The microfinance bank of telecom operator Ufone has managed to generate a profit of Rs1.2 billion in the first three quarters of 2022 despite hazy macroeconomic conditions. Despite the devastation caused by this year’s floods and the disruption they caused to the lending industry in rural Pakistan, U Bank saw a rise in earnings of 44% over the previous year.
With 240 branches and 50,000 active points of sale where it conducts branchless banking through UPaisa, U Bank has improved its earnings per share to Rs3.38 from Rs2.28 in the same time last year. The group’s growth has been considerably aided by U Bank’s expansion. The Ufone 4G network, PTCL Services, and U Microfinance Bank Limited make up the PTCL Group.
Taking advantage of regulatory flexibility on the switch to IFRS 9 is one intriguing factor that has contributed to a rise in U Bank’s earnings. U Bank reversed provisions on liabilities in its income statement in a clever accounting move to boost its financial performance. Provisioning is typically enhanced in cases of flooding and other macroeconomic uncertainties. U Bank, however, decided against it.
The classification and measurement requirements for financial assets, financial liabilities, and some contracts to acquire or sell non-financial objects are laid forth in IFRS 9. In terms of defining the recognition and measurement standards for financial instruments, IFRS 9 has replaced IAS 39.
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