UBL profit declines by Rs 10 billion in 2018

Karachi, February 20, 2019: Profit of Pakistan’s leading bank-United Bank Limited declined drastically Rs 10 billion during the last calendar year (2018) mainly due to massive provisioning.

According to financial results for full year ended December 31st, 2018, UBL’s profit after tax (PAT) declined by 40 percent or Rs 9.96 billion. The bank posted Rs 15.22 billion PAT in 2018 compared to Rs 25.18 billion in 2017.

UBL also reported earnings of Rs4.7 per share in the last quarter of 2018 (4Q2018), down 16 percent YoY primarily due to a hefty provisioning charge during the quarter.

However, the earnings are much higher than market consensus due to reversal in pension charge as well as reversal in Workers Welfare Fund (WWF) expense. UBL announced a dividend of Rs3/share for 4Q2018. 

Net Interest Income (NII) of UBL has remained flat in both this quarter and in 2018 despite 425 basis points hike in policy rate during 2018. This could likely be due to both high proportion of fixed rate Pakistan Investment Bonds (PIBs) in UBLs book.

The bank booked a provision charge of Rs5.6 billion in the quarter, primarily due to provisioning for NPLs in its international operations in order to increase its coverage ratio. The total provision charge for 2018 was reported at Rs13.1 billion, of which profit declined drastically some Rs 10 billion in the last year.

The bank’s earnings were supported by reversal of Rs2.1 billion in pension charge. UBL had booked pension charge of Rs 8.7 billion in nine months of 2018. Further, UBL also booked a reversal of Rs2.6 billion in WWF expense during 4Q2018.

Bank’s non-markup income fell by 8 percent YoY mainly due to Rs309 million loss on sale of securities compared to Rs503 million gain in the same period last year. 

Admin expenses of the bank rose by 18 percent YoY. We believe that the higher growth in admin expenses could be due to expenses related to closure of bank’s US branch. However, we await management guidance with respect to this. 

For 2018 cumulatively, EPS clocked in at Rs12.6, down by 41 percent YoY primarily due to Rs6.7 billion in total pension charge and higher total provision expense booked by the Bank.


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