United Bank Limited (UBL) announced 1H2014 unconsolidated profits of Rs 10.5 billion (EPS Rs 8.6), as compared to Rs 8.3 billion (EPS of Rs 6.8) profit in 1H2013, up by 27.4 percent. According to Topline Securities, the bank also announced interim cash dividend of Rs 2.5 per share. During the period, bank's NII (Net Interest Income) increased by 18.6 percent YoY to Rs 21.2bn.
Though banking spreads averaged 6.1 percent in 1H2014 against 6.25 percent in 1H2013, NII got support from higher yields on increasing PIB portfolio of banks and rising credit growth. As a result, NIMs are estimated to improve by 30bps from 4.6 percent in 1H2013. On the other side, provisions against NPLs (Non-Performing Loans) declined by 31.7 percent YoY to Rs 669 million. In addition, Non-Interest Income increased by 16.4 percent YoY to Rs 10 billion mainly because of 20.2 percent YoY higher fee income to Rs 5.5 billion and 80.4 percent higher income from dealing in foreign currency to Rs 1.4 billion. In 2Q2014, UBL unconsolidated profits stood at Rs 5.3 billion (EPS Rs 4.3) against 1Q2014 profits of Rs 5.2 billion (EPS Rs 4.3). During the quarter, NII increased by 15.6 percent to Rs 11.3 billion while NIMs are estimated to have increased by 60bps from 4.7 percent in 1Q2014.
However, higher provisions and low dividend income dented profitability growth of the bank. During the quarter, banks recorded Rs 522 million against NPLs and Rs 247 million against diminution in investments compared to Rs 147 million and reversal of Rs 6 million in 1Q2014, respectively. Dividend income also declined by 45.9 percent to Rs 365 million which caused 2.1 percent decline in Non-Interest Income to Rs 5.0 billion. On year on year basis, UBL unconsolidated profits increased by 23.4 percent YoY in 2Q2014. During the quarter, NII increased by 25.4 percent to Rs 11.3 billion while Non-Interest Income increased by 4.0 percent.
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