UBA Group 2014 Q1 Results

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2014 first quarter results for investors/analysts

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<ul><li> 1. Quarter One 2014 1 Investors/Analysts Presentation APRIL 29, 2014 </li></ul><p> 2. From time to time, the Bank makes written and/or oral forward-looking statements, including in this presentation and in other communications. In addition, representatives of the Bank may make forward-looking statements orally to analysts, investors, the media and others. All such statements are intended to be forward looking statements. Forward looking statements include, but are not limited to, statements regarding the Banks objectives and priorities for 2014 and beyond and strategies to achieve them, and the Banks anticipated financial performance. Forward looking statements are typically identified by words such as will, should, believe, expect, anticipate, intend, estimate, may and could. By their very nature, these statements require the Bank to make assumptions and are subject to inherent risks and uncertainties, general and specific. Especially in light of the uncertainty related to the financial, economic and regulatory environments, such risks and uncertainties many of which are beyond the Banks control and the effects of which are difficult to predict may cause actual results to differ materially from the expectations Forward Looking Statements effects of which are difficult to predict may cause actual results to differ materially from the expectations expressed in the forward-looking statements. Risk factors that could cause such differences include: credit, market (including equity, commodity, foreign exchange, and interest rate), liquidity, operational, reputational, insurance, strategic, regulatory, legal, environmental, and other risks. All such factors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward looking statements, when making decisions with respect to the Bank and we caution readers not to place undue reliance on the Banks forward looking statements. Any forward looking statements contained in this presentation represent the views of management only as of the date hereof and are presented for the purpose of assisting the Banks investors and analysts in understanding the Banks financial position, objectives and priorities and anticipated financial performance as at and for the periods ended on the dates presented, and may not be appropriate for other purposes. The Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on its behalf, except as required under applicable securities legislation 2 3. Important Notes Definition of terms: FY means Full Year; and Q1 means First Quarter; Q2 means Second Quarter; HY means Half Year; H1 means First Half; Q3 means Third Quarter and 9M means Nine Months. The results were prepared in line with the International Financial Reporting Standards (IFRS). Regional split of African countries we operate in WAMZ UEMOA CEMAC E&amp;SA Ghana Burkina Faso Cameroon Kenya Guinea Benin Republic Chad Mozambique Liberia Cote d'Ivoire Congo Brazzaville Tanzania Sierral Leone Senegal Congo DRC Uganda 3 Important disclosure: This report was prepared by UBA to provide background information on the Group. The report is issued for information purposes only, especially with regards to enabling users understand the inherent potentials of the business. It is therefore not a solicitation to buy or sell the stock. The information contained herein is subject to change and neither the bank nor its staff is under any obligation to notify you or make public any announcement with respect to such change. Users are hereby advised to exercise caution in attempting to rely on these information and carry out further research before reaching conclusions regarding their investment decisions. Sierral Leone Senegal Congo DRC Uganda Gabon Zambia 4. Outline Overview of UBA Macroeconomic Overview Quarter One 2014 Financial Highlights 1 2 3 4 Review of Quarter One 2014 Financial Results Focus on UBA Congo Brazzaville 4 5 Appendix6 5. 