LAHORE - The UBL announced 1H2014 unconsolidated profits of Rs10.5b (EPS Rs8.6) compared to Rs8.3b (EPS of Rs6.8) in 1H2013, up 27.4%. The bank also announced interim cash dividend of Rs2.5 per share.

During the period, bank’s NII (Net Interest Income) increased by 18.6%YoY to Rs21.2b. Though banking spreads averaged 6.1% in 1H2014 against 6.25% in 1H2013, NII got support from higher yields on increasing PIB portfolio of banks and rising credit growth. As a result, NIMs are estimated to improve by 30bps from 4.6% in 1H2013. On the other side, provisions against NPLs (Non-Performing Loans) declined by 31.7%YoY to Rs669m. In addition, Non-Interest Income increased by 16.4%YoY to Rs10.0b mainly because of 20.2% YoY higher fee income to Rs5.5b and 80.4% higher income from dealing in foreign currency to Rs1.4b.

In 2Q2014, UBL unconsolidated profits stood at Rs5.3b (EPS Rs4.3) against 1Q2014 profits of Rs5.2b (EPS Rs4.3). During the quarter, NII increased by 15.6% to Rs11.3b while NIMs are estimated to have increased by 60bps from 4.7% in 1Q2014. However, higher provisions and low dividend income dented profitability growth of the bank. During the quarter, banks recorded Rs522mn against NPLs and Rs247mn against diminution in investments compared to Rs147mn and reversal of Rs6mn in 1Q2014, respectively. Dividend income also declined by 45.9% to Rs365mn which caused 2.1% decline in Non-Interest Income to Rs5.0bn. On year on year basis, UBL unconsolidated profits increased by 23.4% YoY in 2Q2014. During the quarter, NII increased by 25.4% to Rs11.3bn while Non-Interest Income increased by 4.0%.