EUR 4.27 For Business Accounts Only

United Bank Limited (UBL): 1Q2019 EPS of Rs3.9, +73% YoY (-16% QoQ); DPS Rs 2.5/share (Better than expectations)

 

• United Bank Limited (UBL) reported earnings of Rs3.94/share in 1Q2019, +73% YoY, better than our expectations primarily due to lower than anticipated operating expenses and provisioning. UBL announced a dividend of Rs2.5/share for 1Q2019. To note, during similar period last year, the bank booked a higher provisioning charge against loans and advances.
• Net Interest Income (NII) of UBL in 1Q2019 grew by 5% YoY but remained flat QoQ. This could likely be due to high proportion of fixed rate PIBs in UBLs book, we believe.
• Non‐markup income during the outgoing quarter down 31% YoY mainly due to higher base effect. To note, UBL booked Rs3.2bn gain on sale of securities in 1Q2018 on account of sale of equities and bonds, we believe.
• However, fee & commission income (~75% of non‐markup income) witnessed an increase of 20% YoY in 1Q2019.
• Considerable profits growth of 73% on yearly basis was due to lower base effect. To note, UBL booked one‐time pension charge of Rs6.4bn (Rs3.2/share after tax) in 1Q2018.
• Key risks for UBL include: 1) limited NII growth owing to lower rate PIBs exposure 2) lower than expected advances growth, 3) delay in hike in interest rates, and 4) deterioration of Pakistan macros.