Investor Presentation Half Year 2015 results

The core of our strategy

To be a key player in the Sri Lankan banking sector by becoming a fully fledged commercial bank

Key Company Milestones

First bank to launch Internet banking

1995-2000 2001-2010 2011-2014 2015

Established as the 8th

indigenous Commercial Bank

Landmark investment from Middle East - Royal Family of Saudi Arabia

Restructuring of the bank through a Sampath Bank led consortium

Acquisition of NAMAL and UB Finance

CFI award for Best SME Bank

TPG through its affiliate Culture Finance Holding strikes landmark deal with Union Bank

Listed in the CSE, Highest oversubscribed IPO

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First bank in Sri Lanka to implement Microsoft cloud technology

Union Bank TODAY

62 Branches with access to a network of

2,700 ATM’s Island wide

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

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Financial results- 2Q15 (Snapshot)

Financial Highlights - Bank

2Q results for 2015 LKR Mn QoQ Variance

Net Interest Income 511 3%

Total Operating income 688 4%

Operating Cost 563 3%

Pre Impairment Profits 125 8%

Net Profit for the period 35 39%

Loans and Advances 33,093 13%

Customer Deposits 30,398 4%

Key Financial Ratios

1Q15 2Q15

Capital Adequacy 38.1% 33.2%

Interest Margins 4.3% 4.0%

Non Performing Loans 5.8% 4.9%

Return on Equity 0.6% 0.7%

Return on Assets 0.3% 0.3%

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Financial results- 1H15 (Snapshot)

Financial Highlights - Bank

For the six months ended June 2015 LKR Mn YoY Growth

Net Interest Income 1,039 43%

Total Operating income 1,350 37%

Operating Cost 1,109 45%

Pre Impairment Profits 242 9%

Net Profit for the period 60 211%

Loans and Advances 33,093 38%

Customer Deposits 30,398 7%

Key Financial Ratios

1H14 2014 1H15

Capital Adequacy 14.4% 42.3% 33.2%

Interest Margins 4.1% 4.5% 4.0%

Non Performing Loans 12.4% 8.3% 4.9%

Return on Equity 0.7% 0.7% 0.7%

Return on Assets 0.1% 0.2% 0.3%

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Information of ordinary shares of the bank

Name of Shareholder Structure 30.06.2014

Culture Finance Holdings (An affiliate of TPG) 70.00%

Vista Knowledge Pte Ltd 5.90%

Associated Electrical Corporation Ltd 2.70%

Mr.A.I.Lovell 2.10%

Mr.C.P.A.Wijeyesekera 1.70%

Mr.D.A.J Warnakulasuriya 1.40%

Exsab International Holding Co for Trading Development 0.80%

Ashyaki Holdings (Pvt) Ltd. 0.70%

Rosewood (Pvt) Limited 0.70%

Mr.M.D.Samarawickrama 0.70%

Total 86.70%

Top 10 shareholdersShare Price Performance (LKR)

Number of shares in public holding 239,337,200

Number of public shareholders 33,868

Percentage of public holding 21.9%

As at 30th June 2015

(LKR) 30/6/2015 30/6/2014

Rs Rs

Market Value 23.70 21.50

Highest Price for the quarter 26.40 22.10

Lowest Price for the quarter 23.60 18.10

Market Value

10

12

14

16

18

20

22

24

26

28

LKR

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Profitability Overview – Bank

Net Interest income Interest Margins

7

-

100

200

300

400

500

600

700

LKR Mn

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Profitability Overview - Bank

Net fees and Commission income

Trading and other operating income

The bank has placed a lot of emphasis on building its Fee

based business lines to catch up with industry averages.

Key initiatives have been set in place to grow Fee based

income from Corporate, SME and Retail segments.

-

50

100

150

200

250

LKR Mn

-

5

10

15

20

25

30

35

40

LKR Mn

8

Profitability Overview - Bank

The Bank has invested significantly over the last

few quarters to improve efficiencies in processes

and delivery systems by upgrading existing

technology and introducing new systems.

