United Bank (UBL) posted consolidated earnings of Rs. 16.1 billion during the quarter that ended on March 31, 2024, up 12 percent year-on-year (YoY) and 19 percent QoQ.
According to Topline Securities, the result came higher than industry expectations due to higher than expected gain on securities.
Alongside the result, the bank also announced a first interim cash dividend of Rs. 11/share, which was also higher than expectations.
In 1Q2024, UBL recorded a gain of Rs. 12.8 billion on securities, with Rs. 8 billion attributed to federal government securities and Rs. 4.6 billion to foreign securities.
Net Interest Income NII for 1Q2024 settled at Rs. 28 billion down 20 percent YoY and 24 percent QoQ mainly due to negative yield on Repo borrowings. To highlight, UBL’s Repo borrowings from SBP increased to Rs. 2.9 trillion in 1Q2024 from Rs. 2.7 trillion in 4Q2023.
UBL’s fees & commission income are up 24 percent YoY and 16 percent QoQ at Rs. 5.9 billion in 1Q2024. Foreign exchange income down 39 percent YoY and 19 percent QoQ at Rs. 2.7 billion in 1Q2024.
UBL recorded a provision reversal of Rs. 1.7 billion in 1Q2024 compared to provision expense of Rs. 2.7 billion in 1Q2023.
Operating expenses saw an increase of 22 percent YoY while flat QoQ, likely driven by inflationary pressures.
UBL’s cost-to-income ratio jumped to 40 percent in 1Q2024 as compared to 37 percent in 1Q2023 and 41 percent in 4Q2023. Excluding the Rs. 12.8 billion gain on securities from non-interest income, the cost-to-income ratio is likely to be around 54 percent in 1Q2024.
The effective tax rate of bank docked in at 48 percent in 1Q2024 vs. 42 percent in 102023 and 53% in 402023.
UBL posted earnings per share of s. 13.05 during 1Q2024 compared to an EPS of Rs. 11.62 in the same period last year.
Topline maintains a buy stance on UBL, with the stock currently trading at a 2024E PE ratio of 4.1x and a PBV ratio of 0.8x.
At the time of filing, the bank’s scrip at the bourse was Rs. 194.88, up 1.02 percent or Rs. 1.96 with a turnover of 3.4 million shares on Wednesday.
