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					    FACTS BEHIND THE FIGURES
    OF UNION BANK OF NIGERIA PLC

            PRESENTED BY

               G A T OBOH
      GROUP MANAGING DIRECTOR/CHIEF EXECUTIVE


        10th September, 2002


1
    1.0 INTRODUCTION

       DG of the NSE
       Management & Staff
       Doyen of the Capital Market
       Distinguished Stock Brokers & Dealers
       Members of the Press
       Ladies & Gentlemen

2
        INTRODUCTION (contd.)

       In consonance with tradition and our faith in the
        Stock Exchange, we are here to make a full
        disclosure of the facts behind our success and
        financial performance for the year ended 31st
        March, 2002.
       In spite of the tough challenges during the financial
        year, our bank returned an enviable result.
       For an appreciation of the financial statements,
        permit me to review the economy and the banking
        industry during year 2001/2002.



3
     2.0 THE ECONOMY
      Performance of the economy was mixed:
     Real GDP was 4.2% as against budget of
      5.0% though better than 3.8% for year 2000.
     Capacity utilisation was over 50%
      compared to 38% in previous year
     Stock of External Reserves improved but
      not as much as in 2000.


4
        The Economy (cont’d.)
       Fiscal operations of the Federal
        Government worsened with a deficit of 4%
        of GDP.
       Inflation reversed to the double-digit of 19%
        in 2001 as against 7% in 2000.
       The growth in monetary aggregates
        surpassed the programmed rates.
       Thus, Narrow Money (M1) grew at 28.1% as
        against target of 4.3%
       Broad Money (M2) grew by 27.0% as
        against target of 12.2%.

5
        The Economy (cont’d.)

       However, these growth rates indicated
        vast improvements over the rates of 62.2%
        and 48.1% respectively in year 2000.
       Similarly aggregate bank credit grew by
        76% as against target of 16%.
       Government credit grew by 80%.
       Credit to the Private sector grew by 43.5%.




6
            The Economy (cont’d.)

       Also during the period, the economy was, as
        usual,characterised by:
        –   Weak real sectors
        –   Poor socio-economic infrastructure
        –   High import dependence
        –   Widespread poverty
        –   High unemployment rate
        –   External debt overhang at US$29 Billion
        –   Vicious armed robbery attacks, serial ethnic
            killings, threats of strike by the Nigeria Police, etc.



7
          The Economy (cont’d.)



       The table below summarises the hard
        figures for the economy in 2001 (in %,
        otherwise):




8
    Index            Target   Actual         Comments
     M2            12.2        27.0          Expansionary
     M1            4.3         28.1          Expansionary
    Aggregate
    Credit Growth 15.8        75.8           Expansionary
    Credit to FG   2.6        79.7           Expansionary
    Credit to
    private sector 22.8       43.5           Expansionary
    Inflation       7.0       19.0           Unfavourable
    GDP            5.0         4.2           Under-achievement
    External Debt   -         $28.5billion    Unfavourable
    Naira Exchange
    Rate (End of
    period N/$)       -       113.5          Very High



9
         The Economy (cont’d.)
        Despite the gloom, there were positive signals:
          –   Economic fundamentals remained very
              strong.
          –   The capital market exhibited a bullish
              prognosis as epitomised in the capitalisation.
          –   FG’s continued unbundling of the economy:
                  12 enterprises for privatisation in 2002.
                  24 in 2003, etc.
                  NEPA to be broken into 18 separate companies.
          –   Also during the period, the supply of energy
              significantly improved nationwide
          –   Communications had a major improvement
              due to the liberalisation of the sector.

10
         3.0 THE BANKING INDUSTRY

        Excess liquidity persisted and was
         aggravated by the Government’s
         expansionary fiscal operations.




11
         THE BANKING INDUSTRY (contd.)

         – Tinkering of IFEM guidelines and the
           subsequent introduction of the Dutch
           Auction System
        Other significant measures:
         – Capital votes of Government parastatals
           transferred to the CBN.




