Karachi, April 24, 2019: United Bank Limited (UBL) reported earnings of Rs3.94/share in the first quarter of this year (1QCY19), up by 73 YoY.
Analysts at Topline said that results are better than expectations primarily due to lower than anticipated operating expenses and provisioning. The bank’s profit after tax reported at Rs 4.829 billion in the first quarter of this year compared to Rs 2.785 billion in the same period of CY18, showing an increase of 73 percent. While UBL’s profit before tax was Rs 9.891 billion up from Rs 4.508 billion.
UBL announced a dividend of Rs2.5 per share for 1QCY19. To note, during a similar period last year, the bank booked a higher provisioning charge against loans and advances.
Net Interest Income (NII) of UBL in 1Q2019 grew by 5 percent YoY but remained flat QoQ. This could likely be due to a high proportion of fixed rate PIBs in UBLs book, we believe.
Non-markup income during the outgoing quarter down 31 percent YoY mainly due to the higher base effect. To note, UBL booked Rs3.2bn gain on sale of securities in 1QCY18 on account of sale of equities and bonds, we believe.
However, fee & commission income (~75 percent of non‐markup income) witnessed an increase of 20 percent YoY in 1QCY19.
Considerable profits growth of 73 percent on yearly basis was due to lower base effect. To note, UBL booked one-time pension charge of Rs6.4 billion (Rs3.2/share after tax) in 1QCY18.
Analysts said that key risks for UBL include: 1) limited NII growth owing to lower rate PIBs exposure 2) lower than expected advances growth, 3) delay in the hike in interest rates, and 4) deterioration of Pakistan macros.