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UBL_1QCY21 Result Review (Above Expectation), (AKD, Off the Analyst's Desk, April 22, 2021)

AKD, Off the Analyst's Desk

UBL: 1QCY21 Result Review (Above Expectation)

  • United Bank Limited (UBL) announced its 1QCY21 results today where the bank posted earnings of PkR7.6bn (EPS: PkR6.20) compared to PkR4.9bn (EPS: PkR3.98) in the same period last year. The result came above our expectations.
  • Moreover, the bank surprised on the dividend, announcing cash payout of PkR4.0/sh.
  • The above-expected earnings came as a result of lower provisioning expense (PkR376mn in 1QCY21 vs. PkR2.2bn in 4QCY20) leading credence to our understanding that provisioning coverage on overseas loan book is near complete.
  • On a sequential basis, earnings improved by 46.0% driven by capital gains (1QCY21: PkR1.9bn vs. –ve PkR0.4bn in 4QCY20) and sharp reduction in provisioning costs. Net Interest income remained flat QoQ with marginal dip being witnessed in gross yield (1QCY21: 53.2% vs. 54.0% in the previous quarter).
  • Effective tax rate normalized in 1QCY21, standing at 39.2% compared to 36.0% in the previous quarter.

AKD Research

Underlying
United Bank Limited

United Bank is engaged in commercial banking and related services. Co. operates five business segments: Corporate Finance, Trading and Sales, Retail Banking, Commercial Banking and Asset Management. As of Dec 31 2016, Co. operates 1,341 branches inside Pakistan including 47 Islamic Banking branches and 2 branches in Export Processing Zones, and 18 branches outside Pakistan.

Provider
AKD Securities Limited
AKD Securities Limited

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.

Analysts
Hamza Kamal

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