INVESTOR PRESENTATION 9M15 RESULTS

1

The core of our strategy

2

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

Key Company Milestones

3

1995-2000

Established as the 8th

indigenous Commercial Bank

First bank to launch Internet banking

2001-2010 2011-2013 2014-2015

Restructuring of the bank through a Sampath Bank led consortium

Landmark investment from Middle East - Royal Family of Saudi Arabia

Listed in the CSE, Highest oversubscribed IPO

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

New Core-Banking system Implementation

First bank in Sri Lanka to implement Microsoft cloud technology

63 branches with access to over 2,700 ATM’S

Union Bank TODAY

4

New Shareholder - TPG with 70% ownership

Board of directors reconstituted

Management strengthened with key industry leaders

New business plan with a strategic focus on Corporate, SME and Retail Banking

New branch outlook and consumer focused layouts

Key Highlights - 3Q15

5

Loans & Advances49% Growth YTD

Q-3 Highest ever since 2011

Loans & Advances49% Growth YTD

Q-3 Highest ever since 2011

Interest Income Q3 is the highest ever since Jan

2014

Fee & Other IncomeQ3 is the highest ever since Jan

2014

Customer Acquisitionshighest ever in 3Q- 2015

Personal LoansLKR 500Mn in 3 months since

launch

Profit After Tax Q3 is the highest since Jan 2014

* Excluding the one off gain from the sale of UB Finance shares

Network Expansion – 3Q15

6

1New Branch

15Refurbishments

13Offsite ATM

Debit Card launched

7

Speed to Market award 2015

Financial results- 9M15 (Snapshot)

8

Financial Highlights - Bank

For the nine months ended September 2015 LKR Mn YoY GrowthNet Interest Income 1,538 32%

Total Operating income 2,072 33%

Operating Cost 1,706 44%

Net Profit for the period 117 109%

Loans and Advances 38,594 56%

Customer Deposits 33,471 20%

Key Financial Ratios

As at 30th September 2015 9M14 9M15Core Capital Adequacy 54.2% 28.3%

Interest Margins 4.3% 3.6%

Gross Non Performing Loans 11.6% 4.0%

Return on Equity 1.4% 0.9%

Return on Assets 0.2% 0.3%

Financial Results- 3Q15 (Snapshot)

9

Financial Highlights - Bank

3Q results for 2015 LKR Mn 3Q14vs 3Q15Variance

Net Interest Income 498 14%

Total Operating income 722 26%

Operating Cost 597 42%

Net Profit for the period 57 58%

Net Profit after tax

0

10

20

30

40

50

60LKR Mn

Information of ordinary shares of the bank

10

Share Price Performance (LKR) Top 10 shareholders

Name of Shareholder Structure 30.09.2015

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%

Market Value

(LKR) 30/9/2015 30/9/2014

Rs Rs

Market Value 21.50 23.00

Highest Price for the quarter 25.00 24.00Lowest Price for the quarter 21.40 19.00

As at 30th September 2015

Number of shares in public holding 239,327,750Number of public shareholders 33,756Percentage of public holding 21.9%

10121416182022242628

LKR

Net Interest Income

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Interest Income Interest Expense

850

900

950

1000

1050

1100

LKR Mn

0

100

200

300

400

500

600

700

800

LKR Mn

Net Interest Income

0

100

200

300

400

500

600

700

LKR Mn • Interest Income is the highest reported for a quarter since Q12014. This is due to the increased IEA.

• However, due to the increasing interest costs at a higher rate NII showed a reduction.

• Increase in investments in Units of which the return is reflected under other operating income is the main reason for this.

Fee and Other Income

12

0

10

20

30

40

50

60

70

80

LKR Mn

Fee and Commission Income Net Trading Income

0

10

20

30

40

50

60

70

80

LKR Mn

Other Operating Income

0102030405060708090

100

LKR Mn

• 3Q2015 is the best quarter for all these income categories and the trend is also in the right direction

• Trade, Guarantee and increasing processing fees led the growth in fee income.

• Increasing investments in Units is the main reason for the increase in trading income

• Exchange gain is the main income under Other Operating income. Increasing transaction volumes coupled with exceptional margins during September were the key reasons to the improved performance .

Name Business Facility

Orit Trading Lanka (Pvt) Ltd. Export of Garments Export Financing

Richard Peiris Group

Maskeliya Plantations Management of Tea Plantation Long Term Financing

Singer (Sri Lanka) PLC Manufacture, Import &Distribution of Consumer Products

Import Financing / Money MarketFinancing

Siyapatha Finance PLC Finance Company Term Financing

Softlogic Group

Softlogic Finance Leasing & Hire Purchase Finance Term Financing

Operating Income, Expenses and Impairment

13

0

100

200

300

400

500

600

700

800

LKR Mn

Total Operating Income

Impairment

0

50

100

150

200

250

300

LKR Mn

Expenses

• Reflecting the effectiveness of asset management to get the best return, total income highlighted consistent growth over last three quarters.

• Operating expenses are on the rise as expected and is a result of the strategic initiatives.

• Reflecting the improvement in quality of the portfolio, Impairment recorded the lowest since 1Q2014

0

100

200

300

400

500

600

700

LKR Mn

Loans and Funding

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Loans Mix – 30th September 2015

52%

21%

21%

6%

Term Loans

O/D

Trade Finance

Others

Gross Loans and Receivables

15,000

20,000

25,000

30,000

35,000

40,000

LKR Mn

Deposit Mix – 30th September 2015

67%

17%

9%7%

FD

SA

CA

Others

Customer Deposits

15,000

20,000

25,000

30,000

35,000

LKR Mn

Asset Quality Overview

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Gross NPL

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 Jul Aug Sep

2014 2015

Significant progress over the last 15 months has been made with regard to NPL’s.

