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1 Investor Presentation - 3Q 2017
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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 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.
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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 quarterfor Union Bank, which is a clear affirmation of the Bank’s focused strategy to winmarket share through profitable and inclusive expansion in terms of productportfolios, geographic reach and technological lead. We are confident that wewill be able to build on these results to deliver on the anticipated growthobjectives in the final lap of this year.”
- CEO- 5
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 bankinggrowth. Profit after Tax for the period was Rs. 341Mn, 6% growth YoY. The YoY PAT growth wasimpacted due to one-off income recorded from subsidiaries during the comparative period lastyear.
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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 of40% 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, whichis a significant increase of 88%. A change in the Asset Mix of the Bank resulted in a dilution of the NetTrading Income as funds were shifted to Interest Earning Assets from Investments in Units, triggering aresultant decline in the income from investment in units by 45% YoY to Rs. 193Mn. Consequently, theTotal 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 foreignexchange income.
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444
535
672
856
767 793757
1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17
323354 351
213244
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 grewto Rs. 76,405Mn, with a 21% increase YTD.
• In line with the Bank’s strategic priority to expand its liability productportfolio, Customer Deposits saw a further build up by 30% YTD, reportingRs. 67,398Mn as at end of September 2017. The continued focus on strategicCASA development initiatives resulted in the CASA portfolio growing by asignificant 23% YTD. 10
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 AssetsLKR Mn
51,841 57,200 62,719 67,397
Dec-16 Mar-17 Jun-17 Sep-17
DepositsLKR Mn
63,186 61,168 73,008 76,405
Dec-16 Mar-17 Jun-17 Sep-17
LoansLKR 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.
1210.00%
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
48,51352,418
55,438
61,16864,047
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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42,59845,803
49,58951,841
57,200
62,71967,397
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 CompanyLimited, recorded a 37% increase in Net Interest Income to Rs. 2,789Mn. Net Fee andCommission Income of the Group grew by 14% YTD to Rs. 607Mn. The Profit after Tax recordedby 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
