Mar 16 - 22, 2009

United Bank Limited achieved consolidated profit before tax of Rs.14.1 billion at the close of 2008, which is 2% higher than last year. Profit after tax at Rs.8.4 billion translates into earnings per share of Rs.8.26. This performance remained sound despite the prevailing uncertainty in the domestic market through most of the year and significant turmoil in the global financial markets in the latter part of the year, resulting in a marked slowdown in business momentum overseas.

Profitability in 2008 was partly impacted by the decision to charge 50% of the impairment loss on the equities portfolio amounting to Rs.1.88 billion against this year's P&L, although the State Bank of Pakistan has allowed banks to defer booking the loss till 2009. Without the impairment loss, the bank's profit before tax would have reached Rs.15.9 billion, 15% above last year.

Net interest income before provisions rose to Rs.28.8 billion, which is 16% higher than last year, whereas non-interest income grew by 9% over a similar period to Rs.10.8 billion. Fee and commission income grew by 24% mainly due to higher corporate finance fees and trade commission. Net provisions at Rs.7.8 billion are up by 21% from the corresponding period last year.

Administrative expenses increased by 17% over the corresponding period last year despite inflationary pressures (FY 08 CPI at 22%) on account of tighter cost controls. Nearly 35% of the increase is attributed to higher rent and utilities costs. Personnel costs were higher by 10.6% only on account of headcount rationalization brought about by efficiency improvements, on account of bank-wide process restructuring initiatives during the year. International operating expenses were impacted by the devaluation of the rupee which accounted for 19% of the increase.

Deposits showed strong growth of 20% to Rs.492 billion in 2008, with domestic deposits growing at a slightly lower rate of 15%. Total advances increased by 23%. Domestic bank advances accounted for 46% of the increase as a result of a strong push in the corporate financing sector. However, liquidity constraints in the second half of the year led to rationalization of lending, which resulted in a drop in market share from 9.4% in December 2007 to 9.2% in December 2008. Advances to deposits ratio increased from 75% in December 2007 to 77% in December 2008.

International operations contributed significantly to the bank's overall results despite tough economic conditions in the latter part of the year. 30% of total profitability and 23% of total assets came from UBL's international operations. Profit after tax grew by 30% to Rs.2.7 billion. The balance sheet size also increased with deposits growing by a healthy 46% to Rs.104 billion and advances by 51% to Rs.97 billion.

Consumer business in general witnessed unprecedented reduction in the domestic market. However, it was a rewarding year for UBL in many respects, one of them being the successful implementation of Proxima business process reengineering across different functions such as customer services, product, sales and the centralized processing units that will help reduce costs further and also improve service delivery and risk management.

The main strategic challenges for next year remain in terms of effectively managing asset quality, maintaining adequate liquidity and further strengthening of our capitalization. The management's continued focus will remain in these areas and it is expected that the initiatives put in place in 2008 for strengthening risk and liquidity management will yield positive results going forward.


Khalid A. Kamda, Chairman of the Board of Directors DIB Pakistan chaired the Board Meeting of DIB Pakistan Limited to review the bank's performance and formulate framework for future operations and expansion in Pakistan . The meeting was attended by Fahad Bin Fahad, Vice Chairman DIB Pakistan; Junaid Ahmed Chief International Head DIB; Saad Zaman, Deputy CEO DIB Capital; M. A. Mannan, CEO DIB Pakistan and other directors of the board.

Khaled Al Kamda, Chairman, Board of Directors, Dubai Islamic Bank said "One of the key strengths of our consumer banking business has been our mortgage and auto product performance - DIBPL has been the number 1 issuer of consumer products. Our prudent and innovative credit and risk management policies have led to a quality asset portfolio and have resulted in sustained business growth despite turbulent economic conditions. 8 new branches were opened and customer base has grown to over 40,000. The corporate and investment banking business exceeded its targets and this performance has been recognized in the form of prestigious awards like "Sovereign Deal of the Year" and "Pakistan deal of the Year" by Islamic Finance News for the consortium-led deal of Pakistan Domestic Sukuk Company."

Addressing the occasion, CEO DIB Pakistan, M. A. Mannan said: "DIBPL is running profitable operations in Pakistan since the last quarter of 2008, and this positive trend is expected to continue for the year 2009. DIBPL achieved 58% growth in deposits and 59% in financing during 2008. We closed the year at an asset base of over Rs. 30 billion, deposits of over Rs. 25 billion and a network of 25 strategically placed branches. We are confident that DIBPL will achieve greater milestones during the coming year."

The board meeting was followed by a stakeholder reception attended by Shaukat Tareen, Advisor to PM on Finance; Saleem Raza Governor SBP; Pervaiz Said, Director Islamic Banking and Advisor to Governor SBP and other distinguished guests from the banking and financial sector, various local and multinational companies and academia.