UBL profit up by 46.5 percent

The United Bank Ltd (UBL) posted consolidated earnings of Rs6.82 billion for JulySeptember, up by 46.5 per cent from a year ago.

A filing on the Pakistan Stock Exchange (PSX) said the bank also announced a cash dividend of Rs4 per share, which is in addition to the interim cash dividend of Rs8 per share.

According to a research note by Topline Securities, the result was in line with market expectations. "Provision reversal continued to support the bottom line of the bank as it clocked in at Rs708 million in the third quarter versus a provision charge of Rs5.5bn in the same period of 2020," it said.

The bank's earnings in the first nine months of 2021 amounted to Rs21.86bn, up by 42.1pc from a year ago.

In the nine-month period, the provision reversal stood at Rs866m against a provisioning charge of Rs15bn last year. "This shows declining non-performing loans pressures on both domestic and international fronts," it added.

Net interest income of the bank in the third quarter went down 1pc year-on-year largely in line with the estimates. Noninterest income was up 29pc year-on-year to Rs5.8bn led by higher fee and commission income, dividend income and foreign exchange income.

The UBL's share price went up on Wednesday by 2.58pc to Rs133.37 apiece.

UBL and OPay recently joined hands with the objective to expand digital acceptance and financial inclusion in Pakistan. An MoU was signed by both institutions in this regard.

Picture shows Sharjeel Shahid, Group Executive Digital Banking UBL and Zeb Khan, Vice President, OPay Pakistan at the signing ceremony along with senior executives from both organizations.

UBL and OP Digital Services Pvt. Ltd (OPay) have agreed to join hands for a strategic collaboration in the areas of merchant acceptance (point-of-sale acquiring) and financial inclusion (branchless banking). OPay is a Fintech company based out of Beijing, China, having presence across Africa and Asia, with a valuation close to $ 2 billion.

Speaking at the occasion, Sharjeel Shahid, Group Executive - Digital Banking, UBL said, "This collaboration is a prime example of how cross-border synergies can be leveraged to create a meaningful impact. UBL takes pride in its digital services menu and this will further augment our contribution in this space."

The Pakistani banks' total advances have grown 15 per cent on a year -on-year basis to reach Rs9.3 trillion at the end of September, the State Bank of Pakistan reported on Monday.

It is the highest growth witnessed after three years, it said.

Growth in advances remained stagnant during the last two years due to the economic slowdown and banks reluctance to increase their share in lending.

The private sector credit also grew 15 per cent on a year-onyear basis to Rs7.8 trillion as of September 30, 2021.

"Advances are also up 4 per cent on a month-on-month basis. We believe that improvement in LSM [large-scale manufacturing] and disbursements against Temporary Economic Relief (TERF), which is a concessional financing scheme, has led to higher growth in advances," Umair Naseer at Topline Research said.

Additional taxation by the government on banks with low ADR [Advance-to-Deposit ratio] may also have led [the] banks to increase their lending. [The] ADR ratio of the sector still remains on the lower side at 47 per cent in September 2021 against 48 per cent in September 2020, the central bank said.

Investments of the sector continued to post strong growth, as they increased 27 per cent on a year-on-year basis to reach Rs14.1 trillion as of September 30, 2021.

Investment-to-Deposit ratio (IDR) of the sector increased to 71 per cent in September 2021 against 66 per cent in September 2020.

Provisions against advances went up 14 per cent on a year-onyear basis and one per cent on a month-on-month basis to Rs658 billion. This is better than the pace at which the advances have grown both on a year-on-year and monthon-month basis, which indicates that the pressure from the non-performing loans remain low.

On the liability side, the deposits of the sector grew 17 per cent on a year-on-year basis to Rs19.8 trillion at the end of September, slightly above the last five year's average growth of 16pc.

Broad Money (M2) growth also clocked-in at 15 per cent on a year-on-year basis, primarily driven by growth in borrowing from scheduled banks, which went up 16 per cent on a year-onyear basis. The currency in circulation increased 15 per cent on the year-on-year basis during the same period.