Karachi: United Bank Limited (UBL) today shared its financial results and future outlook for the first nine months of fiscal year 2024 during an analyst briefing. The bank reported a significant 35% year-over-year increase in unconsolidated profits, reaching PkR55.0 billion. This growth was driven primarily by a robust increase in Non-Interest Income despite a decline in Net Interest Income and higher operating expenses.

According to AKD Securities Limited, UBL announced an interim dividend of PkR11.0 per share, bringing the total payout for the period to PkR33 per share. Interest earned soared by 145% year-over-year to PkR825.9 billion, attributed to a 47% year-to-date increase in investments. Conversely, Interest Expenses surged by 213% due to higher reliance on government borrowing, leading to a slight 1% decline in Net Interest Income. Non-Interest Income saw a dramatic rise of 167% year-over-year to PkR61.3 billion, bolstered by substantial capital gains and the sale of United National Bank Limited, UK. Additional income streams such as Fee and Commission income, Trade and guarantee income, card-related fees, and remittances also showed significant increases.

Administrative expenses rose by 23% to PkR58 billion, driven by a 28% increase in staff costs due to expansion in branch network and front office hiring. Despite these higher costs, the cost to income ratio improved to 36.0% from 37.4% in the previous year. The bank holds a substantial T-bills investment portfolio set to mature in the fourth quarter of 2024, with plans to use the proceeds to retire OMO-based borrowings. Deposit growth was robust, with a 21% increase since December of the previous year, largely fueled by a surge in current accounts.

Advances showed a modest 1% increase, but with decreasing inflation and policy rate cuts, the bank has developed a significant pipeline of advances expected to materialize in the fourth quarter. The Bank’s management remains confident in achieving an Advances to Deposits Ratio above 50% by year-end without the need for additional provisions for enhanced taxes. UBL is well-capitalized, with a consolidated Capital Adequacy Ratio of 19.2%, well above the regulatory minimum. Management anticipates the policy rate to stabilize between 10-13%, reflecting the country’s current forex reserves situation.