These investments are inline with the new

strategic initiatives.

Total Operating income Operating Expenses

37% 45%

-

200

400

600

800

1,000

1,200

1H14 1H15

LKR Mn

Profit after tax

-

10

20

30

40

50

60

70

1H14 1H15

LKR Mn211%

9

-

200

400

600

800

1,000

1,200

1,400

1,600

1H14 1H15

LKR Mn

Loans and Funding

Loans Mix – 30th June 2015 Gross Loans and Receivables

Deposit Mix – 30th June 2015 Customer Deposits

50%

23%

20%

7%

Term Loans

OD

Trade

Others

65%

18%

9%

8%

FD

SA

CA

Others

15,000

20,000

25,000

30,000

35,000

LKR Mn

10

15,000

20,000

25,000

30,000

35,000

LKR Mn

Asset Quality Overview

Gross NPL

Significant progress over the last 12 months has been

made with regard to NPL’s.

Origination and underwriting strengthened for the

future.

Recoveries streamlined and strengthened.

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

2H14 1H15

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CASA

Current Accounts Savings Accounts

CASA

Significant progress has been made to strengthen

CASA within the bank.

Current Accounts have grown at a compounded

monthly growth rate of 6% over the last 6 quarters.

Savings Accounts have grown at a compounded

monthly growth rate of 8% over the last 6 quarters.

The CASA ratio for 1H15, remains stable at 27%.

0

500

1,000

1,500

2,000

2,500

3,000

LKR Mn

0

1,000

2,000

3,000

4,000

5,000

6,000

LKR Mn

0%

5%

10%

15%

20%

25%

30%

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Financials – Income Statement (Bank)

Rs Mn 1Q14 2Q14 1H 14 1Q15 2Q15 1H15IH15 vs 1H14

YoY

2Q15 vs 2Q14

YoY

Net Interest Income 330 399 729 528 511 1,039 43% 28%

Net Fee and commission income 28 30 58 25 30 55 6% 2%

Net Trading and other operating

income 95 103 198 109 147 256 29% 43%

Total Operating income 453 533 986 662 688 1,350 37% 29%

Operating Cost 357 407 765 546 563 1,109 45% 38%

Pre- Impairment profits 96 125 221 116 125 242 9% 0%

Less: Impairment 75 111 186 58 48 107 43% 56%

Net profit before taxes and VAT

on FS21 14 35 58 77 135

Taxes including VAT on FS 13 3 16 33 42 75

Net Profit for the period 8 12 19 25 35 60 211% 200%

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Financials – Balance Sheet (Bank)

Rs Mn 1H 14 2014 1Q15 IH151H15 VS 1H14

YoY

Assets

Cash and Balances with CB 4,112 13,634 10,436 4,353 6%

Loans and receivables to other customers 23,922 25,945 29,258 33,093 38%

Other interest earning assets 5,318 6,238 6,489 15,032 183%

Investment in subsidiaries 892 892 892 892 0%

Non interest earning assets 2,344 2,286 2,366 2,455 5%

Total 36,589 48,995 49,442 55,825 53%

Equity & Liabilities

Customer Deposits 28,506 27,809 29,201 30,398 7%

Due to banks and repurchased agreements 1,335 3,207 2,232 7,212 440%

Non interest earning liabilities 1,360 1,229 1,235 1,405 3%

Equity 5,388 16,750 16,774 16,811 212%

Total 36,589 48,995 49,442 55,825 53%

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Financials – Income Statement (Group)

