Investor Presentation - 3Q 2017 1 Vision Our Vision is to be the - - PowerPoint PPT Presentation

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Investor Presentation - 3Q 2017

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“Our Vision is to be the innovator of Banking Solutions to the wider Corporate, SME and Retail Segments and to be their Bank of choice, through professional and empowered people”.

Vision

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Mission

• To our customers we provide the means of economic upliftment through

customized banking and financial services.

• To our shareholders we provide a return on their investment above industry

norm.

• To our staff we are a learning and innovative organization providing
• pportunities for faster career progression within a pleasant work

environment.

• We adhere to the practice of good Corporate Governance in the eyes of the

regulatory authorities.

• We are conscious of the need to be a responsible corporate citizen for the

betterment of our society.

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Key Company Milestones

1995-2010 2011-2013 2014-2016 2017 onwards

Established as the 8th Indigenous Commercial Bank First bank to launch Internet Banking Restructuring of the Bank through a Sampath Bank led consortium Landmark investment from Middle East - Royal Family of Saudi Arabia Listed in the CSE, Highest oversubscribed IPO Acquisition of NAMAL and UB Finance CFI award for Best SME Bank TPG through its affiliate Culture Finance Holding strikes landmark deal with Union Bank New Core-Banking System Implementation First bank in Sri Lanka to implement Microsoft Cloud Technology 65 branches with access to over 3,500 Lanka Pay ATM’S Introduction of Transaction Banking BBB (Stable) rating from ICRA UB Brand was ranked 6 notches above in the Top 100 Brands list by Brand Finance. First Bank to publish Annual Report last two years consecutively.

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First Bank in Sri Lanka to receive the International Payment Card Industry Data Security Standard (PCI DSS) by the Security Standards Council.

Financial Overview - Bank

“I am happy to share this impressive performance up to the end of the 3rd quarter for Union Bank, which is a clear affirmation of the Bank’s focused strategy to win market share through profitable and inclusive expansion in terms of product portfolios, geographic reach and technological lead. We are confident that we will be able to build on these results to deliver on the anticipated growth

• bjectives in the final lap of this year.”
• CEO-

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Snapshot

Group Performance

• Net Interest Income up 37% YoY to Rs. 2,789Mn
• Net Fee and Commission Income up 14% YoY to Rs. 607Mn
• Total Operating Income grew by 18% YoY to Rs. 3,943Mn
• Profit before Tax grew by 26% YoY to Rs. 560Mn
• Total Assets grew by 24% YTD to Rs. 124,648Mn

Bank Performance

• Net Interest Income up 40% YoY to Rs. 2,319Mn
• Net Fee and Commission Income up 21% YoY to Rs. 495Mn
• Total Operating Income grew by 24% YoY to Rs. 3,297Mn
• Results from Operating Activities grew by 56% YoY to Rs. 631Mn
• Profit before Tax grew by 44% YoY to Rs. 437Mn
• Total Assets grew by 25% YTD to Rs. 116,299Mn
• Strong Balance Sheet with Total Capital Adequacy Ratio at 19%

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Financial Performance – Bank (Quarter)

• Pre-impairment profits are up by 47%.

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LKR Mn 2017 3Q 2016 3Q Net interest income 757.8 672.3 85.5 13% Net fee and commission income 176.4 157.6 18.7 12% Net trading & operating income 180.2 77.7 102.5 132% Total operating income 1,182.0 1,023.8 158.2 15% Operating cost 835.1 787.6 47.4 6% Pre- impairment profit 346.9 236.2 110.8 47% Impairment charges 80.0 20.1 59.9 298% Share of subsidiary profits 9.9 10.7

• 0.8
• 7%

Profit before tax 276.8 226.8 50.1 22% Taxes ( including VAT & NBT ) 142.7 108.1 34.7 32% Net profit for the period 134.1 118.7 15.4 13% Growth

Financial Performance – Bank (YTD)

The Bank’s Results from Operating Activities increased by 56% YoY to record Rs. 630Mn, reflecting the successful execution of its strategic initiatives which emphasized core banking

• growth. Profit after Tax for the period was Rs. 341Mn, 6% growth YoY. The YoY PAT growth was

impacted due to one-off income recorded from subsidiaries during the comparative period last year.

