United Bank Limited achieved a profit after tax of Rs 18 billion for 2012, 16 percent higher than last year translating into earnings per share of Rs 14.71 (2011: Rs 12.66). The Board of Directors also approved a final cash dividend of 35 percent (Rs 3.50 per share) bringing the total cash dividend for the year 2012 to 85 percent, ie Rs 8.5 per share. UBL has achieved a pre-tax profit of Rs 27 billion, 12 percent higher than last year.
This was achieved despite severe spread compression, through a growth in the balance sheet, improved non-fund income and lower provisions. The continually declining rate environment resulted in lower yield on earning assets, while cost of funds reduced marginally as the increase in the minimum PLS saving rate limited rate reduction on deposits. Consequently, the net interest margin for 2012 was lower than 2011. The Bank was able to offset most of this spread compression through balance sheet growth, with net interest income declining by 2 percent to Rs 38.6 billion in 2012. Total provisions declined by 40 percent from Rs 7.5 billion in 2011 to Rs 4.5 billion for 2012, while net credit loss ratio improved from 2.1 percent to 1.1 percent.
Non-interest income increased from Rs 12.7 billion to Rs 17.1 billion, 35 percent over last year. Fees and commissions grew by 17 percent to Rs 8.2 billion, mainly attributable to increase in remittances, FI commissions, improved general banking fees and cross-sell of bank assurance. Higher investments in mutual funds resulted in dividend income rising to Rs 2.7 billion, while derivatives income increased to Rs 3.0 billion, primarily on account of one-off gains.
UBL grew its balance sheet by 15 percent over December 2011. This was primarily funded by a growth in deposits which increased by 14.2 percent to Rs 700 Billion in December 2012. The domestic low cost deposit ratio also improved, as did the CASA ratio, which improved from 80 percent in December 2011 to 83 percent in December 2012. Gross advances increased by 11.7 percent to Rs 409 billion in December 2012, from Rs 366 billion in December 2011. Despite the reduction in interest rates, the advances to deposits ratio continued to reduce, in line with the rest of the banking sector.
UBL's capital adequacy ratio (CAR) strengthened year on year due to the bank's organic capital generation capabilities. Total CAR improved from 14.3 percent in December 2011 to 14.8 percent in December 2012. Tier 1 CAR was maintained at 10.5 percent as in 2012, the bank paid interim dividends totalling Rs 5 per share in addition to the Rs 6 per share final dividend for the previous year. On a consolidated basis, the Tier 1 CAR as at December 2012 was 10.1 percent whilst total CAR was 14.7 percent.
UBL has demonstrated consistency and resilience in its performance whilst making significant investments in its businesses and by being innovative in offering new and diversified solutions and products to its customers. Key priorities for 2013 will continue to be proactive risk management of the loan book, low cost deposit growth, cost containment and investment in our human capital.-PR
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