Pakistan's United Bank's Profit Little Changed as Bad Debt Provisions Rise
United Bank Ltd., Pakistan’s third- largest by assets, said first-quarter profit was little changed as provisions for bad debts rose. Shares rose.
Net income fell to 2.74 billion rupees ($32.8 million), or 2.47 rupees a share during the three months ended March 31, from 2.76 billion rupees, or 2.48 rupees, a year earlier, the Karachi-based bank said in a statement to the stock exchange today. Revenue rose to 8.66 billion rupees from 8.28 billion rupees.
Pakistan’s central bank in October 2007 began requiring lenders to set aside more funds to cover delinquent loans, then eased the rules last year. Banks are currently allowed to use 40 percent of the value of assets provided as collateral to meet requirements for provisions against defaults.
United Bank, which has gained 15 percent this year, rose 1.7 percent to 61.06 rupees as of 9:48 a.m. local time on the Karachi Stock Exchange.
Provisions for loan defaults and bad debts rose to 1.74 billion rupees at the end of the first quarter, from 1.6 billion rupees a year earlier, according to the statement.
The U.K.’s Bestway Holdings, United Arab Emirates-based Abu Dhabi Group and Pakistan’s government are the lender’s largest stakeholders.
To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan firstname.lastname@example.org.