UBL outperforms its peers for the second year running

UBL’s “Omni” continues to lead innovation in branchless banking segment.

United Bank Limited announced its results for the year ended 31 December 2012 on 25 February 2013. For the second consecutive year, UBL outperformed its peers by recording the highest percentage increase in profit, according to a press release issued by the bank. Consolidated profit after tax increased by 30% over 2011 to Rs19.3 billion while unconsolidated profit recorded a growth of 16%. On consolidated results, HBL’s profit after tax remained flat, while and ABL’s and MCB’s profits grew by 16% and 10% respectively.

The impact of the discount rate cut coupled with the increase in the floor on the PLS saving rate resulted in severe spread compression for the banking industry. Despite this, UBL managed to mitigate the impact of spread compression through a 15% growth in the balance sheet which was largely driven from the growth in deposits. UBL’s total revenues grew 12%, driven by strong growth in non-fund income. Management’s focus on asset quality has also resulted in provisioning charge declining for the third year in a row, 37% lower than the previous year.



UBL’s Branchless Banking business “Omni” continues to lead innovation in the branchless banking space with its Dukaan network of over 10,000 agents across more than 650 cities and towns. UBL Omni has transformed the Government to People (G2P) disbursements arena in Pakistan by working closely with the Government of Pakistan (GoP) and multilateral agencies. These unparalleled efforts have led UBL Omni to be recognized in the GSMA Global Mobile Award 2012 for “Best Use of Mobile in Emergency or Humanitarian Situations” and Financial Insights Innovation Award for “Innovation in Cash Disbursements (G2P)” in February 2012. UBL is the only organisation from Pakistan to win an award from GSMA in their 17 year history.

During the year, UBL became the market leader in home remittances business with a market share of 22%. Home remittances volumes increased by 30% YoY to reach $3 billion earning much needed foreign exchange reserves for the country.  This was achieved through a superior “Tez Raftar” product offering, along with brand building and joint marketing initiatives with overseas partners, thus improving the Bank’s reach and enhancing partner relationships and co-ordination.

UBL’s international operations continue to offer significant depth and geographical diversification to UBL whilst contributing 15% of the group’s profits. In pursuance of the Bank’s strategy to explore and invest in markets which offer the right opportunities and are a natural fit with its overall strategy, UBL is due to commence operations in Tanzania after having received  approval from the SBP and the central Bank of Tanzania. UBL’s management is very optimistic about the opportunities in Tanzania, where commercial launch is expected in the coming months.

Amongst its peers, UBL was also the only bank which recorded a growth in both Return on Assets (ROA) and Return on Equity (ROE). UBL’s ROA improved from 2.0% in 2011 to 2.2% in 2012, whilst ROE increased from 21.6% to 24.2%.

In light of UBL’s strong performance, the Bank increased its cash dividend distribution for 2012 to Rs8.5 per share, up from Rs7.5 per share in 2011. UBL also initiated a quarterly dividend payout for the first time, to provide a more stable income stream to smaller investors. UBL’s stock price grew from Rs52.39 at Dec 31, 2011 to Rs83.67 at Dec 31, 2012 representing an increase of 60% compared to a 49% growth in the KSE-100 index over the same period. The current share price of Rs92.26 (Mar 5, 2013) is reflective of the market’s confidence in the bank.

In recognition of UBL’s performance, UBL won the 2012 Bank of the Year in Pakistan Award, awarded by The Banker Magazine. Further, UBL also won the ASIAMONEY Best Domestic Bank Award for 2012.

Published in The Express Tribune, March 21^st, 2013.

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