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00000000000000000000000000000 00000000000000000000000000000 000 Investor Presentation 3Q 16 1
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Investor Presentation3Q 16
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We are geared to deliver a bold new world
Vision
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
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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 opportunities 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.
Key Company Milestones
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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 2,700 ATM’S
2014-20162011-20132001-20101995-2000
Introduction of Transaction Banking
BBB (Stable) rating from ICRA
2016 Key Milestones
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Cash Management System Implemented
Fitch changed outlook from BB+ (Stable) to BB+ (Positive)
Re-launched “Kidz Saver Account”
65 Branches,119 ATMs of which 54 are Offsite ATMs and Employees 1,171
Recognition at Global Excellence awards 2016
Personal Loan portfolio crossed the LKR 2,000Mn mark
BBB (Stable) rating from ICRA
Re-Launched an improved Online Banking platform
Launched “Investment Plus” investment plan
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Financial Overview - Bank
“Union Bank’s first 9 months’ results are impressive, given the changes taking place in the market place. The growth achieved despite macro-economic challenges can be attributed to the operational excellence and the renewed strategic business focus of the Bank.
With the backing of a strong capital base, a focused business plan and a dynamic team geared for performance; Union Bank will continue to build on this success, while taking on the challenges and opportunities that would emerge within the final quarter of 2016 and beyond.” - CEO
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Snapshot 3Q 16
Group
• Net Profit grows 148% Year on Year (YoY) to Rs.415Mn
• Operating Income grows 34% YoY to Rs.3,346Mn
• Total Assets increased 22% YTD to Rs.93,577Mn
Bank
• Net Profit grows 125% YoY to Rs.262Mn
• Operating Income grows by 30% YoY to Rs.2,685Mn
• NPL ratio reduced to 2% reflecting further improvement in asset quality.
• Net Loans and advances grew 31% YTD to Rs.52,418Mn
• Customer Deposits grew 32% YTD to Rs.49,589Mn
• Total Assets increased 22% YTD to Rs.86,783Mn
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Financial Performance (Quarter) – Bank
91% growth in Profit After Tax
LKR Mn 3Q 16 3Q 15
Net Interest Income 672 498 174 34.9%
Net Fee and commission income 67 66 1 2.1%
Net Trading and other operating income 290 158 132 83.3%
Total Operating income 1,030 722 307 42.6%
Operating Cost 793 597 (196) (32.7%)
Impairment Charges 20 30 9 33.3%
Net profit before taxes and VAT on FS 216 95 121 128.4%
Taxes including VAT on FS 108 39 (69) (176.9%)
Net Profit for the period 108 57 52 91.9%
Growth
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Financial Performance (YTD) – Bank
125% growth in Profit After Tax
LKR Mn YTD 16 YTD 15
Net Interest Income 1,651 1,538 113 7.3%
Net Fee and commission income 188 120 68 56.7%
Net Trading and other operating income 846 414 432 104.3%
Total Operating income 2,685 2,072 613 29.6%
Operating Cost 2,226 1,706 (520) (30.5%)
Impairment Charges 38 137 99 72.2%
Net profit before taxes and VAT on FS 420 230 190 82.6%
Taxes including VAT on FS 158 113 (45) (39.8%)
Net Profit for the period 262 117 145 125.0%
Growth
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Net Interest Income
Other Non-Interest Income
Revenue Generation (Quarterly) – Bank
Net Fees and Commission
Significant increase in NII as a result of portfolio growth and improvement in NIM.
528511
498484
444
535
672
1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16
LKR Mn
2530
66
60 6259
67
1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16
LKR Mn
109
147 158
223
261
295 290
1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16
LKR Mn
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Statement of financial position – Bank
Total Assets (LKR Mn)
Loans (LKR Mn)
Deposits (LKR Mn)
LKR Mn Sep 16 Dec 15
Treasury Assets 25,592 24,490 1,102 4.5%
Loans & Advances 52,418 40,095 12,323 30.7%
Non Earning assets 3,959 3,609 350 9.7%
Cash & Balance with CB 4,813 2,811 2,002 71.2%
Total Assets 86,783 71,005 15,777 22.2%
Borrowings 18,003 15,188 2,816 18.5%
Customer Deposits 49,589 37,653 11,937 31.7%
Non Interest Bearing Liabilities 2,121 1,243 878 70.6%
Equity 17,070 16,922 147 0.9%
Total Equity & Liabilities 86,783 71,005 15,777 22.2%
Growth
Sep 16Dec 15
Sep 16Dec 15
Sep 16Dec 15Strong growth of 22.2% YTD in Total Assets.
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Segmental dispersion of Loans
Composition of the Balance Sheet
Assets
Funding
Loans – 60.4%
Treasury Assets – 29.4%
Deposits – 57.1%
Treasury Borrowings – 20.7%
Assets Composition
Funding Composition Product composition of Deposits
48%
42%
10%
Corporate SME Retail
6%17%
77%
CA SA FD
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Loans and Receivables
Capital Adequacy
Loan Growth & Capital AdequacyNet NPL
Significant progress in NPL reduction despite the aggressive loan growth.
