Union Bank 2017 Rights Issue - Chapel Hill Denham...2016 ₦882bn ₦1,123bn Total Assets 27% 2012...
Transcript of Union Bank 2017 Rights Issue - Chapel Hill Denham...2016 ₦882bn ₦1,123bn Total Assets 27% 2012...
Union Bank 2017 Rights Issue
September 2017
Overview of Union Bank
Invest in 100 years of heritage…
Invest in a smarter future
3
UBN – Celebrating 100 Years of Strength, Reliability and Growth
1917 - 1970 1971 - 1990 1991 - 2008 2009 - 2012 2013 - 2015 2016 - 2017
Established as
Colonial Bank
Became Barclays
Bank DCO, 2nd
commercial bank
in Nigeria
Became Barclays
Bank of Nigeria
Ltd.
1917
1925
1969
Listed on the
Nigerian Stock
Exchange
Became Union
Bank of Nigeria
Plc.
1971
1979
2nd largest
branch network
with ~280
branches
Established UK
subsidiary
Acquired
Universal Trust
Bank & Broad
Bank
1999
2004
2005
Banking crisis /
CBN
intervention
3rd largest
branch network
with ~350
branches
2009
2012
Strategy
redefined with
new
management
Sale of
subsidiaries
with focus on
core banking
Huge
investments in
people, process
& technology
2013
2014
2015
Launched re-
energized
brand. Awards
received
2015
Received most
improved retail
bank award
Simpler,
Smarter Bank
2016
2016
2017
Received
Nigeria’s Best
Bank Awards in
2000-2, 2004,
2006
Opened full-
fledged branch
in London
1983
Grew branch
network to 59
1970
Recapitalization
with UGPL as
core investors
2012
4
Union Bank at a Glance
₦1,209Bn*
Total Assets
₦261Bn*
Total Equity
~3.8Mn
Customers
~2,700
FT Employees
Alt. Channels
~850 ATMs
~5,300 POS
645K+ Mobile Users
123K+ Online Users
Fitch
BBB+ National Rating
Stable Outlook
GCR
A2 Short Term
Moody’s
Aa3 National LCY Rating
Stable Outlook
~350 Sales & Service
Centres
*As of June 2017
5
Our Robust Product Portfolio
Savings account:
• Union Savings, Union Save, Union Save More,
Union Enterprise Hybrid, Union Vibe, Union
Kids, DomKids, UnionKorrect, UnionGoal,
UnionFuture, UnionExclusive and Union Beta
Current Account:
• Union Current Account, Union Silver Current,
UnionBiz, Payroll Plus Current & Dom accounts
Term Deposits
Credit and debit cards
• Issued in partnership with Visa, MasterCard
and Verve
• The cards are further segmented into Personal
Banking, Elite and Royalty cards for High Net
Worth customers
Deposit Products
• Import letters of credit
• Export letters of credit
• Import bills for collection
• Export bills for collection
• Bonds
• Guarantees
• Online Trade portal
Financing Solutions
• Personal loans for
retail customers
• Asset finance
• Inventory finance
• Receivable
discounting
• Project finance
• Contract financing
• Loan syndication
• Term loans
• Guarantees & indemnities
• Leases
• Distributor/vendor financing
• Banker’s acceptance for
SMEs, commercial and
corporate customers.
• Union One Solution
• Consolidated Balance Reporting
• Account Management
• Collections
• Primary dealer for government bonds in Nigeria
• Offer a range of foreign exchange products
including foreign exchange spots and forwards,
non-deliverable forwards and FX swaps
• Primary and secondary market sales and trading
desks offering fixed deposits, call deposits,
treasury bills and secured lending products
01
02
03
04
05
06
Card Solutions Cash Management Solutions
Trade Offering Treasury / Investment Solutions
6
Awards / Recognition Reinforce Transformation Success
“Most Improved Bank in
Retail Banking”
– Business Day
“Best Bank to Support Nigeria’s
Small And Medium Scale
Enterprises” – Business Day
“Best Participating Bank in
Nigeria” – CBN Agricultural
Credit Guarantee Scheme Fund
“Top 10 Best
Company to Work for
in Nigeria” –
Jobberman
“Best Brand Development to
Reflect Changed Positioning”;
“Best Visual Identity from the
Financial Services Sector” –
Transform Awards MENA
“Most Efficient Bank on e-
Reference Operations” –
2017 CBN/NIBSS e-Payment
Efficiency Awards
“Best Commercial Agriculture
Bank” – Nigeria Agriculture
Awards
Latest PCIDSS (ver. 3.2)
certification – Payment
Card Industry Data Security
Standard (PCIDSS)
7
International & Diverse Non-Executive Board of Directors
Richard KramerChairman, African Capital Alliance
Former Managing Partner, Arthur Anderson Nig.
