United Bank Limited (UBL) has announced its highest-ever quarterly profit of Rs. 36 billion (EPS of Rs. 28.9) for the first quarter of 2025, marking a substantial increase of 126 percent year-on-year and 39 percent quarter-on-quarter.
The bank’s exceptional performance significantly exceeded industry expectations, which had projected earnings between Rs. 12.8 and Rs. 22.9 per share. UBL’s quarterly profit is now the highest ever recorded by any bank in Pakistan in a single quarter.
According to Topline Securities, the remarkable jump in earnings was primarily driven by a surge in Net Interest Income (NII), which reached Rs. 84 billion in Q1 2025, representing a 24 percent increase quarter-on-quarter and an impressive 200 percent rise year-on-year.
Industry sources indicate that this substantial growth in NII was supported by an increase in current account deposits and higher yields on investments, particularly Open Market Operation (OMO) borrowings. The bank benefited from a lower cost of borrowing and well-timed deployment of funds.
UBL recorded a provision reversal of Rs. 1.6 billion in Q1 2025, compared to a reversal of Rs. 1.7 billion in Q1 2024 and a provision expense of Rs. 14.2 billion in Q4 2024.
The bank’s Non-Interest Income declined by 21 percent year-on-year and 38 percent quarter-on-quarter to Rs. 16.8 billion, primarily due to a 55 percent year-on-year and 69 percent quarter-on-quarter decrease in gain on securities, which fell to Rs. 5.8 billion. However, UBL’s fees and commission income showed strong growth, reaching Rs. 7.5 billion, up 26 percent year-on-year and 90 percent quarter-on-quarter.
The effective tax rate for UBL stood at 53 percent in Q1 2025, contrary to industry expectations of a lower rate following the bank’s merger with SILK Bank.
Alongside the impressive financial results, UBL has announced a dividend of Rs. 11 per share, in line with market expectations. The bank has also declared a stock split in the ratio of 2 shares for every 1 share held, which is likely to enhance liquidity in the stock.
UBL’s stock is currently trading at a 2025 estimated price-to-earnings ratio of 7.7x and offers a dividend yield of 9 percent, making it an attractive option for investors seeking both growth and income.