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LKR Mn 2017 3Q 2016 3Q Net interest income 2,318.7 1,650.8 667.8 40% Net fee and commission income 495.2 408.2 87.0 21% Net trading & other operating income 300.7 355.5

• 54.8
• 15%

Total operating income 3,296.6 2,653.3 643.3 24% Operating cost 2,454.3 2,210.8 243.5 11% Pre- impairment profit 842.3 442.5 399.8 90% Impairment Charges 211.7 38.5 173.2 449% Share of subsidiary profits 39.5 76.7

• 37.2
• 49%

Profit before tax 670.1 480.7 189.4 39% Taxes ( including VAT & NBT ) 328.6 158.1 170.5 108% Net profit for the period 341.4 322.5 18.9 6% Growth

Revenue Generation - Bank

Net Interest Income (Rs. Mn) Non Interest Income (Rs. Mn)

• The Net Interest Income (NII) rose to Rs. 2, 318Mn in the 3rd quarter of 2017- an impressive increase of

40% Year on Year (YoY)..

• Net Fee and Commission Income grew to Rs. 495Mn, a 21% increase YoY.
• The Bank’s Treasury performance was notable and recorded Rs. 106.1Mn surge in capital gains YoY, which

is a significant increase of 88%. A change in the Asset Mix of the Bank resulted in a dilution of the Net Trading Income as funds were shifted to Interest Earning Assets from Investments in Units, triggering a resultant decline in the income from investment in units by 45% YoY to Rs. 193Mn. Consequently, the Total Trading Income decreased marginally by 15% to Rs.300Mn.

• Other Operating Income fell by 24% YoY to report Rs. 182Mn, largely due to the decline in foreign

exchange income.

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444 535 672 856 767 793 757 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 323 354 351 213 244 309 424 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Statement of Financial Position - Bank

• Total Assets of the Bank grew to Rs. 116,299Mn, a 25% growth YTD.

Corresponding to this growth, the Loans and Receivables of the Bank grew to Rs. 76,405Mn, with a 21% increase YTD.

• In line with the Bank’s strategic priority to expand its liability product

portfolio, Customer Deposits saw a further build up by 30% YTD, reporting

• Rs. 67,398Mn as at end of September 2017. The continued focus on strategic

CASA development initiatives resulted in the CASA portfolio growing by a significant 23% YTD.

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LKR Mn. Sep 2017 Dec 2016 Treasury Assets 28,691 20,845 7,846 38% Loans & Advances 76,405 63,186 13,219 21% Cash & Balance with CB 6,883 4,994 1,889 38% Other Assets 4,335 3,984 351 9% Total Assets 116,314 93,009 23,305 25% Borrowings 28,805 22,417 6,388 28% Customer Deposits 67,398 51,841 15,557 30% Other Liabilities 2,372 1,667 705 42% Equity 17,739 17,083 656 4% Total Equity & Liabilities 116,314 93,009 23,305 25% Growth

93,009 100,907 103,247 116,313 Dec-16 Mar-17 Jun-17 Sep-17

Total Assets

LKR Mn

51,841 57,200 62,719 67,397 Dec-16 Mar-17 Jun-17 Sep-17

Deposits

LKR Mn

63,186 61,168 73,008 76,405 Dec-16 Mar-17 Jun-17 Sep-17

Loans

LKR Mn

Composition of Balance Sheet

Assets Composition

Assets

Loans – 66 % Treasury Assets – 25%

Funding Composition

Funding

Deposits – 58% Treasury Borrowings – 25%

Segmental Loan Composition In line with the Bank’s strategy, Retail assets composition have increased to 17% from 11% in the previous year.

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Loan Growth & Capital Adequacy

Loans and Receivables (Rs. Mn) Non Performing Asset Ratio Capital Adequacy Ratio

• Loans and Receivables of the Bank grew to
• Rs. 76.405Bn, a 21% growth YTD.
• Non- Performing Asset Ratio decreased QoQ.
• The Bank’s Capital Adequacy Ratios were well

above regulatory requirements.

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10.00% 12.00% 14.00% 16.00% 18.00% 20.00% 22.00% 24.00% 26.00% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17

Capital Adequacy Ratio %

Core Capital Total Capital 43,259 48,513 52,418 55,438 61,168 64,047 67,391 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 2.30% 2.00% 1.90% 1.60% 1.90% 1.78% 1.66% 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17

Deposit Growth and CASA

Customer Deposits (Rs. Mn) CASA (Rs. Mn)

• Customer Deposits grew by 30% to YTD Rs. 67.4Bn YTD.
• CASA balance grew to Rs. 15.2Bn YTD.

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42,598 45,803 49,589 51,841 57,200 62,719 67,397 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 9,809 10,583 11,703 12,358 13,020 14,516 15,229 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

Key Indicators - Bank

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Sep 2017 Dec 2016 Return on Assets (After Tax), % 0.4% 0.6% Return on Equity (After Tax), % 2.6% 2.6% NIM 2.9% 3.1% NPL Ratio % ( Gross) 2.5% 2.4% NPL Ratio % ( net) 1.7% 1.6% Core Capital Adequacy 19.0% Total Capital Adequacy 19.0%

Financial Performance – Group (Quarter)

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• Pre-impairment profits are up by 42%.

