United Bank (UBL) posted a net profit of Rs10.5 billion on Wednesday for the first six months of 2014, which is 27.4% higher than the after-tax profit of Rs8.3 billion recorded in January-June 2013.
According to the unconsolidated results sent to the Karachi Stock Exchange, the board of directors of UBL also announced an interim cash dividend of Rs2.5 per share.
UBL’s net interest income for the first half of 2014 surged 18.6% on a year-on-year basis to Rs21.2 billion.
According to Topline Securities analyst Zeeshan Afzal, banking spreads averaged 6.1% in January-June of 2014 as opposed to 6.25% in the corresponding six-month period of 2013. Still, net interest income of UBL received support from higher yields on increasing portfolio of Pakistan Investment Bonds and rising credit growth.
“As a result, net interest margins are estimated to improve by 30 basis points from 4.6% in the first half of 2013. On the other side, provisions against non-performing loans declined by 31.7% year-on-year to Rs669 million,” he said.
Non-interest income went up by 16.4% year-on-year to Rs10 billion. The reason for the increase, according to Afzal, is 20.2% higher ‘fee income’ and 80.4% higher ‘income from dealing in foreign currency’.
In the second quarter of 2014, UBL’s unconsolidated profits stood at Rs5.3 billion against the preceding quarter’s profit of Rs5.2 billion. During the April-June quarter, net interest income increased 15.6% to Rs11.3 billion while net interest margins are estimated to have increased by 60 basis points from 4.7% in the January-March quarter.
“However, higher provisions and low dividend income dented profitability growth of the bank,” Afzal said. Dividend income also declined by 45.9% to Rs365 million, causing 2.1% decline in non-interest income to Rs5 billion.