UBL may not have matched the profit growth of its peers, but still raked in a sizeable double-digit after-tax growth in after tax profits. The domestic business on a standalone basis, has done remarkably well, registering a 36 percent year-on-year growth in pretax profits to Rs36 billion. The domestic business profitability growth comfortably outpaces the overall pretax profit growth of 1 percent year-on-year, as the international business continues to face headwinds.

The details on September end asset mix are awaited, but the first glance tells the volumetric growth in average earning assets may well have been rather modest. The interest rate scenario is significantly altered from a year ago, which also explains a single digit increase in mark-up earned. The bank seems to have worked the deposit cost in its favor, evident from a sizeable increase in gross spread ratio.

UBL’s CASA ratio had touched 86 percent as at June end 2020, and by the looks of things, it seems to have been hovering around the same for September end period. The domestic deposit portfolio at Rs1.35 trillion is 11 percent higher over December 2019. The government securities have continued to be the favored parking spot for most banks and UBL is no exception. The domestic government securities have offered attractive yields, and opportunities to timely adjust the investment tenors from short-term to longer-term.

UBL has witnessed traction in non-markup income as it sees the economic activities going back to pre-Covid levels, which is testament to Pakistan’s rather sharp and swift recovery from the ills of the pandemic, that continues to grip a large part of the world. The core fee lines such as the commissions, trade, bancassurance are all back to pre-Covid levels, up by 22 percent over last quarter. UBL continues to be the market leader in the home remittance segment, with almost one-quarter share of the entire market, channeling $6 billion remittances in the last 12 months.

In line with the de risking strategy of the international loan portfolio, and generally prudent approach towards Covid, the bank has opted for aggressive provision – evident from more than double increase in provisioning charges, year-on-year. With economic activities on the rise, and the loan book looking neat and well provided for, UBL may well now turn the focus towards the advances side of things, in the next few quarters, as the interest rate scenario continues to be conducive for higher appetite.