United Bank Limited (UBL) has revealed a substantial decline of 39.53 percent in its annual profit for the year ended December 31, 2018, attributing the decrease to significant provisioning, write-offs, and pension liabilities.
The financial results were submitted to the Pakistan Stock Exchange (PSX) on Wednesday, shedding light on the bank’s financial performance and the factors influencing its profit margins.
According to the submitted financials, UBL reported a profit after tax of Rs15.22 billion for the year 2018, a notable decrease from the Rs25.18 billion recorded in the preceding year. The earning per share (basic and diluted) for the year was declared at Rs12.44, down from Rs20.57 a year ago.
The substantial increase in net provisioning and write-offs was a key factor contributing to the decline in annual profit. The figures surged by 427 percent, reaching Rs12.91 billion for the year ended December 31, 2018, compared to Rs2.45 billion at the end of the preceding year. Additionally, the bank incurred expenses in the form of pension liabilities, amounting to Rs6.65 billion for the year.
Despite a flat net mark-up/interest income of Rs56.23 billion in 2018, compared to Rs56.42 billion in the preceding year, the bank experienced growth in non-mark-up/interest income, reaching Rs25 billion as opposed to Rs22.16 billion a year ago.
In response to the challenging financial performance, UBL announced a final cash dividend for the year ended December 31, 2018, at Rs3 per share, representing a payout of 30 percent. This dividend is in addition to the interim dividends already paid at Rs8 per share, equivalent to 80 percent.
The decline in annual profit reflects the broader economic challenges faced by the banking sector, including increased provisioning and write-offs. As the banking industry navigates through these challenges, financial institutions are adapting to evolving market conditions, regulatory requirements, and economic uncertainties.
UBL’s decision to distribute dividends despite the decline in annual profit underscores the bank’s commitment to providing returns to its shareholders. However, the announcement also serves as a reminder of the importance of careful financial management and strategic planning in a dynamic economic environment.
Market analysts will closely scrutinize UBL’s financial performance and the measures taken by the bank to address the challenges. The banking sector’s resilience and ability to adapt to changing economic landscapes will play a crucial role in shaping the industry’s trajectory in the coming years.
