UBL’s Earnings Jump Sharply Year-on-Year, But Quarter-on-Quarter Growth Slows

United Bank Limited (UBL) has announced its financial results for the second quarter of 2025. The numbers show a strong year-on-year improvement in profitability, although there is a noticeable decline compared to the previous quarter.

UBL reported a profit after tax of PKR 28.6 billion in 2QCY25, which equals earnings per share (EPS) of PKR 11.4. This is a 93 percent increase from the same period last year, but a 21 percent decline compared to the first quarter of 2025. The bank also declared an interim dividend of PKR 8.0 per share, taking the total half-year payout to PKR 13.5 per share.

Core Banking Income Drives Results

UBL’s main source of income, known as net interest income (NII), came in at PKR 91.2 billion. This is more than three times higher than the same quarter last year, and 8 percent higher than the previous quarter. The growth came from a larger investment portfolio and a rise in loans and advances.

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Markup income rose by 8 percent year-on-year to PKR 303 billion, while markup expense fell by 16 percent to PKR 212 billion. This combination helped maintain net interest margins at around 4.2 percent, the same as the previous quarter.

Non-Core Income Weaker, But Fees Hold Up

Non-interest income fell to PKR 16.6 billion, down 15 percent year-on-year. This drop was mainly due to a sharp decline in gains from the sale of securities. In contrast, fee income rose significantly, reaching PKR 9.0 billion, which is a 61 percent increase compared to the same quarter last year.

This rise in fee income suggests that UBL is building strength in areas such as digital banking, cards, and transaction services.

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Costs and Credit Quality

Operating expenses increased sharply to PKR 35.9 billion, up 76 percent year-on-year. Despite this, the cost-to-income ratio improved to 32 percent, compared to 40 percent in the same quarter last year. However, it was higher than the 25 percent recorded in the first quarter of this year.

UBL also booked a provision reversal of PKR 2.3 billion, indicating that the bank did not need to set aside large sums for bad loans during the quarter. This is a positive sign for the bank’s asset quality.

Higher Taxes Impact Bottom Line

One area of concern was the tax rate. UBL paid an effective tax rate of 61 percent, which is much higher than the 47 percent in 2QCY24 and 53 percent in 1QCY25. This rise in tax expense played a role in the quarter-on-quarter drop in profit.

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →