UBL navigates cost pressures to deliver robust double-digit earnings growth

April 15, 2026 (MLN): United Bank Limited (PSX: UBL) reported a profit after tax (PAT) of Rs48.42 billion for the quarter ended March 2026, showing a 34.09% increase compared to Rs36.11bn in Q1 2025.

Earnings per share (EPS) rose to Rs19.33 from Rs14.67 in the same period last year.

The board declared an interim cash dividend of Rs8 per share (160%) for the first quarter ended March 31, 2026.

The bank's mark-up/return/interest earned rose 23.97% YoY to Rs323.53bn from Rs260.97bn, reflecting higher asset volumes during the period.

However, mark-up/return/interest expensed climbed at a steeper pace of 26.80% YoY to Rs224.11bn from Rs176.75bn, driven by increased funding costs.

As a result, net mark-up/interest income (gross profit) increased 18.05% YoY to Rs99.42bn from Rs84.22bn.

The gross profit margin, however, compressed slightly to 30.73% from 32.27% in Q1 2025, showing the relatively faster rise in funding costs compared to asset yields.

Total non-mark-up/interest income surged 157.94% YoY to Rs43.39bn from Rs16.82bn. Within this, fee and commission income grew 19.07% to Rs8.94bn, while dividend income declined sharply by 83.18% to Rs145.2m.

Foreign exchange income rose 13.99% to Rs4.18bn. Loss from derivatives narrowed 29.35% to Rs885.1m. Gain on securities net soared 422.24% to Rs30.42bn, providing a significant boost to non-markup earnings. Other income jumped 178.78% to Rs586.1m.

The share of loss from associates stood at Rs2.01bn, reversing from a profit of Rs182.9m in Q1 2025.

Consequently, total income increased 41.34% YoY to Rs142.81bn from Rs101.04bn.

On the expense side, total non-mark-up/interest expenses rose sharply by 52.30% YoY to Rs40.66bn from Rs26.70bn. Operating expenses surged 53.31% to Rs38.64bn, showing inflationary pressures and business expansion costs.

Workers' Welfare Fund expense increased 34.71% to Rs2.01bn, while other charges escalated significantly to Rs8.2m from Rs0.7m in Q1 2025.

Profit before credit loss allowance grew 34.37% YoY to Rs100.15bn from Rs74.53bn.

The bank recorded a net reversal of credit loss allowance and write-offs of Rs455.1m, compared to a larger reversal of Rs1.61bn in Q1 2025, indicated a moderation in recoveries and provisioning benefits year-on-year.

As a result, profit before taxation increased 32.13% YoY to Rs100.60bn from Rs76.14bn.

Taxation expense rose 30.37% to Rs52.18bn from Rs40.03bn, partially absorbing the pre-tax earnings growth.

The net profit margin stood at 33.90% in Q1 2026, slightly lower than 35.74% in Q1 2025, as expense growth particularly in operating costs and a reduced share of associate profits tempered the bottom-line expansion relative to total income growth.

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