Arina McDonaldCFO, Atlas Mara Co-Invest Ltd
Former Head, Group Central Finance, Standard Bank
Onikepo AkandePresident, Lagos Chamber of Commerce & Industry
Former Two-Time Minister of Industry
Mansur AhmedDirector, Dangote Group
Former Group Executive Director, NNPC
John BottsOperating Partner, Corsair Capital
Former CEO, Citicorp’s Investment Bank, EMEA
Richard BurrettPartner, Earth Capital Partners
FMO (Netherlands Dev. Finance Co.)
Ian ClyneJasmine Capital / Chandler Corporation
Former MD/CEO, Bank South Pacific Ltd
Beatrice Hamza-BasseyGeneral Counsel,
Atlas Mara Co-Invest Ltd
Cyril Odu (Chairman)CEO, African Capital Alliance
Former Vice Chairman, Mobil Producing Nigeria
Taimoor Labib*Regional Head of MENA,
Standard Chartered Private Equity
*Subject to regulatory approval/confirmation
8
Strong Leadership Team with Extensive Experience
Kandolo Kasongo
Chief Risk Officer
32+ years experience in banking
Lola Cardoso
Head, Corporate Strategy
18+ years experience in
strategy & banking
Carlos Wanderley
Head, Retail Banking
24+ years experience in retail &
banking
Emeka Emuwa
Chief Executive Officer
30+ years experience in banking
Joseph Mbulu
Head, Transformation
24+ years experience in business
transformation & banking
Adekunle Sonola
Head, Commercial Banking
23+ years experience in banking
Nath Ude
Head, Service & Technology
25+ years experience in banking
Emeka Okonkwo
Head, Corporate Banking
24+ years experience in banking
Oyinkan Adewale
Chief Financial Officer
33+ years Chartered Accountant, 28+
years experience in banking
Miyen Swomen
Head, Human Resources
20+ years experience in HR,
strategy & banking
Ibrahim Kwargana
Head, Public Sector & Government
Relations
26+ years experience in banking
Our Operating Environment
Invest in 100 years of heritage…
Invest in a smarter future
10
Nigeria has exited the recession and banking sector outlook is positive
Source: CBN, NBS , FDC,OPEC, other research Notes: 1 IMF GDP forecasts; 2 World bank GDP growth forecasts
Nigeria’s GDP is projected to expand
0.81-1%2 in 2017. In Q2, GDP grew 0.6%
The external reserves rose to $31.9bn as
of Sept 14 (vs. $30.3bn as at Jun’17)
CBN’s official FX remained flat at
₦306/$. IEFX closed at ₦366/$ in Jun
and ₦359/$ in July
Inflation rate eased to 16.05% in July vs.
18.6% in Dec.
Foreign Exchange Developments
Stable oil prices/production levels and liberalization
of the FX market in April led to improved FX liquidity
Gradual convergence of FX rates between the
informal market & CBN’s IEFX & Interbank windows
Regulatory-Driven Dynamics
CRR, liquidity ratio, and MPR unchanged at 22.5%,
30.0% and 14.0% respectively
Banks gearing up for IFRS 9 implementation
effective Jan 1, 2018
Constrained profitability for mid tier banks albeit slowly
improving as economy recovers
Liquidity constraints persist, especially mid-tier banks,
Rising NPLs impacting asset quality
Macroeconomic Pressures on Sector
Technology and Innovation
Leveraging technology to drive growth, financial
inclusion and customer experience
Electronic platforms in line with CBN’s cashless
policy e.g. internet and mobile banking
Macroeconomic Updates Banking Sector Outlook
Union Bank – A Compelling
Growth Story
Invest in 100 years of heritage…
Invest in a smarter future
12
Union Bank – Our Journey to A Simpler, Smarter Bank
• Strategic direction defined
• Sale of non-banking subsidiaries -
