Investor Presentation September 2016

Transcription

1 Investor Presentation September 2016

2 UNB Key Highlights Majority ownership (50%) and strong support from the Government of Abu Dhabi Stable and conservative management Demonstrated consistent performance of a time tested strategy, even in a challenging environment Reaffirmed strong ratings Diversified loan book and prudent provisioning High capitalization Strong CAR and Tier I ratio of 18.6% and 17.4% respectively Strong fundamentals, consistent strategy and management track record supporting sustainable growth 1

3 Overview of UNB Strong Ratings Constantly Maintained A1 A+ A+ Overview Established in 1982 and headquartered in Abu Dhabi. Joint Abu Dhabi and Dubai Government ownership. Listed on the Abu Dhabi Securities Exchange (ADX). Provides a full array of wholesale and retail banking services through a network of 72 branches in UAE. 5 th largest local commercial bank (excluding Islamic Financial Institutions) in UAE in terms of loans and advances. International footprint in China,Egypt, Kuwait and Qatar. Over 3,000 employees as at 30 September Market capitalization of AED 11.0 Billion (USD 3.0 Billion) as at 30 September Group Operating Structure UNION NATIONAL BANK- GROUP Union Brokerage Company Al Wifaq Finance Company UNB- Egypt Rep Office China Qatar Branch Kuwait Branch 2

4 Highlights - Income Statement AED in Million 9M Sep M Sep 2015 Y-o-Y % Q Q Q-o-Q % Operating income for the nine month period ended 30 September 2016 was lower by 10%, mainly due to drop in net interest income by 14%, while non interest income increased by 5%. Net interest income and income from Islamic financing 1,926 2,245 (14%) (13%) Non interest income % % Operating Income 2,582 2,870 (10%) (6%) Operating expenses (801) (778) ( 3%) (279) (260) ( 7%) Operating profit 1,781 2,092 (15%) (10%) Impairment charge on financial assets, net (390) (385) (1%) (192) (200) 4% Net interest income dropped by 14%, due to the drop in net interest margins by 47 bps to 2.64% on account of higher costs of deposits and lower customer yields, due to increased NPLs in SME segment. Non interest income up by 5%, due to increase in gains from dealing in foreign currencies, derivatives and net investment income. Operating expenses increased by 3% year on year in 2016 with cost income ratio at 31.0%, one of the most efficient in the industry. Impairment charge on financial assets for the nine month of 2016 marginally increased by 1% as compared to the same period last year. Income tax expenses (59) (38) (55%) (22) (13) (69%) Net Profit 1,332 1,669 (20%) (15%) 4

5 Highlights - Financial Position AED in Billion 30-Sep Sep-2015 Y-o-Y % 31-Dec-2015 % Change over prior year end Loans and advances % % Investments % % Total assets % % Customers deposits % Total liabilities % % Equity attributable to equity holders of the Bank % % Group assets increased by 4% year-on-year and by 3% over prior year end. Loans and advances were up by 7% year on year and by 8% as compared to the prior year end, due to selective growth both in Consumer and Corporate Banking business. The investment portfolio increased by 24% year on year to AED 19.4B as at 30 September 2016 to comply with liquidity norms and to optimize the overall balance sheet returns. Customer deposits increased by 2% as at 30 September 2016, compared to the corresponding period in the previous year and remained unchanged as compared to prior year end. The Group s liquidity position remains comfortable with the liquid assets, including investments constituting 26.0% of the total assets as at 30 September Capital adequacy ratio remains strong at 18.6% as at 30 September

6 Key Performance indicators Return On Average Equity * (Annualized) Return On Average Assets (Annualized) 14.6% 12.1% 11.0% 2.3% 1.9% 1.7% 9M 2015 FY M 2016 * Excluding Tier I Capital Notes Cost to Income Ratio 9M 2015 FY M 2016 Capital Adequacy Ratio 27.1% 27.8% 31.0% 18.9% 17.7% 19.4% 18.3% 18.6% 17.4% 9M 2015 FY M M 2015 FY M 2016 Capital Adequacy Ratio Tier 1 Ratio 6

7 Balance Sheet Customer Loans Gross Loans and advances (AED Billion) +7% +8% Net loans and advances comprised 69.8% of total assets as at 30 September Gross Loans and advances increased by 7% year on year driven by the growth in services, consumer and financial Institutions. Well diversified Loan book by product and industry. Selective lending with focus on long-term relationships. Sep-15 Dec-15 Sep-16 Construction 6% Energy 6% Diversified Loan Book Others 6% Manufacturing 4% Consumer 22% Sovereign 8% Trade 9% Services As at 30 September % Fin Inst. 14% Real estate & Mortgages Loans 16% 7

8 Funding Structure Product-wise Deposit break-down (AED Billion) Diversified funding mix, with Customers deposits constituting 86% of total liabilities. Customers deposits increased by 2% compared to the corresponding period in the previous year and remained unchanged as compared to prior year end. The bank successfully concluded issuance for US$ 600M of 5-year senior unsecured bonds under its Euro medium term note program. Sep-15 Dec-15 Sep-16 Time CASA Others 3% Funding Mix (AED Billion) as at 30 September 2016 Customers' Deposits 86% Sector-wise Deposit Break-down as at 30 September 2016 Retail, 13% Public Sector, 11% Sovereign, 39% Due to banks 5% Medium term borrowings 6% Corporate, 37% 8

