Equity Analysis /
Pakistan

United Bank: 1QCY22 review – Accelerating

  • UBL has posted 1QCY22 EPS of PKR7.60, up 22%yoy,beating projected EPS of PKR6.50. The interim DPS of PKR5.0 is inline.

  • Positive surprise has arisen from NII and fee, which have tailwinds behind them. Asset quality remains in control.

  • An exceptional result & adds further conviction to our Buy rating. Valuations are cheap, particularly on P/E & D/Y.

Raza Jafri
Raza Jafri

Executive Director, Research

Yusra Beg
Yusra Beg

Senior Investment Analyst

Intermarket Securities
20 April 2022

UBL has posted 1QCY22 consolidated NPAT of PKR9.3bn (EPS: PKR7.60), up 22%yoy and 7%qoq. The result was significantly above our projected NPAT of PKR8.0bn (EPS: PKR 6.50), due to positive surprises on NII and fee income. The first interim dividend of PKR5.0/sh is inline (payout: 66%)

Key highlights include:

  • Strong net interest income of PKR22.4bn, up a robust 28%yoy and 18%qoq. The investment book looks well positioned, better compared to the last few years.

  • Non-interest income of PKR6.8bn is up 8%yoy but down 2%qoq. In this, the strong fee income growth of 22%yoy is particularly impressive. 

  • Asset quality issues appear confined to the past and the cost of risk appears to be comfortable in the sub-20bps range.

  • Admin expenses are up 18%yoy but down 8%qoq. However, the strong revenue growth means that Cost/Income has come off to just 45% vs. 49% in CY21.

This is an exceptional result by UBL. It has been driven by strong core income – NII and fee – which have tailwinds behind them. The strong performance adds further conviction to our Buy rating, and there appears to be room for us to lift our near-term earnings estimates. UBL’s trades at a CY22f P/B of less than 0.8x and P/E of 4.9x while offering a dividend yield of 14.3%. Our Dec’22 TP is PKR165/sh.