United Bank Limited (UBL) was last amongst the top five banks to announce the 9MCY12 financial results, but it topped the pack with a stupendous 42 percent year-on-year increase in profits.
The earnings growth was primarily driven by a steep decline in provisioning charges and an impressive increase in other income.
UBLs assets grew by a reasonable 13 percent over December-end 2011, pretty much in line with the peer group. The asset composition tilted slightly more towards investments, as has been the strategy of the major banks of late.
UBL increased its exposure in government papers and securities by 22 percent over December-end 2011, increasing the IDR to 53 percent as at September end 2012, from 47 percent as at December-end 2011.
UBL led the way in lending to private sector and individuals with an 11 percent increase over December end 2011.
This is significantly above the average advances growth of 4.9 percent during this period amongst the top-five banks, showing that UBL is still pretty much engaged in the core business of banking, albeit with a slightly higher exposure in investments.
The 10 percent deposit growth over December 2011 was right at par with the peer group, and the deposit mix remained nearly similar to what it was at the beginning of CY12.
UBLs CASA ratio of 65 percent took a two percentage points dip from December-end, yet it was at par with the peer groups average CASA ratio.
The top line growth was modest in single digit, primarily due to low interest rate scenario and more exposure in low interest yielding government papers. The gross spread ratio resultantly dipped to 52.7 percent from 56.6 percent in the corresponding period last year.
The requirement of increased return on deposits also played its part in lowering the spreads.
UBLs NPLs increased by 10 percent over December 2011, but adequate provision meant the infection ratio stayed similar to previous years level.
The real boost to the bottom line came from the banks other operations, as a result of which other operating income rose to 30 percent as a percentage of operating revenue.
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UNITED BANK LIMITED
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(Rs mn) 9MCY12 9MCY11 chg
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Mark-up Earned 56,685 53,197 7%
Mark-up Expensed (26,805) (23,073) 16%
Net Markup Income 29,880 30,124 -1%
Provisioning (3,208) (6,513) -51%
Net Mark-up income after provision 26,672 23,611 13%
Other income 13,171 9,354 41%
Operating revenues 43,051 39,478 9%
Other expenses (19,461) (16,459) 18%
Profit before taxation 22,095 16,406 35%
Profit after taxation 15,024 10,599 42%
EPS (Rs) 12.20 8.66
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Source: Company Accounts