5 1. Overview of Macro Economy 6. Nigeria GDP ($bn) 432.0 GDP Growth 6.8% Population (mn) 166.2 Inflation Rate 7.8% Interest Rate 12.0% Debt-to-GDP Ratio 11.0% Exchange Rate 162.5 Foreign Reserve ($bn) 41.3 Ghana GDP ($bn) 41.0 GDP Growth 4.9% Population (mn) 25.4 Inflation Rate 14.5% Interest Rate 18.0% Debt-to-GDP Ratio 44.9% Exchange Rate 2.3 Foreign Reserve ($bn)4.7 Overview of Macro Economy Guinea GDP ($bn) 7.0 GDP Growth 4.2% Population (mn) 11.5 Inflation Rate 10.3% Interest Rate 16.0% Debt/GDP Ratio 64.1% Exch. Rate 7,020.0 Guinea Senegal Sierra Leone Liberia Ivory Coast Ghana Nigeria Cameroon Chad DR Congo Uganda Kenya Gabon Burkina Faso Benin Locations outside AfricaLiberia GDP ($bn) 2.0 GDP Growth 8.1% Population (mn) 4.2 Inflation Rate 8.5% Interest Rate 13.5% Debt-to-GDP Ratio 44.9% Exchange Rate 85.5 Cote DIvoire GDP ($bn) 25.0 GDP Growth 9.80% Population (mn) 23.2 Inflation Rate -0.2% Interest Rate 3.5% Debt-to-GDP Ratio 78.8% Exchange Rate 486.4 Sierra Leone GDP ($bn) 4.0 GDP Growth 20% Population (mn) 5.98 Inflation Rate 8.2% Interest Rate 10.0% Debt/GDP Ratio 28.3% Exchange Rate 4,328.5 Burkina Faso GDP ($bn) 10.0 GDP Growth 8.0% Population (mn) 16.5 Inflation Rate 0.1% Interest Rate 3.5% Debt-to-GDP Ratio 16.2% Exchange Rate 513.2 Benin Republic GDP ($bn) 8.0 GDP Growth 4.2% Population (mn) 10.1 Inflation Rate 0.4% Interest Rate 3.5% Debt-to-GDP Ratio 18.8% Exchange Rate 513.2 Cameroun GDP ($bn) 25.0 GDP Growth 6.1% Population (mn) 21.7 Inflation Rate 1.6% Interest Rate 3.3% Debt-to-GDP Ratio 6.5% Exchange Rate 486.4 TChad GDP ($bn) 11.0 GDP Growth 7.2% Population (mn) 12.5 Inflation Rate 3.1% Interest Rate 3.3% Debt-to-GDP Ratio 19.5% Gabon GDP ($bn) 19.0 GDP Growth 6.1% Population (mn) 1.6 Inflation Rate 3.3% Interest Rate 3.3% Debt-to-GDP Ratio 13.8% Exchange Rate 515.4 USA GDP ($bn) 15,685 GDP Growth 2.7% Population (mn) 317.3 Inflation Rate 1.6% Interest Rate 0.3% Debt/GDP Ratio101.6% Exchange Rate 1.00 Foreign Reserve ($bn) 145,205 France GDP ($bn) 2,613 GDP Growth 0.8% Population (mn) 65.3 Inflation Rate 0.6% Interest Rate 0.3% Debt/GDP Ratio 93.5% Exchange Rate 1.35 Uganda GDP ($bn) 20.0 GDP Growth 6.9% Population (mn) 36.4 Inflation Rate 7.1% Interest Rate 11.5% Debt-to-GDP Ratio 33.3% Exchange Rate 2,475.00 Congo Zambia Tanzania Mozambique WA EA CA Exchange Rate 513.2 Senegal GDP ($bn) 14.0 GDP Growth 0.03% Population (mn) 13.7 Inflation Rate -0.1% Interest Rate 3.5% Debt-to-GDP Ratio 59.4% Exchange Rate 513.2 Zambia GDP ($bn) 21.0 GDP Growth 6.5% Population (mn) 14.6 Inflation Rate 7.7% Interest Rate 12.0% Debt-to-GDP Ratio 31.2% Exchange Rate 5.6 Exchange Rate 515.4 Congo Brazzaville GDP ($bn) 14.0 GDP Growth 4.9% Population (mn) 4.3 Inflation Rate 3.4% Interest Rate 3.3% Debt-to-GDP Ratio 19.6% Exchange Rate 505.9 Congo GDP ($bn) 18.0 GDP Growth 8.1% Population (mn) 65.7 Inflation Rate 1.2% Interest Rate 2.0% Debt-to-GDP Ratio 47.0% Exchange Rate 924.0 Kenya GDP ($bn) 37.0 GDP Growth 4.4% Population (mn) 43.2 Inflation Rate 6.3% Interest Rate 8.5% Debt-to-GDP Ratio 46.5% Exchange Rate 86.5 Tanzania GDP ($bn) 28.0 GDP Growth 6.5% Population (mn) 47.8 Inflation Rate 6.10% Interest Rate 12.0% Debt-to-GDP Ratio 39.9% Exchange Rate 1621.5 Mozambique GDP ($bn) 15.0 GDP Growth 7.1% Population (mn) 25.2 Inflation Rate 3.0% Interest Rate 8.3% Debt-to-GDP Ratio 42.2% Exchange Rate 30.9 Exchange Rate 1.35 Foreign Reserve (#bn) 125.7 UK GDP ($bn) 2,440 GDP Growth 2.8% Population (mn) 63.3 Inflation Rate 1.9% Interest Rate 0.5% Debt/GDP Ratio 88.7% Exchange Rate 1.06 Foreign Reserve (#bn) 110,883 Source: Trading Economics 6 7. 