UBL Posts Highest Ever Quarterly Profit of Rs. 36 Billion in Q1 2025

United Bank (UBL) announced its 1Q2025 result today, where the bank recorded its highest ever quarterly earnings of Rs. 36 billion (EPS of Rs. 28.9), up 126 percent YoY and 39 percent QoQ. UBL’s 1Q2025 earnings exceeded industry expectations, which ranged between Rs. 12.8–22.9 per share, and were also the highest ever recorded for any bank in a single quarter. The significant jump in earnings is due to an increase in Net Interest Income (NII), according to Topline Securities. NII for 1Q2025 settled at Rs. 84 billion, up 24 percent QoQ and 200 percent YoY. As per our channel checks, this uptick was supported by an increase in current account deposits and higher yields on investments, particularly OMO borrowings, benefiting from a lower cost of borrowing and well-timed deployment. UBL recorded a provision reversal of Rs. 1.6 billion in 1Q2025 compared to the reversal of Rs. 1.7 billion in 1Q2024 and provision expense of Rs. 14.2 billion in 4Q2024. Non Interest Income of the bank declined by 21 percent YoY and 38 percent QoQ to Rs. 16.8 billion in 1Q2025, primarily driven by a fall in gain on securities by 55 percent YoY and 69 percent QoQ to 5.8 billion in 1Q2025. However, UBL’s fees and commission income clocked in at Rs. 7.5 billion, up 26 percent YoY and 90 percent QoQ. The effective tax rate clocked in at 53 percent in 1Q2025, contrary to industry expectations, as the industry was expecting a lower effective tax rate due to mergers with SILK Bank. Alongside the result, the bank has also announced a dividend of Rs. 11/share, in line with market expectations. UBL also announced a stock split in the ratio of 2 shares for every 1 share held. The stock is currently trading at a 2025E PE ratio of 7.7x and dividend yield of 9 percent.