Performance Highlights – 9M 2018 Investor Relations Conference Call October 19th, 2018 Speakers: Mr. Aameer Karachiwalla - Chief Financial Officer Mr. Arif Saifie, FCA, CFA - Financial Controller and Head of Investor Relations Investor Relations Release
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UBL Performance Overview – 9M 2018
Performance Highlights – 9M 2018
Investor Relations Conference Call
October 19th, 2018
Speakers:
Mr. Aameer Karachiwalla - Chief Financial Officer
Mr. Arif Saifie, FCA, CFA - Financial Controller and Head of Investor Relations Investor Relations Release
UBL Performance Overview – 9M 2018
Table of Contents
3
7
29
PAGE
Key Highlights
Growth at a Glance
Execution and Delivery
Quarterly Trend Analysis
25
UBL Performance Overview – 9M 2018 3
PBT before extraordinary items at Rs. 25.2 bln, down 20% vs. 9M’17
PBT at Rs. 16.5 bln, down 47% vs. 9M’17
Major downsides impacting results in 9M’18:
Rs 8.7 bln recorded as pension liability (Q1’18: Rs 6.4 bln; Q2’18: Rs 2.0 bln; Q3’18: Rs 0.3 bln)
International Provisions of Rs 6.9 bln taken in 9M’18 (Q1’18 Rs 2.7 bln; Q2’18: Rs 2.4 bln; Q3’18: Rs 1.8 bln) to build coverage from 58% in Dec’17 to 74% in Sep’18.
Major upsides building core earnings in 9M’18:
Average domestic current deposits at Rs. 449 bln, up 16% vs. 9M’17
Average CASA for the period was 86.8% (9M’17: 82.4%)
Domestic cost of deposits maintained at 2.74% (9M’17: 2.75%) – despite rate hike
Domestic fees grew by 26% YoY to reach Rs 8.5 bln in 9M’18
FX income increased by 103% to Rs 2.7 bln in 9M’18
Overall Bank revenues up by 5%, closing at Rs. 61.3 bln in 9M’18
Overall operating expenses growth well contained at 7% - 9M’18 vs 9M’17 (staff costs increase of 3%)
CAR has improved from 15.45% in Dec’17 to 17.35% in Sep’18
Key Performance Highlights
UBL Standalone Results
UBL Performance Overview – 9M 2018
Net Interest Income of Rs. 41.9 bln in 9M’18 (9M’17: Rs. 42.2 bln)
446,000 NTB current accounts mobilized in 9M’18 (9M’17: 405,000)
Growth led by current deposits – average growth of 16%, incremental vol. of Rs. 61 bln
Domestic CASA of 88.6% at Sep’18 end (Dec’17: 84.7%). Current to total deposits ratio at 47.7%
(Dec’17: 44.3%). Average domestic deposits grew by 5% year on year
Average performing advances growth of 23% - Domestic up 36%, International down 15%
Growth led by Corporate – average loan book expansion of 33%
Average Consumer portfolio grew 35% to Rs. 13 bln, SME lending up 27% to Rs. 29 bln
PIBs portfolio at Rs 402 bln (Dec’17: Rs 542 bln) - maturities of Rs 64 bln in 9M’18
Repo book reduced from Rs. 450 bln at Dec’17 to Rs. 177 bln at Sep’18 end
4
Branch Banking builds deposit base in cost efficient manner
Avg. Total Assets of Rs 1.83 tln in 9M’18, a growth of 8% over 9M’17
UBL Performance Overview – 9M 2018 5
Overall NFI closed at Rs 19.4 bln in 9M’18, a 21% growth over 9M’17
DOM FX revenue up by Rs 1.4 bln to Rs 2.5 bln in 9M’18 – amidst higher FX volumes
Fee income stood at Rs 10.0 bln, up 14% from 9M’171
Domestic fees grew by 26% YoY to reach Rs 8.5 bln in 9M’18:–
Home remittances revenues grew by 42% - market share up to 30% (9M’17: 25%)
Trade commissions growth of 5% to reach Rs 682 mln
Debit card commissions grew by 33% - 509,000 new cards issued (9M’17: 538,000)
Banca revenues up 45% to reach Rs 999 mln (9M’17: Rs 690 mln)
Cash management commissions grew by 21% over 9M’17 to reach Rs 395 mln
Dividend income of Rs. 1.4 bln (9M’17: 1.5 bln) – yield of 7.9% (9M’17: 8.0%)2
Capital gains of Rs. 4.7 bln realized (9M’17: Rs 3.8 bln) – mainly on the PIBs portfolio 3
FX income increased by 103% to Rs 2.7 bln in 9M’184
UBL Performance Overview – 9M 2018
DOM net provision charge of Rs 0.5 bln in 9M’18 (9M’17: net reversal of Rs 2.2 bln)
DOM asset quality stood at 5.2% at the end of Sep’18 (Dec’17: 6.2%)
International provisions of USD 58.7 mln taken in 9M’18 (9M’17: USD 21.9 mln)
Overall NPLs closed at Rs. 57.3 bln at Sep’18 (Dec’17: Rs. 51.1 bln)
International NPLs at USD 236 mln at Sep’18(Jun’18: USD 233 mln Dec’17: USD 207 mln)
International coverage stood at 74% in Sep’18 (Jun’18: 71% and Dec’17: 58%)
Overall asset quality maintained at 7.9% (Dec’17: 7.9%)
At Bank level specific coverage at 82% (Dec’17: 76%) – DOM coverage at 91% (Dec’17: 91%)
6
Net provision charge of Rs. 7.4 bln in 9M’18 vs. Rs. 0.1 bln in 9M’17
Administrative expenses stood at Rs. 28.2 bln, up 8% YoY
Personnel costs for 9M’18 at Rs. 12.4 bln, up 3% vs 9M’17
Premises cost up 7% in 9M’18 to reach Rs 5.3 bln
Variable / Other costs increased by 15% - primarily due to higher sales related commissions,
cash transportation charges, consultancy charges etc.
