Karachi: United Bank Limited (UBL) today announced a significant increase in its third-quarter profits for CY24, alongside a steady dividend payout. The bank reported a net profit after tax of PKR 18.3 billion, marking a substantial year-on-year and quarter-on-quarter growth, with earnings per share rising to PKR 15.0. The bank’s financial health was buoyed by notable gains in markup earnings and other income, including a profitable sale of its stake in UNBL UK.
According to AKD Securities Limited, UBL’s net interest income reached PKR 51.6 billion in the third quarter, a 30% increase from the same period last year and a remarkable 77% from the previous quarter, largely driven by a robust increase in markup earned, which soared by 106% year-on-year to PKR 310.8 billion. This growth in markup was attributed to an expansion in the bank’s investment book. Despite this, the bank’s net interest margins (NIMs) fell to 2.9%, down from 4.8% year-on-year but improved from 1.8% in the preceding quarter, likely due to higher investment yields.
Non-interest income also showed a positive trajectory, recovering from a loss in the same period last year to reach PKR 16.8 billion. This increase was supported by higher fee income, foreign exchange income, and gains on securities. Notably, the bank overcame a significant loss on securities from the previous year.
However, provisioning expenses presented a challenge, with the bank recording PKR 894 million compared to reversals in the prior year. Non-markup expenses rose by 26% year-on-year to PKR 24.0 billion, reflecting inflationary pressures and increased staff costs associated with expansion. The effective tax rate for the quarter was significantly higher at 56.9%, influenced by capital gains taxes from the UNBL UK stake sale and anticipated adjustments related to Automated Dispute Resolution (ADR)-based taxes on investments.
UBL’s continued commitment to shareholder returns was evident in its cash payout of PKR 11 per share for the quarter, maintaining a payout ratio of approximately 74% for the ninth month of CY24.