United Bank Limited (UBL) - July 2023

United Bank Limited (UBL) – July 2023

Research Team

Table of Contents

On a consolidated basis, the Company’s revenue surged by 36% to PKR 85.474 billion in the first half of CY23, compared to PKR 62.624 billion in the same period last year. This impressive growth was largely driven by a 15% increase in fee income, contributing significantly to the
rise in revenue.

UBL achieved a remarkable profit of PKR 27.552 billion in the first half of CY23 (EPS: PKR 22.01), showing substantial improvement from the profit of PKR 12.153 billion (EPS: PKR 9.73) in the corresponding period of the previous year. The bank’s average CASA (Current Account and Savings Account) levels of 90% (compared to 87% in 1HCY22) played a significant role in enhancing

Operating expenses of the company declined by 25% from 26% in 1HCY22. However, inflation, investments in human resources, and other variable expenses did impact the overall cost structure of the bank.

UBL declared an interim cash dividend of PKR 11 per share (110%) for 2QCY23, marking the highest cash dividend ever paid by the bank.

Due to higher interest income (increase of PKR 89.97 billion), UBL recorded a Net Interest Income (NII) of PKR 72.334 billion in 1HCY23, representing a 53.9% year-on- year growth, compared to NNI of PKR 46.990 billion in the same period last year.

Non-Markup Income (NMI) of UBL declined by 19% to PKR 13.139 billion in 1HCY23, down from PKR 15.634 billion in SPLY. This decrease was primarily attributed to a loss on securities of PKR 4.918 billion in 1HCY23, contrasting with a gain of 0.647 billion in SPLY. Furthermore, the bank’s provision expenses stood at PKR 0.411 billion in 1HCY23, compared to provision reversals of
PKR 1.367 billion in SPLY.

The company paid a tax of PKR 24.498 billion in 1HCY23, showing a 9.2% year-on-year increase compared to PKR 22.444 billion in SPLY. Additionally, the Bank’s Net Interest Margins (NIMs) were reported at 5.5% in 1HCY23, up from 4.5% in SPLY, due to higher asset yield.

According to management, the robust rise in fee and commission income contributed to the Non-Funded Income (NFI) of PKR 12.8 billion in 1HCY23, with a 7% increase in branch banking fee (PKR 1.3 billion) and notable growth in corporate service charges and foreign investment rebate and commissions by 34% and 9% respectively.

Moreover, trade & guarantee income witnessed a significant 85% increase, reaching PKR 1.4 billion in
1HCY23. Card-related and remittances commissions also rose to PKR 1.6 billion and PKR 1.5 billion (22% increase) respectively during the same period.

During 1HCY23, UBL’s average advances stood at PKR 754 billion, reflecting an 18% year-on-year growth.

Similarly, the overall investment portfolio NPLs increased by 28%, reaching PKR 1.9 trillion.
In the same period, the bank’s average current account savings and average current to total deposit ratio grew by 16%, 9%, and 48% year-on-year, respectively.

Total equity of UBL was reported at PKR 236 billion in 1HCY23, showing a 7% year-on-year increase compared to PKR 220 billion in SPLY. Non-controlling income (NCI) also grew by 47% to PKR 13 billion, compared to PKR 9 billion in SPLY. The bank’s net assets stood at PKR 249 billion in 1HCY23, as opposed to PKR 229 billion in SPLY.

In 1HCY23, bank added now new branch to the network, However, certain relocations of branches were carried out. Similarly, the bank has no plan to buy back shares in the foreseeable future.
Looking ahead, the bank aims to maintain asset quality across all segments and keep a solid balance sheet. It plans to add new branches by the end of December this year and focus on improving key efficiencies.

Important Disclosures


This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

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