Corporate results: United Bank profits jump 39% to Rs15.5 billion
26% jump in non-interest income, lower provisioning contributed to impressive earnings growth.
KARACHI:
United Bank beat market expectation by posting net profit increase of 39% on the back of all around improvement in 2011. Net profit stood at Rs15.5 billion during the year compared with Rs11.2 billion in 2010, according to unconsolidated results announced on Tuesday.
Although net interest income grew, 26% jump in non-interest income and lower provisioning also contributed to the impressive earnings growth, said Topline Securities analyst Farhan Mahmood.
UBL also surprised on the upside amid announcing a final cash dividend of Rs6 per share to bring the full-year payout to Rs7.5 per share. A higher than expected cash dividend has compensated for absence of any stock dividend.
Net interest income rose 15% to clock in at Rs39.43 billion on the back of higher return on assets amid rising interest rate scenario during the period under review against last year’s Rs34.3 billion.
In line with the industry practice, United Bank has also maintained a strategic shift towards investments which has increased investment-to-deposit ratio to 48% in September 2011) compared with 41% in December 2010.
Non-interest income rose 26% to Rs12.72 billion where dividend income/gain on sale of securities has shot up by 1.8 times. Non-mark up income was also supported by 10% YoY increase in fee and brokerage income coupled with 26% rise in income from forex dealing.
Additionally, constant focus on technological innovation and branchless banking has led UBL to have the lowest cost to income ratio at 0.38 in the entire sector, followed by MCB Bank at 0.43.
Moreover, controlled lending led overall provisioning to decline to Rs7.3 billion from Rs8 billion. Alone in the fourth quarter, banks overall provisioning stood at Rs0.8 billion against the average of Rs2.2 billion in first three quarters of 2011.
Published in The Express Tribune, February 22nd, 2012.
United Bank beat market expectation by posting net profit increase of 39% on the back of all around improvement in 2011. Net profit stood at Rs15.5 billion during the year compared with Rs11.2 billion in 2010, according to unconsolidated results announced on Tuesday.
Although net interest income grew, 26% jump in non-interest income and lower provisioning also contributed to the impressive earnings growth, said Topline Securities analyst Farhan Mahmood.
UBL also surprised on the upside amid announcing a final cash dividend of Rs6 per share to bring the full-year payout to Rs7.5 per share. A higher than expected cash dividend has compensated for absence of any stock dividend.
Net interest income rose 15% to clock in at Rs39.43 billion on the back of higher return on assets amid rising interest rate scenario during the period under review against last year’s Rs34.3 billion.
In line with the industry practice, United Bank has also maintained a strategic shift towards investments which has increased investment-to-deposit ratio to 48% in September 2011) compared with 41% in December 2010.
Non-interest income rose 26% to Rs12.72 billion where dividend income/gain on sale of securities has shot up by 1.8 times. Non-mark up income was also supported by 10% YoY increase in fee and brokerage income coupled with 26% rise in income from forex dealing.
Additionally, constant focus on technological innovation and branchless banking has led UBL to have the lowest cost to income ratio at 0.38 in the entire sector, followed by MCB Bank at 0.43.
Moreover, controlled lending led overall provisioning to decline to Rs7.3 billion from Rs8 billion. Alone in the fourth quarter, banks overall provisioning stood at Rs0.8 billion against the average of Rs2.2 billion in first three quarters of 2011.
Published in The Express Tribune, February 22nd, 2012.