Q1 2019 Results Analyst Presentation Unaudited Financial Results for the 3 months ended March 31, 2019 April 2019 Your simpler, smarter bank 1
Disclaimer This presentation contains or incorporates by reference ‘forward -looking statements’ regarding the belief or current expectations of Union Bank Plc, the Directors and other members of its senior management about the Group’s businesses and the transactions described in this presentation. Generally, words such as ‘‘could’’, ‘‘will’’, ‘‘expect’’, ‘‘intend’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘plan’’, ‘‘seek’’ or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and/or its Group and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward-looking statements. Such risks and uncertainties include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. The Bank assumes no responsibility to update any of the forward looking statements contained in this presentation. Any forward-looking statement contained in this presentation based on past or current trends and/or activities of Union Bank should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company. Each forward-looking statement speaks only as of the date of the particular statement. Union Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward- looking statements contained herein to reflect any change in Union Bank’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 2
Union Bank at a Glance Our People Awards Assets / Equity ₦ 233bn Total Equity 4,500,000 Customers Best Company in Total Assets ₦ 1.5tn Employees 2,600 Environmental Excellence and Most Outstanding Company in Our Channels Ratings CSR/Sustainability - 2018 Sustainability, Enterprise 1,100 ATM A- (Stable Outlook) and Responsibility Awards (SERAs) B3 (Stable Outlook) Debit Cards 3.7m B- (Stable Outlook) 2019 Advertiser of the Year - POS Terminals 7.4k BBB+ (Stable Outlook) Pitcher Awards 630k Online Banking Recipient of the Bronze award for Integrated Social Engagement 1.5m Mobile Banking Marketing Campaign – 834,000 2019 Pitcher Awards 147,000 Branches / Cash 300 Centers 55,000 27,000 3
4 2 3 1 The Q1 2019 Union Bank Looking Operating Financial Update Ahead Environment Performance
1 The Operating Environment Emeka Emuwa Chief Executive Officer
Q1 ‘19 Macro -Economic Trends in Nigeria Mar - 18 Jun - 18 Sep - 18 Dec - 18 Mar - 19 N/A 2.38% • Nigeria’s GDP grew by 2.38% (y/y) in Q4’18, with an 1.95% 1.81% GDP 1.50% annual growth rate of 1.93% 80.4 Oil Price $/barrel 76.7 • Oil prices closed at $68.1/barrel in March 2019 68.1 65.9 52.4 47.5 Reserve 45.7 • Nigeria’s foreign reserves declined in the last quarter 44.4 44.4 $’ bn 42.4 of 2018, rose in Q1’19 364.2 360.8 362.5 362.1 360.4 • I & E and NIFEX FX rates converged in Q4’18, as the 360.0 N/A (N/$) 340.0 333.9 353.6 CBN stepped up its interventions across its different FX 306.7 306.9 FX windows 305.8 305.8 306.0 Official Rate IEFX Rate NIFEX Rate Inflation 13.30% • There has been a steady decline in inflation rate from 13.3% in Q1’18 to 11.25% in Q1’19 11.44% 11.28% 11.20% 11.25% 6 Category 1 Category 2 Category 3 Category 4 Source: CBN, OPEC, FMDQ, NBS
2 Union Bank Update Emeka Emuwa Chief Executive Officer
Our Ambitions 2 3 1 Growth Nigeria’s Most Reliable Leader in Citizenship, Leader in Retail and Sustainability and and Trusted Banking Transaction Banking Partner Innovation Our Priorities UNION BANK UPDATE Digital and Automation Service and Product Innovation Operational Efficiency Ecosystems for Value Creation and Growth Enabling Nigeria’s Success – Education, Technology, Women, SMEs 8
Q1 2019 Achievements • We have seen a 45% increase in New to Bank (NTB) accounts in Q1 ’ 19. We continue to intensify our pursuit for quality customers Customer and deepen our relationship with existing Acquisition customers. • The TechVentures was launched in January to support tech-based businesses in various UNION BANK UPDATE lifecycle stages, providing them with funding and advisory services. Emerging • Our α lpHer proposition launched in March is Segments designed to empower and ‘enable success’ for women across all segments of the Nigerian society through tailored financial services, capacity building opportunities etc. • Our Long Term Efficiency Acceleration Programme is in full swing, we expect to record Cost savings on the expense lines in 2019. Optimization 9
Improved Digital Penetration (Q-o-Q) User count is up 128% to 1.5m Mobile Our total online users is up by 133% to 630k with Online our new users up 51% to 96k. UNION BANK UPDATE Total POS volume is up 41% to 3.5m with the POS value up by 33% from N17.7bn to N24bn in Q1 2019 Our total transaction volume is up 5% to 20.8m while the total transaction value is up 4% to ATM N187bn 10
Group Financial Performance Income Statement Q1 2019 Q1 2018 Trend Gross Earnings (₦’ bn) -4.5% 37.7 39.5 Net Revenue after Impairments (₦’ bn) 1.7% 23.7 23.3 Profit Before Tax (PBT) (₦’ bn) 1% 5.4 5.4 Balance Sheet Trend Mar 2019 Dec 2018 Customer Deposits (₦’ bn) 867.2 857.6 UNION BANK UPDATE 1.1% Gross Loans (₦’ bn) 539.4 519.7 3.8% Ratios FY 2018 Trend Q1 2019 RoE 9.3% 6.8% RoA 1.6% 1.6% CAR 16.5% 16.4% Cost to Income 80.9% 82.9% 8.1% NPL Ratio* 7.0% 11 * Bank Figures.
