INVESTOR PRESENTATION 9M15 RESULTS 1 The core of our strategy To - - PowerPoint PPT Presentation

INVESTOR PRESENTATION

9M15 RESULTS

1

The core of our strategy

2

To be a key player in the Sri Lankan banking sector by becoming a fully fledged commercial bank

Key Company Milestones

3

1995-2000

Established as the 8th indigenous Commercial Bank First bank to launch Internet banking

2001-2010 2011-2013 2014-2015

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

• versubscribed 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 63 branches with access to over 2,700 ATM’S

Union Bank TODAY

4

New Shareholder - TPG with 70%

• wnership

Board of directors reconstituted Management strengthened with key industry

leaders

New business plan with a strategic focus on

Corporate, SME and Retail Banking

New branch outlook and consumer focused

layouts

Key Highlights - 3Q15

5

Loans & Advances 49% Growth YTD Q-3 Highest ever since 2011 Loans & Advances 49% Growth YTD Q-3 Highest ever since 2011 Interest Income Q3 is the highest ever since Jan 2014 Fee & Other Income Q3 is the highest ever since Jan 2014 Customer Acquisitions highest ever in 3Q- 2015 Personal Loans LKR 500Mn in 3 months since launch Profit After Tax Q3 is the highest since Jan 2014

* Excluding the one off gain from the sale of UB Finance shares

Network Expansion – 3Q15

6

1

New Branch

15

Refurbishments

13

Offsite ATM

Debit Card launched

7

Speed to Market award 2015

Financial results- 9M15 (Snapshot)

8

Financial Highlights - Bank For the nine months ended September 2015

LKR Mn YoY Growth

Net Interest Income 1,538 32% Total Operating income 2,072 33% Operating Cost 1,706 44% Net Profit for the period 117 109% Loans and Advances 38,594 56% Customer Deposits 33,471 20% Key Financial Ratios

As at 30th September 2015

9M14 9M15

Core Capital Adequacy 54.2% 28.3% Interest Margins 4.3% 3.6% Gross Non Performing Loans 11.6% 4.0% Return on Equity 1.4% 0.9% Return on Assets 0.2% 0.3%

Financial Results- 3Q15 (Snapshot)

9

Financial Highlights - Bank 3Q results for 2015

LKR Mn

3Q14vs 3Q15 Variance Net Interest Income 498 14% Total Operating income 722 26% Operating Cost 597 42% Net Profit for the period 57 58% Net Profit after tax

10 20 30 40 50 60 LKR Mn

Information of ordinary shares of the bank

10

Share Price Performance (LKR) Top 10 shareholders

Name of Shareholder

Structure

30.09.2015 Culture Finance Holdings (An affiliate of TPG) 70.00% Vista Knowledge Pte Ltd 5.90% Associated Electrical Corporation Ltd 2.70% Mr.A.I.Lovell 2.10% Mr.C.P.A.Wijeyesekera 1.70% Mr.D.A.J Warnakulasuriya 1.40% Exsab International Holding Co for Trading Development 0.80% Ashyaki Holdings (Pvt) Ltd. 0.70% Rosewood (Pvt) Limited 0.70% Mr.M.D.Samarawickrama 0.70% Total 86.70%

Market Value

(LKR) 30/9/2015 30/9/2014 Rs Rs Market Value 21.50 23.00 Highest Price for the quarter 25.00 24.00 Lowest Price for the quarter 21.40 19.00

As at 30th September 2015

Number of shares in public holding 239,327,750 Number of public shareholders 33,756 Percentage of public holding 21.9%

10 12 14 16 18 20 22 24 26 28 LKR

Net Interest Income

11

Interest Income Interest Expense

850 900 950 1000 1050 1100 LKR Mn 100 200 300 400 500 600 700 800 LKR Mn

Net Interest Income

100 200 300 400 500 600 700 LKR Mn

• Interest Income is the highest reported for a quarter

since Q12014. This is due to the increased IEA.

• However, due to the increasing interest costs at a higher

rate NII showed a reduction.

• Increase in investments in Units of which the return is

reflected under other operating income is the main reason for this.

Fee and Other Income

12

10 20 30 40 50 60 70 80 LKR Mn

Fee and Commission Income Net Trading Income

10 20 30 40 50 60 70 80 LKR Mn

Other Operating Income

10 20 30 40 50 60 70 80 90 100 LKR Mn

• 3Q2015 is the best quarter for all these income categories and

the trend is also in the right direction

• Trade, Guarantee and increasing processing fees led the

growth in fee income.

• Increasing investments in Units is the main reason for the

increase in trading income

• Exchange gain is the main income under Other Operating
• income. Increasing transaction volumes coupled with exceptional

margins during September were the key reasons to the improved performance .

Name Business Facility

Orit Trading Lanka (Pvt) Ltd. Export of Garments Export Financing Richard Peiris Group Maskeliya Plantations Management of Tea Plantation Long Term Financing Singer (Sri Lanka) PLC Manufacture, Import & Distribution of Consumer Products Import Financing / Money Market Financing Siyapatha Finance PLC Finance Company Term Financing Softlogic Group Softlogic Finance Leasing & Hire Purchase Finance Term Financing

Operating Income, Expenses and Impairment

13

100 200 300 400 500 600 700 800 LKR Mn

Total Operating Income Impairment

50 100 150 200 250 300 LKR Mn

Expenses

• Reflecting the effectiveness of asset management to get the

best return, total income highlighted consistent growth over last three quarters.

• Operating expenses are on the rise as expected and is a

result of the strategic initiatives.

