The Board of Directors of United Bank Limited (UBL) has approved a cash dividend of rupees three per share, ie 30 percent, and one bonus share for every four shares, ie 25 percent for the year ended on December 31, 2007, following a meeting held in Islamabad to consider and approve the audited annual accounts on Thursday, says a press release.
The UBL closed the year 2007 with consolidated profit before tax at Rs 13.8 billion. Although five percent lower than the last year, the figure reflects the strong business growth maintained by the bank during the year, despite difficult conditions in the domestic market and more stringent prudential regulations, which resulted in an additional provisioning charge of Rs 3.8 billion this year, the release said.
Net interest income increased by 16 percent to Rs 24.8 billion in 2007 due to a 21 percent growth achieved in advances, along with a richer portfolio mix. Non-fund income grew 32 percent to Rs 9.6 billion, boosted by fee income of Rs 5.9 billion, 39 percent above last year.
Growth in trade business, higher corporate finance fee and healthier commissions on the consumer loan portfolio also contributed to this increase. Better capital gains on investment in the mutual fund units and 24 percent higher exchange income also strengthened the non fund income.
Both advances and deposits saw significant expansion in 2007. Advances grew by 21 percent to Rs 308 billion, at a faster rate than the market. UBL's share of advances improved to 9.4 percent in the domestic market, as against 9.2 percent in 2006. Deposits grew to Rs 412 billion, an increase of Rs 68 billion, spurred in part by a 22 percent increase in domestic deposits.
However, profit after tax dropped 4 percent to Rs 9.2 billion resulting in a 23 percent return on average equity and restricting EPS to Rs 11.09, mainly due to the incremental provisioning charge of Rs 3.8 billion created due to the amendment made by State Bank of Pakistan in the Prudential Regulations.
Administrative expenses were also 23 percent higher than last year at Rs 14.2 billion, mainly on account of ongoing investments in upgrading and expanding the branch network in Pakistan and overseas, to improve the overall service environment. Higher personnel costs, due in part to the implementation of the bank's Early Retirement Scheme and other ongoing costs in support of the consumer business also increased administrative expenses, it said.
A bank-wide 'business process re-engineering (BPR)' programme was launched in the last quarter of 2007 that will, along with a new core technology platform being inducted in early 2008, enable the branch staff to concentrate their energies on improving sales and customer service rather than on liability generation activities only.
As part of the BPR programme, a Retail Banking structure has been created, replacing the earlier matrix structure comprising a stand-alone Consumer Banking Group and a separate Commercial Banking Group. The Retail Banking structure stands on three pillars viz. Sales, Customer Service and Marketing and Product Management, and has a strong central processing unit to provide effective back office support.
A total of 170 branches across Pakistan, mainly in Karachi, Lahore and Islamabad/Rawalpindi regions, including 29 new branches approved by the State Bank of Pakistan under the annual branch expansion plan (ABEP), have been given a complete make-over, based on new 'branch branding graphics'.
These branches have also started operating with universal tellers and customer service teams under the new business model, and their number is expected to grow to 400 by 2008. The bank's ATM network continued to grow at a brisk pace in 2007, reaching a figure of 326 ATMS in 83 cities across Pakistan, making UBL the second largest ATM network provider in the country.
Several new products were launched during 2007. These included Galleria, the first chip-enabled picture credit card in the Asia Pacific region, UBL Orion - the first mobile phone banking product in the country that allows customers to open accounts, pay bills, purchase prepaid cards and send money to other users of mobile phones with SMS capability and UBL Uniflex - a high yielding savings product for the benefit of low-income depositors.
UBL's international operations demonstrated impressive growth in 2007, contributing significantly to business volume and profits growth. Profit after tax was higher by 31 percent, advances grew 67 percent and deposits edged up by 12 percent.
Although most of the growth came from the commercial banking business including real estate development and civil construction contracting, significant progress was made in the consumer financing area as well.
UBL's mortgage loans product was launched in the UAE and Bahrain, and auto loans in Qatar. Two new branches were opened in Qatar and Yemen, raising the tally of overseas branches to 17. A major success in International in 2007 was the issuance of a license for establishing a representative office in Beijing.-PR
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