UBL declared Profit Before Tax (PBT) of Rs. 50.7 billion for the nine months ended September 30, 2022, a stellar growth of 29% over last year. Earnings per share (EPS) stood at Rs. 15.33 (9M’21: Rs. 18.59), with strong growth in EPS from Rs. 1.91 in Q2’2022 to Rs. 5.64 in Q3’2022. The Bank remains well capitalized for future business expansion with a Capital Adequacy Ratio (CAR) of 18.4%, which is around 7% in excess of the regulatory minimum requirements. The Bank declared dividends of Rs. 4.0 per share for the third quarter of 2022, taking the overall dividend distribution to Rs. 13.0 per share for the nine months ended September 30, 2022.
Strong revenue expansion of 34% in 2022 driven by all core segments
Gross revenues were reported at Rs. 94.9 billion for 9M’22, with an increase of 34% over last year. Net mark-up income grew significantly by 36%, as a well-positioned loan and investment portfolio repriced well during the year. Maintaining a focus on low-cost deposit mobilization remained a priority across the network resulting in an efficient cost of deposits despite a rising rate environment. A growth of 13% in the current account portfolio along-with the expansion in the core customer base, enabled the Bank to improve its average current to total deposits ratio to 44.3% from 42.0% last year. This contained the domestic cost of deposits to 5.9% for 9M’22, despite the sharp increase in interest rates during the period, which enabled the Bank to expand its net interest margins (NIMs) from 3.8% in 9M’21 to 4.6% this year.
Non-funded income continued to grow and was recorded at Rs. 22.1 billion, which is 28% ahead of last year with strong build up in business momentum from new debit card acquisitions, trade flows across corporate clients, revenues from home remittances business across each major corridor and growing throughput levels across cash management business.
Despite an exceedingly high inflationary environment and continued investments in human resources, branch network and technology, the Bank’s cost to income improved from 44% in 9M’21 to 40% in 9M’22.
Serving 11 million customers across the nation – the deposit franchise remains our cornerstone
UBL operates one of the largest branch networks in Pakistan with 1,338 branches and 1,445 ATMs along-with the Bank’s branchless banking proposition, UBL Omni spread all over the country. The network is augmented by the Banks’ award winning and industry leading Digital Banking services, which together serve over 11 million customers nationwide. UBL remains the preferred partner to the Pakistani diaspora with a market share of over 21% within the home remittance space. The Bank is a key partner in the SBP’s Roshan Digital initiative, having opened over 88,000 accounts, with inflows crossing the USD 700 million mark recently.
Branch Banking Group continues to provide the foundation for the Bank’s core earnings. UBL’s domestic deposits averaged Rs. 1.6 trillion for 9M’22, an increase of 7% year on year. The Bank on-boarded 450,000 new current account relationships during the year which resulted in a 13% growth in average current deposits. This was made possible by the growing momentum of our Good Citizen Product, a current account for active tax filers, which has grown to Rs. 22 billion this year. As part of the Bank’s Diversity and Inclusion agenda, UBL further enriched its exclusive product for women, “UBL Urooj” with a dedicated debit card and targeted alliances to meet the specific needs of women. Since its launch, the portfolio has built up to over 21,000 account holders with Rs. 4.0 billion in deposits.
We continue to build our loan book, with good asset quality and NFI growth in 2022
UBL continues to expand its intermediation role within all key segment and regions, as Bank level performing advances averaged Rs. 647 billion in 9M’22, with a strong growth of 19%. The Bank is serving and building on long standing relationships while leveraging a growing suite of digital capabilities. We are integrating financial services across value chains within all major sectors. Deepening customer relationships through cross sell enabled the Bank to record a 23% growth in domestic trade and guarantee business income, with a 17% growth in earnings from cash management. The Bank continues to expand within the mid-market segment as the average portfolio of SME and Agri loans recorded a 17% growth over last year.
UBL Digital – Recognized as the best in the industry, our innovation spirit leads the way
UBL’s Digital Banking Services continue to be the hallmark in the Pakistani banking space. With its digital transformation strategy, the Bank is actively delivering innovative digital solutions and providing easy access to financial services in a seamless and convenient manner. The Bank’s digitally registered customer base now stands at over 3.1 million customers with payments throughput of Rs. 1.8 trillion, which is up 51% year on year. In recognition of our industry leading services, UBL was once again declared Pakistan’s Best Digital Bank by Asiamoney, an associate of Euromoney, for the third year in a row in 2022. The award is a testament to UBL’s contribution towards digitization of banking in the country.
As an industry first, recently the Bank, in collaboration, hosted the “BuiltByHer 3.0” Hackathon. The Hackathon focused on empowering aspiring female entrepreneurs in creating technologies to address Pakistani women’s economic inclusion issues while promoting STEM education amongst young women. Furthermore, in order to introduce fresh talent to digital financial services, UBL has launched a training program in partnership with a leading university to equip fresh graduates in the areas of design thinking principles and product engineering.
Islamic Banking – UBL ‘Ameen’ a brand gaining ground within its target segment
UBL Ameen continued to build on the momentum of last year with strong results in 2022. UBL Ameen’s branch network now stands at 150 branches (Dec’21: 145 branches) and is further supported by 197 Islamic Banking Windows (IBWs) within conventional branches. UBL Ameen’s deposit base closed at Rs. 234 billion at Sep’22, growing by 68% over Dec’21, while Islamic advances averaged Rs. 62 billion for 9M’22, an increase of 81% over the previous period. The Bank is actively building up its scale and presence and views the Islamic segment as the key driver of growth for the Bank in the near future.
UBL Cares – Relief and sustainability efforts during testing times
The country suffered the worst spell of flooding in recent memory that caused devastation on an unimaginable scale. During these troubling times, UBL has been actively working to provide assistance to thousands of families displaced and affected by the floods, under the Bank’s overall ESG agenda. The Bank provided immediate relief to the distressed families through distribution of cooked meals and dry-food ration bags in the worst affected districts of Sindh and Baluchistan provinces. Furthermore, we also set up medical camps with the help of local NGOs to provide healthcare services to those affected by water-borne diseases.
Bestway Foundation, the charitable foundation operated by the Bank’s principal sponsors, held a fundraising event in London where it raised funds for flood relief. These funds, together with earlier donations by the group for relief efforts amounted to over USD 2 million and are being used to provide sustainable assistance to the scores of people tragically affected by the floods.
Commenting on the results, Mr. Shazad G. Dada, President & CEO of UBL said: “We continue to maintain a strong customer acquisition momentum across our major segments. With a well-positioned asset book, we have seen strong expansion in margins. Our fee-based revenues provide a significant diversification benefit in the long term as we continue to grow our market leading positions. Our results reflect the resilience of our core earnings, built around the strong trust that our customers place in the quality of our services, the UBL brand and our innovative digital solutions. As an institution we always endeavor to deliver best in class services to our valued customers whom we are privileged to serve. In these challenging times, we shall continue to play our role in strengthening and building on the strong potential of the Pakistan banking sector, driven by the unwavering commitment of the UBL staff.”
