United Bank Limited (UBL) notified 1st Quarter CY2021 financial results today where the bank posted Net Profit of PKR7.6bn (EPS: PKR6.20) compared to PKR4.9bn (EPS: PKR3.98) in the same period last year.
Surprisingly UBL announced quarterly dividend of PKR4.0/share. The Profit was above analyst expectation as Bank booked lower provisioning expense (PKR376mn in 1QCY21 vs. PKR2.2bn in 4QCY20). This is probably because the Bad Loans in its Foreign Loan book is almost fully provided.
Net Interest Income (NII) declined by 3% on a YoY basis which we opine is due to greater exposure of the bank to short term federal government securities while on a QoQ basis, NII increased by a marginal 1%.
Above expected non funded income triggered the surge in earnings having shot up by a sizable 26/40% YoY/QoQ respectively. The NFI surge emanated from hefty capital gains which clocked in at PKR 1.9Bn against gains of PKR 264Mn in the same quarter last year.
Besides, enhanced NFI and signficant decline in provisioning expense, Higher Net Profit accretion is also credited to controlled admin expenses which declined by 8% QoQ to PKR 10.1Bn.
| (Rupees in ‘000) | January – March 2021 | January – March 2020 |
| Mark-up / return / interest earned | 32,930,550 | 44,374,183 |
| Mark-up / return / interest expensed | 15,425,644 | 26,584,742 |
| Net mark-up / interest income | 17,504,906 | 17,789,441 |
| Fee and commission income | 3,469,334 | 3,510,113 |
| Dividend income | 252,206 | 177,699 |
| Foreign exchange income | 524,508 | 770,976 |
| Income / (loss) from derivatives | 7,254 | (11,274) |
| Gain on securities – net | 1,874,07 | 458,052 |
| Other income | 127,885 | 174,599 |
| Total non mark-up / interest income | 6,255,259 | 5,080,165 |
| Total income | 23,760,165 | 22,869,606 |
| Non mark-up / interest expenses | ||
| Operating expenses | 10,314,814 | |
| Workers’ Welfare Fund | 248,494 | 219,422 |
| Other charges | 24,547 | 181,039 |
| Total non mark-up / interest expenses | 11,057,674 | 10,715,275 |
| Share of profit / (loss) of associates | 152,002 | (147,536) |
| Profit before provisions | 12,854,493 | 12,006,795 |
| Provisions and write-offs – net | 376,332 | 3,701,317 |
| Profit before taxation from continuing operations | 12,478,161 | 8,305,478 |
| Taxation | 4,892,227 | 3,400,320 |
| Profit after taxation from continuing operations | 7,585,934 | 4,905,158 |
| Discontinued operation | ||
| (Loss) / profit from discontinued operation – net of tax | (33) | 6,505 |
| Profit after taxation | 7,585,901 | 4,911,663 |
| Earnings Per Share | 6.21 | 3.98 |
| Dividend Per Share | 4 | 2.5 |
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