Feb 2016 1 Vision We are geared to deliver a bold new world Our - PowerPoint PPT Presentation

Investor Presentation Feb 2016 1

Vision We are geared to deliver a bold new world 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 2

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 3

Key Company Milestones 1995-2000 2001-2010 2011-2013 2014-2015 Established as the 8th Restructuring of the bank Listed in the CSE, TPG through its affiliate indigenous Commercial through a Sampath Bank Highest Culture Finance Holding Bank led consortium oversubscribed IPO strikes landmark deal with Union Bank First bank to launch Landmark investment Acquisition of New Core-Banking Internet banking from Middle East - NAMAL and UB system Implementation Royal Family of Saudi Finance Arabia CFI award for Best First bank in Sri Lanka SME Bank to implement Microsoft cloud technology 64 branches with access to over 2,700 ATM’S 4

Increasing footprint and reach Num. of Branches Province 2014 2015 Western 23 26 North Western 7 7 5 Southern 7 7 Central 5 5 North Central 5 5 Northern 5 5 5 Sabaragamuwa 5 5 Eastern 2 2 Uva 2 2 7 2 Total 61 64 5 5 26 2 Channels 2012 2013 2014 2015 Branches 36 51 61 64 ATMS 35 50 61 103 7 We are rapidly growing our footprint and reach 5

New branch outlook 22 branches were refurbished during the year 6

Elite Circle launched 7

People Management Select, recruit and promote based on competency. Position Select UB as an employer of choice externally. Develop capability so that employees are equipped to Develop do their jobs as well as develop within the Bank. Engage and energize employees so that they can perform Energize at their best Value employees and recognize the Value contributions they make 8

Financial Overview - Bank “ 2015 was a significant year of growth and preparation, in which we laid a strong foundation that would become the launch pad for robust growth in the ensuring years” – CEO 9

Snapshot 2015 – Strong Performance 2015 LKR Mn YoY Growth Net Interest Income 2,021 15% Total Operating income 2,839 24% Operating Cost 2,335 42% Net Profit for the period 193 238% Loans and Advances 40,095 55% Customer Deposits 37,653 35% Total Assets 71,005 45% Profit for Shareholders grew by 238% 10

Financial Performance – Income Statement YoY 2015 2015 Growth Net Interest Income 2,021 15% Net Fee and commission income 181 18% Net Trading and other operating income 637 69% Total Operating income 2,839 24% Operating Cost 2,335 42% Impairment 177 -67% Net profit before taxes and VAT on FS 328 191% Taxes including VAT on FS 135 144% Net Profit for the period 193 238% 11

Revenue Generation LKR Mn 5,000 5.00% Incremental Income 2015 LKR Mn YoY 4.50% 4,000 4.00% NII 259 15% 3.50% 3,000 3.00% Fee Income 27 18% 2.50% 2,021 1,734 2,000 2.00% 1,233 1.50% Trading & Others 260 69% 1,155 982 1,000 1.00% 0.50% - 0.00% 2011 2012 2013 2014 2015 NII NIM Industry NIM Source: CBSL, Research estimates 22% Fee & Commission 44% income Trading NII NII 71% 77% Other operating income 34% OI OI 29% 23% 2014 2015 Total operating income grew by 24% 12 *OI – Other income

Operating Expenses Incremental cost 2015 LKR Mn YoY Staff Cost Staff Cost 333 50% Depreciation & D&A 66 25% Amortization Other Operating Other Operating cost 296 42% cost 2015 2014 Operating Expenses (LKR Mn) Cost to income ratio % 81.8% 2,335 Expense distribution 2014 2015 72.9% Staff Cost 40% 43% 1,640 Depreciation & 17% 14% Amortization 2014 2015 2014 2015 Other Operating cost 43% 43% The increase in cost was in line with our 13 strategic initiatives.

Statement of financial position – (Bank) LKR Mn YoY Total Assets (LKR Mn) Cash and balances with banks 2,811 17% 71,005 1,513 -86% Reverse REPO 48,990 284 284% Placement with banks 40,095 55% Loans & Receivables Investment in units 7,985 327% 2014 2015 Other interest earning assets 14,709 195% Loans (LKR Mn) Investment in subsidiaries 892 0% 40,095 25,944 Non interest earning assets 2,716 19% 71,005 45% Total Assets Customer Deposits 37,652 35% 2014 2015 Due to banks and repurchased Deposits (LKR Mn) 15,188 374% agreements 37,652 Non interest earning liabilities 1,243 1% 27,808 Equity 16,922 1% Total Equity and Liabilities 71,005 45% 14 2014 2015

Financial Position - Composition of the Balance Sheet Segmental dispersion of Loans Loans - 56% 6% 42% Corporate Assets SME Retail Treasury Assets - 32% 52% Product composition of Deposits Deposits - 53% 6% 8% 16% Funding CA SA Borrowings - 22% FD CD 69% 15

Financial Position - Balance Sheet growth 2014 2015 Union Bank Growth 55% Loans Industry Growth 20-23% Est. 35% Union Bank Growth Deposits 17-20% Est. Industry Growth 45% Union Bank Growth Total Assets 18-20% Est. Industry Growth 16 Source : Based on research estimates * The industry data is based on the top eight listed banks

Financial Position - Loan Growth & Capital Adequacy 2015 Loans and Receivables 6% LKR Mn 45,000 52% 42% 40,000 35,000 30,000 25,000 2014 Corporate SME Retail 20,000 15,000 10,000 40% 5,000 - 2011 2012 2013 2014 2015 60% Capital Adequacy Corporate SME 45% 40% 35% 30% 25% 20% We maintained a healthy 15% capital adequacy ratio despite Tier 2 10% our robust loan growth in 2015 Tier 1 5% 0% 2011 2012 2013 2014 2015 17 Tier 1 Tier 2

Financial Position - Deposit Growth & CASA Customer Deposits LKR Mn 40,000 6% 8% 35,000 16% 30,000 CA 25,000 SA 20,000 FD 15,000 10,000 CD 5,000 69% - 2011 2012 2013 2014 2015 CASA LKR Mn 10,000 30% 25% 8,000 20% 6,000 15% CASA grew by 31% in 2015 4,000 10% 2,000 5% - 0% 2011 2012 2013 2014 2015 18 CASA CASA Ratio

Asset quality overview Gross NPL – Last 18 months Sector wise Exposure 16.00% 23% 25% 14.00% 12.00% 10.00% 8.00% 12% 6.00% 23% 4.00% 18% 2.00% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Note: Based on CBSL classification Traders Manufacturing 2015 2014 Financial and Business Services Agriculture & Fishing Other Significant progress over the last 18 months has been made with regard to NPL’s despite our aggressive loan growth. Net NPL for 2015 was 2.7% 19

Key Indicators - Bank Performance Indicators 2014 2015 Return on Equity 0.7% 1.1% Return on Assets 0.1% 0.3% Net Interest Margin 4.2% 3.4% Gross - Non Performing Loans 8.3% 3.6% Net – Non Performing Loans 7.4% 2.7% 41.5% 23.6% Total Capital Adequacy Net Asset value per share (Rs) 15.50 15.35 2014 2015 20

Financial Performance – Group YoY 2015 2015 Growth Net Interest Income 2,440 24% Net Fee and commission income 343 17% Net Trading and other operating income 652 36% Total Operating income 3,436 25% Operating Cost 2,747 38% Impairment 260 -51% Net profit before taxes and VAT on FS 428 84% Taxes including VAT on FS 174 12% Net Profit for the period 255 226% 21

Statement of financial position – (Bank) LKR Mn YoY Total Assets (LKR Mn) Cash and balances with banks 3,015 12% 76,542 1,619 -85% Reverse REPO 52,558 294 58% Placement with banks 45,450 56% Loans & Receivables Investment in units 7,985 327% 2014 2015 Other interest earning assets 14,135 227% Loans (LKR Mn) Investment in real estate 213 -18% 45,450 29,217 Non interest earning assets 3,831 14% 76,542 46% Total Assets Customer Deposits 41,624 37% 2014 2015 Due to banks and repurchased Deposits (LKR Mn) 15,150 367% agreements 41,623 Non interest earning liabilities 3,053 22% 30,324 Equity 16,715 1% Total Equity and Liabilities 76,542 46% 22 2014 2015