United Bank Limited (PSX: UBL) has reported a net profit of Rs128.01 billion for the year ended December 31, 2025, marking a 59% increase from Rs80.53 billion in the previous year. The bank’s board has maintained its dividend payout at Rs8 per share, rewarding shareholders amid exceptional financial performance.
Read More: Airlink Communication Profit Jumps 32% in 1HFY26 to Rs3.05 Billion
Earnings per share rose to Rs51.33, up from Rs32.89 in the corresponding period last year, based on the unconsolidated statement of profit and loss.
Net Interest Income More Than Doubles
The bank’s mark-up or interest income increased by 9% year-on-year to Rs1.18 trillion. More significantly, mark-up or interest expensed declined by 10% to Rs823.26 billion. This favorable dynamic resulted in net mark-up or interest income surging by 2.1 times to Rs361.56 billion, compared to Rs173.41 billion in FY2024.
The sharp expansion in net interest income reflects the bank’s ability to manage its cost of funds effectively while growing its earning assets. This metric was the primary driver of overall profitability growth.
Non-Interest Income Declines
Total non-mark-up or interest income declined by 34% to Rs57.99 billion from Rs87.49 billion in the prior year, reflecting softer performance in certain fee-based and trading revenues.
Within this category, fee and commission income grew by a strong 48% to Rs27.99 billion, demonstrating robust growth in core banking fees. Dividend income increased by 35% to Rs2.42 billion, while foreign exchange income surged by 41% to Rs17.19 billion.
However, the bank recorded a loss from derivatives of Rs523.9 million compared to a gain of Rs1.23 billion last year. Gain on securities declined sharply by 77% to Rs9.88 billion from Rs42.59 billion, as the prior period had benefited from significantly higher trading gains. Other income dropped by 87% to Rs1.04 billion.
Expenses and Operating Performance
Total non-mark-up or interest expenses increased by 39% to Rs135.94 billion. Operating expenses rose by 37% to Rs130.19 billion, reflecting investments in people, technology, and branch network. The workers’ welfare fund increased by 82% to Rs5.65 billion, a direct reflection of higher profitability.
Total income increased by 61% to Rs419.56 billion, driven primarily by the strong growth in net interest income. Profit before credit loss allowance reached Rs283.62 billion, up 74% from Rs162.94 billion in the prior year.
Asset Quality Improvement
The bank recorded a net reversal of credit loss allowance and write-offs of Rs4.65 billion, compared to a charge of Rs12.75 billion in FY2024. This substantial reversal indicates significantly improved asset quality and lower provisioning requirements, and it positively impacted profitability.
Tax Impact
Profit before taxation stood at Rs288.27 billion, up 92% from Rs150.19 billion in the corresponding period last year. The bank recorded a taxation expense of Rs160.26 billion, up 2.3 times from Rs69.66 billion.
Despite the substantially higher tax burden—which more than doubled—the strong operational performance enabled the bank to deliver 59% profit growth at the net level. The effective tax rate increased significantly during the year.
Shareholder Returns
The dividend of Rs8 per share, while unchanged from the prior level, represents a substantial payout given the higher profit base. The bank’s ability to maintain dividend levels while absorbing higher taxes and investing in operations demonstrates its strong cash generation and capital position.
Strategic Implications
UBL’s results reflect the benefits of higher interest rates on net interest income, effective cost management on the funding side, and improving asset quality that reduced provisioning requirements. The sharp reversal in credit loss allowance suggests the bank’s loan book is performing well despite macroeconomic challenges.
For investors, the key metrics are the 2.1 times growth in net interest income and the 59% increase in net profit. These demonstrate the bank’s core earning power and its ability to convert operational strength into bottom-line results, even with higher taxes and lower non-interest income.
