United Bank : UBL 3rd Quarter Report 2023

LEADING THE WAY IN DIGITAL REVOLUTION

N I N E M O N T H S R E P O R T S E P T E M B E R 3 0 , 2 0 2 3 ( U N - A U D I T E D )

CONTENTS

Company Information	02
Directors' Report to the Members	03
Unconsolidated Condensed Interim Financial Statements	05
Unconsolidated Condensed Interim Statement of Financial Position	06
Unconsolidated Condensed Interim Profit and Loss Account	07
Unconsolidated Condensed Interim Statement of Comprehensive Income	08
Unconsolidated Condensed Interim Statement of Changes in Equity	09
Unconsolidated Condensed Interim Cash Flow Statement	10
Notes to the Unconsolidated Condensed Interim Financial Statements	11
Consolidated Condensed Interim Financial Statements	41
Consolidated Condensed Interim Statement of Financial Position	42
Consolidated Condensed Interim Profit and Loss Account	43
Consolidated Condensed Interim Statement of Comprehensive Income	44
Consolidated Condensed Interim Statement of Changes in Equity	45
Consolidated Condensed Interim Cash Flow Statement	46
Notes to the Consolidated Condensed Interim Financial Statements	47
Directors' Report to the Members (Urdu)	80

Nine Months Report 2023		01

COMPANY INFORMATION

Board of Directors
Sir Mohammed Anwar Pervez, OBE, HPk		Mr. Muhammad Irfan A. Sheikh
Chairman/Non-Executive Director		Non-Executive Director
Lord Zameer M. Choudrey, CBE, SI Pk		Mr. Daniel Michael Howlett
Non-Executive Director		Independent Director
The Honourable Haider Zameer Choudrey		Mr. Tariq Rashid
Non-Executive Director		Independent Director
Mr. Rizwan Pervez		Ms. Shazia Syed
Non-Executive Director		Independent Director
Mr. Muhammad Jawaid Iqbal
President & CEO
COMMITTEES OF THE BOARD		Chief Financial Officer
BOARD AUDIT COMMITTEE (BAC):		Mr. Arif Akmal Saifie
Ms. Shazia Syed	Chairperson	Company Secretary & Chief Legal Counsel
The Honourable Haider Zameer Choudrey	Member	Mr. Aqeel Ahmed Nasir
Mr. Rizwan Pervez	Member
Mr. Tariq Rashid	Member
Mr. Aqeel Ahmed Nasir	Secretary	Registered Office:
BOARD HUMAN RESOURCE & COMPENSATION	13th Floor, UBL Building, Jinnah Avenue, Blue Area,
Islamabad.
COMMITTEE (HRCC):		UBL Head Office
Mr. Tariq Rashid	Chairman
I.I. Chundrigar Road, Karachi - 74000, Pakistan.
Sir Mohammed Anwar Pervez, OBE, HPk	Member
Ms. Shazia Syed	Member
Lord Zameer M. Choudrey, CBE, SI Pk	Member	Share Registrar
Mr. Aslam Sadruddin	Secretary	THK Associates (Pvt.) Limited
BOARD RISK & COMPLIANCE COMMITTEE (BRCC):	Plot No. 32-C, Jami Commercial Street - 2
D.H.A. Phase VII,
Mr. Daniel Michael Howlett	Chairman	Karachi - 75500.
Phone No.: 021-35310187
Lord Zameer M. Choudrey, CBE, SI Pk	Member	UAN: 021-111-000-322
Mr. Muhammad Irfan A. Sheikh	Member	Fax No.: 021-35310190
Mr. Muhammad Jawaid Iqbal	Member	Email: [e-mail]
Mr. Imran Sarwar	Secretary
BOARD IT COMMITTEE (BITC):		Auditors
The Honourable Haider Zameer Choudrey	Chairman	M/s. EY Ford Rhodes
Chartered Accountants
Mr. Rizwan Pervez	Member
Mr. Daniel Michael Howlett	Member
Mr. Muhammad Irfan A. Sheikh	Member	Legal Advisors
Mr. Muhammad Jawaid Iqbal	Member	M/s. Mehmood Abdul Ghani & Co.
Mr. Sohail Aziz	Secretary	Advocates
BOARD NOMINATION COMMITTEE (BNC):		Contacts
Sir Mohammed Anwar Pervez, OBE, HPk	Chairman
UAN: 111-825-111
Lord Zameer M. Choudrey, CBE, SI Pk	Member	Contact Centre: 111-825-888
The Honourable Haider Zameer Choudrey	Member	Website: www.ubldigital.com
Mr. Aqeel Ahmed Nasir	Secretary	Email: [e-mail]

02 United Bank Limited

DIRECTORS' REPORT TO THE MEMBERS

On behalf of the Board of Directors, we are pleased to present the financial statements of United Bank Limited (UBL) for the nine months ended September 30, 2023.

