Pakistan's United Bank Second-Quarter Profit Rises 30% on Lower Provisions
United Bank Ltd., Pakistan’s third- largest by assets, said second-quarter profit rose 30 percent as provisions for bad debts declined.
Net income rose to 2.38 billion rupees ($27.8 million), or 1.97 rupees a share, from 1.83 billion rupees, or 1.50 rupees, a year earlier, the Karachi-based bank said in a statement to the stock exchange today. Revenue rose to 8.9 billion rupees from 7.62 billion rupees.
“Despite the decline in interest income, the drop in provisioning helped the bank post a profit in the quarter,” said Hifza Zia, research analyst at Elixir Securities Ltd., in Karachi.
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.
Shares of United Bank, which have gained 11 percent this year, fell 0.9 percent to 58.95 rupees as of 3:13 p.m. local time on the Karachi Stock Exchange. The bank plans to pay an interim cash dividend of 10 percent, according to the statement.
Provisions for loan defaults and bad debts fell to 1.99 billion rupees at the end of the second quarter, from 4.47 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.
Net income in the first six months rose to 5.13 billion rupees, or 4.22 rupees, from 4.59 billion rupees, or 3.75 rupees, a year earlier, the bank said. First-half revenue rose to 17.6 billion rupees from 15.9 billion rupees. The provisions for loan defaults and bad debts fell to 4.12 billion rupees.