LKR Mn 2017 3Q 2016 3Q Net interest income 921.8 806.2 115.6 14% Net fee and commission income 215.7 196.9 18.9 10% Net Trading and other Operating income 268.1 217.2 50.9 23% Total operating income 1,405.6 1,220.3 185.3 15% Operating cost 960.2 907.3 52.9 6% Pre- impairment Profit 445.5 313.0 132.5 42% Impairment Charges 111.0 50.6 60.4 119% Profit Before Tax 334.5 262.4 72.1 27% Taxes ( including VAT & NBT ) 176.9 122.2 54.7 45% Net profit for the period 157.5 140.2 17.4 12% Growth

Financial Performance – Group (YTD)

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The Group comprising Union Bank, National Asset Management Ltd and UB Finance Company Limited, recorded a 37% increase in Net Interest Income to Rs. 2,789Mn. Net Fee and Commission Income of the Group grew by 14% YTD to Rs. 607Mn. The Profit after Tax recorded by the Group for the period under review was Rs. 410Mn.

LKR Mn 2017 2016 Net interest income 2,789.4 2,035.5 753.9 37% Net fee and commission income 607.4 531.8 75.6 14% Net Trading & other Operating income 546.5 763.4 (216.9)

• 28%

Total operating income 3,943.3 3,330.6 612.7 18% Operating cost 2,821.9 2,570.7 251.2 10% Pre- impairment Profit 1,121.4 759.9 361.5 48% Impairment Charges 291.3 109.8 181.5 165% Profit Before Tax 830.1 650.1 180.0 28% Taxes ( including VAT & NBT ) 419.9 235.4 184.5 78% Net profit for the period 410.2 414.8 (4.6)

• 1%

Growth

Statement of Financial Position - Group

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• Total Assets of the Group grew to Rs. 124.6Bn, a 24% growth YTD. Contributing to the same,

the Loans and Receivables of the Group grew to Rs. 84Bn, 33% growth YTD.

• Customer Deposits grew by 26% to Rs.72.7Bn YTD.

LKR Mn Sep-17 Dec-16 Treasury Assets 28,869 21,299 7,570 36% Loans & Advances 83,797 69,671 14,126 20% Other Assets 4,544 4,356 188 4% Cash & Balance with CB 7,437 5,205 2,232 43% Total Assets 124,649 100,533 24,116 24% Borrowings 31,318 23,716 7,602 32% Customer Deposits 72,734 57,525 15,209 26% Other Liabilities 2,905 2,321 584 25% Equity 17,679 16,965 714 4% Total Equity & Liabilities 124,649 100,533 24,116 24% Growth

Corporate Information

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Board of Directors

Name Title Atul Malik Chairman Priyantha Fernando Deputy Chairman/ Senior Director Indrajit Wickramasinghe Executive Director/ CEO Sow Lin Chiew Non Independent, Non Executive Director Sabry Ghouse Yudhishtran Kanagasabai Independent, Non Executive Director Independent, Non Executive Director Ranvir Dewan Non Independent, Non Executive Director Gaurav Trehan Non Independent, Non Executive Director Puneet Bhatia Non Independent, Non Executive Director Michael J. O’Hanlon Non Independent, Non Executive Director Dilshani Wijayawardana Independent, Non Executive Director Trevine Fernandopulle Independent, Non Executive Director Sumedh Jog Alternate Director Yoke Sun Woon Alternate Director

Leadership Team

Name Title Indrajit Wickramasinghe Director/ Chief Executive Officer Hiranthi de Silva Vice President Wholesale Banking Malinda Samaratunga Chief Financial Officer Ravi Divulwewa Vice President Credit Rajeev Munasinghe Vice President Information Technology Ravi Jayasekera Vice President Human Resources

• S. Sri Ganendran

Vice President Operations Chaya Jayawardena Vice President Retail Banking Suhen Vanigasooriya Wije Dambawinna Chief Risk Officer Vice President Treasury

Legal Form

A Public Limited Liability Company incorporated in Sri Lanka under the Companies Act No. 17 of 1982. Re- registered under the Companies Act No. 7 of 2007. Listed as a public quoted Company at the Colombo Stock Exchange in 2011. A Licensed Commercial Bank under the Banking Act

• No. 30 of 1988.

Credit Ratings

ICRA : (SL) BBB Stable Fitch : BB+ (lka) Positive

Date of Incorporation

February 2nd, 1995

Auditors

Ernst & Young Chartered Accountants,

• No. 201, De Saram Place

Colombo 10