Has UBL paved the way for other banks to maximize arbitrage opportunities?

Pakistani banks have had a ball in the past one year with record profitability at the back of high-interest rates. The government’s never-ending appetite for deficit financing means that the local financial institutions have ample liquidity in the form of benevolent lending by the State Bank of Pakistan (SBP) aka repo transactions.

Profit has previously covered how Development Finance Institutions (DFI) like Pak Kuwait Investment Company (PKIC) and Microfinance players like U Microfinance Bank (UBank) have leveraged the current monetary and fiscal environment to increase the size of their balance sheets by 3-6 times. 

Read: Grow your company size by 3 to 6 times in just months. At least two Pakistani companies have done this & you can too. Here is how

Little did we know back then that one of the largest commercial banks in the country, United Bank Limited (UBL) would be inspired by this high-risk strategy and go all guns blazing in 2023 as a loaded investment entity.