Investor Presentation December 2016

Transcription

1 Investor Presentation December 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 18.9% and 17.8% 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 73 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 31 December Market capitalization of AED 12.5 Billion (USD 3.4 Billion) as at 31 December 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 Y-o-Y % Q Q Q-o-Q % Operating income for the period ended 31 December 2016 was lower by 7%, mainly due to drop in net interest income by 10%, while non interest income increased by 6%. Net interest income and income from Islamic financing 2,630 2,924 (10%) (4%) Net interest income dropped by 10%, due to the drop in net interest margin by 37 bps to 2.66% on account of higher cost of deposits and lower customer yields due to increased NPLs in SME segment. Non interest income % % Operating Income 3,487 3,732 (7%) % Operating expenses (1,133) (1,037) ( 9%) (332) (258) ( 29%) Operating profit 2,354 2,696 (13%) % Non interest income up by 6%, due to increase in gains from dealing in foreign currencies & derivatives, net investment income and higher fair value gain on investment properties. Operating expenses increased by 9% year on year in 2016 to support higher business activity levels along with investments in infrastructure and technology upgrades. Impairment charge on financial assets, net (702) (780) 10% (313) (395) 21% Impairment charge on financial assets decreased by 10% in 2016 due to write backs driven by enhanced recovery efforts and stable provisions. Income tax expenses (69) (51) (35%) (10) (14) 29% Net Profit 1,583 1,864 (15%) % *Figures may not add up due to rounding off difference 4

5 Highlights Balance Sheet AED in Billion 31-Dec Dec-2015 % Change over prior year end Group assets increased by 2% over prior year end. Net Loans and advances were up by 8% as compared to the prior year end due to selective growth both in Consumer and Corporate Banking business. Net Loans and advances % Investments % Total assets % Customers deposits % Total liabilities % Equity attributable to equity holders of the Bank % The investment portfolio increased by 7% year on year to AED 15.8B as at 31 December 2016 to comply with liquidity guidelines and to optimize the overall balance sheet returns. Customer deposits increased by 4% as at 31 December 2016, compared to prior year end. The Group s liquidity position remained comfortable with the liquid assets, including investments constituting 24.9% of the total assets as at 31 December Capital adequacy ratio remained strong at 18.9% as at 31 December

6 Key Performance indicators Return On Average * Equity Return On Average Assets 12.1% 9.9% 1.9% 1.5% * Excluding Tier I Capital Notes Cost to Income Ratio Capital Adequacy Ratio 27.8% 32.5% 19.4% 18.3% 18.9% 17.8% Capital Adequacy Ratio Tier 1 Ratio 6

7 Balance Sheet Customer Loans Net Loans and advances (AED Billion) % 73.7 Net Loans and advances increased by 8% year on year driven by the growth in services, consumer and financial Institutions sectors. Well diversified Loan book by product and industry. Selective lending with focus on long-term relationships. Diversified Loan Book Loan Book by Segment (AED Billion) Islamic Banking 8% Treasury and investment banking 12% International and unallocated 3% Corporate Banking 46% 23.0 Consumer and Private Banking 31% As at 31 December

8 Funding Structure Product-wise Deposit break-down (AED Billion) Diversified funding mix, with Customers deposits constituting 91% of total liabilities. Customers deposits increased by 4% compared to the corresponding period in the previous year The Bank successfully issued US$ 600M of 5-year senior unsecured bonds under its Euro medium term note program to further diversify its funding mix in H2-16. Time CASA Funding Mix (AED Billion) as at 31 December 2016 Sector-wise Deposit Break-down as at 31 December 2016 Due to banks 1% Others 2% Customers' Deposits 91% Public Sector, 10% Retail, 12% Corporate, 44% Medium term borrowings 6% Sovereign, 34% 8

9 Comfortable Liquidity Position Liquidity Position Investments Geographical Break up 91% 95% 28% 25% 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 31 December 2016 TOTAL : AED 15.8 Bn * *Consolidated including subsidiaries 9

10 110.0% 105.0% 10.0% 90. 0% 85. 0% 75. 0% 70. 0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Credit Quality Loan Loss Coverage and NPL Ratio (%) Asset quality remained stable and continued to be tightly 107.7% 108.3% managed with NPLs to gross loans at 3.4% as at 31 December % 3.5% 3.4% Prudent provisioning with the improved loan loss coverage of 108.3% as at 31 December 2016 as compared to the prior year 80. 0% end. Loan Loss Coverage Ratio NPLs / Gross Loans General provision constituted 1.6% of the credit risk weighted assets as at 31 December Impaired Loans and Impairment allowances Cost of Risk AED Billion % 0.95% NPLs Impairment Allowance 10

