UBL Completes Sale of UNBL UK Stake

UBL Completes Sale of UNBL UK Stake

Karachi, July 5, 2024 – United Bank Limited (UBL) has successfully concluded the sale of its entire shareholding in United National Bank Limited (UNBL) UK, marking a strategic shift aimed at enhancing its financial position and shareholder returns.

The announcement, made to the Pakistan Stock Exchange (PSX) on Friday, confirmed the divestment of UBL’s 55% stake in UNBL UK to the Bestway Group, following regulatory approvals from both Pakistan and the UK.

The decision to sell UNBL UK, approved by UBL’s board in September 2023, is underpinned by its significant impact on UBL’s consolidated Capital Adequacy Ratio (CAR). Financial analysts from Arif Habib Limited (AHL) noted that as of June 30th, 2023, UNBL UK’s Risk Weighted Assets (RWA) amounted to PKR 339.2 billion, contributing to a reduction of 200 basis points in UBL’s overall CAR. With the completion of this divestment, UBL expects an improvement in its CAR, potentially exceeding 16%, a notable increase from the 14.8% recorded in the first half of calendar year 2023.

The sale of UNBL UK is anticipated to bolster UBL’s financial health, enabling the bank to sustain its recent dividend payouts. Throughout calendar year 2023 (CY23), UBL disbursed dividends amounting to PKR 44 per share, followed by PKR 11 per share in the first quarter of CY24 (1Q CY24). Analysts foresee UBL continuing to offer attractive dividends to shareholders in light of the strengthened CAR resulting from the divestment.

By removing UNBL UK’s RWAs from its balance sheet, UBL not only improves its capital ratios but also strategically aligns its resources towards enhancing operational efficiencies and focusing on core markets. The divestment reflects UBL’s commitment to optimizing its portfolio and allocating capital where it can generate maximum returns.

Moreover, the transaction underscores Bestway Group’s strategic expansion in the financial sector, leveraging UNBL UK’s established presence and customer base. For UBL, the sale represents a shift towards streamlining operations and concentrating on core banking activities in Pakistan, where it maintains a leading position.

Looking ahead, UBL aims to capitalize on the capital released from the sale to further strengthen its market position and explore growth opportunities domestically. The bank remains committed to delivering sustainable value to its shareholders through prudent financial management and strategic initiatives.

In conclusion, the sale of UBL’s stake in UNBL UK marks a pivotal moment in its strategic evolution, poised to reinforce its financial robustness and sustain shareholder confidence through continued dividend distributions and enhanced capital ratios.