Karachi, February 19, 2025 – United Bank Limited (UBL) has taken a significant step towards strengthening its financial position and supporting its long-term strategic objectives.
On Wednesday, the bank’s Board of Directors approved the issuance of Additional Tier-1 (AT1) capital instruments, a move aimed at enhancing regulatory capital adequacy in compliance with Basel III guidelines issued by the State Bank of Pakistan (SBP) under BPRD Circular No. 6 of 2013.
UBL plans to raise up to PKR 20 billion through this issuance, including a potential green shoe option, which allows for additional issuance if investor demand exceeds expectations. The instruments will be privately placed and subsequently listed, ensuring both institutional participation and market visibility. However, the issuance remains subject to obtaining necessary corporate and regulatory approvals before execution.
In addition to approving the capital issuance, UBL’s Board of Directors also reviewed the bank’s financial performance for the year ending December 31, 2024. The bank posted its highest-ever quarterly earnings in 4Q2024, with earnings per share (EPS) reaching Rs 21.27, reflecting a 93% increase year-over-year (YoY) and a 42% rise quarter-over-quarter (QoQ). This strong quarterly performance took UBL’s full-year 2024 earnings to a record Rs 61.4 per share, marking a 36% YoY growth.
UBL’s earnings significantly outperformed market expectations, which had projected an EPS of Rs 13.9. This positive surprise was largely driven by a lower effective tax rate of 46% in 2024, compared to the anticipated 54% tax burden. The reduction stemmed from previous years’ tax adjustments and a reversal of provisions related to the 2021 ADR rule, as per industry sources.
Additionally, UBL’s non-interest income surged by 67% QoQ, primarily due to a Rs 18.5 billion gain on securities, up 212% QoQ. Consequently, the bank’s revaluation surplus on investments declined to Rs 38.8 billion as of December 2024, compared to Rs 52.3 billion in September 2024.
However, the positive earnings impact was partially offset by higher provisions of Rs 14.2 billion in 4Q2024, bringing UBL’s total provisions for the year to Rs 12.8 billion. Analysts are awaiting further details regarding the reasons behind the increased provisions.
Alongside its financial results, UBL has declared a final dividend of Rs 11 per share, bringing the total dividend payout for 2024 to Rs 44 per share. This translates into an impressive payout ratio of 72%, reaffirming UBL’s commitment to shareholder returns.
