Performance Highlights – FY 2018 Investor Relations Conference Call February 21st, 2019 Speakers: Mr. Aameer Karachiwalla - Chief Financial Officer Investor Relations Release Mr. Arif Saifie, FCA, CFA - Financial Controller and Head of Investor Relations UBL Performance Overview – FY 2018
Table of Contents PAGE Key Highlights 3 7 Execution and Delivery 25 Growth at a Glance 29 Quarterly Trend Analysis UBL Performance Overview – FY 2018
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 period was 86.9% (FY’17: 82.8%) Domestic cost of deposits maintained at 3.02% (FY’17: 2.73%) – despite rate hike of 425bps in 2018 Strong build up in Domestic fees - up by 20% YoY to reach Rs. 11.9 bln in FY’18 FX income increased by 85% to Rs 3.5 bln in FY’18 Overall Bank revenues up by 3%, closing at Rs. 81.3 bln in FY’18 Overall expenses growth well contained at 2% - FY’18 vs FY’17 (WWF Reversal of Rs. 2.7 bln in FY’18) CAR has improved from 15.45% in Dec’17 to 17.74% in Dec’18 Major one offs and downsides impacting results in FY’18: Rs. 6.7 bln recorded as pension liability (Q1’18: Rs. 6.4 bln ; Q2’18: Rs. 2.0 bln ; Q3’18: Rs. 0.3 bln ; Q4’18: Reversal of Rs. 2.1 bln) International Provisions of Rs. 11.2 bln taken in FY’18 (Q1’18 Rs 2.7 bln ; Q2’18: Rs 2.4 bln ; Q3’18: Rs 1.8 bln; Q4’18: Rs. 4.3 bln ) to build coverage from 58% in Dec’17 to 74% in Dec’18. UBL Performance Overview – FY 2018 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 – average growth of 15% , incremental vol. of Rs. 60 bln Domestic CASA of 86.8% at Dec’ 18 end (Dec’ 17: 84.5%). Current to total deposits ratio at 45.9% (Dec’ 17: 43.4%). Average domestic deposits grew by 5% year on year Average performing advances growth of 23% - Domestic up 35%, International down 17% Growth led by Corporate – average loan book expansion of 31% Average Consumer portfolio grew 36% to Rs. 14 bln, SME lending up 25% to Rs. 31 bln PIBs portfolio at Rs 410 bln (Dec’ 17: Rs 542 bln) - maturities of Rs 97 bln in FY’ 18 Repo book reduced from Rs. 450 bln at Dec’ 17 to Rs. 131 bln at Dec’ 18 end UBL Performance Overview – FY 2018 4
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 by 27% to reach Rs. 1.6 bln (FY’17: Rs. 1.3 bln) Remittances including home remittances revenues grew by 41% to reach Rs. 2.5 bln - Home remittances market share up to 29% (FY’17: 26.5%) Trade commissions growth of 8% to reach Rs. 523 mln Banca revenues up 37% to reach Rs. 1.6 bln (FY’17: Rs. 1.2 bln) Cash management commissions grew by 17% over FY’17 to reach Rs. 694 mln Investment Banking fees up by 17% to reach Rs. 704 mln 2 Dividend income of Rs. 2.1 bln (FY’17: 2.4 bln) – yield of 9.3% (FY’17: 10.3%) 3 Capital gains of Rs. 4.6 bln realized (FY’17: Rs. 4.4 bln) – mainly on the PIBs portfolio 4 FX income increased by 85% to Rs. 3.5 bln in FY’18 DOM FX revenue up by Rs 1.9 bln to Rs. 3.6 bln in FY’18 – amidst higher FX volumes UBL Performance Overview – FY 2018 5
