Corporate results: UBL’s earnings increase 17.8%, clock in at Rs21.9b

Core income primarily driven by investment in PIBs.

KARACHI:

The profit of United Bank (UBL) for 2014 increased to Rs21.9 billion, up 17.8% from earnings of Rs18.6 billion in the preceding year.

In its financial results sent to the Karachi Stock Exchange (KSE) on Wednesday, UBL also announced a final cash dividend of Rs4 per share in addition to the interim dividend of Rs7.5 per share already paid in the first three quarters of 2014.

The bank’s net interest income (NII) for the year increased 19% on a year-on-year basis to Rs44.9 billion. According to Shajar Capital research analyst Hamza Kamal, the expansion in UBL’s core income was primarily driven by its investments in Pakistan Investment Bonds and the re-pricing mismatch in the last quarter. While UBL’s interest income surged 14% on a year-on-year basis, its interest expense grew by 8% only, financial accounts show.

Provisions against non-performing loans (NPLs) declined 32% to Rs882 million on an annual basis while non-interest income went up 7% to Rs19.2 billion.

Kamal said the rise in non-interest income was led by 11% year-on-year jump in fee, brokerage and commission income stemming from UBL Omni and Bancassurance along with 40% rise in income generated from dealing in foreign currencies.

In the last quarter (October-December), UBL’s profits stood at Rs6 billion with its earnings per share (EPS) clocking up at Rs4.9.

The cost-to-income ratio improved from 48% in 2013 to 46% in 2014, which suggests that administrative and other expenses were largely kept in check throughout the year.

Return to profitability for Silk Bank

Meanwhile, Silk Bank announced its return to profitability in 2014 by posting net earnings of Rs86.8 million on Wednesday. Its net loss amounted to Rs1.1 billion in 2013.

Its net interest income after provisions increased more than 100% to Rs3.1 billion. In contrast, its administrative expenses remained controlled and reflected an increase of only 6.9% over the preceding year. In absolute terms, the bank reduced its non-performing loans by Rs1.6 billion from a year ago, it said in an official statement.

It added the bank’s deposit mix showed a positive improvement with deposits belonging to current and savings accounts increasing to 57.4% from 54.9% in 2013. Their increased share in the deposit helped the bank control its interest expense during the year.

Silk Bank has taken steps to address its capital adequacy issues after the State Bank of Pakistan put another small bank under a six-month moratorium for same reasons. Silk Bank has already announced right shares of Rs10 billion, which will increase its total capital to over Rs16 billion. It also received Rs2 billion in December as advance subscription against right shares.

Published in The Express Tribune, February 26^th,  2015.

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