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UBL 1QCY23; above explained top-line growth, upwelling fee, forex income pump earnings

April 29, 2023 at 8:42 am | Economic Affairs

April, 28(E. A Report) — Uninted Bank Limited (UBL) registered above expected top-line growth, upwelling fee and forex income pumped earnings.
Filing its first quarter result, UBL announced of printing earnings of Rs. 14.5 billion where EPS of Rs.11.6 increased by 53/9% year on and quarter basis respectively.
Along with the result, bank announced a surprise dividend of Rs. 11.0/sh.
Net Interest Income (NII) of the bank increased by a healthy 56% year on though it was lower than the increase noted in other banks due to UBL’s greater international exposure.
NII accretion was driven by NIMs accretion backed by persistent rate hikes over the past 12 months and robust balance sheet expansion. On a sequential basis, increase was recorded at 10%.
Moving forward, NIMs expansion theme is expected to play out over the rest of the year and keep NII accretion intact.
Non-markup income remained strong at Rs. 9.3 billion, an increase of 37% Year on despite a Rs. 637million capital loss. The increase was driven primarily by hefty increase in forex income alongside improved fee income. Increase in forex income can be attributed to increased Rupee volatility and greater transactional volumes, however, higher fee income can be linked to improved card related fee, branch banking income and trade related commissions.
On a sequential basis however, there was a decline of 27% due to the absence of one off gains of Rs. 6.8 billion booked in fourth quarter pertaining to the wind up of a foreign subsidiary.
Provisioning charges for the quarter were recorded at Rs. 2.7 billion against a nominal charge of Rs. 334 million in the SPLY. Its is noted that the bank booked a sizable Rs. 10.8 billion charge in the previous quarter primarily on the bank’s investments in overseas branches, however, recoveries from the domestic loan book remained strong.
Admin expenses increased to Rs. 15.7Bn in 1St quarter, recording an increase of 24% YoY on the back of increased compensation expense, Rupee devaluation, investment in IT infrastructure and growing inflationary pressures.
Effective tax rate for 1St quarter eased off to 42.4%, down from 53.2% recorded in CY22 as advances related tax was rolled back.

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