Karachi, April 16, 2025 — United Bank Limited (UBL) has announced its financial results for the first quarter of 2025, posting an all-time high quarterly profit of Rs. 36 billion, translating into an earnings per share (EPS) of Rs. 28.9. This marks a 126% year-on-year (YoY) and 39% quarter-on-quarter (QoQ) surge in profitability, significantly outpacing industry expectations which ranged between Rs. 12.8 and Rs. 22.9 per share.
This is not only UBL’s highest ever quarterly earnings but also the highest earnings ever recorded by any bank in a single quarter in Pakistan’s banking history.
Strong Net Interest Income Drives Earnings
According to a report by Topline Securities, the robust earnings growth was primarily fueled by a sharp rise in Net Interest Income (NII), which reached Rs. 84 billion in 1Q2025 — up 24% QoQ and a staggering 200% YoY. This growth was supported by a rise in current account deposits and higher yields on investments, particularly Open Market Operations (OMO) borrowings, benefiting from a lower cost of funds and strategic investment deployment.
Provision Reversals and Non-Interest Income Trends
UBL recorded a provision reversal of Rs. 1.6 billion during the quarter, compared to a reversal of Rs. 1.7 billion in the same period last year and a provision expense of Rs. 14.2 billion in the previous quarter (4Q2024).
Meanwhile, Non-Interest Income declined by 21% YoY and 38% QoQ, totaling Rs. 16.8 billion in 1Q2025. This drop was largely due to a 55% YoY and 69% QoQ reduction in gains on securities, which amounted to Rs. 5.8 billion. However, the bank’s fee and commission income showed a strong recovery, increasing 26% YoY and 90% QoQ to reach Rs. 7.5 billion.
Higher Tax Rate Surprises Market
UBL’s effective tax rate came in at 53%, higher than industry estimates. Analysts had anticipated a lower effective tax rate due to the ongoing merger activities involving SILK Bank.
Dividend and Stock Split Announcement
In line with market expectations, UBL declared a cash dividend of Rs. 11 per share. Additionally, the bank announced a stock split in a 2-for-1 ratio, granting shareholders two shares for every one share held.
Valuation
At current levels, UBL is trading at a 2025E price-to-earnings (PE) ratio of 7.7x, offering a dividend yield of 9%, making it an attractive option for income-seeking investors.