refocus on core banking
• A right-sized organisation fit for
purpose and growth
2009 - 2012 2013 - 2014 2015 & Beyond …
• Repositioned as a highly
respected provider of quality
banking services
• Revitalized brand
• Enhanced technology platform
and operations
• Robust and modern distribution
network
• Consistent delivery of high quality
customer experience
• A simpler, smarter bank
• CBN Intervention
• Recapitalization
• New Management
Execute &
Reposition
Strategize
& Rebuild
Stabilize &
Recapitalize
13
Our Vision and Ambition Defined
Growth
A Top Tier Bank
1
Nigeria’s Most
Reliable and
Trusted Banking
Partner
2
Union Bank
today
Union Bank
in 2018
• Leader in retail banking, trade
and transaction banking • Leader in governance and controls
with international-standard compliance
• Service predictability & consistency
• Energized & productive workforce
• Efficient and reliable platforms Union Bank
from 2021A Top-Tier Bank
Leader in
Citizenship,
Sustainability
and Innovation
3
• Leading driver of change and
sustainable development
• Leader in innovation – customer
experience and social innovation
The Leading
Mid Tier Bank
A Mid
Tier Bank
14
Six Areas Prioritized for Accelerated Growth & Recognition
People
Risk &
ComplianceSystems/
ProcessesQuality of
Earnings
Retail
Trade &
Transaction
Banking
Commercial Corporate
Areas of Focus
Efficient Channels:
Online & Mobile
Innovative
Products
Predictable Service
Delivery
Strong Focus on
Customer
Acquisition
Enhanced Service
Delivery
Market Leader in
Domestic Trade
Leverage Value
Chain for Network
Effect
Deep Sector
Expertise
e.g. Agriculture
Cost Efficiency &
Productivity
Strong Sales/Service
Capability
Proactive Risk
Management
Enabling
Partnerships
Quality of our talent & professional standards Quality of our banking platform
15
Significant Investments in People, Process and Technology
Our Technology…• State of the art core banking platform and data centre launched in 2015
• Oracle ERP, HRMS and SharePoint now in place to support operations
• Omni-channel network with fastest growing digital channel penetration
• Improved network stability by deploying/rationalizing links across the network
• Business support tools in place e.g. Payments & Collections, Trade, MIS
Our Processes…• Central Processing Centre in place for efficient processing
• Overhauled critical processes e.g. instant account opening / debit card
issuance
• Outsourced non-critical initiatives e.g. cheque processing
Our People…• Key hires and leadership roles filled, building talent pool for the future (e.g.
Management Trainee Program)
• Quality of talent enhanced bank-wide via strategic recruitments, training, etc.
• Optimized front office to back office mix, now ~50%:50% (vs. 30%:70% in 2014)
• Improved staff productivity (staff costs to revenue down, revenue per staff up)
16
Stronger Positioning Driven by Product & Service Improvements
Customer GrowthNew Customer
Growth
New Product
LaunchesService
Improvements
1 2 3
• 8 target savings products
launched (e.g. UnionBetta,
UnionKorrectRussia,Self-
Employed Loans)
• ~20 Bancassurance solutions
with insurance companies
• SME & Commercial products
launched (e.g. UnionAccelerate)
• Over 200 branches transformed
from 2014 till date
• ~90% customer satisfaction rate
across key branches
• Average monthly new to bank
retail accounts up by almost 4x
since transformation (~80k vs.
