UBL gains Rs1.3 bln exchange translation reserve on New York branch closure

August 8, 2019 (MLN):  The United Bank Limited (UBL) has conducted its analyst briefing today to discuss 1HCY19 financial results, where the bank’s after-tax profits clocked in at Rs. 9.2 bln (EPS: Rs 7.5), up by 48% YoY.

As per the briefing note by Insight Securities, higher other income (up 35% QoQ) was as a result of realizing Rs 1.3 bln exchange translation reserve on New York branch closure.

During 1HFY19, bank’s deposits grew by 5.9% YoY to Rs. 1.5 trillion, where anticorruption and tax drive has not impacted much but could be a factor in coming periods.  In the coming months, the bank would focus on growth in current accounts.

On the other hand, bank’s advances were down by 9.8% to Rs. 681 bln, mainly due to reduction in foreign loan book as planned.

As per the briefing, going forward, some growth might come from Qatar but not expecting any growth from UAE. In addition, 90% of Consumer loan book is made up of car loans which is not much risky as much of it involves salaried class.

Moreover, the management of UBL, believes that the NPLs on international book in 2H19 would remain similar to 1H as Dubai portfolio is under control, Abu dhabi is witnessing some pressure, while there is nothing material from Qatar. However, the management seeks to increase the provision coverage.

Currently, yield on PIBs is 8.5%, while the management expects approximately Rs. 75 bln run down every year from 2020 to 2023.

With regards to Treasury Single Account (TSA), management informed that the development on TSA is pending on Govt. front, however, even if it goes through, UBL would not be impacted much.

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