12
     THE BANKING INDUSTRY (contd.)




     –   Enforcement of the increase in
         capitalisation of new banks to N2
         billion.
     –   Because of high risk of default, banks
         were forced to make provision of 50%
         and 100% on performing & non-
         performing loans to governments and
         their agencies.


13
     THE BANKING INDUSTRY (contd.)


       –   Currently, 91 banks are operating in the
           Industry.
       –   To prevent a repeat of the generalised
           distress of 1990s, banks were forced to
           put in place a contingency plan on crisis
           avoidance and mitigation.
       –   In spite of all these challenges which
           confronted the Industry, Union Bank
           performed well as a financial power-
           house.
14
         4.0 THE BANK
        Our institution has been around and
         operating in the Nigerian market for nine
         decades.
        Hence, not only do we understand the
         environment, we have unequivocally been in
         the vanguard of developing and monetising
         the economy.
        The current size of the bank has been made
         possible by the generations of management
         and staff as well as the loyalty & confidence
         of customers and shareholders.
15
          THE BANK (contd.)



        We remain focused in our vision of making
         Union Bank the “best of the best to bank
         on”.




16
     5.0 OUR STRATEGIC FOCUS
        Banking in 21st century is not the arm-
         chair scenario of the past.
        Hence, the need to apply our creativity &
         doggedness
        Our strategic focus has been
         programmed towards 5 main projects:

       5.1 STALLION 2000 PROJECT
      Our renewal agenda code-named “Stallion
       2000” started in 1998.
17
        We embarked on an aggressive programme of
         attitudinal change & paradigm shift involving:
          – Formal/informal training
          – New code of conduct
          – Effective communication
          – Re-energising and re-awakening the bank’s core
            ideology
        To synchronise with attitudinal change we
         embarked on
         –   Physical restructuring of branches & head office departments
         –   Process re-engineering



18
         OUR STRATEGIC FOCUS (contd.)


        We have now moved a gear up to start the
         cross-engineering of resources, facilities
         and locations.
        Currently, 38 of our strategic locations are
         operating on-line, real-time.




19
        5.2 SUBSIDIARIES
       5.2.1 UNION MERCHANT BANK LTD
      Union Merchant Bank Ltd witnessed a
       dramatic improvement in its performance
       when compared with its peers in the
       industry.
      It successfully consummated the largest
       State Bond ever on the Nigerian Capital
       Market.
      It made a profit after tax of N557.7 million
       for year ended 31/3/02.
20
       OUR STRATEGIC FOCUS (contd.)


     5.2.2 UNION HOMES SAVINGS & LOANS LTD
      Another subsidiary which continues to
       dictate the tune in its sector of operations
       and setting the benchmark is Union Homes
       Savings & Loans Ltd.




21
        It has a network of 13 branches nationwide.
        During the financial year ending 31/3/02, it
         returned a profit after tax of N488.2 million.

      5.2.3 UNION TRUSTEES LTD
      Our subsidiary in the Trusteeship sub-
       sector is Union Trustees Ltd.
      In keeping with its tradition of
       steadfastness, during the financial year, it
       made a profit after tax of N76 million.


22
          OUR STRATEGIC FOCUS (contd.)



      5.2.4 UNION ASSURANCE COMPANY LTD
      Our insurance outfit has been making a steady
       progress.
      In its financial year ending 31/12/2001, it made a
       profit after tax of N12.5million.
      Ladies and gentlemen, we will continue our
       strategy of building a financial hyper-market
       through the establishment of viable subsidiaries in
       sectors with new windows of opportunity.


23
         OUR STRATEGIC FOCUS (Cont’d)

     5.3 STAFF
        Our greatest asset is our staff and we
         encourage their intellectual capacity
         building in terms of quality, efficiency and
         affirmative action.
        An eloquent testimony to this intellectual
         capacity building and re-orientation of the
         bank is that today, Union Bank has the
         largest number of professionally qualified
         and chartered bankers in the industry.