20k)
• # of active customers increased
from 1.7M to ~3.5m today
17
Launched New UnionMobile and USSD code
18
By year end, more than 80% of our branches will be transformed
Over 50% of our branches looked like
this before 2013
Today, most of our branches look like
this
19
The Results:
Sustained Positive Performance Trajectory
Note: FY 2016 bank figures; *Includes one-time gain on sale of subsidiaries: FY’14 – ₦6.3bn; FY’15 – ₦3.6bn; FY’16 – ₦0.8bn
FY
2014
FY
2012
FY
2013
FY
2011
FY
2015
Gross Earnings (₦’bn) 109.896.5 103.271.2 118.4
Gross Loans (₦’bn) 326149 231156 371
Return On Assets
(With Core PBT / With Total PBT)0.4% 0.5%(12.3%)
Customer Deposits (₦’bn) 507482 480400 569
Profit Before Tax (PBT) (₦’bn)
(Core PBT / Total PBT)3.4 4.2(102.6)
Return On Equity
(With Core PBT / With Total PBT)1.8% 2.8%(428%)
Cost To Income Ratio 67%96% 71%183% 67%
TransformationPre-Transformation
FY
2016
123.5
518
634
65%
20.7* 18.5* 16.1*
14.4 14.9 15.3
2.3%* 1.9%* 1.5%*
10.4%* 8.2%* 6.6%*
7.2% 6.6% 6.2%
1.6% 1.6% 1.4%
20
The Results:
Positive Performance Trajectory Over the Last Four Years
2012 2016
₦188bn ₦251bn
Total Equity
Fin
an
cia
lC
han
nels
33%2012 2016
₦882bn ₦1,123bn
Total Assets
27%2012 2016
₦3.4bn ₦16.1bn
Total PBT
374%
2012 2016
1.7m 3m
Active Customers
~2x2012 2016
203k 1,721k
Cards
~8x2012 2016
N15tr N30tr
Transaction Value
2x
Cu
sto
mer
&
Pro
du
cts
2012 2016
273 789
ATM
~3x2012 2016
1,031 3,111
POS
~3x2012 2016
11k 414k
Mobile Banking User
~38x2012 2016
8k 86k
Online Banking User
~11x
21
The Results:
UBN generally outperformed peer banks in H1 2017
H1 2016 H1 2017
₦60.1bn ₦73.7bn
Gross Earnings
Inco
me
Sta
tem
en
t
23%
Dec 2016 Jun 2017
₦534bn ₦511bn
Loans
Bala
nce
Sh
eet
Customer Deposits
H1 2016 H1 2017
₦8.7bn ₦9.1bn
Profit Before Tax
Dec 2016 Jun 2017
₦658bn ₦759bn
15%
Tier 1 average growth: 31%
Mid tier average growth: 3%
Tier 1 average growth: 24%
Mid tier average growth: -16%
Tier 1 average growth: -4%
Mid tier average growth: 1%
Tier 1 average growth: -4%
Mid tier average growth: 2%
5%
6%
Source: Banks’ financials
UBN Rights Issue: A Case For Investment
Invest in 100 years of heritage…
Invest in a smarter future
23
Union Bank – A Strong Investment Case
Robust risk
management and
compliance
standards
Improving
operational
efficiency
Iconic brand with
rich heritage
Solid and
experienced
leadership team
Steadily growing
and resilient
customer base
(~3.8m customers)
Extensive
distribution with
~350 branches with
omni-channel
network
Sustained positive
financial
performance
trajectory
State of the art
core banking
platform
Strengthened
talent pool with
improving
productivity
Strong reputation
for ethical
standards (trust,
professionalism)
24
Capital: A Key Requirement for UBN’s Growth
PeopleFunding &
LiquidityPositioning
Operational
& Cost
Efficiency
Capital
• Investment in the
right people
• Continuous
training for staff
• Improving staff
productivity
• Delivering strong
employee value
proposition
• Talent retention
and succession
planning
• Capital injection of
up to N50bn to
fund working
capital and growth
• Disciplined
management for
sustainable impact
• Continued
compliance with
regulatory
standards with
ample buffer
• Strong liquidity
management
• Focus on liquidity
(LCY and FCY)
generation via
business
segments
• Access to
diversified funding
sources for trade
• Disciplined cost
management
• Alternative / omni-
channel push
• In-house DevOps
for app dev.
• Infrastructure
optimization
• Increase capacity
to drive volumes
• Positive brand
perception
• Investment in
innovation
• Sales and service
excellence
• Employer of
choice – improve
position from 9th
Best Company to
Work For
(Jobberman)
• Simpler and
smarter bank
We aspire to be the leading mid-tier Bank by 2018 and a top tier bank from 2021
25
The Rights Issue will enhance our capital base and better position
UBN to deliver stronger and sustained shareholder returns
Rights Issue Impact
• Improve capital adequacy ratio for the long-
term and build a strong buffer for regulatory
requirements
• Create additional / grow risk assets in
strategic market segments and sectors,
thereby enhancing lending capacity
• Greater headroom to raise Tier II capital to
further capitalize on carefully selected
emerging opportunities as the Nigerian
economy continues to recover
• Boost competitive positioning and market
confidence in UBN
• Improved availability of incremental FX and
access to FCY funding
High Volume and Quality Assets &
Liabilities
Improved Financial Metrics
(ROE, PBT)
Higher Credit Rating
Lower Cost of Funds
26
Rights Issue Summary
Issue Size
Number of
Shares & Price
Acceptance
Period
Use of
Proceeds
• ₦49.7 billion
• 12.1 billion ordinary shares of 50 kobo each at N4.10 per share
• On the basis of 5 (five) new ordinary shares for every 7 (seven) ordinary shares
held as at August 21, 2017
• Opens: September 20, 2017
• Closes: October 30, 2017
• Enhance the Bank’s regulatory capital requirement
• Increase working capital and grow in strategic areas that correspond to emerging
opportunities in Nigeria
• Enhance technological platforms through strategic investments in technology and
digitalization
• Optimize customer experience with investments in customer touch points.
