Union Bank performance highlighted

"We are not a high street bank. We have our design on upscale banking and are interested in credible business practice." The optimism and resolve emanated from Union Bank President and CEO Shaukat Tarin, while analysing half yearly report of his bank in a hotel on Saturday.
Tarin pointed out that they had quality banking in sight that is why their minimum limit for opening an account was Rs 100,000.
He relished his achievement in securing the bank's stability and high ranking in a few years time after he took control of the bank in 2000, and informed the audience that the bank's capital in 2003 was Rs 725 million, but it has sky-rocketted 10 times in 2005-a great leap forward indeed.
He said the Union Bank did not believe in products and dealings that were not reliable, adding: "Our bank laid stress on heavy investment in IT and consumer products."
Referring the steps he took when he joined the bank and found it in not very enviable situation, he consolidated the acquisition of corporate banking business and SMEs.
The other steps included hiring the right human resources and save them being poached by other banks.
The Union Bank, according to Tarin, relies on quality banking even if the profit was less. He corroborated his claim by saying that the bank had nine-consumer business, three of them were making profit while the remaining six were yet to generate profit. He said that the bank had broken even in auto-finance.
Tarin informed the bank's new venture in farmers-related "Kisan Card" that would provide financial support and many other facilities to the farmers.
The Union Bank had recorded an operating profit of Rs 582 million in June 30, 2004, while it swelled to Rs 1,282 million on June 30, 2005. This is 120 percent higher than the previous year. In the current period general reserves and specific provisions as required under the Prudential Regulations, including discounting of forced Sales Values of tangible securities, have been fully provided, he added.
Net income grew by 68.8 percent whereas fee, commission and brokerage income recorded an increase of 75.8 percent as compared to the corresponding period of six months that ended June 2004. Due to various initiatives taken by the bank, the expense to revenue ratio of the bank has significantly improved to 47.4 percent from 61.1 percent for the same period of 2004.
The balance-sheet footing increased by Rs 10,229 million and stood at Rs 87,939 million on June 30, 2005. Advances and deposits increased by 15.5 percent and 10.6 percent respectively, as compared to December 31, 2004.
The bank's excellent financial performance and significant improvement in all the areas of risk management and corporate governance got itself upgraded credit ratings from the Premier Credit Rating Agency of Pakistan (Pacra). The current long-term equity ratings stand at AA- while the previous rating was A+. The short-term current ratings are A1+ while the previous rating was A1. TFCs first issue has current ratings as A+ while previous ratings was A. The second issue current rating has A+ while previous rating was A.
Expense/Revenue Ratio in June 2003 was 69.68 percent, 63.23 percent in December 2003, 60.11 percent in June 2004, 57.59 percent in December 2004,and 47.12 percent in June 2005.
Return of Total Assets was 0.78 percent, 0.64 percent, 0.91 percent, 1.07 percent and 1.82 percent in June 2003, December 2003, June 2004, December 2004, and June 2005, respectively.
Return on Total Equity in June 2003 was 16.55 percent, in December the percentage was 17.06, 25.02 percent in June 2004, 24.87 percent in December 2004 and 38.68 percent in June 2005.
Capital Adequacy Ratio (CAR) was 8.95, 8.78, 8.12, 8.17 and 9.00percent in June 2003, December 2003, June 2004, December 2004 and June 2005 respectively.
Earning /Share was 1.47, 2.17, 4.00, 4.22 and 6.60 in June 2003, December 2003, June 2004, December 2004 and June 2005 respectively.
Intermediation Cost on Total Assets in June 2003 was 3.50 percent, 3.25 percent in December 2003, 3.09 percent in June 2004, 3.30 percent in December 2004 and 3.41 percent in June 2005.