FY 2019 Results Presentation March 10, 2020 1
Disclaimer This presentation contains or incorporates by reference ‘forward -looking statements’ regarding the belief or current expectations of Union Bank Plc, the Directors and other members of its senior management about the Group’s businesses and the transactions described in this presentation. Generally, words such as ‘‘could’’, ‘‘will’’, ‘‘expect’’, ‘‘intend’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘plan’’, ‘‘seek’’ or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of the Company and/or its Group and are difficult to predict, that may cause actual results to differ materially from any future results or developments expressed or implied from the forward- looking statements. Such risks and uncertainties include, but are not limited to, regulatory developments, competitive conditions, technological developments and general economic conditions. The Bank assumes no responsibility to update any of the forward looking statements contained in this presentation. Any forward-looking statement contained in this presentation based on past or current trends and/or activities of Union Bank should not be taken as a representation that such trends or activities will continue in the future. No statement in this presentation is intended to be a profit forecast or to imply that the earnings of the Company for the current year or future years will necessarily match or exceed the historical or published earnings of the Company. Each forward-looking statement speaks only as of the date of the particular statement. Union Bank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Union Bank’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 2
Union Bank at a Glance Financial Highlights People Total Assets Total Equity Customers Employees ₦ 1.9tn ₦ 252bn 5.8m 2.3K Ratings Channels A- (Stable Outlook) ATMs Cards Mobile Banking 977 4.8m 2.1m BBB+ (Stable Outlook) B3 (Negative Outlook)* Online Banking Branches/Cash centres POS Terminals B- (Negative Outlook)* 1.3m 5.9K 240 3 * Country Specific
1 The Operating Environment Emeka Emuwa 2 Union Bank Update Chief Executive Officer 3 FY 2019 Financial Performance 4 Looking Ahead
Overview of the Nigerian Economy Regulatory Trends Socio-political Trends Consumer Trends Macro Updates • 2020 budget signed in • Women driving 70% • Fragile recovery with GDP • CBN revised bank charges Dec’19 consumer spending in to drive inclusion growth rising but slower than Nigeria and Africa – population growth ‒ • Tight monetary policy Full year impact of increasingly an attractive stance maintained – CRR up • Volatility in oil prices – due budget / spend expected target segment to global events to 27.5% (vs. 22.5%) • 2019 Finance Bill signed in • Food and non-alcoholic Jan’ 20 • Declining reserves due to • LDR raised to 65% to drive beverages make up the lending to the real sector lower oil prices & FDI outflow ‒ VAT up from 5% to 7.5% largest consumer spend (~27%) – opportunity for • Increase in electricity tariff • Inflation inching upwards, expected to drive FG by NERC* – likely to put revenues general commerce / currently at 12.13% manufacturing sectors pressure on consumers and ‒ • Stable exchange rates Possible impact on strengthen the sector inflation 5 NERC – National Electricity Regulatory Commission; CRR – Cash Reserve Requirement; LDR – Loan to Deposit Ratio Source: Kainos Edge, 2019 Nigeria Consumer Report, Africa Report
Macroeconomic Overview Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 • GDP grew by 2.3% in 2019 vs. 1.9% in 2018 Real GDP 2.55 2.38 2.28 • The non- oil sector grew by 2.26% in Q4’19 2.01 1.94 Growth Rate (%) • Rise due to border closure and higher food inflation Inflation 11.98 • 11.44 Expected to further rise due to higher VAT & 11.25 11.22 11.24 (%) electricity tariffs External 45.07 44.43 43.12 • 41.85 Reserves affected by exit of foreign portfolio 38.59 Reserves investors (FPIs) and OPEC cuts in oil production ($’bn) 70.39 67.67 66.74 65.28 • Volatility in oil price in 2019 due to US-China trade 58.16 Crude Oil war and rising tensions in the Middle East impacting (Bonny Light) demand and supply ($/barrel) Exchange 364.76 363.57 362.27 360.68 360.74 • Rates remained largely stable, growing very Rate marginally in 2019 (IEFX) (N/$) 6 Source: NBS, CBN, Bloomberg