27
Key Contacts
Rights Issue Summary – Our Partners
Financial Advisors/
Issuing House
Receiving BanksStockbrokers
Legal Advisers
Stockbrokers
1
3 4
2
28
Union Bank – Why Invest in the Rights Issue?
Positive outlook for the
financial sector strengthened
by exit from recession
Innovation and digitization
driving sector growth and
financial inclusion levels
Attractive Sector
Since recapitalization, UBN
has sustained its positive
performance trajectory
Incremental capital will
guarantee sustained growth
and shareholder returns
Compelling Growth Story
N4.10 pricing is a 21%
discount to share price on
qualification date (Aug 21)
Opportunity for
shareholders to continue to
invest in the success story
of Union Bank
Attractive Pricing
80% of proceeds to be used
as working capital -
Manufacturing, Agro-
processing, Services i.e.
Education and Health,
Infrastructure (road, rail)
12% invested in technology,
innovation and digitalization
8% invested in customer
touch points
Strategic Use of Proceeds
29
Use of Proceeds: Our working capital deployment is aligned to
key growth sectors of the economy and FGN’s priorities
Use of Working
Capital
Six Priority Areas for the Nigerian Government*
Agriculture Manufacturing Solid Minerals
Services
(Health,
Education)
Construction
& Real EstateOil & Gas
Deployment of working capital from rights issue
*Economic Recovery and Growth Plan (2017)
30
Update on Union Bank’s Trading Performance
High (N) Low (N) VWAP (N)Share price
volatility
30 day 6.10 4.60 5.40 32.6%
60 day 6.10 4.52 5.04 35.0%
90 day 6.10 4.31 4.88 41.5%
120 day 6.10 4.12 4.73 48.1%
6 month 6.10 4.12 4.76 48.1%
1 year 6.10 3.57 3.93 70.9%
Market cap (N billion) 101,614
RI Size (N billion) 49.75
RI size as % of Market Cap 48.96%
Key statistics (as at 18 September 2017)
Description #
Share Price (N) 6.00
Shares outstanding ( ‘millions) 16,936
Market cap (N ‘billions) 101,614
P/E (2016) 6.35
P/BV (2016) 0.38
Free float liquidity 14.11%
VWAP analysis
The volume
weighted
average price
provides a sense
of trading
momentum on
the stock
Union Bank’s
share price
appreciated by
59% in the last
twelve months.
This is largely in
line with sector
performance
The recent
trading
performance of
Union Bank on
the NSE will be a
core benchmark
for shareholders
considering
participation in
the Rights IssueSource: Bloomberg as at 18 September 2017, Union Bank’s 2016 annual report and H1 2017 financial statement
Recent trading performance of UBN supports investment case
6 Months VWAP: N4.76
90-Day VWAP: N4.88
30-Day VWAP: N5.40
1 Year VWAP: N3.93
31
Our shareholders have 3 options – We hope you accept your
rights
5 for 7 Rights Issue
Instruct broker to
trade rights on the
NSE
Shareholder earns
premium on rights
traded
Shareholder receives 5 shares
for every 7 shares held
Shareholder takes
no action
Shareholder gets
diluted
Accept your rights
in full
(additional rights can
also be applied for)
Trade Do Nothing
Shareholding level is
retained
(…and potentially
increased)
Accept 1 2 3
32
2017
2019
& Beyond
• UBN @ 100 – from awareness of brand vs.
