United Bank Limited (UBL) has concluded the sale of its 55% shareholding in UNBL UK (United National Bank Ltd UK) after obtaining all regulatory approvals, according to a notice sent to the Pakistan Stock Exchange (PSX) on Friday.
According to AKD Research, the Bestway Group has acquired 50.1% shares upfront for GBP 25.49 million with an option to purchase the remaining 4.9% shares within 36 months of the initial acquisition of 50.1% on the same price, terms and conditions. This would result in a Capital Gain of Rs 7.2 billion or Rs 5.87 per share, on disposal of UNBL UK stake on an unconsolidated basis.
However, Intermarket Securities said in its note that the transaction was priced at GBP 25.495 million, equivalent to approximately Rs 9 billion or Rs 7.5 per share.
This would help improve UBL’s CAR and maintain its strong dividend payout. The divestment in UNBL UK is expected to have a positive impact on UBL’s Capital Adequacy Ratio (CAR), IMS Research said.
The brokerage report added that UNBL UK’s risk-weighted assets stood at Rs 340 billion in June 2023, which led to a downward impact of 200 bps on the consolidated capital adequacy ratio of UBL. The removal of the same would help improve UBL’s CAR from 15% to 17%, thus allowing it to maintain its recent strong run of dividend payouts.
“UBL has paid out dividends of PKR11.0/share in 1QCY24, and we expect this to continue into the upcoming quarter – particularly as the impact of high rate OMO borrowings unwind amid declining interest rates. The stock trades at a CY24f P/B and P/E of 1.1x and 4.7x, respectively, and offers a CY24f dividend yield of 18%. UBL is one of the highest dividend-yielding stocks,” read the brokerage note.
In addition to divesting from UNBL UK, UBL is planning to establish an exchange company as a wholly-owned subsidiary with an initial paid-up capital of Rs 1 billion. This decision aligns with recent structural reforms introduced by the SBP in the exchange companies’ industry to have greater control and oversight in the Forex market.
United National Bank Ltd (UBL UK) is an authorised banking institution incorporated in the UK. It was formed in 2001 from the merger of the UK branches of United Bank Ltd and the National Bank of Pakistan.
The principal activities of UBL UK are to provide retail banking, wholesale banking and treasury services to financial institutions and trade finance facilities to businesses of all sizes. UBL UK operates one branch inside the UK.