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 taken in FY’18 (FY’17: USD 45.2 mln) Overall NPLs closed at Rs. 68.6 bln at Dec’18 (Dec’17: Rs. 52.2 bln) International NPLs at USD 293 mln at Dec’18 (Dec’17: USD 218 mln) International coverage stood at 74% in Dec’18 (Dec’17: 58%) Overall asset quality maintained at 8.8% (Dec’17: 7.8%) At Bank level specific coverage at 82% (Dec’17: 75%) – DOM coverage at 93% (Dec’17: 91%) Administrative expenses stood at Rs. 38.8 bln, excluding DPC up 8% YoY Total staff costs up 10% in FY’18 to reach Rs. 15.4 bln (DOM: Rs. 11.6 bln up 10% YoY) Property expenses up 8% in FY’18 to reach Rs. 7.3 bln (DOM: Rs. 6.3 bln up 7% YoY) Information technology expenses up 16% in FY’ 18 to reach Rs. 2.8 bln (DOM: Rs. 2.4 bln up 14% YoY) Other operating expenses up 9% in FY’ 18 to reach Rs. 13.3 bln (DOM: Rs. 10.7 bln up 11% YoY) UBL Performance Overview – FY 2018 6
Execution and Delivery UBL Performance Overview – FY 2018 7
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 Cons. Equity Dec’18 - Rs. 168 bln Rs in bln 50 260 Cons. Book value Dec’18 - Rs. 138 per share 240 159 45 152 151 142 220 126 200 40 101 92 180 124 79 68 35 130 124 160 116 103 140 30 82 75 120 56 65 100 25 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Equity - St. BV Per share - St. UBL's share price KSE 100 Index Dividend Payout EPS & Price Earnings Ratio 20.0 25.0 140% 80% * 65.8% 64.2% 61.9% 57.4% 63.2% 69.3% 70% 120% 54.8% 59.2% 58.2% 16.4 20.1 60% 100% 50% 12.8 15.3 80% 40% 130% 130% 130% 60% 115% 110% 30% 9.2 10.4 100% 85% 40% 75% 20% 50% 20% 10% 5.6 5.6 0% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2.0 0.7 Dec'10 Dec'11 Dec'12 Dec'13 Dec'14 Dec'15 Dec'16 Dec'17 Dec'18 EPS 9.1 12.7 14.7 15.2 17.9 21.0 22.7 20.6 12.4 Cash Dividend Dividend Payout Ratio PE 7.5 4.1 5.7 8.7 9.9 7.4 10.5 9.1 9.9 UBL Performance Overview – FY 2018 8 * Payout for 2018 is computed on normalized PAT excluding the effect of one-off pension cost
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 Revenue 81.3 78.6 3.5% 20.0 19.0 5.5% Admin. Expenses (38.8) (35.3) -9.8% (10.7) (9.6) -10.7% Total Expenses (36.8) (36.2) -1.5% (8.2) (9.8) 16.9% Pre Prov. Operating Profit 44.5 42.4 5.1% 11.9 9.1 29.6% Provision Exp./Other writeoffs (12.9) (2.4) -427.1% (5.5) (2.9) -87.7% Profit Before Extra Ordinary / Unususal Item and Tax 31.6 39.9 -20.8% 6.4 6.2 2.4% Extra Ordinary / Unususal Item - Pension Cost (6.7) - -100.0% 2.1 (0.3) 711.0% Profit Before Tax 25.0 39.9 -37.5% 8.5 5.9 43.8% Profit After Tax 15.2 27.6 -44.9% 5.5 3.5 58.8% UBL Performance Overview – FY 2018 9
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 Revenue 70.7 67.0 5.6% 17.7 16.0 11.1% Admin. Expenses (31.0) (28.2) -10.2% (7.9) (8.1) 2.8% Total Expenses (29.1) (29.1) -0.3% (5.9) (8.1) 26.9% Pre Prov. Operating Profit 41.6 37.9 9.6% 11.8 7.8 50.2% Provision Exp./Other writeoffs (1.7) 2.6 -167.2% (1.2) (1.1) -8.6% Profit Before Extra Ordinary / Unususal Item and Tax 39.9 40.5 -1.6% 10.6 6.8 56.9% Extra Ordinary / Unususal Item - Pension Cost (6.7) - -100.0% 2.1 (0.3) 721.8% Profit Before Tax 33.2 40.5 -18.0% 12.7 6.4 97.5% Profit After Tax 20.6 24.9 -17.3% 7.9 4.8 64.3% UBL Performance Overview – FY 2018 10
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 88 7.9% Total Liabilities 1,738 1,874 -7.2% Net Assets 151 159 -5.0% Share Capital 12 12 0.0% Reserves 54 44 24.2% Unappropriated Profit 68 71 -4.1% Surplus on revaluation of Assets 17 32 -48.7% Total Equity including Surplus 151 159 -5.0% UBL Performance Overview – FY 2018 11
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