Performance Overview

UBL reported a Standalone Profit Before Tax (PBT) of Rs. 79.1 billion for the nine months ended September 30, 2023, representing a 56% year on year increase. Profit After Tax (PAT) stood at Rs. 40.9 billion in 9M'23, compared to Rs. 18.8 billion in 9M'22 with Earnings per share (EPS) of Rs. 33.38 compared to Rs. 15.33 for the same period last year. UBL reported Consolidated PAT of Rs. 41.7 billion (9M'22: Rs. 18.5 billion) with consolidated EPS of Rs. 34.05 (9M'22: Rs. 15.09).

The Board of Directors of UBL declared an interim cash dividend of Rs. 11 per share in their meeting in Islamabad held on October 25, 2023, along with the results for the nine months ended September 30, 2023.

Revenue

The Bank posted a growth of 26% in gross revenues for 9M'23 at Rs. 119.8 billion. Net mark-up income stood at Rs. 106.6 billion, with a 47% increase over the previous year. Non-mark-up income stood at Rs. 13.1 billion in 9M'23 (9M'22: Rs. 22.1 billion). Fee-based revenues maintained the overall business momentum throughout the year with a 12% increase over the same period last year. Benchmark interest rates averaged over 21% in 9M'23 as compared to 13.5% in the same period last year, which along with repricing within the asset base resulted in improvement in interest margins and growth in earnings. Domestic CASA deposits averaged Rs. 1.6 trillion for 9M'23, with a portfolio increase of Rs. 195 billion (14% growth year on year). The average CASA to total deposits ratio continued to strengthen and was measured at 90.5% in 9M'23 (9M'22: 85.8%). Bank level performing advances averaged Rs. 707 billion for 9M'23, growing by 9% year on year. Domestic performing advances averaged Rs. 570 billion for 9M'23, with an increase of 13%.

Cost management

Due to high inflationary pressures, the Bank's operating expenses recorded a 24% increase over 9M'22 to Rs.

47.0 billion. Staff costs stood at Rs. 18.2 billion, increasing by 26%, in line with the growth across the network and hiring mainly within front office functions. Property related expenses were recorded at Rs. 7.2 billion, up 11%. IT stood at Rs 5.3 billion with an increase of 41%, impacted by the steep devaluation in the PKR. Other operating expenses increased by 24% reported at Rs. 16.2 billion, in line with increased business volumes as compared to last year.

Provisions and loan losses

UBL recorded a net provision reversal of Rs. 7.8 billion for 9M'23 against a net provision charge of Rs. 5.4 billion in the corresponding period last year. The current period includes a provision reversal of Rs 9.5 billion arising on the sale of foreign currency sovereign bonds. Bank level non-performing loans (NPLs) stood at Rs. 109.3 billion at Sep'23, (Dec'22: Rs. 93.3 billion). The increase is mainly due to the impact of currency devaluation on the International NPL portfolio.

Capital Ratios

The bank seeks to maintain an efficient capital base that provides a foundation for future growth as well as maintaining adequate buffers over regulatory requirements. The overall CAR stood at 18.6% at Sep'23 (Dec'22: 19.2%), with a buffer of 6.6% over the minimum regulatory requirement of 12.0%. The Common Equity Tier 1 (CET-1) ratio stood at 13.0% at Sep'23 (Dec'22: 13.4%). Total Tier 1 Capital ratio was measured at 14.0% at Sep'23 (Dec'22: 14.4%).

Nine Months Report 2023		03

Credit Rating

VIS Credit Rating Company Limited (VIS) re-affirmed the entity ratings of UBL at ''AAA / A-1+" (Triple A / A-One Plus) on June 27, 2023. Furthermore, UBL's Additional Tier-1(ADT-1) TFC has also been re-affirmed at 'AA+' (Double A plus). Outlook on the assigned ratings are 'Stable'.

