UBL earnings clock in at Rs15.6 per share

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KARACHI: The Board of Directors of United Bank Limited (UBL) announced a 40pc final cash dividend, equivalent to Rs4 per share for the year ended 31st December 201, in addition to the interim dividend of Rs8 per share, paid earlier this year.

UBL reported a 27pc increase in earnings per share with the EPS clocking in at Rs15.6 for 2019.

Due to a change in policy rates, UBL experienced an increase in both interest earnings (by 34.62pc YoY) and interest expenses (59.51pc YoY), thus bringing the net interest income to rise by 9.32pc YoY to Rs63 billion.

Speaking to this scribe, Faizan Kamran, Analyst at Arif Habib Limited, said, “We see the impact of rate hikes coming through on net interest margins. Net interest income improved 6pc QoQ with interest expense reducing 16pc which we attribute to deleveraging of the balance sheet, as banks had increased repo borrowings last quarter.”

The total non-markup/interest income shrank for the year by 9.43pc to Rs23 billion as opposed to Rs26 billion in 2018. UBL was able to turn its loss from derivatives into income, however, fee & commission income, dividend income, and securities income contracted.

Hamza Kamal, Analyst at AKD Securities Ltd, said, “Against the expectations, UBL recorded a capital loss on securities. These were partly offset by better performance from associates.”

Other income grew by 82.66pc for the year.

Total non-markup/interest expenses increased by 11.58pc despite a 65pc decrease in other charges. This is due to a significant increase in worker’s welfare fund that has increased by Rs2.9 billion.

Profit before provisions decreased by 3.61pc, however, due to a 41.24pc YoY decrease in provisions (owing to reduced provisioning on the gulf books), profit before taxation increased by 39.84pc to Rs35.73 billion.

Kamran further said, “Earnings rebound of the bank has been led by 41pc YoY lower provisions primarily due to a cleaner international book with international coverage in excess of 90pc (including FSV benefit).”

Taxation expense increased by 48.85pc, and thus profit after taxation from continuing operations increased by 33.67pc to Rs20.273 billion in 2019 as opposed to Rs15.167 billion in 2018.

Loss from discontinued operations for UBL Tanzania grew by 9 times its value in 2018, from Rs117 million to Rs1.225 million, thereby bringing final profits to grow by 26.67pc to Rs19.048 billion in 2019.

UBL shares have been trading at Rs170.75 after rising by 1.32pc as of 1309. The share price returns are up by 12.51pc over a year, whereas price returns for the month are down by 5.82pc. UBL is operating at a higher Price Earnings Ratio of Rs8.68 for the sector, and has clocked in with one of the highest earnings per share. It is to be noted that 68.48pc of shares in UBL are owned by foreign companies.

In the last five years, UBL gave out dividends in five financial years with an average dividend amount of Rs12.4 per share. The TTM dividend yield is 7.15pc.

UBL is also the only bank to win the Pakistan Stock Exchange “Top Companies of the Year” Award for three consecutive years (2016-2018).

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