Press Release

VIS Reaffirms Ratings of Basel 3 Compliant Additional Tier-I (ADT-1) TFC-5 Instrument of United Bank Limited

Karachi, June 30, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the rating assigned to TFC-5 of United Bank Limited (‘UBL’ or the ‘Bank’) at ‘AA+’ (Double A Plus). The long-term instrument rating of ‘AA+’ denotes high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. The entity ratings of UBL have also been reaffirmed at 'AAA/A1+' (Triple A/A One Plus). The outlook on the assigned rating is ‘Stable.’ The previous rating action was announced on June 26, 2024.

The instrument is a fully paid-up, rated, perpetual, unsecured, subordinated, non-cumulative, and contingent convertible debt instrument, structured as a Term Finance Certificate (TFC), qualifying as ADT-1 Capital under State Bank of Pakistan’s (SBP) Basel III framework. The TFC was issued on January 29, 2019, with an issue size of PKR 10.0 billion and a perpetual tenor.

The TFC carries a markup at the rate of 3-month KIBOR plus 1.55%, with profit payments to be made quarterly in arrears on a non-cumulative basis. A call option is embedded, allowing the Bank to call the instrument at its sole discretion any time after five years from the issue date, subject to prior approval of the SBP. The lock-in clause stipulates that markup payments will only be made if the Bank is profitable and fully compliant with SBP’s Minimum Capital Requirement (MCR), Capital Adequacy Ratio (CAR), and Liquidity Ratio (LR) requirements. Additionally, the instrument features a loss absorbency clause, wherein the TFCs may, at the discretion of SBP, either be converted into ordinary shares or permanently written off (partially or in full).

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.

Applicable Rating Criteria:

Financial Institution
https://docs.vis.com.pk/Methodologies%202024/Financial-Institution-v2.pdf
Instrument Rating
https://backupsqlvis.s3.us-west-2.amazonaws.com/Methodologies-2025/IRM-Apr-25.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright June 30, 2025 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.