Flash Note: United Bank (UBL): 1Q2018 Conference Call Notes
- UBL declared earnings of Rs2.2/share in 1Q2018, down 63% YoY primarily due to one-off pension cost. Normalized earnings excluding outlier stood at Rs5.9/share.
- Cost to income ratio stood at 41% in 1Q2018, down from 43% in 1Q2017.
- Deposits of the bank grew by 10% to Rs1.4tn mainly on back of current account growth.
- CAR of the bank has improved to 16% in 1Q2018 vs. 15.5% in 1Q2017.
- The bank booked Rs1.9bn of net provisions charge in 1Q2018 to build up coverage against its international operations as a measure of prudence. This is net of Rs800mn recovered from domestic front.
- NPLs against international operations were also up 10% QoQ to Rs25bn in 1Q2018.
- Coverage of the bank against its international operations now stands at 68% and the bank plans to improve it further in coming quarters. So, additional provisions against international NPLs can not be ruled out however the quantum of the charge could be lower in coming quarters.
- The bank charged a net pension cost of Rs6bn representing actuarial estimate of the pension cost as per the Supreme Court’s order to increase minimum pension to Rs8000/month. As per the management, this is the maximum that the bank will have to pay however the estimate may change based on the ongoing verification process.
- Management does not expect any major impact of Amnesty Scheme on banking sector deposits. Instead, M2 growth will remain the main driver of banking sector deposit going forward.
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.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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