UBL delivered yet another solid performance generating a Profit Before Tax (PBT) of Rs. 68.3 billion for the year ended December 31, 2022, with a year on year growth of 31%. Profit after tax (PAT) was reported at Rs. 32.1 billion with Earnings per Share (EPS) at Rs. 26.19 (2021: Rs. 25.23). The Bank declared dividends of Rs. 9.0 per share for the fourth quarter of 2022, taking the overall dividend distribution to Rs. 22.0 per share for the full year which is significantly higher than the Rs. 18.0 per share declared in 2021. Despite economic challenges this year, UBL remained resilient in sustaining its leading position in the Pakistan banking industry.
UBL remains one of the largest financial institutions of Pakistan with a footprint of 1,335 branches in Pakistan and an asset base of over Rs. 2.8 trillion. Serving 11 million customers, with deposits of over Rs. 1.84 trillion and gross advances of Rs. 1.01 trillion as at December 31, 2022, UBL is at the forefront of banking and financial services in Pakistan.
We are proud of our highly dedicated and professional team of around 13,500 staff members and remain steadfast in our commitment of reaching remote areas of the country and providing access to banking facilities, thus serving the goal of financial inclusion for every citizen of Pakistan.
The Bank continues to build on its award-winning digital banking infrastructure which has repeatedly been recognized as one of the best in Pakistan in providing the most innovative banking solutions.
Substantial revenue growth across both funded and fee based segments
The Bank earned net markup income of Rs. 103.2 billion in 2022, with a strong build up in the revenue base which is up 44% year on year. With consistent build up in the balance sheet during the year, markup earning assets averaged Rs. 2.2 trillion in 2022, growing by 13%. A timely repositioning within the asset book strengthened interest earnings driven by a well-diversified portfolio of fixed and floating rate investments. This resulted in a sharp increase in net interest margins (NIMs) from 3.8% in 2021 to 4.9% in 2022.
Non-Fund Income (NFI) recorded significant growth of 47% over last year, reported at Rs. 34.4 billion, and contributed 25% of the overall gross revenues of the Bank. The year witnessed an increase in Fee and Commission Income by 21%. Customer fees from branch banking operations stood at Rs. 2.3 billion, with an increase of 33%, driven mainly by business acquisitions across the retail network.
Income from cards of Rs. 3.1 billion was earned in 2022, up 21% on the back of the portfolio of active debit card customers growing to over 2.5 million, with 930,000 new acquisitions during the year. Home remittance commissions were a strong contributor with Rs. 2.0 billion earned during the year as UBL maintained its leadership as the preferred partner to the overseas Pakistani diaspora.
Given our strategic partnership with leading insurance companies, banc assurance remained one of the leaders with a 25% market share in the industry, generating fee income of Rs. 1.6 billion in 2022.
Branch Banking builds earnings base across the Bank
In 2022, the bank focused on building on its low-cost deposit base and on boarded 613,000 new current account relationships, leading to a robust growth of 13% in average current deposits, with volumes reaching Rs. 715 billion. The average current to total deposits ratio improved to 43.6% in 2022 from 42.1% in 2021, while savings accounts averaged Rs. 674 billion in 2022 (2021: Rs. 661 billion). The domestic cost of deposits came in at 6.4% as against 3.6% in the corresponding period of last year and remained well contained despite the sharp increase in interest rates during the year. In the Home Remittances space, UBL continues to be in the forefront with transactions growing by 20%, thus increasing the Bank’s market share to 21.6%.
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 as well as 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 and winning a ‘Dragons of Asia’ Award in 2022.
UBL Ameen remains a core focus with strong growth
Islamic banking continues as one of the key strategic segments of the Bank expanding its footprint across the country. The Islamic network stands at 150 branches (2021: 145 branches), along with 219 Islamic Banking Windows (IBWs) within conventional branches (2021: 197 IBWs).
UBL strengthened its Islamic business with a strong performance of 87% growth in the Islamic loan book, which averaged Rs. 69 billion in 2022. UBL Ameen’s deposits averaged Rs. 178 billion in 2022, demonstrating strong average growth of 21% over last year.
