The year 2002 marks the beginning of a new era in the history of the bank

 14 - 20, 2003

United Bank Limited (UBL) has posted Rs 2,756 million profit before tax for the year ending December 31, 2002, registering 88% growth over the previous year. The factors contributing to this improvement were increase in net mark-up income as well as non-markup income and reduction in provisioning, though there was slight increase in administrative expenses. The credit for this enviable performance goes to Amar Zaffar Khan and his team. Privatization of the bank marks the beginning of the era of consolidation through implementation of new vision.

The enviable performance of UBL is evident from a number of indicators. The most remarkable feature was a 112% increase in home remittances handled by the bank, going up from Rs 8 billion to Rs 17 billion. Deposits went up by 15% to Rs 162 billion. Total assets grew by 14% to 192 billion. The value of foreign trade handled by the bank registered 17% growth to Rs 135 billion. There was a marked improvement in the capital adequacy, asset quality and efficiency. The net non-performing advances also declined by 51% to Rs 5.7 billion. The NPL ratio decreased by 4 percentage points and stood at as little as 2.9% of total assets.

Mark-up/return earned declined from Rs 11.395 billion to Rs 11.158 billion due to declining trend of interest rates in the country. However, the decline was more than offset by the decline in mark-up/return expenses, a decline from Rs 6.335 billion to Rs 5.379 billion. Net mark-up/return/interest income after provisions went up from Rs 3.799 billion to Rs 5.039 billion. This increase can be attributed to lower provision against non-performing advances and provision for diminution in the value of investment.

Non-mark-up/return also went up from Rs 2.844 billion to Rs 3.134 billion. This was mainly due to increase in fees, commission and brokerage income an improvement from Rs 1.148 billion to Rs 1.626 billion. Dividend income/gains on sale of investment grew by four folds, from Rs 66.9 million to Rs 277 million. Other income also went up from Rs 163 million to Rs 179 million. However, there was a decline in income from dealing in foreign currencies, from Rs 1.467 billion to Rs 1.052 billion.

Non-mark-up/return/interest expenses went up from Rs 5.185 billion to Rs 5.442 billion. This was mainly due to increase in administrative expenses, going up from Rs 4.559 billion to Rs 5.390 billion. However, this increase was offset by the decline in other provisions/write offs and other charges. Other provisions also came down from Rs 514 million to Rs 27 million. Other charges declined from Rs 111 million to Rs 24 million.

UBL was the largest privatization attempted by the GoP. Initially 21 parties had shown interest in acquiring 51% shares along with management control of the bank. However, the bidding was impacted by the 9/11 incident and finally the transaction was concluded in October 2002. The consortium comprising of Abu Dhabi Group and Bestway Group succeeded in acquiring the bank by offering the highest bid. This signalled the strong confidence reposed by these investor groups in the improved governance of the country, the economic potential, opportunities in the banking sector and the existing management of the bank.

The new sponsors and President of the bank, Amar Khan, shared their satisfaction on the performance at a press briefing. His highness Shaikh Nahayan Mabarak Al Nahayan, Chairman, Board of Directors, said, "In our acquisition of UBL, our aim is to illustrate how through a privatization a showcase institution of the highest international standards can be created using the best indigenous talent available in the region."

Amar Khan said, "Our leadership in the investment banking sector is illustrated from the fact that the bank acted as joint lead manager for the Term Finance Certificate (TFC) issue worth Rs 15 billion for the national flag carrier. Besides, the bank also advised and arranged short and medium term financing of Rs 14 billion and offshore Morabaha financing of Rs 4 billion for the airline. The bank advised and arranged TFC issue worth one billion rupee for a major textile group, the largest TFC issue in this sector in the history of Pakistan. The bank developed and arranged the listed securitization of the future receivables for a mobile phone company worth one billion rupee, also the first ever deal of its kind in the history of Pakistan."


The President of the bank also talked about the various initiatives for boosting the yield of agriculture sector. This includes Agrimall project, a one-window centre of agricultural supplies through franchised shops. The bank has also entered into a strategic alliance with Sweetwater International, a company manufacturing internationally accredited equipment for treatment of saline/sodic water and soils. UBL has agreed to finance the purchase of equipment by the farmers. This coalition will help in enhancing farmers' ability to bring more land under cultivation and improve yield at a very economic cost.

During 2002, the bank introduced a web-based account enquiry service. The bank intends to expand this by allowing online transfer of funds, payment of utility bill and online investments. The bank has also introduced inter-branch banking system at all activated hubs to ultimately enable the consumers to transact from any online branch throughout the country.