United Bank Limited (UBL) Reports 17% YoY Increase in 2Q2024 EPS

Staff Report:United Bank Limited (UBL) has announced its consolidated earnings for the second quarter of 2024, reporting an earnings per share (EPS) of Rs12.1. This represents a 17% year-over-year (YoY) increase, although there was a 7% decline quarter-over-quarter (QoQ). The results align with market expectations.

For the first half of 2024, UBL’s earnings reached Rs25.15 per share, marking a 14% YoY growth. The bank has also declared a second interim cash dividend of Rs11 per share, bringing the total dividend for 1H2024 to Rs22 per share.Pakistan Banks’ Earnings to Fall 6% QoQ and Up 22% YoY in 2Q2024

The QoQ decline in earnings was attributed to a lower gain of Rs9.2 billion from securities and financial assets, compared to Rs12.8 billion in 1Q2024. Net Interest Income (NII) for 2Q2024 stood at Rs29 billion, down 22% YoY, primarily due to negative yields on repo borrowings. However, NII showed a 4% QoQ increase.

As of March 2024, UBL’s repo borrowings from the State Bank of Pakistan (SBP) amounted to Rs2.9 trillion. The bank’s fees and commission income rose 13% YoY but declined 6% QoQ, totaling Rs5.6 billion in 2Q2024. Foreign exchange income surged by 44% YoY and 38% QoQ to Rs3.8 billion.

UBL recorded a provision reversal of Rs664 million in 2Q2024, compared to a reversal of Rs1,718 million in 1Q2024 and a provision expense of Rs298 million in 2Q2023. Operating expenses increased by 16% YoY and 2% QoQ, attributed to inflationary pressures.

The bank’s cost-to-income ratio rose to 42% in 2Q2024, up from 39% in 2Q2023 and 40% in 1Q2024. The effective tax rate for the quarter stood at 47%, down from 52% in 2Q2023 and 48% in 1Q2024.

With UBL trading at an estimated 2024 price-to-earnings (PE) ratio of 4.8x and a price-to-book value (PBV) ratio of 1.2x, the bank maintains a “buy” stance,” Topline said in a report.