance Sheet Rs. in mlns 2018 2017 2016 2015 2014 2013 2012 Assets Cash and balances with treasury and other banks 206,813 177,099 146,428 128,870 87,573 114,388 109,396 Lending to financial institutions 33,942 10,868 25,711 24,095 21,872 28,835 21,953 Investments- gross 792,857 1,095,555 808,959 7
Slide 27: Profit & Loss
Profit & Loss Rs. in mlns 2018 2017 2016 2015 2014 2013 2012 Markup / return / interest earned 113,198 107,206 98,219 94,353 82,735 72,846 73,507 Markup / return / interest expensed (56,964) (50,781) (41,177) (38,511) (37,769) (34,910) (34,948) Net Markup / Interest income 56,234 56,425 57,042 55,84
Slide 28: Key Financial Ratios & Share Information
Key Financial Ratios & Share Information 2018 2017 2016 2015 2014 2013 2012 Key Financial Ratios Return on equity (RoE) 11.6% 20.6% 24.9% 25.7% 23.9% 22.3% 23.8% Return on assets (RoA) 0.8% 1.4% 1.8% 2.0% 2.1% 2.0% 2.1% Profit before tax ratio 30.7% 50.8% 57.1% 54.2% 52.0% 49.6% 48.2% Return on capi
Slide 29: Quarterly Trend Analysis
Quarterly Trend Analysis Bank Level - Standalone UBL Performance Overview – FY 2018 29
Slide 30: Profit before tax
Profit before tax Rs in bln 13.5 11.8 10.9 11.2 11.3 10.8 11.2 10.2 9.9 10.4 9.3 +4% 8.4 8.3 8.8 8.5 7.8 8.0 +44% 7.1 8.4 +61% 6.4 6.5 5.9 -54% 5.9 -10% 4.1 Q1'13 Q2'13 Q3'13 Q4'13 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
Slide 31: Profit after tax
Profit after tax Rs in bln 7.1 7.3 7.3 7.0 6.5 6.5 6.4 6.1 7.0 +8% 6.3 5.7 6.0 5.6 5.5 5.2 5.3 5.3 5.9 +59% 4.7 4.3 -58% 4.0 +37% 3.6 3.5 -5% 2.6 Q1'13 Q2'13 Q3'13 Q4'13 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 UBL Perfor
Slide 32: Deposits
Deposits Rs in bln +2% +1% +2% +1% 1,366 +2% 1,315 1,335 1,273 1,301 1,256 1,254 1,183 1,142 1,1471,167 1,051 1,070 992 994 945 895 828 847 858 866 752 773 703 Q1'13 Q2'13 Q3'13 Q4'13 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 33: Net Advances
Net Advances Rs in bln +6% 716 -0% 675 673 +8% +11% -0% 627 624 565 567 509 519 496 498 459 455 417 434 430 420 408 447 391 377 363 369 352 Q1'13 Q2'13 Q3'13 Q4'13 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 UBL Performance
Slide 34: Revenue
Revenue Rs in bln 21.9 +0% 21.3 +4% 21.2 21.2 +5% 20.3 20.4 20.3 20.0 20.0 19.3 19.5 19.2 +13% -10% 17.6 19.0 18.6 18.1 17.9 16.3 15.4 14.9 13.8 14.1 15.5 12.6 Q1'13 Q2'13 Q3'13 Q4'13 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 35: Net Interest Income
Net Interest Income Rs in bln 15.7 +4% 14.7 +2% 14.2 14.3 +1% 14.2 14.2 14.4 14.0 13.6 13.1 12.8 14.2 -3% -3% 13.8 13.9 13.7 13.9 13.7 11.3 11.0 10.6 9.8 9.5 9.0 8.8 Q1'13 Q2'13 Q3'13 Q4'13 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
Slide 36: Non Funded Income
Non Funded Income Rs in bln 8.4 7.3 +21% 7.0 -5% 6.2 6.2 6.3 +10% 6.1 6.0 5.7 5.6 +60% -26% 4.9 5.1 5.0 4.8 4.8 4.84.8 4.6 5.2 4.5 5.1 3.9 4.5 3.8 Q1'13 Q2'13 Q3'13 Q4'13 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 UBL Perfo
Slide 37: Provisions
Provisions Rs in bln 5.5 +88% +11% 2.9 2.6 +37% 2.0 2.1 1.3 +260% -8% 1.9 0.9 0.9 0.8 0.7 0.5 0.3 0.3 0.6 0.2 0.2 0.1 0.8 -0.1 -0.3 -0.3 -0.1 -0.5 Q1'13 Q2'13 Q3'13 Q4'13 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 UBL Perfo
Slide 38: Administrative Expenses
Administrative Expenses Rs in bln 10.7 +11% 9.9 +5% +14% 9.2 -2% 9.6 8.8 8.8 8.6 8.4 8.5 8.2 -6% 8.0 8.7 7.8 7.6 7.3 7.4 7.4 7.2 7.1 6.9 6.9 6.5 6.5 6.2 Q1'13 Q2'13 Q3'13 Q4'13 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 UBL
Slide 39: Important Information
Important Information The information contained herein reflects our latest business statement as at December 31, 2018. 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 ex
Slide 40: Thank You
Thank You UBL Performance Overview – FY 2018 40