United Bank Limited (UBL) has announced its CY25 earnings, posting its highest-ever profit of Rs. 130 billion (EPS: Rs. 51.9), marking a strong growth of 73 percent year-on-year (YoY). On a quarterly basis, profit stood at Rs. 29.9 billion (EPS: Rs. 11.95), up 17 percent YoY but down 15 percent quarter-on-quarter.
The bank also declared its highest annual dividend of Rs. 29.5 per share, compared with Rs. 22 per share in CY24.
According to Arif Habib Limited (AHL), earnings growth was primarily driven by a sharp increase in net interest income (NII) along with provisioning reversals recorded during the year.
UBL’s NII amounted to Rs. 362 billion in CY25, reflecting a robust increase of 108 percent YoY. The growth was supported by higher interest income and a decline in interest expense. Interest income was reported at Rs. 1.2 trillion (up 9 percent YoY), while interest expense declined to Rs. 823 billion (down 10 percent YoY).
Non-funded income declined by 25 percent YoY to Rs. 62.7 billion in CY25, mainly due to lower gains on the sale of securities, which fell to Rs. 9.9 billion (down 78 percent YoY). However, fee income rose sharply by 48 percent YoY to Rs. 32 billion, foreign exchange income increased 43 percent YoY to Rs. 18 billion, and dividend income grew 34 percent YoY to Rs. 2.3 billion.
On the provisioning side, the bank booked a provisioning reversal of Rs. 4.7 billion in CY25, compared with a provisioning expense of Rs. 12.7 billion in CY24.
Operating expenses increased 38 percent to Rs. 139 billion. Despite higher costs, strong income growth led to an improvement in efficiency, with the cost-to-income ratio declining to 32.7 percent in CY25 from 39 percent in CY24. The effective tax rate rose to 55 percent, compared with 48 percent last year.
On the balance sheet front, deposits crossed Rs. 5 trillion in CY25, reaching their highest-ever level and posting an exceptional growth of 96 percent YoY. Investments also hit a record Rs. 9.9 trillion, up 69 percent YoY, while advances declined to Rs. 1.4 trillion, down 5 percent YoY.
The stock is currently trading at a price-to-book multiple of 3x and offers a dividend yield of 6.6 percent for CY26E, based on the last closing day price (LDCP).