KARACHI, Oct 17 (Focus Pakistan) - UBL profit fell 13% in the third quarter as United Bank Limited spent heavily to win deposits, pushing operating costs up 66% and sending earnings below analysts’ forecasts. The bank’s aggressive expansion strategy came at a steep price.
Consolidated profit attributable to shareholders came to 30.6 billion rupees for July-September, which works out to 12.24 rupees a share. Against April-June, earnings shed 18%. That makes it a second quarterly slide in a row, after the 23% drop UBL posted for the second quarter.
The nine-month picture looks healthier. UBL earned 116.5 billion rupees from January to September, 16% more than in the same stretch of 2025, and earnings per share climbed to 46.54 rupees from 40.19.
Shareholders get 8 rupees a share for the quarter, the same interim payout as a year ago. With the first-half dividends added, the 2026 tally reaches 24 rupees, up from 21.50 rupees at this point last year.
THE COST OF GROWTH
Operating expenses climbed 66% year on year and 12% from the previous quarter to 54.1 billion rupees. Topline Securities said higher-than-expected costs caused the miss. Its analysts linked most of the spending to branch expansion and marketing aimed at capturing deposits.
Also Read: SBP Slaps 5% Cap on Islamic Banks’ Tawarruq Financing, Tightens Shariah Rules
The bill shows up in the bank’s efficiency numbers. UBL now spends 46 rupees to earn every 100 rupees of income, up from 31 a year ago and 40 in the second quarter. For the nine months, the cost-to-income ratio rose to 38% from 30%.
Deposits kept climbing. They rose 36% from a year earlier and 6% in the quarter to 6.5 trillion rupees at the end of September, up from 6.1 trillion in June. The bank cut borrowings by 36% in the quarter to 5.4 trillion rupees.
A THINNING CUSHION
Investment gains provided substantial support to UBL’s earnings in the first half. That cushion is shrinking.
Gains on investments reached 6.2 billion rupees in the third quarter, according to Topline, down 51% from the previous quarter. Topline’s earlier reviews put those gains at about 29.5 billion rupees in the first quarter and 12.8 billion in the second. The third-quarter figure still beat last year’s 0.9 billion rupees.
Foreign exchange income jumped 75% to 8.8 billion rupees. Total non-interest income rose 71% year on year to 24.3 billion rupees but slid 20% from the second quarter.
Net interest income, the bank’s core lending margin, barely moved. It rose 1% year on year and 3% in the quarter to 93.3 billion rupees as assets repriced.
UBL wrote back 0.2 billion rupees in provisions, against a 0.8 billion-rupee reversal a year earlier. The effective tax rate remained at 52%, absorbing more than half of pre-tax profit for a second consecutive quarter.
ANALYSTS STAY BULLISH
Topline kept its buy rating on the shares despite the miss. It values the stock at 8.1 times its 2026 estimated earnings and 2.4 times book value.
The dividend matched Topline’s forecast, providing a measure of continuity despite weaker quarterly earnings.
The harder question concerns the fourth quarter. With capital gains shrinking and costs still climbing, UBL needs its new deposits to start earning their keep.
