Tuesday, January 19, 2021

UBL earning shrinks by 41% YoY

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Zubair Yaqoob
Zubair Yaqoob
The author has diversified experience in investigative journalism. He is Chief content editor at wnobserver.com He can be reached at: [email protected]
UBL announced earnings on Wednesday for CY18 at PKR 15.5bn (EPS: PKR 12.65/share), depicting a YoY decline of 41%, above expectations. Ex-pension liability, earnings have contracted ~28% YoY primarily on account of heavy provisioning booked during the year (+5x YoY).

During 4Q the bank posted a 61% QoQ profitability jump led by a 12.6x QoQ higher reversal on account of Workers’ Welfare Fund (PKR 2.1bn during CY18 against an expense of PKR 815mn SPLY) which came on account of a court order in its favour.

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Moreover, the expense in respect of the pension liability has been revised down from PKR 8,847mn to PKR 6,657mn.

The combined impact of these events has caused an uptick of ~PKR 1.8/share QoQ. That said, hefty provisioning expenses continued, with the bank booking PKR 5.6bn during 4Q (+80% QoQ).

The bank announced a dividend of PKR 3.00/share for 4QCY18, taking total payout to PKR 11.00/share for the year.

Net Interest Income of the bank settled at PKR 58.2 bn during CY18, remaining flattish YoY despite the rate hikes by SBP, as 13% YoY higher interest expense offset the 6% YoY higher interest earned.

On a sequential basis NII increased 3% QoQ as impact of loan repricing has started coming through.

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NFI recorded an impressive 10% YoY increase during CY18 as the bank booked healthy improvements in FOREX income (+66% YoY) and fee income (+7% YoY).

Fee income and FX income also portrayed a staggering improvement of 18.3% QoQ and 171% QoQ respectively.

The bank booked a heavy provisioning expense once again worth PKR 5.6bn during 4QCY18, bringing total provisioning to PKR 13.1bn for CY18 (+5x YoY). We attribute the provisioning primarily to the bank’s UAE loan book.

Effective tax rate was set at 41% during CY18 compared to 36% SPLY.

 

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Zubair Yaqoob
Zubair Yaqoob
The author has diversified experience in investigative journalism. He is Chief content editor at wnobserver.com He can be reached at: [email protected]
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