24
     OUR STRATEGIC FOCUS (Cont’d)


        And we continue to organise in-house and
         external courses to update staff knowledge
         about banking operations and practice.
        Our industrial harmony has also been
         excellent which explains why we are not
         always in the news.




25
     OUR STRATEGIC FOCUS (Cont’d)


         5.4 BRANCH NETWORK
        The bank continued to exploit the
         opportunity of economies of scale by
         expanding our branch network and those of
         subsidiaries.
        The number of branches for the bank and
         the subsidiaries stood at 306 by the end of
         March 2002.
        Our branch expansion policy is not limited
         to the domestic economy but off-shore as
         well.
26
     5.5 INFORMATION, COMMUNICATION
     TECHNOLOGY (ICT) PRODUCTS/SERVICES.

        A major capacity issue for Union Bank is our
         information, communication and technology and
         the associated infrastructures.
        New electronic products such as “Union e-link”,
         “Telephone Banking” and Automated Teller
         Machine (ATM) are currently riding on our
         Flexcube Banking Application Package and
         being enjoyed by our customers.



27
     OUR STRATEGIC FOCUS (cont’d)


        Apart from having the highest traffic on our
         ATMs in the Industry, in addition to the
         current number, we are deploying 100 more
         ATMs nationwide to make financial
         transactions seamless for the banking
         public.
        We are also a leading promoter of the
         electronic purse product - the Valucard.
        Following this trend, we are converging
         towards the EMV-compliance.
28
     6.0 FACTS AND FIGURES:

       6.1 BALANCE SHEET POSITION
      It is commonly observed that Union Bank
       has a solid balance sheet, which makes it a
       bank of first choice whenever issues of
       safety, professionalism and public
       confidence are uppermost in the investors’
       mind.
      During the review period, our balance sheet
       constituted a significant proportion of the
       industry’s aggregates.
29
         FACTS (Cont’d)


        Permit me, at this juncture, to discuss the most
         important items on the bank’s balance sheet:

      6.1.1 TOTAL ASSETS
      The bank’s total assets remain the largest in the
       Nigerian banking industry.
      It increased by 28% from N214.885 billion in 2001 to
       N275.2 billion as at 31st March, 2002.
      This asset base is good and attractive given its
       balanced portfolio spread.


30
          FACTS (Contd)




        Such spread has always given a good mix
         between return and risk within the
         philosophy of Union Bank culture so as to
         retain customers’ confidence in the Big,
         Strong, Reliable bank.
        The Group’s total assets increased by 26%
         from N238.3 billion to N300.0 billion during
         the same period.



31
         FACTS (cont’d)

         6.1.2 TOTAL DEPOSITS
        The bank mobilised a total deposit of N204.3billion as
         at 31st March 2002 which was a 20% increase over
         171.0billion in 2001.
        In a similar fashion the figure for the Group increased
         by 18% closing at N222.7 billion during the same
         period.

      6.1.3 LOANS & ADVANCES
      Creation of credits especially to the real sector
       remains a core function of our institution.

32
         FACTS (cont’d)

        The bank enlarged its lending portfolio to
         N45.5 billion which was a 23% increase
         over the N36.93 billion for 2001.
        In year 2001, the Banking Industry set
         aside N6.2 billion to fund SME projects.
        Considering that there are ninety-one (91)
         banks operating, the contribution of N741
         million by Union Bank Group, representing
         12% of the Industry total, is enviable.



