UBL posts Rs4.3bn profit, no entitlements
Thursday, July 30, 2009
By our correspondent
KARACHI: United Bank Limited (UBL) has posted net earnings of Rs4.3 billion for the first half of the year ended on June 30. This is 23 per cent lower than the Rs5.6 billion profit it earned in the same period in 2008.
Accordingly, earning per share slighted to Rs3.85 as against Rs4.51 last year, while the bank announced no payout and entitlements for its share holders for the period under review, according to a KSE notification.
“The negative surprise is primarily the result of higher provisions and write-downs at Rs6.4 billion, which is almost 42 per cent higher than our forecast,” said Kamran Rehmani at First Capital Equities.
“According to the bank’s management, downgrading of a few large exposures in real estate and corporate sector resulted in notably higher provisions,” he reported.
For the first half of 2009, the bank has recorded mammoth Rs5.3 billion provisions against NPLs, which is 2.7 times higher than the similar period’s provisions of Rs2.0 billion. Contrary to general market anticipations, a major chunk of provisions came from the bank’s domestic operations rather than from overseas business.
It is important to mention that majority of provisions are not the result of new NPLs, which are now controlled under stringent risk control measures. Instead, this was the result of further downgrading of some real estate corporate and other commercial exposures, Rehmani further emphasised.
As per the bank’s management, corporate and consumer contributed 50 per cent and 24 per cent in the provisions expense while 11 per cent each were contributed by commercial and international segments, he explained.
The bank’s net interest income (NII) grew by 20 per cent to Rs15.8 billion during the period as against Rs13.2 billion in last year’s period, quite in-line with First Capital Securities’ forecast of Rs15.9 billion.
During the period, the bank’s margin (NIM) improved slightly to 5.88 per cent as against 5.78 per cent in the comparable period of 2008. Net advances stood at Rs368 billion, representing an increase of 12 per cent on year-on-year basis.
On the other hand, the bank’s non interest income dropped by four per cent to Rs5.8 billion as compared to Rs6.0 billion in the first half of 2008. However, in the second quarter of 2009, non interest income was recorded at Rs3.8 billion, 20 per cent and 45 per cent higher on yearly basis and quarterly basis, respectively. Decent growth is due to a significant gain of Rs1,370 million on derivatives, as compared to Rs182 million in the preceding quarter, he underlined.
In the second quarter of 2009 alone, the bank’s profitability was recorded at Rs1.75 billion (EPS Rs1.57), 31 per cent and 35 per cent lower on quarterly and yearly basis, respectively.