UBL strong and steady

Corporate results are pouring in, and on behalf of the domestic banking industry, United Bank Limited (UBL) performed the ribbon cutting ceremony for 1HCY12 result season on Wednesday after it recorded a fat bottom line of Rs.9.3 billion in the first half of CY12. This marks a 39 percent jump in its net profits compared to the same period of last year, thanks to the lower provisioning cost and higher non-mark-up income. The bank managed to increase its top line by 6 percent in 1HCY12 as opposed to the same period of last year, but with growth in mark-up expenses exceeding by 16 percent over the same period, net mark-up income stayed flat. Lower KIBOR, along with increase in minimum profit rates on saving accounts, has squeezed the industrys margins, as evident from the banks gross spread ratio, which has eased down by around 3.7 percentage points to 53 percent in 1HCY12, relative to the same period of last year. The central bank has raised the minimum profit rate on rupee saving accounts from 5 to 6 percent, effective from May 1st, 2012. As per the latest available data, the banking industrys spread averaged around 7.25 percent during the first five months of CY12, as opposed to 7.57 percent same period of last year. The relief came in the form of lower provisioning expenses, with provisions against loans and advances (net) totalled to around Rs.959 million 1HCY12, as opposed to Rs.4.4 billion during the corresponding period of last year. On the heels of a higher income from investment banking activities, dividend income and gain on sale of securities, non-mark-up income improved by a whopping 30 percent. In light of higher inflationary pressure, the Banks administrative expenses increased by around 15 percent to Rs.11.3 billion in 1HCY12, reducing the total operating income to non-mark-up expense ratio to 2.3 in 1HCY12 from 2.5 same period of last year.

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United Bank Limited
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(Rs mn)                   1HCY12     1HCY11    chg
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Markup Earned            36,258     34,077      6%
Markup Expensed         (17,045)   (14,747)    16%
Net Markup Income        19,213     19,331     -1%
Provisioning             (1,303)    (4,942)   -74%
Net Markup income
 after provision         17,910     14,389     24%
Other  income             7,680      5,899     30%
Operating revenues       26,893     25,229      7%
Other  expenses         (11,782)   (10,058)    17%
Profit before taxation   13,808     10,229     35%
Profit after taxation     9,318      6,705     39%
EPS (Rs)                   7.61       5.48
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Source: Company Accounts