UBL - Mammoth payout surprises in 1QCY23, (AKD Off the Analyst's Desk Apr 28, 2023)
United Bank Limited (UBL) announced its 1QCY23 financial performance earlier today, wherein the bank posted NPAT of PkR14.5bn (EPS: PkR11.6) for the quarter, higher by 9%QoQ and 54%YoY. The earnings were substantially higher than our expectations.
- As anticipated, the earnings growth in the quarter came from NIMs expansion, which clocked in at ~5.5% in 1QCY23, compared to 5.0% in the preceding three-month period—driven by the hike in interest rates during the period. As a result, the net interest income at UBL saw a sequential increase of 10% to ~PkR35.0bn.
- On the Non-interest income front, the bank posted a QoQ dip to the tune of 28%QoQ, despite the increase in FX income from PkR832mn in 4QCY22 to PkR4.4bn in 1QCY23. This was offset by the absence of ~PkR6.8bn in other income recorded in the earlier quarter. On a YoY basis, the non-interest income increased by 35%.
- Further strength to the bank’s profitability during the period came from lower than expected provisioning during the period, wherein the bank posted PkR2.7bn under the head. This was lower by 75% compared to the previous quarter, wherein the bank had to provide against the foreign securities in its investment portfolio following the downgrade on Pakistan’s sovereign bonds.
- The aforementioned positives were somewhat offset by the relatively higher effective tax rate in the quarter, clocking in at 42% compared to 25% in the previous quarter. To recall, UBL posted a reversal in the earlier quarter against the higher taxation that it had paid in the first 9 months of the year.
- After having paid out PkR9/sh in the final quarter of CY22, UBL has announced a PkR11/sh cash dividend alongside the earnings, beating our expectations—corresponding to a payout ratio of ~95%.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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