Karachi: United Bank Limited (UBL) announced its financial results for the fourth quarter of 2025, showing a 15% year-on-year increase in earnings per share (EPS) to Rs11.9, despite the results not meeting industry expectations due to rising non-interest expenses.
According to JS Global, UBL's consolidated earnings for the quarter amounted to Rs29.9 billion, while the total earnings for the year reached Rs130 billion, marking a 73% year-on-year increase. The shortfall in meeting industry expectations was attributed to a 21% rise in the bank's operating costs year-on-year, which grew by 34% quarter-on-quarter to Rs43.6 billion. This increase was driven by the bank's strategic initiatives, including branch expansions and marketing efforts to boost deposit growth, resulting in a 96% year-on-year increase in total deposits to Rs5.2 trillion by the end of December 2025.
The bank's cost to income ratio rose to 40% in the fourth quarter, compared to 38% in the same period the previous year and 31% in the third quarter of 2025. For the entire year, the cost to income ratio stood at 33%, down from 39% in 2024. Meanwhile, net interest income reached Rs94.1 billion for the fourth quarter, reflecting a 38% year-on-year and 2% quarter-on-quarter increase, attributed to higher current account deposits and improved investment yields.
Non-interest income experienced a significant decline of 42% year-on-year, primarily due to a 92% drop in gains on securities and financial assets, which totaled Rs1.5 billion for the quarter. The effective tax rate for the quarter was recorded at 55%, slightly higher than the 53% in the previous quarter, bringing the annual effective tax rate to 55% compared to 48% in 2024.
In addition to its financial results, UBL announced a dividend of Rs8 per share, resulting in a total dividend of Rs29.5 per share for 2025. JS Global maintains a "BUY" stance on UBL, noting the stock is currently trading at a projected 2026 price-to-earnings ratio of 7.9x with a dividend yield of 7%.
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