Karachi, August 09, 2021 (PPI-OT): UBL Consolidated EPS clocks in at PKR12.2sh (Above expectation)

United Bank Limited (UBL) announced its 1HCY21 results where the bank’s earnings during the period clocked at PkR15.1bn (EPS: PkR12.2) compared to PkR10.7bn (EPS: PkR8.9) during the same period last year, up 40%YoY.

The result came above our expectation on account of i) higher than anticipated fee and commission income and ii) lower provisioning expenses where bank recorded reversals of PkR534mn as opposed to our forecasted provisioning expense of PkR595mn.

Together with the result, the bank announced a dividend of PkR4.0/sh, taking cumulative CY21TD payout to PkR8.0/sh.

In 2QCY21 alone, UBL reported earnings of PkR6.04/sh, down 3.0%QoQ where sequential decline is primarily attributable to lower capital gains in the outgoing quarter (-62%QoQ amid high base effect) and slight growth in administrative costs (up 2.1%QoQ).

Effective tax rate for the quarter stood at 45.5% vs. 39.2% in 1QCY21 which contained the growth in profitability. The higher taxation maybe on account of anticipated additional tax implemented in the budget where ADR is not maintained above 50%.

UBL trades at a forward PBV of 0.71x. We have a BUY rating on the scrip with a TP of PkR140/sh.