August 10, 2020 (MLN): United Bank Limited (UBL) on Friday conducted its conference call to deliberate upon the latest financial performance of the bank, along with its future endeavors.

UBL's financial performance during 1HCY20 ended June 30, 2020, had shown net profits of Rs 10.72 billion (EPS: Rs 8.94), i.e. higher by 17% YoY against Rs 9.16 billion earned in the same period last year.

The analysis done by several brokerage houses suggested that the increase in profitability was a result of the higher net interest income (up by 31% YoY to Rs 40 billion), as well as a surge in capital gains (up by 177% YoY to Rs. 858.2 million), as the bank most likely booked gains on fixed income securities.

Meanwhile, the bank’s provisioning expenses stood at Rs 9.95 billion, up by 2.7x YoY, most likely on the overseas book as GCC countries are going through a major economic meltdown following the pandemic outbreak, the research by Arif Habib revealed.

Sharing their insight on the latest as well as future performance, the management of UBL informed that it intends to achieve a coverage ratio of 100%, which as of now, stands at 78%. The only factor which is causing a delay in the fulfillment of this goal is the ongoing pandemic and the adverse operating conditions resulting from it.

According to Topline Securities, the management also made it clear that provisioning cost might certainly go up in the upcoming periods owing to the relief measures obtained by the Bank from the Central Banks of respective international books for up to 6-12 months.

Further commenting on the same, the management said that it is slightly pessimistic over the payment of these loans, which means that it will now work towards achieving an ADR ratio of 41% by the end of the current year, as opposed to the ratio of 38% achieved in June 2020.

The management also spoke about the bank being on the steering committee of the housing finance mandate, stating that even though the work was being carried out at a fast pace, the problem foreclosure laws still needed to be addressed.

Talking on the technological front, the management informed that the registrations for UBL’s digital app had improved by 14% during the first six months of the current year, with most of the boost coming from the COVID-19 pandemic and the ensuing lockdown which forced customers to switch to online banking. Going by the figures provided by BMA Capital, digital channels now represent 15.8% of the bank’s total transactions vis-à-vis 8.2% in January 2020.

With Mr. Shazad Dada’s appointment as the Chief Executive Officer, several new strategies are in the pipeline, most of which focus on increasing customers by offering more end to end products, further developing and expanding the Bank’s digital platform, improving operational efficiency and minimizing costs. The CEO, who was also present at the conference call, spoke about his intention of placing more focus on deposits growth and continued de-risking of the existing portfolio.

The Bank is also intending to maintain a payout ratio within the range of 60-70% in the upcoming periods.

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