Rs Mn 1Q14 2Q14 1H 14 1Q15 2Q15 1H15IH15 vs 1H14

YoY

2Q15 vs 2Q14

YoY

Net Interest Income 384 431 815 615 615 1,230 51% 43%

Net Fee and commission income 57 63 120 62 68 131 9% 8%

Net Trading and other operating

income 124 204 328 124 133 257 22% 35%

Total Operating income 565 698 1,263 801 816 1,617 28% 17%

Operating Cost 441 483 925 637 662 1,299 40% 37%

Pre- Impairment profits 124 215 339 165 154 319 6% 29%

Less: Impairment 80 104 184 79 60 139 25% 43%

Net profit before taxes and VAT

on FS 44 111 155 86 94 180

Taxes including VAT on FS 21 76 97 48 50 98

Net Profit for the period 23 35 58 38 45 82 42% 27%

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Financials – Balance Sheet (Group)

Rs Mn 1H 14 2014 1Q15 IH151H15 VS 1H14

YoY

Assets

Cash and Balances with CB 4,761 14,014 10,622 4,463 6%

Loans and receivables to other customers 26,256 29,218 32,867 36,909 41%

Other interest earning assets4,828 5,699 6,175 14,648 203%

Non interest earning assets3,883 3,628 3,685 3,784 3%

Total 39,728 52,558 53,349 59,805 51%

Equity & Liabilities

Customer Deposits30,563 30,324 31,850 33,270 9%

Due to banks and repurchased agreements1,376 3,242 2,207 7,113 417%

Non interest earning liabilities2,633 2,497 2,761 2,859 9%

Equity 5,157 16,497 16,531 16,563 221%

Total39,728 52,558 53,349 59,805 51%

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Key highlights of 1H15

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New Management and organizational structure implemented in keeping with the new business strategy.

Customer reach expansion accelerated with branches totaling to 62 and 20 offsite ATMs.

Branch layouts and branches are being refurbished with stronger consumer oriented branding.

Operations are being centralized.

Sales teams are being introduced to strengthen the alternate channels.

Brand equity and awareness building campaigns led with a multimedia corporate campaign launched.

Corporate and SME credit underwriting and processes streamlined to have better turnaround times.

New liability and consumer asset products introduced.

A performance culture is being built across the organization.

Quality of portfolio significantly improved with better underwriting and collection processes being

introduced.

Corporate Information

Board of Directors Legal Form

Date of Incorporation

A Public Limited Liability Company incorporated in Sri Lanka

under the Companies Act No. 17 of 1982. Re-registered under the

Companies Act No. 7 of 2007. Listed as a public quoted Company

at the Colombo Stock Exchange in 2011.

February 2nd, 1995

Name Title

P. Jayendra Nayak Chairman

Alexis Lovell Deputy Chairman

Asoka de Silva Senior Director

Indrajit Wickramasinghe Executive Director/ CEO

Sow Lin Chiew Non Independent, Non Executive Director

Priyantha Fernando Independent, Non Executive Director

Sabry Ghouse Independent, Non Executive Director

Hussain Imtiaz Muhseen Independent, Non Executive Director

Ranvir Dewan Non Independent, Non Executive Director

Gaurav Trehan Non Independent, Non Executive Director

Puneet Bhatia Non Independent, Non Executive Director

Michael J. O’Hanlon Non Independent, Non Executive Director

Ayomi Aluwihare Independent, Non Executive Director

Sumedh Jog Alternate Director

Yoke Sun Woon Alternate Director

Name Title

Indrajit Wickramasinghe Director/ Chief Executive Officer

Hiranthi de Silva Vice President Wholesale Banking

Malinda Samaratunga Chief Financial Officer

Ravi Divulwewa Vice President Credit

Rajeev Munasinghe Vice President Information Technology

Ravi Jayasekera Vice President Human Resources

S. Sri Ganendran Vice President Operations

Chaya Jayawardena Vice President Retail Banking

Suhen Vanigasooriya Chief Risk Officer

Leadership Team

Auditors

Ernst & Young

Chartered Accountants,

No. 201, De Saram Place

Colombo 10

A Licensed Commercial Bank under the Banking Act

No. 30 of 1988.

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