UBL’s profitability increases by 17% on higher NII despite hefty provisions

MG News | August 06, 2020 at 10:59 AM GMT+05:00

0:00

August 6, 2020 (MLN): United Bank Limited (UBL) has announced its financial results for the 1HCY20 ended June 30, 2020. As per the results, the bank has posted its net profits of Rs 10.72 billion (EPS: Rs 8.94), showing an increase of 17% YoY against net profits of Rs 9.16 billion of the same period last year.

Here, it is pertinent to mention that the earnings per share are largely in line with market expectations.

The profitability of the bank went up primarily due to higher net interest income (NII), up by 31% YoY to Rs 40 billion on the back of a 29.5% YoY increase in bank’s interest income.

During the period under review, the bank’s non-funded income (NFI) declined by 26% YoY due to lower dividend income (down by 38% YoY) and lower FX income (down by 24% YoY) along with losses from derivatives of Rs 13million.

However, according to Arif Habib Limited, capital gains for the bank went up by 177% YoY as the bank most likely booked gains on fixed income securities. Fee income took a major 25% sequential hit owing to the impact of the pandemic on economic activity as well as SBP waivers on digital transactions.

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

During 1HCY20, the tax expenses decreased by 13% YoY to Rs 7.52 billion.

Consolidated Profit and Loss Account for the Half-year ended on June 30, 2020 (Rupees '000)
	Jun-20	Jun-19	% Change
Mark-up/return/interest earned	88,339,565	68,241,685	29.5%
Mark-up/return/interest expensed	48,270,433	37,656,138	28.2%
Net mark-up/return/interest income	40,069,132	30,585,547	31.0%
Non mark-up/interest income
Fee, commission, and brokerage income	6,056,639	8,099,318	-25.2%
Dividend income	395,832	639,614	-38.1%
Foreign exchange income	1,821,352	2,286,903	-20.4%
Income /Loss from derivatives	(13,508)	85,426	-
Gain on sale of securities - net	858,261	309,937	176.9%
Other income	582,766	1,727,373	-66.3%
Total non-mark-up /interest income	9,701,342	13,148,571	-26.2%
Total Income	49,770,474	43,734,118	13.8%
Non mark-up/interest expenses
Operating expenses	20,944,433	20,902,009	0.2%
Workers' Welfare Fund	502,933	356,662	41.0%
Other charges	152,333	2,218	6768.0%
Total non-mark-up/interest expenses	21,599,699	21,260,889	1.6%
Share of profit of associates	44,129	348,724	-87.3%
Profit before provision	28,214,904	22,821,953	23.6%
Provisions and write offs-net	9,952,594	3,677,940	170.6%
Extra ordinary/ unusual item- charges in respect of pension liability	-	-	-
Profit before taxation from continuing operations	18,262,310	19,144,013	-4.6%
Taxation	7,525,752	8,646,392	-13.0%
loss from discontinued operations- net of tax	10,271	1,330,512	-99.2%
Profit after taxation	10,726,287	9,167,109	17.0%
Earnings per share - basic and diluted (Rupees) for profit from continuing operations attributable to the ordinary equity share	8.95	8.58	4.3%
Earnings per share - basic and diluted (Rupees) for profit attributable to the ordinary equity share	8.94	7.5	19.2%

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