(Updates with share price in sixth paragraph.)
Nov. 25 (Bloomberg) -- United Bank Ltd., Pakistan’s third- largest lender by assets, forecast full-year profit growth will accelerate to about 30 percent as the lender opens more local offices and expands overseas.
The bank plans to add 125 branches in Pakistan, taking its domestic total to more than 1,300 outlets, Chief Executive Officer Atif R. Bokhari, said in an interview in Karachi. The lender will also expand operations overseas to tap cheaper funding costs and maintain profitability, he said. Profit grew 16 percent to 11 billion rupees ($129 million) last year.
The investments would equip United Bank to tap rebounding demand for corporate credit in an economy that’s poised to expand 3.5 percent in the year ending June 30, up from 2.4 percent in the previous year. New branches at home would help raise low-cost funds from deposits while the bank expands abroad to narrow the gap with larger rivals, Bokhari said.
United Bank, which has operations in eight countries, is awaiting a license to open a branch in Tanzania and expects to start operations there in the first quarter, he said. The bank is also considering expansion into Sri Lanka, the CEO said. Karachi-based National Bank of Pakistan and Habib Bank Ltd. operate in more markets, he said.
International operations currently account for about 20 percent of revenue, and the bank aims to generate 25 percent to 30 percent from overseas in the next two years, he said.
Shares of United Bank, which have fallen 17 percent this year, dropped 0.5 percent 56.87 rupees as of 10:53 a.m. on the Karachi Stock Exchange.
“The basic philosophy behind opening branches is to generate deposits,” Bokhari, 54, said. A new branch would on average take about 18 months to become profitable, he said. The bank will also be hiring at least another 600 people to support the expansion plans, he said.
United Bank’s loans climbed 21 percent to 247 billion rupees last year, according to its annual report. Net income has climbed 35 percent in the first nine months of this year to 10.7 billion rupees, it said on Oct. 25.
Pakistan’s central bank began reversing its monetary tightening in July, and has since slashed the benchmark discount rate by 2 percentage points to spur investment.
Bokhari said he expects a further cut of 50 basis points in the country’s discount rate, without specifying a time frame.
--Editors: Chitra Somayaji, James Gunsalus
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