Economy Review

Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement in Jun'23. This would support Pakistan in meeting its external financing needs and provide the much needed impetus for economic stability. In 2023, Pakistan has faced a number of challenges as a result of steep inflation, a high interest rate environment, and a declining currency. However with stabilization measures under way, there are signs of a recovery with the recent appreciation in the PKR, reduction in the current account deficit, moderation in domestic demand and a more favorable trend in non-oil commodity prices. The PSX 100 index has also depicted a positive trend more recently and increased to over 46,000 points (14% over Dec'22 levels) in September as a result of an improving business outlook. At the end of Sep'23, the banking sector's deposits stood at Rs. 26.3 trillion, an increase of 17% from Dec'22, while advances stood at Rs. 11.9 trillion, largely in line with Dec'22 level. Non-performing loans for the banking sector stood at Rs. 959 billion as of June 23, with a 3.8% growth over Dec'22 with asset quality at 7.4% in Jun'23 in line with Dec'22 levels of 7.3%.

Future Outlook

Being a leading financial institution UBL is committed to reinvesting in core businesses and supporting the Pakistan economy as it transitions to stability. We remain focused on expanding our footprint while improving our service levels across all channels. UBL continues to evolve its digital platform, as we build on our technological capabilities to deliver innovative products and redefine customer experiences. UBL's most valuable asset remains its people, and the bank continues to invest in their growth and development. UBL is committed to delivering a strong and consistent return on equity, as we expand our presence in core segments, while creating new opportunities for the future.

Acknowledgements

On behalf of the Board of Directors, we would like to express our appreciation to UBL's shareholders and customers for their continued trust in the UBL brand and to the UBL staff for their commitment and dedication. We would also like to extend our gratitude to the Government of Pakistan, the State Bank of Pakistan, the Securities and Exchange Commission of Pakistan and other regulatory bodies for their continuous guidance and support.

Muhammad Jawaid Iqbal	Daniel Michael Howlett
President & CEO	Director
Islamabad,
October 25, 2023

04 United Bank Limited

UNCONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 (Un-audited)

Nine Months Report 2023		05

UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

AS AT SEPTEMBER 30, 2023

AS AT SEPTEMBER 30, 2023

Note	(Un-audited)	(Audited)
	September 30,	December 31,
	2023	2022

--------------- (Rupees in '000) ---------------

ASSETS
Cash and balances with treasury banks	6
Balances with other banks	7
Lendings to financial institutions	8
Investments	9
Advances	10
Fixed assets	11
Intangible assets	12
Deferred tax assets	13
Other assets	14
LIABILITIES
Bills payable	16
Borrowings	17
Deposits and other accounts	18
Liabilities against assets subject to finance lease
Subordinated debt	19
Deferred tax liabilities	13
Other liabilities	20
NET ASSETS
REPRESENTED BY:
Share capital
Reserves
Surplus on revaluation of assets	21
Unappropriated profit
CONTINGENCIES AND COMMITMENTS	22

286,747,079

25,660,061

225,948,265

2,560,482,509

603,224,654

71,687,753

2,331,109

30,143,962

176,671,403

3,982,896,795

22,331,716

1,357,057,439

2,227,394,873

-

10,000,000

-

143,915,636

3,760,699,664

222,197,131

12,241,797

108,407,733

9,734,599

91,813,002

222,197,131

143,004,094

15,692,567

85,296,480

1,415,193,829

921,837,095

70,816,984

2,406,215

18,874,768

85,631,077

2,758,753,109

36,474,017

564,518,588

1,838,366,814

-

10,000,000

-

100,373,434

2,549,732,853

209,020,256

12,241,797

86,254,373

19,085,934

91,438,152

209,020,256

The annexed notes 1 to 42 form an integral part of these unconsolidated condensed interim financial statements.

