Business

Corporate results: UBL posts lower profit as interest income falls

Bank earns Rs12.93b, declares third interim cash dividend.

Our Correspondent October 24, 2013 1 min read

Lower earnings, according to a report of Topline Securities, are the result of a decline in net interest income (NII), which decreased 6.1% to Rs27.4 billion for the period under review. PHOTO: FILE

KARACHI: With a decline in its net interest income, United Bank Limited, one of the country’s top five banks, posted lower profit for the first nine months of calendar year 2013, according to the bank’s latest financial results released on Thursday.

The bank reported after-tax profit of Rs12.93 billion or Rs10.57 per share for the nine months ended September 2013, down 7.4% compared with Rs13.97 billion or Rs11.41 per share in the corresponding period of 2012. It also announced an interim cash dividend, third for the current financial year, of Rs2 per share.

Lower earnings, according to a report of Topline Securities, are the result of a decline in net interest income (NII), which decreased 6.1% to Rs27.4 billion for the period under review. Administration cost, which increased 9.8% to Rs19.2 billion at the end of nine-month period, was another reason for lower earnings, the report said.

Topline attributed the decline in NII to low banking spread, which averaged 6.26% in the first nine months compared with 7.14% in the same period last year. Lower interest rates and rising cost of deposits, it said, were the reasons for the narrowing banking spread.

However, controlled lending along with improved paying capacity of borrowers after decline in interest rates led to a decrease of 55.3% in overall provisioning to Rs1.2 billion, providing some relief to the earnings, Topline report said.

Provisioning refers to the funds set aside by financial firms, such as banks, to pay for losses – questionable loans for example – that are expected to occur in the future.

Quarterly results were almost flat as the bank posted an after-tax profit of Rs4.66 billion or Rs3.81 per share for the third quarter of 2013, down from Rs4.71 billion or Rs3.85 per share in the corresponding period of 2012.

Compared to the previous quarter, the bank registered earnings growth of 8%, according to a report of Global Securities.

Published in The Express Tribune, October 25^th, 2013.

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