3 Q1 2019 Financial Performance Joe Mbulu Chief Financial Officer
Group Highlights: Q1 2019 Down 5% to ₦ 37.7bn ( ₦39.5bn in Q1’18) Gross Earnings Net Interest Income Up 2% to ₦23.7bn (₦23.3bn in Q1’18) after Impairment Up 39% to ₦10.8bn (₦7.8bn in Q1’18) Non-Interest Income Q1 2019 PERFORMANCE Up 1% ₦5.4bn (₦5.4bn in Q1’18) Profit Before Tax Customer Deposits Up by 1% to ₦867.2bn (₦857.6bn as at Dec 2018) Gross Loans Up 4% to ₦539.4bn (₦519.7bn as at Dec 2018) Capital Adequacy Ratio Up to 16.5% (16.4% as at Dec 2018) 13
Q1 2019 Performance – Group Financial Summary Mar-2019 Dec-2018 Balance Assets 1,521.4 1,463.9 Sheet Gross Loans and Advances 539.4 519.7 (₦ ’bn) Customer Deposits 867.1 857.6 NPL Ratio * 7.0% 8.1% Key Capital Adequacy Ratio 16.5% 16.4% Ratios Coverage Ratio 106% 102% Q1 2019 PERFORMANCE Q1 2019 Q1 2018 Gross Earnings 37.7 39.5 Net Interest Income 12.0 17.8 Income Non-Interest Income 10.8 7.8 Statement Credit/Other Impairment Charge 0.8 (2.3) (₦ ’bn) Operating Expenses (18.5) (17.9) Profit Before Tax 5.4 5.4 Profit After Tax 5.3 5.3 Net Interest Margin 5.7% 8.4% Cost to Income Ratio 80.6% 69.7% Key Return on Equity 9.3% 6.8% Ratios Return on Assets 1.5% 1.5% Net Asset Value per share N8.01 N9.81 Earnings Per Share 18k 18k 14 * Bank figures.
Gross Earnings NRFF (₦’ bn) Non Interest Income (₦’ bn) Gross Earnings (₦’ bn) 39.5 31.7 37.7 Q1’19 3.8 2.3 4.7 10.8 26.9 14.8 13.8 Q1 2019 PERFORMANCE Q1’18 1.2 7.8 3.3 3.3 26.9 31.7 2018 2017 Interest Income Interest Expense Fees & Commissions Trading Other NII • Gross Earnings are down by 4.6% due to lower earning assets. 10.8 • Non-interest income is up 38% on the back of increased loan 7.8 growth, increase in customer transactions, and significant recoveries. Q1’19 Q1’18 Interest Income NII 15
Operating Expenses Operating Expenses (₦’ bn) Major Drivers (₦’ bn) 18.5 17.9 Q1’19 Q1’18 Expense Var 8.8 7.9 Q1 2019 PERFORMANCE Staff Expense 8.8 11% 7.9 1.6 1.9 Depreciation & 1.9 1.6 19% Amortisation 8.4 7.8 AMCON & 2.6 12% 2.9 NDIC Q1’19 Q1’18 Staff Cost Dep & Amor Other Overhead Costs 16
Funding Mix Customer Deposits (₦’ bn) Funding Mix 867.1 857.6 Customer Deposits 65.1% 66.7% Debt Securities Issued Onlending Facilities Equity +4% 2.7% Fcy Borrowings 1.1% Q1 2019 PERFORMANCE 2.6% 2.8% Deposit from Banks 612.0 633.6 17.0% 17.1% 5.4% 4.6% 7.2% 7.7% Q1’19 FY’18 Deposit by Segment 8.2% 25.7% 245.6 233.5 25.9% 46.4% 53.6% Retail Q1’19 FY’18 20.6% Commercial 19.5% Corporate Low-Cost Current and Savings Term Q1’19 FY’18 Deposits SME 17
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