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

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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Posted on: 2020-08-06T10:59:00+05:00

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