United Bank Limited is expected to post an after-tax profit of Rs 3.56 billion (EPS: Rs 6.9) showing a growth of 122 percent over last year. Profit before tax is expected to grow by 91 percent, from Rs 3.0 billion in 9M2004 to Rs 5.8 billion in 9M2005.
The factors behind this 122 percent growth in profitability are likely to be the drastic increase in the advances portfolio of the bank, together with the increasing spreads of the banking sector.
In addition to the general increasing spreads of the banking sector, UBL in particular has increased its consumer portfolio, which has increased the bank's spreads relative to other banks.
Net Interest Income of the bank is expected to rise by 93 percent, from Rs 4.9 billion to Rs 9.4 billion in 9M2005. This growth is expected to be on the back of growth in advances, which are expected to grow by 39 percent from Rs 125 billion in September 2004 to Rs 174 billion in September 2005.
Another core earning avenue, the fee, commission and brokerage income of the bank is expected to have increased by 20 percent from Rs 1.15 billion in 9M2004 to Rs 1.38 billion in 9M2005. This avenue is linked to the trade of the economy, which has also grown significantly during this period.
Advances of the bank are expected to have grown by 19 percent from Rs 146 billion in December 2004 to Rs 174 billion in September 2005. On the other hand, deposits of the bank are expected to grow by 18 percent to Rs 272 billion in September 2005 from Rs 231 billion in December 2004. Advances to deposits ratio has been fairly stable at 64 percent. For the full year, analysts expect advances and deposits of the bank to grow by 25 percent and 22 percent, respectively, to Rs 183 billion and Rs 281 billion.