Where PIB's come first

Wonder if the story of any leading bank is going to be any different for the half year ended June 2014. United Bank Limited (UBL) had a good time just like its peers ABL and HBL--with profits swelling, mainly on the back of investment in government papers. The asset composition has long been shifted towards investments, with ADR's of most leading banks hovering in the 40's--UBL is no exception.
With detailed numbers yet to arrive, it is safe to assume that UBL did not miss the PIB party, which offered lucrative yields in the quarter gone by. The gross spreads improved slightly, despite revised conditions for deposit returns. The deposit growth has been largely muted and carefully monitored as the bank has been on a drive to improve the deposit-mix--evident by improved margins.
One of UBL's strong features has been its non-core income contribution. Non-mark-up income continued to offer healthy support to the bottom line, especially the fee and commission income. UBL's market leader status ensures it healthy revenue streams from remittances and Omni business lines. The bank's treasury, too, has been performing pretty well for quite some time.
UBL's drive to clean its books has also resulted in steady decline in NPL's. The infection ratio has now decreased to around 123 percent. There is sufficient coverage for it in the high 80's.
All eyes will now be on the governments borrowing appetite--if it asks for more, it will get that. But a lot will depend on where the interest rates go from here--a reduction in rates would surely prod UBL and peers to do some actual banking.

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United Bank Limited (Consolidated P&L)

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Rs (mn)                                                          1HCY14      1HCY13       chg

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Markup Earned                                              41,741          36,716       14%

Markup Expenses                                         19,687          18,217          8%

Net Markup Income                                      22,054          18,500        19%

Provisioning/(Reversal)                                   1,235            1,344         -8%

Net Markup Income after provisions          20,819          17,155        21%

Non Mark-up/Interest Income                    10,974             9,428        16%

Operating Revenues                                    31,794          26,583        20%

Non Mark-up/Interest Expenses                15,764          14,130        12%

Profit Before Taxation                                  16,696          13,279        26%

Taxation                                                            5,372           4,035         33%

Profit After Taxation                                     11,324            9,245         22%

EPS (Rs)                                                          9.23              7.24

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Source: KSE Notice