INVESTOR PRESENTATION 9M15 RESULTS 1
The core of our strategy To be a key player in the Sri Lankan banking sector by becoming a fully fledged commercial bank 2
Key Company Milestones 2011-2013 2014-2015 1995-2000 2001-2010 Restructuring of the Listed in the CSE, Established as the 8 th TPG through its affiliate bank through a Highest indigenous Commercial Culture Finance Holding Sampath Bank led oversubscribed IPO Bank strikes landmark deal consortium with Union Bank First bank to launch Landmark Acquisition of New Core-Banking Internet banking investment from NAMAL and UB system Middle East - Royal Finance Implementation Family of Saudi First bank in Sri Lanka Arabia CFI award for Best to implement SME Bank Microsoft cloud technology 63 branches with access to over 2,700 ATM’S 3
Union Bank TODAY New Shareholder - TPG with 70% ownership Board of directors reconstituted Management strengthened with key industry leaders New business plan with a strategic focus on Corporate, SME and Retail Banking New branch outlook and consumer focused layouts 4
Key Highlights - 3Q15 Loans & Advances Loans & Advances 49% Growth YTD 49% Growth YTD Q-3 Highest ever since 2011 Q-3 Highest ever since 2011 Interest Income Fee & Other Income Q3 is the highest ever since Jan Q3 is the highest ever since Jan 2014 2014 Personal Loans Customer Acquisitions LKR 500Mn in 3 months since highest ever in 3Q- 2015 launch Profit After Tax Q3 is the highest since Jan 2014 5 * Excluding the one off gain from the sale of UB Finance shares
Network Expansion – 3Q15 15 1 New Branch Refurbishments 13 Offsite ATM 6
Debit Card launched Speed to Market award 2015 7
Financial results- 9M15 (Snapshot) Financial Highlights - Bank For the nine months ended September 2015 LKR Mn YoY Growth Net Interest Income 1,538 32% Total Operating income 2,072 33% Operating Cost 1,706 44% Net Profit for the period 117 109% Loans and Advances 38,594 56% Customer Deposits 33,471 20% Key Financial Ratios As at 30 th September 2015 9M14 9M15 Core Capital Adequacy 54.2% 28.3% Interest Margins 4.3% 3.6% Gross Non Performing Loans 11.6% 4.0% Return on Equity 1.4% 0.9% 0.2% 0.3% Return on Assets 8
Financial Results- 3Q15 (Snapshot) Financial Highlights - Bank 3Q14vs 3Q15 3Q results for 2015 LKR Mn Variance Net Interest Income 498 14% Total Operating income 722 26% Operating Cost 597 42% Net Profit for the period 57 58% Net Profit after tax LKR Mn 60 50 40 30 20 10 0 9
Information of ordinary shares of the bank Top 10 shareholders Share Price Performance (LKR) Structure LKR Name of Shareholder 30.09.2015 28 Culture Finance Holdings (An affiliate of TPG) 70.00% 26 Vista Knowledge Pte Ltd 5.90% 24 Associated Electrical Corporation Ltd 2.70% 22 20 Mr.A.I.Lovell 2.10% 18 Mr.C.P.A.Wijeyesekera 1.70% 16 Mr.D.A.J Warnakulasuriya 1.40% 14 Exsab International Holding Co for Trading Development 0.80% 12 Ashyaki Holdings (Pvt) Ltd. 0.70% 10 Rosewood (Pvt) Limited 0.70% Mr.M.D.Samarawickrama 0.70% Total 86.70% As at 30 th September 2015 Market Value Number of shares in public holding 239,327,750 (LKR) 30/9/2015 30/9/2014 Number of public shareholders 33,756 Rs Rs Percentage of public holding 21.9% Market Value 21.50 23.00 Highest Price for the quarter 25.00 24.00 Lowest Price for the quarter 21.40 19.00 10
Net Interest Income Interest Income Interest Expense LKR Mn LKR Mn 1100 800 700 1050 600 500 1000 400 950 300 200 900 100 850 0 Net Interest Income • Interest Income is the highest reported for a quarter LKR Mn since Q12014. This is due to the increased IEA. 700 600 • However, due to the increasing interest costs at a higher 500 rate NII showed a reduction. 400 • Increase in investments in Units of which the return is 300 reflected under other operating income is the main reason for 200 this. 100 0 11
Fee and Other Income Fee and Commission Income Net Trading Income LKR Mn LKR Mn 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 • 3Q2015 is the best quarter for all these income categories and Other Operating Income the trend is also in the right direction LKR Mn • Trade, Guarantee and increasing processing fees led the 100 growth in fee income. 90 80 • Increasing investments in Units is the main reason for the 70 increase in trading income 60 50 40 • Exchange gain is the main income under Other Operating 30 income. Increasing transaction volumes coupled with exceptional 20 margins during September were the key reasons to the improved 10 performance . 0 12
