Karachi: United Bank Limited (UBL) has reported a notable 31% year-on-year increase in its consolidated earnings for the second quarter of 2026, reaching Rs37.5 billion with earnings per share (EPS) of Rs14.97. However, this marks a 23% decrease compared to the first quarter of the same year. The bank's performance has exceeded industry expectations largely due to higher-than-anticipated capital gains and a reversal in provisions, as opposed to the expected provision expenses.
According to JS Global, UBL's non-interest income saw an 87% year-on-year rise, primarily driven by a significant capital gain of Rs12.8 billion and increased foreign exchange income. On a quarter-on-quarter basis, non-interest income declined by 30%, following a higher capital gain of Rs29.5 billion recorded in the first quarter of 2026. The bank also recorded a provision reversal of Rs3.7 billion during the second quarter.
Operating costs for UBL increased by 35% year-on-year and 19% quarter-on-quarter, amounting to Rs48.4 billion. This rise is attributed to the bank's growth strategy, focusing on branch expansions and marketing efforts to boost deposit growth. UBL's total deposits grew by 43% year-on-year and 13% quarter-on-quarter, reaching Rs6.1 trillion in June 2026.
The cost-to-income ratio for the second quarter was 40%, compared to 33% in the same quarter of the previous year and 28% in the first quarter of 2026. For the first half of 2026, the cost-to-income ratio stood at 34%, up from 30% in the first half of 2025. Meanwhile, net interest income for the second quarter settled at Rs90.3 billion, a 1% year-on-year and 9% quarter-on-quarter decrease, possibly due to realized gains on the investment book.
The effective tax rate for the quarter was consistent at 52%, mirroring the rate from the first quarter of 2026. Additionally, UBL announced a dividend of Rs8 per share, aligning with expectations, bringing the total dividend per share for the first half of 2026 to Rs16.
The bank's board has also approved several strategic initiatives, including the establishment of an agricultural advisory subsidiary with an investment of Rs8 billion, a Rs22 billion equity investment in Khushhali Microfinance Bank, and a Rs10 billion commitment to a not-for-profit university in collaboration with Bestway Foundation, pending regulatory approvals.