Strong Capitalisation to support the growth.
16,902 20,024
23,462 25,945
40,095 43,259
48,513 52,418
2011 2012 2013 2014 2015 1Q 16 2Q 16 3Q 16
LKR Mn
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2011 2012 2013 2014 2015 1Q16 2Q16 3Q 16
Core Capital Total Capital
3.0%
4.5%
7.8%7.4%
2.7%2.3%
2.0% 1.9%
2011 2012 2013 2014 2015 1Q 16 2Q 16 3Q 16
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Customer Deposits
CASA
Deposit Growth & CASA
CASA grows by 29.5% to Rs.11,703Mn YTD.
19,345
23,642
28,340 27,809
37,653
42,598
45,803
49,589
2011 2012 2013 2014 2015 1Q16 2Q16 3Q16
LKR MN
5,262 4,752
5,441
6,924
9,039
9,809
10,583
11,703
2011 2012 2013 2014 2015 1Q16 2Q16 3Q16
LKR Mn
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Key Indicators - Bank
Performance IndicatorsSep YTD
16
Dec YTD
15
Return on Equity 2.1% 1.1%
Return on Assets 0.4% 0.3%
Net Interest Margin 2.8% 3.4%
Gross - Non Performing Loans 2.7% 3.5%
Net - Non Performing Loans 1.9% 2.7%
Core Capital Adequacy Ratio 23.0% 24.4%
Total Capital Adequacy 22.4% 24.0%
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Financial Performance (Quarter) – Group
65% growth in Profit After Tax
LKR Mn 3Q 16 3Q 15
Net Interest Income 806 604 202 33.4%
Net Fee and commission income 106 111 (5) (4.1%)
Net Trading and other operating income 314 167 148 88.6%
Total Operating income 1,226 881 345 39.2%
Operating Cost 913 700 (213) (30.4%)
Impairment Charges 50 48 (2) (4.1%)
Net profit before taxes and VAT on FS 262 133 129 97.0%
Taxes including VAT on FS 122 49 (74) (151.8%)
Net Profit for the period 140 85 55 65.6%
Growth
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Financial Performance (YTD) – Group
148% growth in Profit After Tax
LKR Mn Sep YTD 16 Sep YTD 15
Net Interest Income 2,035 1,833 202 11.0%
Net Fee and commission income 311 241 70 29.0%
Net Trading and other operating income 999 424 575 135.6%
Total Operating income 3,346 2,499 847 33.9%
Operating Cost 2,586 1,999 (587) (29.4%)
Impairment Charges 110 187 77 41.3%
Net profit before taxes and VAT on FS 650 314 337 107.2%
Taxes including VAT on FS 235 146 (89) (61.0%)
Net Profit for the period 415 167 248 148.7%
Growth
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Statement of financial position – Group
Total Assets (LKR Mn)
Loans (LKR Mn)
Deposits (LKR Mn)
LKR Mn Sep 16 Dec 15
Treasury Assets 24,876 24,034 842 3.5%
Loans & Advances 59,172 45,450 13,722 30.2%
Non Earning assets 4,411 4,042 369 9.1%
Cash & Balance with CB 5,117 3,015 2,102 69.7%
Total Assets 93,577 76,542 17,035 22.3%
Borrowings 19,384 16,432 2,952 18.0%
Customer Deposits 54,486 41,624 12,862 30.9%
Non Interest Bearing Liabilities 2,711 1,771 940 53.1%
Equity 16,995 16,715 280 1.7%
Total Equity & Liabilities 93,577 76,542 17,035 22.3%
Growth
Sep 16Dec 15
Sep 16Dec 15
Sep 16Dec 15
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Board of Directors 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 & YoungChartered Accountants,No. 201, De Saram PlaceColombo 10
Leadership Team
Name Title
Indrajit Wickramasinghe Director/ Chief Executive OfficerHiranthi de Silva Vice President Wholesale BankingMalinda Samaratunga Chief Financial OfficerRavi Divulwewa Vice President CreditRajeev Munasinghe Vice President Information TechnologyRavi Jayasekera Vice President Human ResourcesS. Sri Ganendran Vice President OperationsChaya Jayawardena Vice President Retail BankingSuhen VanigasooriyaWije Dambawinna
Chief Risk OfficerVice President Treasury
Corporate Information - Bank
Credit Ratings
ICRA : (SL) BBB StableFitch : BB+ (lka) Positive
Name Title
P. Jayendra Nayak Chairman
Alexis Lovell Deputy Chairman (Retired - 27-09-16)
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
Yudhishtran Kanagasabai Independent, Non Executive Director (Appointed - 27-07-2016)
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
