Karachi: United Bank Limited (UBL) announced its third-quarter earnings for 2026, showing a consolidated profit attributable to shareholders of Rs30.6 billion, equivalent to earnings per share (EPS) of Rs12.24. This marks a 13% decline compared to the same period last year and an 18% decrease from the previous quarter. The bank's performance fell short of industry expectations, largely due to higher operating expenses.
According to JS Global, UBL's operating costs surged by 66% year-on-year and 12% quarter-on-quarter, reaching Rs54.1 billion in the third quarter of 2026. The increase is attributed to the bank's strategy of expanding branches and enhancing marketing efforts to boost deposit growth. Consequently, the cost-to-income ratio climbed to 46% in the third quarter, compared to 31% in the third quarter of the previous year and 40% in the second quarter of 2026.
While non-interest income saw a 71% year-on-year rise, it experienced a 20% drop quarter-on-quarter, amounting to Rs24.3 billion. The year-on-year improvement was fueled by gains on investments and a significant increase in foreign exchange income. However, the sequential decline was primarily due to a 51% reduction in investment gains quarter-on-quarter.
Net interest income showed modest growth, increasing by 1% year-on-year and 3% quarter-on-quarter, totaling Rs93.3 billion in the third quarter. This was largely due to asset repricing, though partially offset by a smaller decline in the investment book. The bank also reported a provision reversal of Rs0.2 billion, compared to Rs0.8 billion in the same period last year.
On the balance sheet, UBL recorded a 36% year-on-year and 6% quarter-on-quarter growth in total deposits, reaching Rs6.5 trillion by the end of September 2026. Borrowings, however, decreased by 6% year-on-year and 36% quarter-on-quarter, totaling Rs5.4 trillion. The bank declared a dividend of Rs8 per share, consistent with expectations, bringing the total dividend per share to Rs24 for the first nine months of 2026.
The bank's stock is currently trading at a 2026 estimated price-to-earnings ratio of 8.1x and a price-to-book value ratio of 2.4x, with a maintained buy stance on the stock.