• Reflecting the improvement in quality of the portfolio,

Impairment recorded the lowest since 1Q2014

100 200 300 400 500 600 700 LKR Mn

Loans and Funding

14

Loans Mix – 30th September 2015

52% 21% 21% 6%

Term Loans O/D Trade Finance Others

Gross Loans and Receivables

15,000 20,000 25,000 30,000 35,000 40,000

LKR Mn

Deposit Mix – 30th September 2015

67% 17% 9% 7%

FD SA CA Others

Customer Deposits

15,000 20,000 25,000 30,000 35,000

LKR Mn

Asset Quality Overview

15

Gross NPL

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2014 2015

Significant progress over the last 15 months has been made with regard to NPL’s. Origination and underwriting strengthened for the future. Recoveries streamlined and strengthened.

Note: Based on CBSL classification

16

CASA

Current Accounts

500 1,000 1,500 2,000 2,500 3,000 3,500

LKR Mn

Savings Accounts

1,000 2,000 3,000 4,000 5,000 6,000

LKR Mn

CASA

0% 5% 10% 15% 20% 25% 30%

Significant progress has been made to strengthen CASA within the bank. Current Accounts have grown at a compounded monthly growth rate of 6% over the last 6 quarters. Savings Accounts have grown at a compounded monthly growth rate of 7% over the last 6 quarters. The CASA ratio for 9M15, remains stable at 25%.

Financials – Income Statement (Bank)

17

Rs Mn 3Q14 9M14 3Q15 9M15 3Q14 vs 3Q15 YoY 9M14 vs 9M15 YoY Net Interest Income 436 1,166 498 1,538 14% 31% Net Fee and commission income 34 92 66 120 94% 30% Net Trading and other operating income 103 301 158 414 53% 37% Total Operating income 573 1,559 722 2,072 26% 32% Operating Cost 420 1,185 597 1,706 42% 43% Pre- Impairment profits 153 374 125 366

• 18%
• 2%

Less: Impairment 92 278 30 136 67% 51% Net profit before taxes and VAT on FS 61 96 95 230 Taxes including VAT on FS 25 40 38 113 Net Profit for the period 36 56 57 117 58% 109%

Financials – Balance Sheet (Bank)

18

Rs Mn

9M14 9M15

9M1 VS 9M15 YoY

Assets Cash and Balances with CB 14,550 4,030

• 72%

Loans and receivables to other customers 24,059 38,065 58% Other interest earning assets 6,111 19,296 216% Investment in subsidiaries 892 892 Non interest earning assets 2,364 2,665 13% Total 47,976 64,948 35% Equity & Liabilities Customer Deposits 27,858 33,471 20% Due to banks and repurchased agreements 1,878 13,221 604% Non interest earning liabilities 1,479 1,391

• 6%

Equity 16,761 16,865 1% Total 47,976 64,948 35%

19

Financials – Income Statement (Group)

Rs Mn

3Q14 9M 14 3Q15 9M15

3Q14 vs 3Q15 YoY 9M14 vs 9M15 YoY

Net Interest Income 491 1,305 604 1,833 23% 4% Net Fee and commission income 68 188 111 241 63% 28% Net Trading and other operating income 130 459 167 425 29%

• 7%

Total Operating income 689 1,952 882 2,499 28% 28% Operating Cost 503 1,428 700 1,999 39% 40% Pre- Impairment profits 186 524 182 500

• 2%
• 5%

Less: Impairment 95 279 48 187

• 50%
• 33%

Net profit before taxes and VAT on FS 91 245 134 313 Taxes including VAT on FS 33 129 49 146 Net Profit for the period 58 116 85 167 47% 44%

20

Financials – Balance Sheet (Group)

Rs Mn

9M 14 9M15

9M14 VS 9M15 YoY

Assets Cash and Balances with CB 15,039 4,176

• 72%

Loans and receivables to other customers 26,881 42,653 59% Other interest earning assets 5,776 18,811 226% Non interest earning assets 3,783 4,010 6% Total 51,479 69,650 35% Equity & Liabilities Customer Deposits 30,283 37,116 23% Due to banks and repurchased agreements 1,914 13,058 582% Non interest earning liabilities 2,724 2,833 4% Equity 16,558 16,643 1% Total 51,479 69,650 35%

Key Initiatives taken to improve financial performance

21

• Accelerated loan growth
• Supplemented market borrowings with customer deposits
• Replaced lower yielding assets with higher yielding assets
• Focused on improving fee income
• Focused on trade business
• Managed costs effectively
• Focused effort to improve recoveries
• Effective tax management

Key Highlights - 9M15

22

New Management and organizational structure implemented in keeping with the new business strategy. Customer reach expansion accelerated with branches totaling to 63 and 30 offsite ATMs. Branch layouts and branches are being refurbished with stronger consumer oriented branding. Operations are being centralized. Sales teams are being introduced to strengthen the alternate channels. Brand equity and awareness building campaigns led with a multimedia corporate campaign launched. Corporate and SME credit underwriting and processes streamlined to have better turnaround times. New liability and consumer asset products introduced. A performance culture is being built across the organization. Quality of portfolio significantly improved with better underwriting and collection processes being introduced.

Corporate Information

23

Board of Directors

Name Title

• P. Jayendra Nayak

Chairman Alexis Lovell Deputy Chairman Asoka de Silva Senior Director Indrajit Wickramasinghe Executive Director/ CEO Sow Lin Chiew Non Independent, Non Executive Director Priyantha Fernando Independent, Non Executive Director Sabry Ghouse Independent, Non Executive Director Hussain Imtiaz Muhseen 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 Ayomi Aluwihare Independent, Non Executive Director Sumedh Jog Alternate Director Yoke Sun Woon Alternate Director

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.

Date of Incorporation

February 2nd, 1995

Auditors

Ernst & Young Chartered Accountants,

• No. 201, De Saram Place

Colombo 10

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 Chief Risk Officer