7 2. Quarter One 2014 Financial Highlights 8. Q1 2014 Financial Highlights Comprehensive Income &amp; Profit 31-Mar-14 31-Mar-13 % Change COMPREHENSIVE INCOME &amp; PROFIT TREND (Nmillion) Gross Earnings 68,079 62,942 +8.16% Net Interest Income 29,272 27,159 +7.78% Operating Income 45,512 44,633 +1.97% Operating Expenses (31,427) (29,393) +6.92% Profit Before Tax 13,544 17,155 -21.05% Profit After Tax 12,587 15,562 -19.12% EFFICIENCY AND Cost-to-Income Ratio (%) 69.1% 61.2% Return on Average Equity (%) 22.1% 31.0% EFFICIENCY AND RETURN Return on Average Equity (%) 22.1% 31.0% Return on Average Assets (%) 1.9% 2.6% Financial Position &amp; Risk 31-Mar-14 31-Dec-13 % Change FINANCIAL POSITION TREND (Nmillion) Total Assets 2,613,256 2,642,296 -1.10% Total Deposits 2,188,861 2,221,764 -1.50% Net Loans 1,009,811 969,591 +4.77% Net Assets 246,279 235,036 +4.78% BUSINESS CAPACITY RATIOS Loan-to-Deposit Ratio (%) 46.13% 44.30% Capital Adequacy Ratio (%) 21.2% 23.20% Liquidity Ratio (%) 50.5% 55.00% 8 9. 9 3. Review of Quarter One 2014 Financial Highlights 10. Income Analysis Gross earnings by income typeGross income trend (Nbn) 52.4 62.9 68.1 Q1'12 Q1'13 Q1'14 68.4% 70.5% 73.3% 31.6% 29.5% 26.7% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Q1'12 Q1'13 Q1'14 non interest income interest income Growing revenue base, up 8.2% in Q1 2014 Interest income represents 73.3% of total revenue; Theres an increasing contribution from operations in other African countries to 21% in first quarter 2014 from 19% in the corresponding period in 2013. Revenue split by geography 10 Q1'12 Q1'13 Q1'14 81.10% 79.2% 18.90% 20.8% 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% Q1'13 Q1'14 Nigeria &amp; RoW Africa (excl. Nig) 11. Profitability Operating Income (Nbn) Profit After Tax for the Year (Nbn) 38.0 44.6 45.5 Q1'12 Q1'13 Q1'14 13.1 15.6 12.6 Q1'12 Q1'13 Q1'14 Return on Avg. Equity Return on Avg. Assets Growth in operating income inched up by 1.9% in Q114. Consequently, profit after tax of N12.6 billion for the period, down by 19.1% from N15.6 billion in the corresponding quarter last year. This is due to higher effective tax rate. ROE and ROA still remain strong at 22% and 1.9% respectively. 11 Q1'12 Q1'13 Q1'14 29.7% 22.1% Q1'13 Q1'14 2.6% 1.9% Q1'13 Q1'14 12. Profit Drivers Net Interest Margin Cost of Funds 5.2% 6.0% 5.9% 3.0% 3.2% 3.6% Q1'12 Q1'13 Q1'14 Cost-to-Income Ratio Net Interest Margins nowb5.9%, regulatory induced pressure on earnings. Cost-to-income ratio increased to 69.1% in the period under review. 12 Q1'12 Q1'13 Q1'14 Q1'12 Q1'13 Q1'14 65.9% 61.2% 69.1% Q1'12 Q1'13 Q1'14 13. Financial Position Total Assets (Ntrn) Total Assets plus Contingents (Ntrn) 2.1 2.4 2.6 Q1'12 Q1'13 Q1'14 2.9 3.1 Q1'13 Q1'14 28.8% 38.6% 26.3% 3.3% 2.9% Q114 Total Assets Mix FY13 Solid balance sheet position of N3.1 trillion, of which assets constitute N2.6 trillion (83%). Increase in loan from Dec-2013 during the period by 52% Share of loans grew to 38.6% in Q114(vs. 36.4% in FY13). 13 Q1'12 Q1'13 Q1'14 Q1'13 Q1'14 29.4% 36.4% 28.7% 2.7% 2.8% Cash and bank balances Loans Investment securities Other assets Property and equipment 14. Loan Portfolio Loan Book (Nbn) Loan Book, by Customer Type 703.7 664.2 1009.8 Q1'12 Q1'13 Q1'14 61.8% 59.5% 65.9% 13.0% 19.4% 13.6% 4.8% 9.7% 8.3% 8.4% 7.2% 8.0% 6.1% 4.3% 4.1% Q1,12 Q1'13 Q1'14 Corporate Retail Public Sector Commercial Financial Sector NPL Ratio Loan growth expected to kick in over the remaining quarters for Oil and Gas, Manufacturing and Telecoms Consumer, Oil and Gas, Manufacturing and Telecoms still account for nearly 70% of total loans 60% of loans booked to corporate customers NPL ratio remains at 1.2% still well below regulatory threshold and industry average. 