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UBL earns Rs 8.4 billion PAT

Staff Report

KARACHI: United Bank Limited’s profit after tax stood at Rs 8.4 billion in 2008, translating into earnings per share of Rs. 8.26, said a press release issued by the bank.

The bank achieved consolidated profit before tax of Rs 14.1 billion in 2008, 2 percent higher than last year’s profit.

Profitability in 2008 was partly impacted by the decision to charge 50 percent of the impairment loss on the equities portfolio amounting to Rs 1.88 billion against this year’s P&L statement, although the State Bank of Pakistan has allowed banks to defer booking the loss till 2009. Without the impairment loss, the bank’s profit before tax would have reached Rs 15.9 billion, 15 percent above last year’s profit, said a press release issued by the bank.

Turmoil in the global financial markets in the later part of the year resulted in a marked slowdown in business momentum overseas.

Net interest income before provisions rose to Rs 28.8 billion, which is 16 percent higher than last year, whereas non-interest income grew by 9 percent over a similar period to Rs 10.8 billion. Fee and commission income grew by 24 percent mainly due to higher corporate finance fees and trade commission. Net provisions at Rs 7.8 billion are up by 21 percent.

Administrative expenses increased by 17 percent over the corresponding period last year. Nearly 35 percent of the increase is attributed to higher rent and utilities costs. Personnel costs were higher by 10.6 percent.

International operating expenses were impacted by the devaluation of the rupee.

Deposits showed strong growth of 20 percent to Rs 492 billion in 2008, with domestic deposits growing at a slightly lower rate of 15 percent. Total advances increased by 23 percent. Domestic bank advances accounted for 46 percent of the increase as a result of a strong push in the corporate financing sector. However, liquidity constraints in the second half of the year led to rationalization of lending, which resulted in a drop in market share from 9.4 percent in December 2007 to 9.2 percent in December 2008. Advances to deposits ratio increased from 75 percent in December 2007 to 77 percent in December 2008.

International operations contributed significantly to the bank’s overall results despite tough economic conditions. About 30 percent of profits and 23 percent of assets came from UBL’s international operations.

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