affinity to brand
• Enhanced customer engagement and
service delivery
• Innovation efforts
• Simpler & smarter bank
• Nigeria’s most reliable and trusted
banking partner
2015 - 2016
On the Right Track to Becoming a Leading Commercial Bank
• Strategy defined
• Refocus on core banking
• Right-sized UBN
• Returned to profitability
• Brand re-launch
• Enhanced technology platform &
operations
• Robust and modern distribution network
• Strong push towards alternative channels
2013 - 2014
2018
• The leading mid-tier bank
• Champion in service delivery
• Recognized as a leader in citizenship,
sustainability and innovation
Appendix -
5-Year Financial Performance
A
Invest in 100 years of heritage…
Invest in a smarter future
34
Historical Performance – Balance Sheet
In millions of Naira Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Jun 17
Assets
Cash and cash equivalents 200,260 100,925 121,960 82,252 136,194 183,075
Non-pledged trading assets 1,895 2,847 745 - 8,323 22,976
Pledged assets 44,503 65,167 83,935 84,728 53,430 49,736
Derivate assets held for risk
management 78 - 7 1,820 2,747 96
Loans and advances to
customers 156,375 229,542 312,797 366,721 507,190 477,646
Investments in equity
accounted investee 5,557 25 24 24 - -
Investment securities 313,754 289,353 197,200 215,137 181,720 190,694
Trading properties 6,971 4,747 1,930 3,177 2,309 1,348
Investment properties 19,296 16,413 - 4,546 4,347 4,775
Investment in subsidiaries - - - - -
Property and equipment 48,466 44,581 51,100 52,611 52,800 53,054
Intangible assets 921 808 2,422 3,749 3,374 4,600
Deferred tax assets 95,349 95,889 95,883 95,883 95,910 95,910
Other assets 121,297 100,069 122,547 138,686 202,298 238,578
Defined benefit assets - - - - 1,643 2,252
1,014,722 950,366 990,550 1,049,334 1,252,285 1,324,741
Assets classified as held for
sale 84 51,684 20,426 397 397 397
TOTAL ASSETS 1,014,806 1,002,050 1,010,976 1,049,731 1,252,682 1,325,138
5-Year Financial Performance - Assets
35
Historical Performance – Balance Sheet
In millions of Naira Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Jun 17
LIABILITIES
Derivative liabilities held for risk
management 78 - 7 - 13 445
Deposits from banks 45,112 46,794 61,890 44,091 90,266 101,802
Deposits from customers 522,443 482,706 527,617 570,639 658,444 759,266
Current tax liabilities 2,317 534 822 382 465 469
Deferred tax liabilities - - - - 101 105
Liability on insurance contract 2,691 -
Liability on investment contract 803 -
Other liabilities 178,587 143,803 103,580 107,533 141,404 111,403
Employee benefit obligations 49,886 22,864 7,525 4,267 805 873
Other borrowed funds 34,564 45,280 78,135 76,059 89,514 68,931
836,481 741,981 779,576 802,971 981,012 1,043,294
Liabilities classified as held for sale - 61,432 7,347 - -
TOTAL LIABILITIES 836,481 803,413 786,923 802,971 981,012 1,043,294
EQUITY
Share capital and share premium 400,109 400,109 400,109 400,109 400,109 401,304
Treasury sharess (65) (240) (35) - - (624)
Retained earnings/(accumulated deficit) (275,159) (275,577) (241,150) (242,063) (244,183) (238,962)
Other reserves 48,461 67,183 59,791 83,377 110,633 114,948
Equity attributable to equity-holders of the
Bank173,346 191,475 218,715 241,423 266,559 276,666
No-controlling interest 4,979 7,162 5,338 5,337 5,111 5,177
Total Equity 178,325 198,637 224,053 246,760 271,670 281,843
Total LIABILITIES AND EQUITY 1,014,806 1,002,050 1,010,976 1,049,731 1,252,682 1,325,138
5-Year Financial Performance – Liabilities and Equity
36
Historical Performance – Statement of Profit or Loss
In millions of Naira Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 H1 2017