11 Business Lines AED million, as at 31 December 2016, unless otherwise stated Corporate Banking Consumer and Private Banking Islamic Banking Treasury and investment banking International and unallocated Total Operating Income 991 1, ,487 Operating Expense (209) (636) (78) (77) (134) (1,133) Operating Profit ,354 Impairment charge (Net) (109) (478) (45) (10) (60) (702) Income tax expense (69) (69) Net Profit ,583 Assets (AED billion) * Figures may not add up due to rounding off differences 11

12 Business Lines Corporate Banking Operating Income (AED Million) 1, % 25% Decrease in Operating income mainly due to lower NII driven by margin compression. Increase in non funded income, up Y-o-Y by 8%, largely due to higher trade, syndicated fee and loan processing fee income. 79% 75% Customer Assets increased by 10% as compared to prior year end to AED 34.5 billion as at 31 Dec 2016 driven by increase in services, real estate, construction and energy sector. Net Interest Income Non Interest Income Operating Income Customer Assets for Corporate Banking constituted 47% of the Group s total loans as at 31 Dec Net Customer Lending (AED Billion) +10%

13 Business Lines Consumer and Private Banking Operating Income (AED million) 1,537 1,338 20% 22% 80% 78% Consumer and Private Banking Operating income of AED 1,338 million for the period ended 31 Dec 2016 decreased by 13% Y- o-y, due to higher NPLs in SME segment and margin compression in retail loans partly offset by increase in retail loans on account of higher sales volume. Customer Assets increased by 7% as compared to prior year end to AED 23.0 billion as at 31 Dec 2016, driven by higher growth in personal loans (salary backed) and private banking loans. Net Interest Income Non Interest Income Operating Income Net Customer Lending (AED Billion) Product wise break up %

14 Business Lines Treasury and Investment Banking Operating Income (AED million) % 42% 71% 58% Net Interest Income Non Interest Income Operating Income Operating income declined by 4% due to impact of higher funding costs. Net interest income declined on account of increase in cost of term deposits and increase in medium term borrowing through syndicated loan of USD 750 M raised in Q Non interest income increased by 38% in 2016, due to increase in gains from dealing in foreign currencies, derivatives and net investment income. Investment portfolio increased by 8% on Y-o-Y basis to enhance the balance sheet yield and comply with the new liquidity ratios. Assets- by type (AED Billion) Asset Breakup as at 31 Dec 2016 (AED Billion) Investments Cash, Placements & Inter bank lending Dec 2015 Dec 2016 Loans 14

15 Business Lines Islamic Banking Operating Income (AED million) % 39% Operating income increased by 7%, mainly due to higher fair value gain on investment properties. Net Islamic lending increased by 25% due to growth in both retail and corporate financing. 75% 61% Income from Islamic Financing Non Financing Income Operating Income Net Islamic Financing (AED Billion) +25% Retail Corporate 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 Super brand award This is the 6th consecutive year that UNB has achieved this distinction. 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 CEO received the Best Business Leader Award & UNB received Customer Delight Award from MENAA 2016 UNB was recognized at the Forbes Middles East event for being amongst the Top Companies in the Arab World UNB won Best Regional Sharia Fund Manager Award at Global Investor/ISF 2016 Middle East Awards. UNB won the Best Enterprise award from the Europe Business Assembly (EBA). Additionally, UNB CEO won the Manager of the Year award from EBA. Union National Bank has been recognized with the ISO and is now certified for the Business Continuity Management Systems by LRQA. 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. UNB received the "The Majestic Falcon Award for Quality and Excellence presented by the "Otherways Association". UNB has won the prestigious 2016 International Diamond Prize for Quality choice presented by the European Society for Quality Research (ESQR). UNB CEO won The International Socrates Award in the Finance & Banking category. UNB was conferred with the GCC Best Employer Brand award 2016 hosted by the Employer Branding Institute. UNB and CEO Mr. Mohammad Nasr Abdeen were recognized with the Excellence in Innovation and Investment Award, by the Europe Business Assembly. 18