KARACHI— United Bank Limited (PSX: UBL) reported a consolidated net profit after tax (NPAT) of Rs36.1 billion for the first quarter of calendar year 2025 (1QCY25), up 124% year-on-year (YoY) and 39% quarter-on-quarter (QoQ), driven by a sharp increase in net interest income (NII) and improved cost efficiency.
The earnings translated into an earnings per share (EPS) of Rs29.34, compared to Rs13.05 in the same period last year. The bank also declared an interim cash dividend of Rs11 per share (110%) and approved a two-for-one stock split, reducing the face value of each share from Rs10 to Rs5.
After the announcement of the financials, the bank’s stock price followed a steep upward trajectory, reaching Rs 519 at one point (~8% increase), its highest ever value, before it came down with the rest of the market, closing at Rs 479.2, slightly above the previous close.
During the first quarter, UBL’s net interest income surged to Rs84.2 billion, more than tripling from the same quarter last year (up 200% YoY) and rising 30% sequentially. The growth was supported by a 60% YoY increase in the bank’s investment portfolio and a 7.1% YoY rise in advances.
Non-interest income, however, declined by 21% YoY to Rs16.8 billion due to a significant drop in gains on sale of securities (down 55% YoY). Other income also fell by over 36% compared to the same quarter last year. However, this was partly offset by a 26% YoY rise in fee income and gains in dividend income (up 82%) and foreign exchange earnings (up 35%).
Operating expenses rose 34% YoY to Rs26.6 billion, mainly due to higher inflation-linked cost pressures and increased business activity. Despite this, the bank’s cost-to-income ratio improved to 26% in 1QCY25, down from 40% in 1QCY24 and 39% in 4QCY24, indicating improved operating leverage.
UBL recorded a provisioning reversal of Rs1.6 billion during the quarter, slightly lower than the Rs1.7 billion reversal in the same period last year. The effective tax rate for the quarter stood at 53%, compared to 48% in 1QCY24 and 40% in the previous quarter, contributing to a higher tax charge of Rs40.03 billion.
Despite pressures on non-interest income, UBL’s strong growth in core banking operations, higher spreads, and lower provisioning continue to support profitability. The stock is currently under review, and market participants will be closely monitoring the impact of the announced share split and any guidance on future payouts.