Policy Evolution LDR LDR OMO restricted Guidelines to bank increased to increased to only banks charges revised to 65% 60% and FPIs effective Jan 1, 2020 March July September October November December January 2019 2019 2019 2019 2019 2019 2020 Cashless policy Nigerian MPR CRR re-introduced Treasury Bills reduced to increased with pilot in 8 (NTB) rates drops 13.5% to 27.5% states to single digit Source: CBN, Business Day, CNBC 7
1 The Operating Environment 2 Union Bank Update Emeka Emuwa Chief Executive Officer 3 FY 2019 Financial Performance 4 Looking Ahead 8
Our Ambition Recap on 2019 Priorities Digital & Automation 1 Nigeria’s Most Reliable & Trusted Banking Partner Portfolio Diversification 2 Leader in Retail and Transaction Banking Operational Efficiency 3 Leader in Citizenship, Sustainability & Innovation Ecosystems for Value Chain & Growth Enabling Nigeria’s success: Education, Technology, Women, SMEs 9
2019 Highlights: Significant achievements across our priorities Digital & Automation Operational Efficiency 01 02 Expansion of RPA 1 to include • • Improved NPL ratio to 5.8% from refunds, reconciliation, term deposit 7.8% (Dec’18) • Digital loan offerings launched • Improved Cost to Income Ratio of 74.1% from 79.2% (Dec’18) • Increased self-service • functionalities on Union Mobile ~N2.4bn in cost savings due to LEAP 2 for operational efficiency Portfolio Diversification Value Chain & Ecosystems • Loan book diversified towards • >10% growth in LC trade volumes the real sector : ($830m vs. $753m in 2018) ‒ • Oil & Gas down to 29% of our 37% growth in payroll sign-ons (15.6k – Dec’19 vs 11.4k – Dec’18) loan book (vs. 36% in 2018) 03 04 ‒ • Retail lending up to ~8% (vs. 76% growth in Key Distributor conversion Dec ’19 (1541 vs 877 – 6% in 2018) Dec‘18) ‒ General commerce up to 14% of our portfolio (vs. 9% in 2018) 10 1. Robotics Process Automation 2. Long Term Efficiency Acceleration Programme
2019 Highlights: Strong business synergies contributing to growth Corporate Commercial Treasury Retail SME • • • • • Revenue up by 124% Revenue up by 20% 128% growth YoY Revenue up 36% Increased cash flow Capture your audience’s Capture your audience’s Capture your audience’s Capture your audience’s Capture your audience’s from N15.3bn to from N22.9bn to sales & trading (N42.5bn vs lending limit to N10m attention. Download this attention. Download this attention. Download this attention. Download this attention. Download this N34.3bn N27.4bn revenue N57.7bn) awesome diagram. Bring awesome diagram. Bring awesome diagram. Bring awesome diagram. Bring awesome diagram. Bring • 15% growth YoY in your presentation to life. your presentation to life. your presentation to life. your presentation to life. your presentation to life. • • • • All images are 100% All images are 100% All images are 100% All images are 100% All images are 100% 19% growth in trade 45% growth in loans Launched investment Loans up 48% from customers acquired editable in PowerPoint. editable in PowerPoint. editable in PowerPoint. editable in PowerPoint. editable in PowerPoint. volumes offerings for retail ~N30bn to ~N44bn • • Launched 33% growth YoY in and SME • • Union 360 transaction reconciliation Mobile users up by loan book value up by 59% platform for schools 62% to 2.1m (vs. 1.3m) • Launched UnionMax 11 *STP – Straight Through Payments
2019 Highlights: Steady channel growth and transaction metrics Channel Update POS count 37% (5.9k vs 9.6k) Mobile users 62% (2.3m vs. 1.3m) Online users 43% (1.3m vs 910k) Volume 68% (18m vs 11m) Volume 109% (63m vs. 30m) Volume 49% (1.7m vs 3.3m) Value 80% (N108bn vs. N60bn) Value 86% (N754bn vs. N404bn) Value 14% (N421m vs. N369bn) Union360 users 72% (18.5k vs. 10.8k) Agent network expanded by Launched 9 new branch locations Volume 42% (33.6k vs. 55k) 10x in 2019 across Nigeria (Lagos, Nasarawa, Anambra, Kano, Value 37% (N122.9bn vs. N77.4bn) Calabar and Taraba) 12 YoY Growth (2019 vs 2018)
2019 Highlights: Deepened engagement / impact in education sector 2nd Annual Edu360 Programme 3rd Annual Innovation Challenge (Edtech) >10,000 People impacted in education ecosystem ~500 Teachers trained ~3,000 Schools in our Highlights from 2 nd Annual Edu360 event & customer base Edtech Challenge 13
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