Report

UBL: 1QCY20 release in-line with estimates

  • United Bank Limited (UBL) announced its 1QCY20 results today wherein the bank posted consolidated PAT of PKR 4,878Mn (EPS: PKR 3.98) for the quarter. 
  • The reported earnings in 1QCY20 improved 21% on a YoY basis but remained flat on a QoQ basis.
  • The bank announced a payout of PKR 2.5 along with the result. Since the bank’s BoD date fell in the cut-off date for 1QCY20 dividends decided by SBP, the bank will now have to skip dividends for the next two quarters i.e. June and September ending quarters.
  • Net Interest Income (NII) of UBL posted improvement both on a YoY (+19%) and on a QoQ basis (5%). We attribute this improvement to continued loan repricing during the quarter. Further details are awaited.
  • Non-Interest Income, especially fee income declined by 16%/3% on a YoY/QoQ basis during 1QCY20. We believe this attrition is mainly due to slowdown in bank’s bancassurance business and general slowdown in economic activity. Growth in this segment is likely to remain weak going forward as well.
  • The bank exhibited strong check over its cost as indicated by ~10ppt fall in its cost to income ratio as compared to Dec’19 quarter. Administrative expenses of UBL declined by 14% on a QoQ basis.
  • High provisioning expenses were major dent to UBL’s earnings in 1QCY20 as overall expenses clocked-in at PKR 3,701 Mn. Majority of these provisioning expenses emanated from increase in loan provisioning expenses as the bank posted reversal in the value of its investments.
  • We have a ‘Buy’ rating on UBL.
Provider
BMA Capital Management Limited
BMA Capital Management Limited

​BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.

Analysts
Faizan Ahmed

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