Operating Income, Expenses and Impairment Total Operating Income Name Business Facility • Reflecting the effectiveness of asset management to get the LKR Mn best return, total income highlighted consistent growth over 800 last three quarters. Orit Trading Lanka (Pvt) Ltd. Export of Garments Export Financing 700 600 • Operating expenses are on the rise as expected and is a Richard Peiris Group 500 result of the strategic initiatives. 400 • Reflecting the improvement in quality of the portfolio, Maskeliya Plantations Management of Tea Plantation Long Term Financing 300 Impairment recorded the lowest since 1Q2014 200 100 Singer (Sri Lanka) PLC Manufacture, Import & Import Financing / Money Market 0 Distribution of Consumer Products Financing Siyapatha Finance PLC Finance Company Term Financing Impairment Expenses LKR Mn LKR Mn Softlogic Group 700 300 600 Softlogic Finance Leasing & Hire Purchase Finance Term Financing 250 500 200 400 150 300 100 200 50 100 0 0 13
Loans and Funding Loans Mix – 30 th September 2015 Gross Loans and Receivables LKR Mn 6% 40,000 35,000 21% Term Loans 30,000 O/D 52% Trade Finance 25,000 Others 20,000 21% 15,000 Deposit Mix – 30 th September 2015 Customer Deposits LKR Mn 35,000 7% 9% 30,000 FD 25,000 SA 17% CA 20,000 67% Others 15,000 14
Asset Quality Overview Gross NPL 16.0% Significant progress over the last 15 months has been made 14.0% with regard to NPL’s. 12.0% Origination and underwriting strengthened for the future. 10.0% 8.0% Recoveries streamlined and strengthened . 6.0% 4.0% 2.0% 0.0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2014 2015 Note: Based on CBSL classification 15
CASA Current Accounts Savings Accounts LKR Mn LKR Mn 3,500 6,000 3,000 5,000 2,500 4,000 2,000 3,000 1,500 2,000 1,000 1,000 500 0 0 CASA Significant progress has been made to strengthen CASA within the bank. 30% Current Accounts have grown at a compounded monthly growth rate of 25% 6% over the last 6 quarters. 20% Savings Accounts have grown at a compounded monthly growth rate of 15% 7% over the last 6 quarters. 10% The CASA ratio for 9M15, remains stable at 25%. 5% 0% 16
Financials – Income Statement (Bank) 3Q14 vs 3Q15 9M14 vs 9M15 Rs Mn 3Q14 9M14 3Q15 9M15 YoY YoY Net Interest Income 436 1,166 498 1,538 14% 31% Net Fee and commission income 34 92 66 120 94% 30% Net Trading and other operating 103 301 158 414 53% 37% income Total Operating income 573 1,559 722 2,072 26% 32% Operating Cost 420 1,185 597 1,706 42% 43% Pre- Impairment profits 153 374 125 366 -18% -2% Less: Impairment 92 278 30 136 67% 51% Net profit before taxes and VAT on 61 96 95 230 FS Taxes including VAT on FS 25 40 38 113 Net Profit for the period 36 56 57 117 58% 109% 17
Financials – Balance Sheet (Bank) Rs Mn 9M14 9M15 9M1 VS 9M15 YoY Assets Cash and Balances with CB 14,550 -72% 4,030 Loans and receivables to other customers 24,059 58% 38,065 Other interest earning assets 6,111 19,296 216% Investment in subsidiaries 892 892 Non interest earning assets 2,364 2,665 13% 47,976 64,948 35% Total Equity & Liabilities Customer Deposits 27,858 20% 33,471 Due to banks and repurchased agreements 1,878 604% 13,221 Non interest earning liabilities 1,479 -6% 1,391 Equity 16,761 16,865 1% Total 47,976 64,948 35% 18
Financials – Income Statement (Group) 3Q14 vs 3Q15 9M14 vs 9M15 Rs Mn 3Q14 9M 14 3Q15 9M15 YoY YoY Net Interest Income 491 1,305 604 1,833 23% 4% Net Fee and commission income 68 188 111 241 63% 28% Net Trading and other operating income 130 459 167 425 29% -7% Total Operating income 689 1,952 882 2,499 28% 28% Operating Cost 39% 503 1,428 700 1,999 40% Pre- Impairment profits 186 524 182 500 -2% -5% Less: Impairment 95 279 48 187 -50% -33% Net profit before taxes and VAT on FS 91 245 134 313 Taxes including VAT on FS 33 129 49 146 Net Profit for the period 58 116 85 167 47% 44% 19
Financials – Balance Sheet (Group) Rs Mn 9M 14 9M15 9M14 VS 9M15 YoY Assets Cash and Balances with CB 15,039 4,176 -72% Loans and receivables to other customers 26,881 42,653 59% Other interest earning assets 5,776 18,811 226% Non interest earning assets 3,783 4,010 6% 51,479 69,650 35% Total Equity & Liabilities Customer Deposits 30,283 37,116 23% Due to banks and repurchased agreements 1,914 13,058 582% Non interest earning liabilities 2,724 2,833 4% Equity 16,558 16,643 1% Total 51,479 69,650 35% 20
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