11 August 2005

DUBAI -- United Bank Limited (UBL), the third largest commercial bank in Pakistan, major shares owned by the Consortium of Abu Dhabi and Bestway Group, earned a pre-tax profit of $. 60.8 million for the half year ended June 30, 2005. The board of directors approved the financial statements of the bank on August 1.

According to the details of the results released by the UBL in Dubai yesterday, the profit before tax depicted a rise of 80 per cent and stood at $ 60.8 million as compared with $34.0 million during the corresponding period of 2004.

Major contributory to the healthy profit was the net mark-up/ interest income after provisions, which doubled to $ 92.5 million (2004: $46.2 million), mainly due to a volume increase in the advances and acceleration in lending rates. Fee income increased by 29 per cent, as compared to corresponding period in last year, to $16.6 million (2004: $13.1 million), mainly due to increased focus on trade business during the period. The profit after tax grew by 91 per cent over last half year to $35.1 million (2004:$17.1 million), translating into an annualised return on shareholders' equity of 28 per cent (June 2004: 19 per cent).

Deposits grew by 17 per cent during the half year and stood at $4,513 million (2004: $3,861 million). The management complimented the field staff for demonstrating high ability to exceed expectations.

The bank achieved an 18 per cent growth in advances to $2,843 million in the half year ended June 30, 2005.

Trade volumes rose sharply by 50 per cent to $ 2,213 million (2004: $. 1,476 million) whereas home remittances also increased by 18 per cent to $ 218 million (2004: $184 million) as compared to same period in last year.

The JCR-VIS Credit Ratings Company Limited has upgraded the bank's medium to long-term credit rating by two notches to "AA", indicating good credit quality, moderate risk and strong protection factors. The short term credit rating maintained at the maximum scale of "A-1+", which denotes outstanding short term liquidity with highest certainty of timely payments.

In June 2005, the Privatisation Commission offered a portion of the government held shares to the general public. The general public subscribed for 4.3 per cent of the share capital and these shares were listed on the Karachi, Lahore and Islamabad Stock Exchanges on July 25, 2005.

With the increasing demand of credit in the economy and the expansion of the consumer business, there has been an increasing pressure on bank's capital. To mitigate this the bank effectively raised supplementary capital through the issuance of another listed, rated, unsecured and subordinated Term Finance Certificates amounting to $33.5 million, taking the total sub-ordinated debt issue size to $67.1 million. The issue was made to the general public in March 2005. The Capital Adequacy Ratio of the bank stood at 10.0 per cent for June 2005.

The first half of 2005 saw the launch of new consumer products, including UBL Credit Card and UBL Money, as well as the continued growth of the products launched last year.

The UBL Visa Credit Card became the first EMV-chip enabled credit card in South Asia. UBL Money, an unsecured personal installment loan facility, was launched in June and has made a promising entry into the market.

Another new initiative from the Bank has been the introduction of e-NRP accounts; web based deposit accounts for Non-Resident Pakistanis. The product has been test launched and appears to hold considerable potential.

With the launch of UBL Money, the bank has successfully achieved its mission of introducing a full suite of consumer financing products in the market. It now intends to focus on consolidating on the launches and attain improved profitability on the back of substantial market shares, which UBL Drive, UBL Address, UBL Cashline and the Credit Card have achieved.

BY M. A. QUDOOS

© Khaleej Times 2005