Gross earnings 117,212 121,398 135,898 117,211 126,590 73,682
Interest income 85,389 80,869 76,373 90,902 98,002 58,251
Interest expense (22,594) (23,576) (24,317) (35,219) (32,963) (26,533)
Net interest income 62,795 57,293 52,056 55,683 65,039 31,718
Net impairment charge for credit losses (1,549) (12,066) (4,828) (9,948) (16,582) (5,377)
Net interest income after impairment charge for credit losses 61,246 45,227 47,228 45,735 48,457 26,341
Net fee and commission income 9,398 9,079 10,153 7,697 10,577 4,910
Net trading income 697 (303) 2,154 5,231 5,089 3,347
Net income from other financial instruments at fair value through profit or loss - 1,820 2,572 44
Other operating income 6,189 13,593 31,832 11,419 10,350 7,130
Non interest income 16,284 22,369 44,139 26,167 28,588 15,431
Operating income 77,530 67,596 91,367 71,902 77,045 41,772
Net impairment write-back/(loss) on other financial assets (218) (3,670) (4,823) 704 693 102
Net operating income after net impairment write-back/(loss) on
other financial assets 77,312 63,926 86,544 72,606 77,738 41,874
Personnel expenses (42,560) (39,544) (29,812) (30,041) (31,234) (15,862)
Depreciation and amortisation (4,284) (3,113) (3,320) (3,986) (4,906) (2,879)
Other operating expenses (26,160) (15,936) (26,287) (23,823) (25,860) (13,673)
Total expenses (73,004) (58,593) (59,419) (57,850) (62,000) (32,414)
Share of profit of equity accounted investee 34 (4) (6)
Profit before income tax from continuing operations 4,342 5,329 27,119 14,756 15,738 9,460
5-Year Financial Performance – Income Statement
Appendix -
H1 2017 Financial Performance
B
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38
H1 2017 Performance – Group Financial Highlights
Jun-2017 Dec-2016 Δ
Balance
Sheet
(₦ ’bn)
Assets 1,325.1 1,252.7 6%
Gross Loans 511.0 535.8 (5%)
Customer Deposits 759.3 658.4 15%
Equity 281.8 271.7 4%
Key
Ratios
Loan to Deposit Ratio 67.3% 81.4% (14.1%)
Non-Performing Loan Ratio 8.2% 6.9% 1.3%
H1 2017 H1 2016 Δ
Income
Statement
(₦ ’bn)
Gross Earnings 73.7 60.1 23%
Interest Income 58.3 44.3 32%
Net Interest Income 31.7 30.9 3%
Non-Interest Income 15.4 15.7 (2%)
Credit Impairment (5.4) (8.8) (39%)
Operating Expenses (32.4) (29.1) 11%
Profit Before Tax 9.5 8.9 7%
Profit After Tax 9.2 8.8 5%
Key
Ratios
Net Interest Margin 7.9% 9.1% (1.2%)
Cost to Income Ratio 68.7% 62.4% 6.30%
Return on Equity 6.8% 6.9% (0.1%)
Return on Assets 1.5% 1.6% (0.1%)
Net Asset Value per share N16.40 N14.93 10%
Earnings Per Share 54k 52k 2k
GR
OU
P F
INA
NC
IAL P
ER
FO
MA
NC
E
39
H1 2017 Performance – Bank Financial Highlights
Jun-2017 Dec-2016 Δ
Balance
Sheet
(₦ ’bn)
Total Assets 1,209.1 1,123.5 8%
Gross Loans 485.6 518.3 (6%)
Customer Deposits 749.5 633.8 18%
Equity 260.8 251.3 4%
Key
Ratios
Liquidity Ratio(regulatory minimum - 30%)
37.0% 33.1% 3.9%
Loan to Deposit Ratio 64.8% 81.8% (17%)
Non-Performing Loan Ratio 8.6% 7.1% 1.5%
H1 2017 H1 2016 Δ
Income
Statement
(₦ ’bn)
Gross Earnings 71.0 59.0 20%
Interest Income 56.1 43.3 30%
Net Interest Income 29.8 30.0 (1%)
Non-Interest Income 14.9 15.7 (5%)
Credit Impairment (5.3) (8.7) (39%)
Operating Expenses (30.8) (28.0) 10%
Profit Before Tax 8.7 9.1 (4%)
Profit After Tax 8.6 9.0 (4%)
Key
Ratios
Net Interest Margin 8.8% 8.8% -
Cost to Income Ratio 68.9% 61.4% 7.5%
Return on Equity 6.8% 7.7% (0.9%)
Return on Assets 1.5% 1.7% (0.2%)
Net Asset Value per share N15.40 N13.79 12%
Earnings Per Share 51k 53k (2k)UB
N F
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40
Continued revenue growth
7589 95
4356
24 35 33 13 26
9.0% 9.0%9.4%
8.8% 8.8%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
9.5%
10.5%
0
20
40
60
80
100
120
FY'14 FY'15 FY'16 H1'16 H1'17