Provisions and Loan Losses
UBL Performance Overview – 9M 2018 7
Execution and Delivery
UBL Performance Overview – 9M 2018
50%75% 85%
100%115%
130% 130% 130%
80%
54.8%59.2% 58.2%
65.8% 64.2% 61.9% 57.4% 62.6% 64.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0%
20%
40%
60%
80%
100%
120%
140%
2010 2011 2012 2013 2014 2015 2016 2017 9M'18
Cash Dividend Dividend Payout Ratio
8
Consistent earnings performance throughout the years
Corporate Bank Commodity Commercial Bank Consumer Bank International Others
UBL Performance Overview – 9M 2018
International Advances - Corporate advances remains the largest component
16
Dubai, 65%
Abu Dhabi, 29%
Sharjah, 6%
By Business - UAEBy Geography
UAE, 75%
Bahrain, 14%
Qatar, 11%Yemen, 0%
NewYork, 0%
EPZ, 0% Corporate, 66%
Consumer,
4%
Others, 30%
Baitna, 98%
Personal loan, 1%
Others, 1%
UBL Performance Overview – 9M 2018
Concentration of Advances as at September 30, 2018 - Standalone
17
2%
12%
10%
1%1%
3%
7%
2%
29%
7%
26%
Chemical & Pharma Agribusiness Textile
Cement Sugar Autos & Transport
Financial Electronics Power & Energy
Individuals Others
UBL Performance Overview – 9M 2018
Diversified investment portfolio with strong market risk management
Investments’ yields
Non Funded revenue streams continue to grow
Portfolio declines in line with reduced leveraging
18
320 414
402
542 18
18
47
39
54
47
0
1
18
31
Sep'18 Dec'17
T Bills PIBs
Listed shares GoP Sukuks / Eurobonds
Foreign bonds Mutual funds
Others
Rs in blnTotal 1,092
Total 86010.4%
11.1%
10.4%
8.9%
7.8%7.5%
2013 2014 2015 2016 2017 9M'18
1,544 1,395
1,323 2,689
3,824
4,676
9M'17 9M'18
Capital gains
FX income
Dividend
Rs in mln
UBL Performance Overview – 9M 2018
Our international outreach - serving in 4 continents under the single “UBL” brand
19
OVERSEAS BRANCHES20
PAKISTAN BRANCHES1,362
SUBSIDIARIES4
ASSOCIATED COMPANIES3
Globally around 20% of our asset base is located overseas
Asset mix by region 2017 2016Domestic Operations 79.9% 76.4%
International Operations 20.1% 23.6%Middle East 14.8% 17.5%USA 0.2% 0.7%Europe 4.7% 5.0%Africa 0.2% 0.3%EPZ 0.1% 0.1%
UBL Performance Overview – 9M 2018
UBL Innovation and Awards
UBL “Firsts” – Initiatives to stay ahead of the market Market recognition and awards
First Commercial Bank in Pakistan to launch Branchless Banking (UBL OMNI)
First Bank in the world to issue VISA Debit Cards for G2P assistance to affectees
First Bank to provide Instantaneous ATM/Debit cards to branchless banking customers at the time of account opening (UBL Omni)
First Pakistani Bank to be granted status of Authorized Derivative Dealer (ADD) in Pakistan and First institution from Pakistan and third in South Asia to be accredited with Primary Membership of International Swaps and Derivatives Association
First Bank in Pakistan to offer Prepaid VISA Debit Card
First Bank in Pakistan to offer Verified by Visa Service
First Bank in Pakistan where customer’s inward remittances are deposited automatically on an ATM and VISA enabled debit card (UBL Tezraftaar PardesCard)
“Best Bank” in the first ever Pakistan Banking Awards 2016
“Best Bank for Corporate Finance and Capital Market Development” in the Pakistan Banking Awards 2017
JCR-VIS reaffirmed UBL’s entity ratings at AAA/A-1+ (Triple A / A-One Plus)
“Innovation Award” at the Mastercard Innovation Forum for ‘Launch of UBL MasterPass QR’
“National Medal of Innovation Award” 2016 for Pioneering G2P Payments – Pakistan Innovation Foundation
Top 25 Companies Award by the Karachi Stock Exchange for 2010-2012, 2015 and 2016
“Best Bank for SMEs” by the Asia Money Pakistan Banking Awards in 2017
2012 & 2013 Bank of the Year in Pakistan Award by The Banker Magazine, an affiliate of the Financial Times, UK
ASIAMONEY Best Domestic Bank Award for 2011 and 2012
Recognized globally in 2013 as one of the 14 “Sprinters” by the GSMA’s Mobile Money for the Unbanked (MMU) program, being the only bank in the category