33
          FACTS (cont’d)

        And this year, we have set aside another
         N752 million making a total of N1.5 billion in
         two years from Union Bank and Union
         Merchant Bank alone.
        The graph below gives the five-year
         summary of all the above growth indices:




34
                                                                           GROWTH INDICATORS




                         300,000                                                                                         299,755

                                                                                                         238,311

                         250,000


                                                                                                                     222,718
                         200,000
                                                                                         138,342     189,605
     Millions of Naira




                                                                           109,586
                                                               85,850
                          150,000


                                                                                     102,774
                          100,000                                      83,093
                                                      63,654


                           50,000
                                                 23,364                                                                               Total Assets
                                                                  26,148
                                                                                28,662          39,631          49,382
                                         6,338                                                                                     Total Deposits
                                                          9,157
                                   0                                       11,199                         32,896
                                                                                          15,191                               Total Loans & Advances
                                       1997
                                                      1998                                                                 Capital Funds (Networth)
                                                                        1999
                                                               Year                      2001
                                                                                                         2002




35
     FACTS (Cont’d)

          6.1.4 CAPITAL ADEQUACY
        The bank’s called-up share capital
         increased from N629 million in 2001 to N1.3
         billion in 2002.
        However, after the successful conclusion of
         our Rights Issue, the Tier 1 Capital and
         Shareholders’ Fund moved to the
         unassailable records of N28.8 billion and
         N30.3 billion respectively.



36
         FACTS (cont’d)


        The bank’s capital adequacy ratio as at
         31st March 2001 stood at 14.4% but has
         moved up to 25.5% by 31/3/02 as against
         the recommended minimum of 8% by the
         Bank for International Settlement (BIS)
         and Central Bank of Nigeria (CBN).
        A cursory look at the graph below
         shows the comfortable liquidity, Capital
         Adequacy and other health indicators of
         the bank in the past five years:

37
                                                              HEALTH STATUS INDICATORS


                                                                                                   49.3
                                                                              46.36                                       Liquidity Ratio
                     50                                                                                            47.92


                     45

                                                       31.8       32.66     37.29
                     40
                                             34.57
                                                                                      Non-Performing Loans
                     35                                       31.04
     In Percentage




                     30                                                                                    27.7
                                                                                                                  25.51
                      25                                                                   22.6

                      20                               18.3            19
                                      14.1                                                    Capital A dequacy Ratio
                      15
                                                                                    14.4

                      10
                                8.6
                          5                     7.18                                               13.25
                                                                                7.3        Price-Earnings Ratio
                          0                                     4.44

                              1997
                                             1998
                                                              1999
                                                       Year                 2001
                                                                                                  2002




38
          FACTS ( Cont’d)

          6.2 PROFIT AND LOSS
        The Group’s earnings stood at N39.4 billion
         during the period ending 31/3/2002
         compared with N40.7billion for 18 months
         in 2001.
        The major contributors to the bank’s
         turnover were the treasury operations,
         44%; interest on loans and advances, 32%;
         commissions, 20%; forex, 1% and others,
         4%.

39
          FACTS (Cont’d)

        Our overhead expenses were largely
         affected by staff welfare and inflation as
         well as our contribution to the Pension
         Fund.
        The net effect of all the statistics is the
         bank’s profit before tax of N7.5 billion
         representing 14% increase over N7.1
         billion achieved in 2001.
        The bank was able to return a profit after
         tax of N4.7 billion.

40
          FACTS (cont’d)


        In a similar fashion, the Group’s profit
         before and after tax stood at N9.0
         billion and N5.7 billion respectively.
        The graph below shows the profit and
         earnings performance of the bank in
         the last five years:




41
                                                        PERFORMANCE INDICES AT A GLANCE




                            20000
                                                                                                        19395
                                                                                                                          19107
                            18000


                            16000


                            14000
     In Millions of Naira




                            12000


                             10000                                                     9521


                              8000                                     7014
                                                        5375
                              6000

                              4000                                                               5767              5866
                                                 1297                           3248
                                                                1924
                              2000
                                           437                                                                                        Value Added
                                    0                     881            1321
                                                                                          1888                  3146              Profit After Tax
                                        1997
                                                        1998
                                                                        1999                                                  Dividend
                                                                Year                     2001
                                                                                                            2002



42
      6.3 APPROPRIATION
      Apart from the large corporate tax of over N2.8
       billion, the bank is currently the largest single
       contributor to the funding of the Industry’s new
       initiative on Small and Medium Industries Equity
       Investment Scheme (SMIEIS).
      The Bank set aside a total sum of N749 million ,
       representing 10% of our profit before tax.
      Adding the contribution of Union Merchant Bank
       Ltd, the Group’s total goes to an unbeatable figure
       of N752million.



