- Bank’s balance sheet averaged at Rs1.7trillion in H1’19, compared to Rs1.8trillion
M Jahangir Hayat
LAHORE: United Bank Limited (UBL) International’s NPLs increased by USD 22.7 million over Dec’18 to reach USD 315.5 million at Jun’19, the bank directors’ report disclosed.
The report said that in order to build adequate buffers against loan losses, a provision charge of USD 16.3 million was taken during H1’19 compared to a charge of USD 44.5 million in H1’18.
Asset quality was recorded at 25.0% at Jun’19 (Dec’18: 19.8%). Specific coverage, after taking into account Forced Sale Value (FSV) of mortgaged properties and cash collateral, stood at 90.0% at Jun’19 (Dec’18: 92.1%, refer to note 10.3.2 to the financial statements), the report said.
The report, however, said that the Bank continues to efficiently manage it cost base by maintaining a lean and agile structure and building synergies across functions.
Administrative expenses were recorded at Rs. 19.2 billion for H1’19, a marginal growth of 4% over the previous year, the report said adding that excluding the impact of deposit protection premium that was not
in effect in H1’18, expenses closed flat on a year on year basis.
Personnel cost has been reduced by 3% compared to the prior year, premises cost managed at 2% lower year on year, IT expenses saw a 17% growth owing to investment in new IT platforms, PKR devaluation and
the Bank’s digital transformation program, it explained.
The Bank’s balance sheet averaged at Rs. 1.7 trillion during H1’19, compared to Rs. 1.8 trillion during the corresponding period last year. The strength of our balance sheet is driven by the domestic Branch Banking Group where the focus is on optimizing the deposit profile through acquisition and deepening within low cost core deposits as opposed to aggressive market share buildup, the report
Average domestic deposits were maintained at Rs. 1.1 trillion during H1’19, depicting a 10% year on year increase. This was led by strong growth in current accounts as the average portfolio grew by 12% against last year to Rs. 475 billion in H1’19, the report highlighted.
On an average basis, current to total deposits were recorded at 44.0% (H1’18: 43.3%), which continues to be the highest in the industry, the report further said, maintain the Bank also actively mobilized savings
deposits during the period under review, with the portfolio averaging 10% higher over last year. The average CASA ratio was recorded at 86.9% during H1’19 (H1’18: 86.1%).
This has enabled UBL to maintain one of the lowest cost of deposits in the industry, despite the prevailing high interest rate regime, at 4.8% in H1’19 (H1’18: 2.6%), the report stated.
UBL’s advances portfolio stood at Rs. 641.8 billion at Jun’19, down 10% over Dec’18. Credit acquisition remains conservative across both domestic and international businesses, with a view to maintain asset quality at optimum levels and maximize capital efficiencies, the report said.
Investments closed at Rs. 857.8 billion at Jun’19 (Dec’18: Rs. 786.4 billion) and portfolio remains concentrated within government securities.
“During the current year, we have built positions within short-term GoP securities which places us well to capitalize on the enhancement in margins as the yield curve trends upwards. The equity book stood at
Rs. 18.2 billion at Jun’19 with a diverse portfolio across top corporate stocks in various industries, invested with a long-term view to maintain a steady stream of dividend income, the report concluded.”