Origination and underwriting strengthened for the future.

Recoveries streamlined and strengthened.

Note: Based on CBSL classification

16

CASA

Current Accounts

0

500

1,000

1,500

2,000

2,500

3,000

3,500LKR Mn

Savings Accounts

0

1,000

2,000

3,000

4,000

5,000

6,000

LKR Mn

CASA

0%

5%

10%

15%

20%

25%

30%

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 7% over the last 6 quarters.

The CASA ratio for 9M15, remains stable at 25%.

Financials – Income Statement (Bank)

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Rs Mn 3Q14 9M14 3Q15 9M153Q14 vs 3Q15

YoY9M14 vs 9M15

YoY

Net Interest Income 436 1,166 498 1,538 14% 31%

Net Fee and commission income 34 92 66 120 94% 30%

Net Trading and other operating income

103 301 158 414 53% 37%

Total Operating income 573 1,559 722 2,072 26% 32%

Operating Cost 420 1,185 597 1,706 42% 43%

Pre- Impairment profits 153 374 125 366 -18% -2%

Less: Impairment 92 278 30 136 67% 51%

Net profit before taxes and VAT on FS

61 96 95 230

Taxes including VAT on FS 25 40 38 113

Net Profit for the period 36 56 57 117 58% 109%

Financials – Balance Sheet (Bank)

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Rs Mn 9M14 9M15 9M1 VS 9M15 YoY

Assets

Cash and Balances with CB 14,550 4,030 -72%

Loans and receivables to other customers 24,059 38,065 58%

Other interest earning assets 6,111 19,296 216%

Investment in subsidiaries 892 892

Non interest earning assets 2,364 2,665 13%

Total 47,976 64,948 35%

Equity & Liabilities

Customer Deposits 27,858 33,471 20%

Due to banks and repurchased agreements 1,878 13,221 604%

Non interest earning liabilities 1,479 1,391 -6%

Equity 16,761 16,865 1%

Total 47,976 64,948 35%

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Financials – Income Statement (Group)

Rs Mn 3Q14 9M 14 3Q15 9M15 3Q14 vs 3Q15 YoY

9M14 vs 9M15 YoY

Net Interest Income491 1,305 604 1,833 23% 4%

Net Fee and commission income68 188 111 241 63% 28%

Net Trading and other operating income 130 459 167 425 29% -7%

Total Operating income689 1,952 882 2,499 28% 28%

Operating Cost503 1,428 700 1,999

39%40%

Pre- Impairment profits186 524 182 500 -2% -5%

Less: Impairment95 279 48 187 -50% -33%

Net profit before taxes and VAT on FS 91 245 134 313

Taxes including VAT on FS33 129 49 146

Net Profit for the period58 116 85 167 47% 44%

20

Financials – Balance Sheet (Group)

Rs Mn 9M 14 9M15 9M14 VS 9M15 YoY

Assets

Cash and Balances with CB 15,039 4,176 -72%

Loans and receivables to other customers 26,881 42,653 59%

Other interest earning assets 5,776 18,811 226%

Non interest earning assets 3,783 4,010 6%

Total 51,479 69,650 35%

Equity & Liabilities

Customer Deposits 30,283 37,116 23%

Due to banks and repurchased agreements 1,914 13,058 582%

Non interest earning liabilities 2,724 2,833 4%

Equity 16,558 16,643 1%

Total 51,479 69,650 35%

Key Initiatives taken to improve financial performance

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• Accelerated loan growth

• Supplemented market borrowings with customer deposits

• Replaced lower yielding assets with higher yielding assets

• Focused on improving fee income

• Focused on trade business

• Managed costs effectively

• Focused effort to improve recoveries

• Effective tax management

Key Highlights - 9M15

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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 63 and 30 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

23

Board of Directors

Name Title

P. Jayendra Nayak ChairmanAlexis Lovell Deputy ChairmanAsoka de Silva Senior DirectorIndrajit Wickramasinghe Executive Director/ CEOSow Lin Chiew Non Independent, Non Executive DirectorPriyantha Fernando Independent, Non Executive DirectorSabry Ghouse Independent, Non Executive DirectorHussain Imtiaz Muhseen Independent, Non Executive DirectorRanvir Dewan Non Independent, Non Executive DirectorGaurav Trehan Non Independent, Non Executive DirectorPuneet Bhatia Non Independent, Non Executive DirectorMichael J. O’Hanlon Non Independent, Non Executive DirectorAyomi Aluwihare Independent, Non Executive DirectorSumedh Jog Alternate DirectorYoke Sun Woon Alternate Director

Legal Form

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.

A Licensed Commercial Bank under the Banking Act No. 30 of 1988.

Date of Incorporation

February 2nd, 1995

Auditors

Ernst & YoungChartered Accountants,No. 201, De Saram PlaceColombo 10

Leadership Team

Name Title

Indrajit Wickramasinghe Director/ Chief Executive OfficerHiranthi de Silva Vice President Wholesale BankingMalinda Samaratunga Chief Financial OfficerRavi Divulwewa Vice President CreditRajeev Munasinghe Vice President Information TechnologyRavi Jayasekera Vice President Human ResourcesS. Sri Ganendran Vice President OperationsChaya Jayawardena Vice President Retail BankingSuhen Vanigasooriya Chief Risk Officer