14 2.2% 1.2% Q1'13 Q1'14 Q1,12 Q1'13 Q1'14 15. Agric, 5% Construction, 6% Finance, 4% Personal, 13% Commerce, 9% Oil &amp; Gas, 18% Power, 7% Real Estate, 1% Others, 8% Loan Distribution, by Sector Loan Portfolio (Contd) Loan Distribution, by Geography Government, 8% Communication, 9% Manufacturing, 12% 15 15 Rest of World, 16% Nigeria, 84% 16. Deposit Portfolio Deposit Book (Ntrn) Deposit Mix, by Cost 1.6 2.0 2.2 81.7% 75.8% 78.5% 18.3% 24.2% 21.5% Q1'13 FY'13 Q1'14 Expensive Cheap Deposit grew by 8.5% in Q114 compared with Q113, while it declined from Q413 position by a marginal 1.5%. Generated largely from cheap sources Cheap deposits make up about 78.5% of total Deposits. 16 Q1'12 Q1'13 Q1'14 Q1'13 FY'13 Q1'14 17. Funding, Liquidity and Capital Adequacy Funding Mix Capital Adequacy Ratio 65.8% 84.3% 83.8% 7.4% 9.2% 9.4%7.2% 1.8%6.6% 4.8% 5.0% Deposits Equity Borrowing Others 23.5% 23.8% 21.2% Liquidity Ratio Deposits represent 83.8% of total funding base, largely the same as FY13. Strong capital adequacy and liquidity positions. Ratios now 21.2% and 50.5% respectively; improvements over FY 2013 positions. 17 Q1'12 FY'13 Q1'14 Q1'13 FY'13 Q1'14 60.0% 69.8% 50.5% Q1'13 FY'13 Q1'14 18. 18 4. Focus on Congo Brazzaville 19. Congo Brazzaville Key Financial Highlights Comprehensive Income &amp; Profit 31-Mar-14 31-Mar-13 Change % COMPREHENSIVE INCOME &amp; PROFIT TREND (Nmillion) Gross Earnings 799 368 118% Net Interest Income 237 69 245% Non Interest Income 534 292 83% Operating Income 770 361 113% Operating Expenses 538 353 53% Profit after Tax 232 8 2,811% EFFICIENCY AND RETURN Cost to Income (%) 70% 98% 19 Return on Average Equity (%) 6.5% 0.2% Return on Average Assets (%) 1.5% 0.03% Financial Position &amp; Risk 31-Mar-14 31-Dec-13 Change % FINANCIAL POSITION &amp; TREND (Nmillion) Total Assets 21,423 24,873 -14% Total Deposits 15,555 18,698 -17% Net Loans 11,641 9,059 +28% Net Assets 4,244 5,428 -22% BUSINESS CAPACITY RATIOS Loan to Deposit Ratio 75% 48% Capital Adequacy Ratio 29% 30% Liquidity Ratio 221% 186% 19 20. Income Analysis Revenue Trend (Nmn) Revenue Mix (%) 367.8 799.9 Q1'13 Q1'14 62% 67% 38% 33% Interest Income Non Interest Income 20 Profitability (Nmn) Gross Earnings grew by an impressive 118% from N367.8 million in Q113 to N800.0 million in the period under review on back of higher Operating income . Interest income grew faster (253% YoY) than non- interest income, consequently PBT came in N232.0 million almost at par with the N279.3 million achieved in FY13. Q1'13 Q1'14 8.0 232.0 Q1'13 Q1'14 FY'13 Q1'14 21. Financial Position Growing Asset Base (Nmn) Deposits (Nmn) Loan growth (Nmn) 6,137 18,698 15,555 - 6,000 12,000 18,000 Q1'13 FY'13 Q1'14 10,358 24,873 21,422 Q1'13 FY'13 Q1'14 21 Loan growth (Nmn) Good loan growth of 592% in the period under review relative to Q113; it also grew 28% from Q413 t Q114. This translates to a loan to deposit ratio of 75% (30% in 2013). Cautious lending strategy, as we increase lending to relatively less risky sectors/segments. Total assets grew by 107% in Q114 compared to Q113 but declined by 14% from Q413 to Q114. Deposit growth of 153% in Q114 compared to Q113 but declined 17% from Q413 to Q114. 1,682.2 9,059.2 11,640.9 68% 30% 75% 0% 25% 50% 75% 100% - 3,000.0 6,000.0 9,000.0 12,000.0 Q1'13 FY'13 Q1'14 Loan L/D Ratio 22. 85.9% 97.8% 69.9% Q1'13 FY'13 Q1'14 Trend in Cost/Income Improving Profitability and Efficiency 0.0% 1.5% Q1'13 Q1'14 Return on Assets Robust profitability: as ROE and ROA were impressive, at 6.5% and 1.5% respectively. Cost to income...</p>