9 Comfortable Liquidity Position Liquidity Position Investments Geographical Break up 94% 91% 98% 28% 28% 26% Sep 2015 Dec 2015 Sep 2016 Loans to Deposit Ratio Liquid Assets to Total Assets* *Liquid assets includes cash, Due from Banks and Investments Investments - Ratings Investments By Type As at 30 September 2016 TOTAL : AED 19.4 Bn * *Consolidated including subsidiaries 9

10 105.0% 10.0% 95. 0% 90. 0% 85. 0% 80. 0% 75. 0% 70. 0% 4.0% 2.0% 0.0% Credit Quality Loan Loss Coverage and NPL Ratio (%) 110.0% 101.7% 107.7% 101.2% 5.0% Asset quality remains stable and continues to be tightly managed with NPLs to gross loans at 3.7% as at 30 September % 3.5% 3.7% 3.0% Prudent provisioning being maintained with the loan loss coverage of 101.2% as at 30 September % Sep 2015 Dec-15 Sep 2016 Loan Loss Coverage Ratio NPLs / Gross Loans Impaired Loans and Impairment allowances Cost of Risk AED Billion % 0.70% 2.5 NPLs Impairment Allowance Sep 2015 Dec 2015 Sep M M

11 Business Lines AED million, as at 30 September 2016, unless otherwise stated Corporate Banking Consumer and Private Banking Islamic Banking Treasury and investment banking International and unallocated Total Operating Income ,582 Operating Expense (157) (424) (56) (56) (107) (801) Operating Profit ,781 Impairment charge (Net) 37 (352) (33) (6) (36) (390) Income tax expense (60) (60) Net Profit ,332 Assets (AED billion) * Figures may not add up due to rounding off differences 11

12 Business Lines Corporate Banking Operating Income (AED Million) % 27% 80% 73% 9M M 2016 Net Interest Income Non Interest Income Operating Income Customer Assets (AED Billion) Decrease in Operating income mainly due to lower NII driven by margin compression. Increase in non funded income up Y-o-Y by 14%, largely due to higher trade, syndicated fee and loan processing fee income. Customer Assets increased by 6% as compared to prior year end to AED 33.4 billion as at 30 Sep 2016 driven by increase in service sector. Customer Assets for Corporate Banking constituted 32% of the Group s total assets as at 30 Sep Sector wise breakup Sep 2015 Dec 2015 Sep

13 Business Lines Consumer and Private Banking Operating Income (AED million) 1,176 21% 79% % 79% Consumer and Private Banking Operating income of AED 998 million for the period ended 30 Sep 2016 decreased by 15% Y-o-Y, due to impact of NPLs in SME and margin compression in retail loans partly offset by increase in retail loans on account of higher sales volume. Customer Assets increased by 5% as compared to prior year end to AED 22.6 billion as at 30 Sep 2016, driven by higher growth in personal loans (salary backed) and private banking loans. 9M M 2016 Net Interest Income Non Interest Income Operating Income Customer Assets (AED Billion) Consumer and Private Banking Gross Loans as at 30 June Product wise % AED 22.6 Billion 19.2 Sep 2015 Dec 2015 Sep

14 Business Lines Treasury and Investment Banking Operating Income (AED million) Investment portfolio increased by 8% on Y-o-Y basis to enhance the balance sheet yield and comply with the new liquidity ratios. 27% 46% 73% 54% 9M M 2016 Net Interest Income Non Interest Income Operating Income Net interest income dropped on account of increase in cost of term deposits and higher medium term borrowing, due to raising of additional US$ 750M syndicated loan in Q Non interest income increased by 50% in 9M 2016, due to increase in gains from dealing in foreign currencies, derivatives and net investment income. Assets- by type (AED Billion) Asset Breakup as at 30 Sep 2016 (AED Billion) Investments Liquid Assets Loans Sep 2015 Dec 2015 Sep

15 Business Lines Islamic Banking Operating Income (AED million) % 33% 73% 67% Operating income remained flat in Sep-16, mainly due to lower NII driven by margin compression, offset by increase in loans and advances. Islamic lending increased mainly due to growth in retail financing. 9M M 2016 Income from Islamic Financing Non Financing Income Operating Income Islamic Financing (AED Billion) Sep 2015 Dec 2015 Sep 2016 Retail Corporate Sep-15 Dec-15 Sep-16 15

16 Awards and Certifications Union National Bank won six awards at the 2016 International Business Awards (Stevies) namely Executive of the Year Financial Services for UNB (Gold Stevie Winner), Health, Safety & Environment Program of the Year in the Middle East and Africa (Gold Stevie Winner), Customer Service Team of the Year for Customer Care Unit (Silver Stevie Winner), Company of the Year, Financial Services (Bronze Stevie Winner), Product Development/Management Department or Team of the Year for Retail Products (Bronze Stevie Winner) and Corporate Social Responsibility Program of the Year in the Middle East and Africa (Bronze Stevie Winner) Union National Bank won the acclaimed Superbrand award This is the 6th consecutive year that UNB has achieved this distinction. Union National Bank has been recognized with the ISO and is now certified for the Business Continuity Management Systems by LRQA. UNB won the Best Enterprise award from the Europe Business Assembly (EBA). Additionally, UNB CEO won the Manager of the Year award from EBA. UNB received four product awards Best Customer Deposit Scheme, Best Consumer Insurance Product, Best Savings Account and Best Current Account Product at the 2016 Banker Middle East Product Awards. UNB was recognized at the Forbes Middles East event for being amongst the Top Companies in the Arab World World Confederation of Businesses has awarded Union National Bank, with the BIZZ The beyond Success Trophy, and UNB CEO Mr. Mohammad Nasr Abdeen with the World Leader Businessperson certificate for being a successful leader at The BIZZ Europe 2016 Award ceremony. 18