43
           FACTS (Cont’d)

        The recommended dividend pay-out to our
         shareholders is N3.15billion representing an
         increase of 67% over the 2001 figure and
         translating into a dividend of N1.25k for every
         50kobo share held.
        The sum of over N709 million was
         appropriated into reserves, thus confirming
         our belief in the adequacy and robustness of
         the bank’s core capital.
        The graph below shows the dividend pay-out,
         earnings/share, dividend cover, net assets/share and
         stock price trend over the last five years:
44
                                                   MARKET PERFORMANCE



                                                                                                             42.00
                45.00


                40.00
                                                                                                 32.50

                35.00


                30.00
     In Naira




                25.00
                                                    13.00
                                                                   10.70        11.30
                 20.00

                                                                                                         12.86
                 15.00
                                                                7.00        9.00
                                             5.00
                 10.00                                                                    5.86
                                          2.89
                                                         2.13            2.42                                          Stock Price
                                                                                      2.99
                   5.00            1.01           1.49            2.54                               1.80            Net Assets / Share
                                                                                   2.24
                            0.35                                                                  2.25           Dividend Cover
                   0.00                    0.70
                                                           1.05
                                                                            0.75                             Earnings / Share
                          1997                                                               1.25
                                      1998                                                                Dividend / Share
                                                     1999
                                                                         2001
                                             Year                                         2002




45
             FACTS (cont’d)



         THE AWARDS
        Several organisations have awarded Union
         Bank honours in recognition of its
         contributions to the economy.
        On the domestic scene, the bank
         monopolised the annual CBN Award for the
         best agriculture-supporting bank winning it
         again for the seventh consecutive year.



46
           FACTS (cont’d)


        “The Banker”, a subsidiary of the Financial
         Times of London only last week gave our
         institution the award of the “number one
         bank in Nigeria”. This is now the third year
         in a row that “The Banker” has so
         recognised Union Bank.
        Also all the Rating Agencies in which we
         participated gave our Bank, a multiple “A”
         rating.

47
      Above all, our Bank was also
      awarded the prestigious
      Nigerian Stock Exchange
      President’s Merit Award for
      the Banking Industry in year
      2001.

48
                 THE FUTURE
        We are not unaware of the numerous
         challenges and adversities that lie ahead of
         the domestic banking industry but we are
         confident that we shall surmount them all,
         given the resources at our disposal.
        Our Bank is poised to explore the limitless
         opportunities offered by the emerging train
         of globalisation in the market place.
        The bank’s renewed focus on better service
         delivery and value creation for customers
         will now be pursued vigorously at all
         locations.
49
        We are also not complacent nor resting on
         our oars regarding competition and the
         insatiable demands from stakeholders.
        We have a culture to repay our investors
         handsomely which informs the
         recommended pay-out of N1.25k.
         Therefore, you should continue to provide
         the right and dispassionate advice to your
         clients.
        In spite of the current skirmish in our
         national polity, our bank remains focused
         and confident about the Nigerian economy.
50
        Distinguished market operators, Ladies and
         Gentlemen, the only thing I can now do is to
         assure you further that Union Bank will
         strive to maintain its leadership position in
         the industry while I admonish you all to
         continue your investments and business
         relationship with the bank and together, we
         shall reap the mouth-watering harvest in
         the current financial year.
        I thank you for listening and God bless

     G A T OBOH
     Group Managing Director/Chief Executive
     10th September 2002
51

				
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