UBL earns Rs 9.3b in 2Q

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LAHORE: United Bank Limited (UBL) posted an impressive 1H2012 result, reporting earnings of Rs9.3b (EPS: Rs7.61) which was up 39 per cent. Lower provisions (down 74 per centYoY) and impressive growth in non interest income (up 30 per centYoY) led the growth in the bottom line.

 In 2Q2012, while earnings dipped slightly by 8 per centQoQ on account of a decline in non interest income, the same witnessed an increase of 30 per centYoY. Along with the result, the bank continued with its new policy of announcing quarterly payout (which has rendered the stock price a rally of 69 per cent in 2012 YTD) with a second interim cash dividend of Rs2/share.

With the recent increase of 100bps in cost of saving deposit, UBL’s Net Interest Income (NII) remained flat in 2Q2012 at Rs9.6 billion compared to 1Q

urther pressure was seen from lower Non Interest Income which declined by 12 per centQoQ to Rs3.9 billion (reduced dividend income and low gains on sale of securities).

However, the bottom line was supported by a 30 per centQoQ drop in provisions, as the bank posted earnings of Rs4.5 billion (EPS: Rs3.64) in 2Q, down 8 per centQoQ. Cumulative earnings for 1H2012, nevertheless, witnessed a growth of 39 per centYoY as declining provisions and write off (down 74 per cent) coupled with high Non Interest Income (up 30 per cent) countered the decreasing NII. On the expenses front, administrative expenses grew by 17 per centYoY mainly on account of opening up of new branches during 2012.

The bank’s deposit base grew by 12 per centQoQ to Rs685 billion in 2Q2012 - with domestic CASA improving to 80 per cent from 79 per cent in March 2012. Experts believe this increase has come due to the recent revision of 100bps in the saving deposit rates. Growth in net advances clocked in at 3.5 per cent during 2Q to Rs357b resulting in the banks ADR to decline further by 4ppts to 52 per cent. Investment, on the other hand, came down by 3 per cent to Rs322 billion.

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