The Bank views the Islamic segment as a key growth opportunity and will continue to aggressively expand UBL Ameen’s presence in this vitally important sector.
Significant growth in loan book while improving credit quality
Bank level gross advances closed at Rs. 1.01 trillion at Dec’22, with a strong growth of 39% led by the Corporate Banking Group. Commission income from cash management was recorded at Rs. 1.1 billion in 2022, growing by 14% year on year with higher throughput volumes across Corporate and SME customers. Income from trade and guarantee business was recorded at Rs. 2.0 billion, registering a strong growth of 58% with steady volumes across long standing customer relationships.
The Bank continues to expand within the mid-market segment as the average portfolio of SME and Agri loans recorded a 23% growth over last year with the aim of creating differentiation through customized financial solutions, digitization and a more partner driven approach.
Digital Banking – Paving the way with growing penetration
UBL continues to be recognized as the industry leader in Digital Banking. For the third consecutive year, Asia money lauded UBL’s digital excellence by declaring it the ‘Best Bank for Digital Solutions’ in Pakistan for 2022. Alongside, Euro money declared UBL as the ‘Market Leader of Digital Banking’ in Pakistan, especially based on its track record as the best in digital. In the year 2022, digital transactions have increased by 48% to 55 million with almost Rs. 2.6 trillion in payments throughput which is up 53% year on year. In addition, the Bank continued to increase its digital penetration with 49% of active bank customers registered on the digital app.
Keeping in line with our key strategy pillars, UBL aims to provide a seamless customer experience across all touchpoints and technology platform-based solutions. UBL continues to strive to create a more holistic payments ecosystem which will clearly transform the payments landscape in Pakistan. In 2022, we introduced distinctive features on the digital side to facilitate the users to execute all financial and non-financial transactions effectively and efficiently without visiting the branch. Digital Account Opening, Digital Cheque Deposit and the Urdu mobile app were some of the noteworthy breakthroughs in 2022.
Commitment to Technology and our Data Strategy – setting us apart
UBL continued its focus on technology, data and digitalization in 2022 which was responsible for our excellent uptimes and service levels across all of technology infrastructure and customer channels. We have embarked on a well-architected multiyear execution plan to embed technology and data DNA in the core of the organization. At the heart of this program is the implementation of our “Digital Banking Platform” which knits the customer onboarding and internet / mobile experiences across all customer channels. The platform is designed with a view to meeting the future needs of a tech-savvy and well-informed young population and is planned to be rolled out in the future.
In line with our strategy of being a data driven organization, UBL contributed towards developing a data community, by organizing the first of its kind “Datathon” which was well acknowledged on both local and international forums in the form of awards and media representations.
Leading by example – Stepping up our social responsibility in times of need
UBL is fully committed to setting benchmarks for the Environment, Social and Governance (ESG) standards in Pakistan though stronger compliance and control standards in line with international best practices. The Bank has focused on investing in green energy solutions and reforming its energy needs through solar energy which will ultimately reduce carbon emissions thus reducing adverse climatic effects and safeguarding natural resources. Through our focus on the United Nations mandated Sustainable Development Goals, the Bank has positively impacted millions of lives in the communities it serves. Post the aftermath of the recent catastrophic floods, 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. Best way Foundation, the charitable foundation operated by the Bank’s principal sponsors, raised over USD 2 million for flood relief which were used to provide sustainable relief to the scores of people tragically affected by the floods.
Commenting on the results, Mr. Shazad G. Dada, President & CEO of UBL said:
“We are proud of our solid performance across all core segments and the resilience of our people and network in these challenging times. Our results reflect our focus on deepening and building customer relationships which reaped dividends with robust growth in fee income and a strong growth in deposits. Despite a high inflationary environment, we have worked diligently to contain costs which is evident from our low cost to income ratio. Our focus remains on investing in our branch network and our staff who are our two biggest assets, and with whom we serve our 11 million customers. As one of the systemically important financial institutions, we remain committed to fulfilling our responsibilities towards our customers, people and our shareholders. We are confident that with our honesty of purpose, commitment to excellence and the dedication of our staff, we will achieve even greater heights in 2023.”
