UBL profits soar 76 percent in 2023, pays out 440 percent dividend

KARACHI: United Bank Limited, Pakistan's second-largest private bank, posted a record annual profit of Rs56.47 billion for 2023, up 76.1 percent from a year earlier, as it benefited from high interest rates and lower provisions.

The bank also announced a final cash dividend of Rs11 per share, or 110 percent, bringing its total payout for the year to Rs44 per share, or 440 percent - the highest in its history. UBL's net interest income, the difference between interest earned and interest paid, rose 38.3 percent to Rs148.98 billion. The bank's interest earnings were boosted by the central bank's policy rate, which peaked at 22 percent scince 2023

However, the banks non-interest income fell 35.3 percent to Rs23.96 billion. The other income, which includes fees, commissions, foreign exchange and brokerage income, also dropped 81.4 percent to Rs1.52 billion.

Despite the decline in non-interest income, UBL's total revenue increased 19.6 percent to Rs172.94 billion, while its total expenses rose 24.9 percent to Rs72.49 billion. The operating expenses increased 23.7 percent to Rs70.09 billion. UBL's provision expense, which reflects the expected losses on loans and investments, was Rs11.13 billion, compared with a reversal of Rs17.6 billion in 2022.

The fee and commission income in 2023 amounted to Rs19.75 billion, an increase of nearly 15 percent against Rs17.24 billion earned in the same period last year. UBL’s foreign exchange income also showed a strong growth of 48 percent, up from Rs8.6 billion in 2022 to Rs12.7 billion in 3QCY23.

On the other hand, the bank sustained massive net losses on securities to the tune of Rs11.58 billion in 2023, in comparison to a gain of Rs560.58 million in the same period last year. The bank's non-performing loans ratio improved to 5.8 percent at the end of 2023, from 6.4 percent a year earlier. The earnings per share (EPS) for 2023 was Rs45.05, up from Rs25.74 in 2022.

Askari Bank posts 54 percent profit growth

Askari Bank Limited reported a 54.2 percent year-on-year increase in its profit after tax for 2023, boosted by higher net interest income and fee income.

The bank earned Rs21.54 billion or Rs14.83 per share in 2023, compared with Rs14.06 billion or Rs9.7 per share in 2022, according to a statement issued to the Pakistan Stock Exchange.

The board of directors recommended a final cash dividend of Rs2.5 per share, or 25 percent, for the year ended Dec. 31, 2023, taking the total payout for the year to Rs5 per share, or 50 percent.

The bank attributed its strong performance to proactive actions to manage businesses, a client-focused strategy, emphasis on technology, effective cost controls, rationalization of human resource and excellent performance of its Islamic banking subsidiary, Ikhlas Islamic Banking.

The bank said it was well positioned for the future with a strong brand, a wide range of products and services, a talented workforce, a robust balance sheet, a growing capital base and a high credit quality.

"Most importantly with the strong governance practices and effective oversight of the Board, the Bank is moving forward with a renewed vision to improve client and employee experience and to drive profitable and sustainable growth for our shareholders," it said in a statement.

The bank’s net interest income, the difference between interest earned and interest paid, rose by 48.77 percent to Rs59.45 billion in 2023, as its interest-earning assets surged by 84.34 percent to Rs305.63 billion.

The bank’s total non-markup income, which includes fee income, dividend income, gain on securities and foreign exchange income, also increased by 14.16 percent to Rs13.26 billion in 2023. The bank’s fee and commission income, which mainly comes from trade finance, remittances, card business and other services, jumped by 34.22 percent to Rs7.31 billion in 2023. The non-performing loans ratio improved to 3.3 percent in 2023, from 3.6 percent in 2022, while its provision coverage ratio increased to 94.9 percent in 2023, from 92.8 percent in 2022.

The bank’s total non-markup expenses, which include operating expenses, workers’ welfare fund and other charges, grew by 28.1 percent to Rs29.57 billion in 2023. The operating expenses increased by 27.53 percent to Rs28.79 billion. The bank’s tax expense also rose by 53.2 percent to Rs20.64 billion

Lotte Chemical profit halves in 2023, dividend cut

Lotte Chemical Pakistan Limited, a subsidiary of South Korea's Lotte Chemical Corporation, reported a 50 percent drop in profit-after-tax for 2023, as lower revenue and higher costs weighed on its performance.

The company, which produces pure terephthalic acid (PTA), a raw material for polyester, said its profit-after-tax fell to Rs5.08 billion in 2023 from Rs10.12 billion a year earlier.

Its earnings per share declined to Rs3.35 from Rs6.68 in the same period. The company's board of directors announced a final cash dividend of Re1 per share, down from Rs2.5 in 2022.

The net revenue decreased by 19 percent to Rs81.62 billion in 2023, as compared to Rs100.27 billion in the previous year, due to lower demand and prices for PTA. The company's gross profit margin also shrank to 12.5 percent from 17.8 percent in 2022, as its cost of sales rose by 9 percent to Rs71.38 billion.

The company's administrative expenses increased by 9 percent to Rs654.4 million, while its other income rose by 39 percent to Rs2.57 billion, mainly from interest income and exchange gains. The company's profit before tax fell by 40 percent to Rs9.51 billion, while its effective tax rate increased to 47 percent from 36 percent in 2022.