Thursday, November 14, 2019

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 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.

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.

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.


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

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