UBL announced earnings today for 2QCY23 at PKR 12.7bn (EPS: PKR 10.4), depicting an uptick of 379% YoY while down by 11% QoQ. The rise in earnings on YoY basis is fueled by a jump in total income and provisioning reversals. The bank also announced a cash dividend of PKR 11.00/share along with the result taking the total payout for 1HCY23 to PKR 22/share. This marks the highest-ever profit and cash payout of the bank in first half.

Result Highlights           

·        Net interest income of the bank settled at PKR 37.4bn during 2QCY23, increasing by 52% YoY. Interest expense was up 107% YoY while interest income increased by 83%, mainly on the back of policy rate hikes of 200bps during the outgoing quarter. On a sequential basis, Net Interest Income rose by 7% with interest income and expense posting a jump of 12% and 14% QoQ, respectively.

·        NFI portrayed a decline of 56% YoY during 2QCY23 taking 1HCY23’s total to PKR 13.1bn (-16% YoY). This decline in 1HCY23 is primarily due to loss on sale of securities of PKR 4.9bn vs. a gain on sale of securities of PKR 648mn in SPLY. However, fee and commission income posted an uptick of 16% YoY, clocking-in at PKR 9.7bn during 1HCY23. Further, FX income of the bank jumped by 49% YoY during 1HCY23, clocking-in at PKR 7.06bn.

·        A provisioning reversal was recorded in the outgoing quarter, settling at PKR 3.1bn, this took the provisioning reversal for the 1HCY23 to PKR 411mn compared to a provisioning charge during 1HCY22 of PKR 1.3bn.

·        The bank’s OPEX increased by 25% YoY in 1HCY23 clocking-in at PKR 33.5bn (2QCY23: PKR 17.3bn, +26% YoY | 6% QoQ). With this, Cost/Income stood at 41.8% in 2QCY23 against 40.9% in same period last year.

·        Effective tax rate was set at 51.5% during 2QCY23 compared to 85.3% SPLY.

Courtesy- AHL Research