UBL Posts Earnings Well Below Market Expectations for Q2 FY 2018

United Bank Limited (UBL) posted earnings of Rs 3.62 billion in April-June 2018, down by 40% from Rs 5.98 billion in the same period last year. A major deviation to earnings forecast resulted from higher provisioning charge during the quarter.

The result was significantly below the market expectations. Additional pension charge of Rs 2 billion dealt the knockout punch to profits.

Earnings per share of the bank were decreased to Rs 2.96 from Rs 4.89 in this quarter.


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Consistent with its previous quarterly payouts, the bank declared an interim cash dividend of PKR 3.0/share.

During Q2CY18, the bank booked provisioning expense of Rs 2.2billion, out of which Rs 1.7 billion pertains to provision charge against advances, while Rs 0.5 billion relates to impairment charges against the value of investments.

Interest income of the bank remained relatively unchanged at Rs 26.02 billion with a 1% YoY increase whereas interest expense of the bank rose 3% YoY, thereby resulting in stagnant net interest income -1%YoY during the quarter and administrative expenses rose by 13% year on year.

On a QoQ basis, there were no surprises with respect to NII which were flat as expected. Similarly, NMI contracted in line with expectations due to quarterly decline in capital gains. Non-Interest Income was supported by 91% YoY higher Income from FX and 15% YoY higher Fee Income.

Capital gains realized by the bank were higher. During the quarter, the bank realized capital gains of Rs 1.5 billion, on top of Rs 3.1 billion gains already booked in Q2CY18.

For the half year, UBL’s Income from dealing in Foreign Currencies also went up, by 61.5%, however, Other Income dropped slightly by 10.2%. Among expenses, the bank’s Workers’ Welfare Funds reduced by 40% while Other charges decreased by 93% as well.

It reduced its Taxation by 52.4%. The overall Profit after Taxation dropped by 54% during the Half year period.

UBL’s script at the bourse was trading at Rs 165.50, down by Rs 7.48 with a turnover of 3.62 million shares.