Interest Income Interest Expense Net Interest Margin
Non-Interest Income (NII) (₦'Bn)Interest Income & Interest Expense (₦'Bn)
• Bank Gross Earnings up 20% to ₦71.0bn (₦59.0bn in
H1’16)
• Bank Interest Income up 29%, driven by loan book
growth
• Non-Interest Income down slightly by 5% to ₦14.9bn;
excluding one-off gains of ₦3.4bn in FX reval and
₦752m in subsidiary sales in H1’16, NII grew by 29%
• Net Interest Income after Impairment up 15%
(₦24.5bn H1’17 vs. ₦21.2bn H1’16)
• ₦1.7bn in Recoveries in H1’17 vs. ₦0.7bn in H1’16
UB
N F
INA
NC
IAL P
ER
FO
MA
NC
E
Gross Earnings (₦'Bn)
7589 95
4356
2930 28
1515
1
FY’15
4
118110
FY’14
6
1
71
H1’16FY’16
124
59
H1’17
Non-Interest Income Interest IncomeGain on Subs. Sale
9 7 10 6
17 1410
7
5
85
64
3
FY’16
3
28
H1’17H1’16
16
1
2
FY’15
15
29
1
FY’14
35
23
FX Reval gainNet trading income
Other NII
Gain on Subs. Sale
E-business and other fee income
41
Increased deposits driven by product penetration & customer growth
Customer Deposits (₦'Bn)
Deposits by Business Segment (Jun’17)
• Customer Deposits up 18% to ₦749.5bn (₦633.8bn
as at Dec 2016); low cost deposits increased to 69%
of total deposits vs. 65% in Dec 2016
- Growth led by new product offerings, increased
market penetration and financial inclusion initiatives,
as well as improved customer adoption
- ~69% YoY increase in new-to-bank customers
- ~120% growth YoY in active mobile subscribers
- ~65% growth YoY in active online subscribers
- ~35% growth YoY in active cards
63%15%
22%
Retail
Commercial
Corporate
UB
N F
INA
NC
IAL P
ER
FO
MA
NC
E
161 208 225 257 226
347
409430 523
361
Dec’14
634
Dec’15
569
Dec’16
507.4
Jun’17Mar’17
686749
Current & Savings Term
Funding Structure (Jun’17)
68%
2%
1%5%
24%Customer deposits
Deposits from Banks
On-lending facilities
FCY Borrowings
Equity
42
Strategic focus on rebalancing of loan book
Gross Loans by Business Segment (Jun’17)
• Bank Gross Loans down 6% to ₦485.6bn
(₦518.3bn in Dec’16): improving FX availability
facilitated liquidation of mature obligations in the Fcy
book
• Fcy loan book down 13% YoY; Lcy loan book up 10%
YoY
• Fcy loan book now 44% of Gross Loans vs 51% at
Dec 2016
Gross Loans by Sector (Jun’17)
UB
N F
INA
NC
IAL P
ER
FO
MA
NC
E
4%
15%
15%
8%
5%8%1%10%
4%
6%
8%
10%
6%
Agriculture
O & G Upstream
O & G Downstream
O & G Services
Construction
General Commerce
Public Sector
Manufacturing
IT & Telecomms
Individuals
Others
Power & Energy
Real Estate
5%
23%
72%
Retail
Commercial
Corporate
Gross Loans (₦'Bn)
Gross Loans by Business Segment (Jun’17)
130 174 165229 215
196197 253
264 271
98
Dec’16Dec’15
371
Dec’14
518
326
486
Jun’17Mar’17
493
FCYLCYDeval growth
43
Strong focus on recoveries and adequate provisioning
*Includes regulatory risk reserves
NPL & Coverage Ratios
Non Performing Loans By Sector (Jun’17)• NPL Ratio of 8.6% at Jun’17 (7.1% Dec’16), reflects
the drop in Gross Loans
• Coverage Ratio of 185.2% at H2’17 (181.8%
Dec’16) reflects adequate provisioning
• We remain focused on NPL recovery and
continuous monitoring of loan book
• ₦1.7bn in Recoveries in H1 2017 vs. ₦724m in
H1 2016 (133% increase)
UB
N F
INA
NC
IAL P
ER
FO
MA
NC
E
42%
19%
12%
7%
6%
6% 4%
2%1%0%
Power and Energy
Real Estate
Finance and Insurance
Oil & Gas Downstream
General Commerce
Individual
Transporation & Storage
Agriculture
Construction
Manufacturing
Others
5.1% 7.0% 7.0% 7.7% 8.6%
191%177% 182% 185% 185%
10%
60%
110%
160%
Dec'14 Dec'15 Dec'16 Mar'17 Jun'17
1.0%
6.0%
11.0%
16.0%
21.0%
26.0%
NPL Coverage*
44
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These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and
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