Message from the Chief Executive Officer
THE CHIEF EXECUTIVE OFFICER JEAN CLAUDE GELHAAR
2018 was a very satisfying year for UBAF, confirming the positive change noted in 2017 and hopefully relegating the more complicated prior financial years to the past.
As our Chairman's speech rightly reminds us, the general context of the past year has been anything but serene or optimistic for the global economy in general, and particularly for trade financing, which is our core business. An increase in protectionism in the form of tariffs, spurts of identity fever in usually wiser countries, unstable geopolitical context, volatility of commodity prices, weakened business confidence and household indices, sometimes chaotic financial markets, global economic growth slowing down…all the conditions for a bumpy landing.
The quantitative elements that we submit to you in this annual report, as well as the qualitative contributions that complement them, demonstrate the resilience of UBAF in an overall degraded context. This situation is not the result of chance or luck but results from the combination of a history and an original corporate culture and technical and organisational developments that have been firmly underway for several years.
As a result, our revenues grew by 5% year-on-year, our expenses dropped by 7% without altering the quality of our execution and control processes; our gross operating income is recovering strongly and stabilising in positive territory.
From a business flow perspective, UBAF's documentary activities recorded a sharp increase of almost 18%, bringing the amount processed to €11.3 billion. Our commercial loan portfolio grew by 19% to reach an average of €951 million and the interest margins generated by financing activities grew by 37%. UBAF's balance sheet has now reached close to €2 billion, up 17% year-on-year. However, our regulatory ratios remain very protective with a solvency ratio calculated by the standard method at the end of the year at 14.2% and a monthly average Liquidity Coverage Ratio at 195%.
Beyond these figures alone, the component that is certainly the most promising for UBAF is maintaining and very often expanding a network of favoured banking contacts and field expertise in countries often considered difficult or complex from the point of view of risk management of all kinds such as Africa, the Arab world or the Indian sub-continent. Emerging economies have strong growth rates and are alternative sources of profitability for many banks, who frequently open up to lower bids on risk premiums associated with trade financing transactions.
Our geographic areas where we operate represented locally by three branches (Singapore, Seoul, Tokyo) and four representative offices (Dhaka, Cairo, Dubai, Algiers) complete a central mechanism based in Paris fully covering our clientele based on sectors dedicated to traders, exporting companies and correspondent banks.
This ensures UBAF is positioned very favourably and securely in an increasingly demanding competitive environment. The good financial and commercial performances of 2018 do not however dim other sources of satisfaction such as the continued improvement of our information systems, of our counterparty and compliance risk management as well as the operational quality of our middle and back office system, without which UBAF's development would not be possible.
These solid foundations mean that we can approach 2019 with confidence and determination, despite the persistence of major political and economic uncertainties internationally, regulatory changes (Basel IV), certainly handicapping our businesses in the future, and unprecedented technological challenges to date, such as the digitalisation of documentary instruments.
Jean-Claude Gelhaar Chief Executive Officer