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


Joseph Mbulu

Head, Transformation

24+ years experience in business

transformation & banking

Adekunle Sonola

Head, Commercial Banking


Nath Ude

Head, Service & Technology


Emeka Okonkwo

Head, Corporate 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


Our Operating Environment



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



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%


Tier 1 average growth: -4%


5%

6%

Source: Banks’ financials

UBN Rights Issue: A Case For Investment



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



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



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

INA

NC

IAL P

ER

FO

MA

NC

E

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

Stanbic IBTC Capital 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.

Union Bank Disclaimer

45


If you received this document in error, please immediately return the document and other related documents to Standard Bank.

On receipt of this document, you agree to be bound and are deemed to understand that:

This presentation is provided for information purposes only on the express understanding that the information contained herein will be regarded as strictly

confidential. It is not to be delivered nor shall its contents be disclosed to anyone other than the entity to which it is being provided and its employees and shall

not be reproduced or used, in whole or in part, for any purpose other than for the consideration of the financing or transaction described herein. If this

presentation has been received in error it must be returned immediately to The Standard Bank of South Africa Limited (“Standard Bank”). This is a commercial

communication. The information does not include a personal recommendation and does not constitute an offer, or the solicitation of an offer for the sale or

purchase of any financial product, service, investment or security. The information, investments and/or strategies discussed here may not be suitable for all

investors; if you have any doubts you should consult your investment advisor.

No liability is accepted by Standard Bank and/or any affiliate, subsidiary or branch thereof (the “Standard Bank Group”) whatsoever for any direct or

consequential loss arising out of reliance upon all or any part of the information contained in this presentation. You are not relying on any communication

(written or oral) from any member of the Standard Bank Group as investment advice or as a recommendation to enter into any transaction; it being understood

that information and explanations related to the terms and conditions of a transaction shall not be considered investment advice or a recommendation to enter

into that transaction. No communication (written or oral) received from any member of the Standard Bank Group shall be deemed to be an assurance or

guarantee as to the expected results of that transaction. The investments discussed may fluctuate in price or value. Whilst every care has been taken in

preparing this presentation, no member of the Standard Bank Group gives any representation, warranty or undertaking, express or implied, and accepts no

responsibility or liability as to the accuracy, or completeness, of the information, statement, assumption or projection contained in this presentation. Past

performance is not indicative of future results.

For the avoidance of doubt, our duties and responsibilities shall not include tax advisory, legal, regulatory accounting or other specialist or technical advice or

services. You are to rely on your own independent appraisal of and investigations into all matters and things contemplated by this presentation. By accepting

this presentation, you agree to be bound by the foregoing limitations. Kindly note that this presentation does not represent an offer of funding since any facility

to be granted in terms of this presentation would be subject to the Standard Bank Group obtaining the requisite internal and external approvals.

Nigeria

Stanbic IBTC Capital Limited, Nigeria, is incorporated in Nigeria (Company Number RC 1031358) and is registered with the Securities and Exchange

Commission as an Issuing House and Underwriter in Nigeria. Stanbic IBTC Capital Limited’s parent company in Nigeria, Stanbic IBTC Holdings PLC is listed

on The Nigerian Stock Exchange.

Copyright 2017 Standard Bank Group. All rights reserved.


46

Chapel Hill Disclaimer

Chapel Hill Advisory Partners Limited (“Chapel Hill”) is the investment banking business of Chapel Hill Denham.

Chapel Hill is registered by the Securities & Exchange Commission (“SEC”) as an issuing house and market maker.

This document was prepared exclusively for the benefit of Union Bank of Nigeria Plc (“Union Bank” or “UBN” or the “Bank”)

in respect of its proposed Transaction. This presentation may contain information proprietary to Chapel Hill and accordingly,

cannot be reproduced, acted upon or disseminated in whole or in part without Chapel Hill’s prior consent.

The information contained in this presentation is confidential and intended solely for the use of the Bank. This presentation

may contain information proprietary to Chapel Hill and accordingly, cannot be reproduced, acted upon or disseminated in

whole or in part without Chapel Hill’s prior consent.

This presentation contains information that has not been independently verified by Chapel Hill. Neither Chapel Hill nor any of

its representatives make any representation or warranty, expressed or implied, as to the accuracy or completeness of any of

the information contained in this document.

Only those particular representations and warranties, if any, which may be made in a definitive written agreement, when, as

and if executed, and subject to such limitations and restrictions as may be specified therein, will have any legal effect.

Any market analysis and estimates presented in this document represent the subjective views of Chapel Hill or the source

referenced, if any.

This presentation is intended for discussion purposes only and does not represent a commitment, proposal,

recommendation, offer open for acceptance or agreement to enter into a transaction. Any transaction is subject to the

agreement of final terms to be set out in a separate written agreement. The decision to enter into any transaction and to

assume the risk associated with the transaction rests solely with the recipient.

Chapel Hill Disclaimer

47

FSDH Disclaimer

The information contained in this presentation is confidential and intended solely for the use of the recipient.

This presentation may contain information proprietary to FSDH and accordingly, cannot be reproduced, acted upon or

disseminated in whole or in part without FSDH’s prior consent. Although FSDH has taken reasonable care in the production

of this document, this presentation contains information that has not been independently verified by FSDH and the same is

being provided by FSDH for information purposes only.

FSDH does not make any representation or warranty, express or implied as to the accuracy or completeness of the

information present herein and does not assume any undertaking to supplement such information as further information

becomes available or in light of changing circumstances. Consequently FSDH does not guarantee the future outcome of the

recommendations contained therein.

FSDH expressly disclaims any and all liability which is based on the information and statements or any part thereof contained

in (or omitted from) this presentation.

This presentation is intended for discussion purpose only and does not represent a commitment, proposal, recommendation,

offer open for acceptance or agreement to enter into a transaction. The delivery of this presentation does not imply that there

has been no change in the business, operations, financial condition, prospects and affairs of the company since the date of

this presentation.

Any transaction is subject to the agreement of final terms to be set out in a separate written agreement. The decision to enter

into any transaction and to assume the risk associated with the transaction rest solely with the recipient.

FSDH Disclaimer

Head OfficeStallion Plaza 36, Marina

P.M.B 2027 Lagos, Nigeria

London Office1 King's Arms Yard

London

EC2R 7AF

Contact InfoWebsite: www.unionbankng.com

Email: [email protected]

[email protected]

TelephoneUnionCare:+234-1-2716816

+234-7007007000

THANK YOU

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