Arif Akmal Saifie	Muhammad Jawaid Iqbal	Shazia Syed	Daniel Michael Howlett	Sir Mohammed Anwar Pervez, OBE, HPk
Chief Financial Ocer	President &	Director	Director	Chairman
	Chief Executive Ocer

06 United Bank Limited

UNCONSOLIDATED CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)

FORUNCONSOLIDATTHE NINEDMONTHSC DEN EDENDEDINT RIMSEPTEMBERPROFIT AND LOSS30,ACCOUNT2023 (UN-AUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

July -	July -	January -	January -
September	September	September	September
2023	2022	2023	2022
Note ------------------------------	(Rupees in '000) ------------------------------

Mark-up / return / interest earned	24	147,350,437	73,458,895
Mark-up / return / interest expensed	25	109,574,476	45,790,734
Net mark-up / interest income		37,775,961			27,668,161
Non mark-up / interest income
Fee and commission income	26	4,290,282			3,937,453
Dividend income		219,638			214,056
Foreign exchange income		2,228,965			3,016,173
Income / (loss) from derivatives		168,164			(25,836)
(Loss) / gain on securities - net	27	(6,221,102)			92,241
Other income	28	241,348			184,052
Total non mark-up / interest income		927,295		7,418,139
Total income		38,703,256		35,086,300
Non mark-up / interest expenses	29
Operating expenses	17,057,279			13,683,016
Workers' Welfare Fund		515,376			333,706
Other charges	30	28,138			1,827
Total non mark-up / interest expenses		17,600,793		14,018,549
Profit before provisions
	21,102,463	21,067,751
(Reversals) / provisions and write-offs - net	31	(7,370,015)	4,650,557
Profit before taxation
	28,472,478	16,417,194
Taxation	32	13,926,053	9,517,237
Profit after taxation
	14,546,425	6,899,957

337,213,439

230,576,398

106,637,041

13,061,887

1,211,050

9,136,511

28,648

(11,147,960)

835,267

13,125,403

119,762,444

46,962,707

1,550,062

32,203

48,544,972

71,217,472

(7,833,184)

79,050,656

38,185,072

40,865,584

176,306,350

103,532,638

72,773,712

11,692,037

1,473,559

7,631,091

(3,349)

666,958

658,822

22,119,118

94,892,830

37,772,363

1,033,309

17,789

38,823,461

56,069,369

5,416,317

50,653,052

31,891,222

18,761,830

		---------------------------------		(Rupees) ---------------------------------
Earnings per share - basic and diluted	33	11.88	5.64	33.38	15.33

The annexed notes 1 to 42 form an integral part of these unconsolidated condensed interim financial statements.

Arif Akmal Saifie	Muhammad Jawaid Iqbal	Shazia Syed	Daniel Michael Howlett	Sir Mohammed Anwar Pervez, OBE, HPk
Chief Financial Ocer	President &	Director	Director	Chairman
	Chief Executive Ocer

Nine Months Report 2023

07

UNCONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)

FORUNCONSOLIDATTHE NINEDMONTHSC DEN ENDEDINT RIMSEPTEMBERSTA ENT OF30,COMPREHENSIVE2023 INCOME (UN-AUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

July -	July -	January -	January -
September	September	September	September
2023	2022	2023	2022

------------------------------ (Rupees in '000) ------------------------------

Profit after taxation for the period

Other comprehensive income

Items that may be reclassified to profit and loss account in subsequent periods

Effect of translation of net investment in overseas branches Movement in deficit on revaluation of investments - net of tax

Items that will not be reclassified to profit and loss account in subsequent periods

Movement in surplus / (deficit) on revaluation of fixed assets - net of tax Movement in surplus on revaluation of non-banking assets - net of tax

Total comprehensive income for the period

14,546,425	6,899,957	40,865,584	18,761,830
	525,347	6,592,038	18,066,802	14,329,899
	756,013		(6,170,137)		(7,813,130)		(17,343,461)
1,281,360		421,901		10,253,672		(3,013,562)
	140	(4,740)	7,190	(105,336)
	-		(25,403)		-		(10,189)
140		(30,143)		7,190		(115,525)
15,827,925	7,291,715	51,126,446	15,632,743

The annexed notes 1 to 42 form an integral part of these unconsolidated condensed interim financial statements.

Arif Akmal Saifie	Muhammad Jawaid Iqbal	Shazia Syed	Daniel Michael Howlett	Sir Mohammed Anwar Pervez, OBE, HPk
Chief Financial Ocer	President &	Director	Director	Chairman
	Chief Executive Ocer

08 United Bank Limited