GSMA Global Mobile Award 2012 for “Best Use of Mobile in Emergency or Humanitarian Situations” and Financial Insights Innovation Award for “Innovation in Cash Disbursements (G2P)”
Recognized by CFA Pakistan Society for the “Best Investor Relations” function in 2013 and 2014
20
UBL Performance Overview – 9M 2018 21
Review of Non Interest Income & Administrative Expenses
UBL Performance Overview – 9M 2018 22
Non Fund Income Standalone Results
9M'18 9M'17 Var %
Fee, commission and brokerage income 8,481 6,738 26%
Dividend income 1,388 1,537 -10%
Income from dealing in foreign currencies 2,466 1,033 139%
Gain / (loss) on sale of securities 4,464 3,598 24%
Other income 588 562 5%
Domestic Total 17,386 13,467 29%
International Total 2,033 2,648 -23%
Bank Total 19,419 16,115 21%
International Total - USD in '000 17,295 25,207 -31%
Rs in mln
UBL Performance Overview – 9M 2018 23
Fees and Commissions performance Standalone Results
9M'18 9M'17 Var %
OMNI fee & commissions 1,377 1,280 8%
Commission on trade 682 648 5%
Corporate service charges/ Facility fee 144 157 -9%
Corporate finance fee 475 168 182%
FIG commission 202 83 144%
Commission on ATM/ Debit cards 1,177 889 33%
Commission on home remittances (net) 787 554 42%
Commission on remittances/ uniremote services 734 638 15%
Commission on consumer loan 623 546 14%
Commission income - Bancassurance 999 690 45%
Commission on cash management 395 325 21%
Commission others 886 760 17%
Domestic Total 8,481 6,738 26%
International Total 1,509 2,026 -25%
Bank Total 9,990 8,763 14%
International Total - USD in '000 12,844 19,283 -33%
Rs in mln
UBL Performance Overview – 9M 2018 24
Administrative Expenses Standalone Results
9M'18 9M'17 Var %
Salaries, allowances & Staff fund
charges8,649 8,019 -8%
Rent taxes insurance etc. 3,054 2,854 -7%
Outsourced service charges
including sales commission3,236 2,985 -8%
Advertisement and publicity 465 611 24%
Communications 794 708 -12%
Depreciation / Amortization 2,037 1,760 -16%
Legal and professional charges 293 215 -36%
Banking service charges 933 744 -25%
Stationery and printing 462 407 -14%
Travelling 137 145 6%
Cash transportation charges 724 579 -25%
Repairs and maintenance 1,098 1,014 -8%
Vehicle expenses 121 134 10%
Office running expenses 292 591 51%
Insurance expense 352 71 -393%
Others 512 487 -5%
Domestic Total 23,157 21,325 -9%
International Total 4,998 4,776 -5%
Bank Total 28,155 26,101 -8%
International Total - USD in '000 42,535 45,458 6%
Rs in mln
UBL Performance Overview – 9M 2018 25
Growth at a Glance
UBL Performance Overview – 9M 2018 26
Balance Sheet
Rs. in mlns 2017 2016 2015 2014 2013 2012
Assets
Cash and balances with treasury and other banks 177,099 146,428 128,870 87,573 114,388 109,396
Lending to financial institutions 33,664 34,168 24,095 21,872 28,835 21,953
The information contained herein reflects our latest business statement as atSeptember 30, 2018.
Except the historical information contained herein, statements in this Releasewhich contain words or phrases such as ‘will’, ‘would’, ‘indicating’ expected to’ etc.,and similar expressions or variations of such expressions may constitute ‘forward-looking statements’. These forward-looking statements involve a number of risks,uncertainties and other factors that could cause actual results to differ materiallyfrom those suggested by the forward-looking statements. These risks anduncertainties include, but are not limited to our ability to successfully implementour strategy, future levels of non-performing loans, our growth and expansion inbusiness, the impact of any acquisitions, the adequacy of our allowance for creditlosses, technological, implementation and changes, the actual growth in demandfor banking products and services, investment income, cash flow projections, ourexposure to market risks as well as other risks detailed in the reports filed by uswith various regulatory authorities as per applicable laws and regulations. UBLundertakes no obligations to update forward-looking statements to reflect event orcircumstances after the date thereof.