Pakistani banks witness record Rs163 billion profit in third
quarter of 2023
In the third quarter of 2023 (Q3CY23), the profitability of
listed banks in Pakistan surged to a record Rs 163 billion, marking a
remarkable 95% year-on-year increase. This remarkable growth was primarily
attributed to a significant rise in Net Interest Income (NII) due to high
interest rates and an expansion of the balance sheet. In US dollar terms, the
profit of listed banks also saw a substantial 50% year-on-year increase to
reach $560 million in the same quarter of 2023.
NII for the sector amounted to Rs 481 billion in Q3CY23, up
70% year-on-year, compared to Rs 283 billion during the same quarter in 2022.
This surge was driven by an increase in average policy rates, which reached 22%
during the third quarter of 2023, compared to 15% in the same quarter of the
previous year. Interest income grew by 79% year-on-year, reaching Rs 1.6 trillion,
while interest expenses increased by 84% year-on-year, totaling Rs 1.1
trillion.
Standard
Chartered Pakistan records profit growth of 121% in 9 months of 2023
However, non-interest income for the sector experienced a
5.0% year-on-year decline to Rs 79 billion in Q3CY23, mainly due to losses on
securities and a decrease in foreign exchange (FX) income. Conversely,
non-markup expenses rose by 30% year-on-year to Rs 229 billion in the same
quarter, driven by higher administrative expenses in line with inflation.
The cost-to-income ratio for the sector improved to 41% in
Q3CY23, compared to 48% during the same quarter in 2022. Remarkably, despite
high interest rates, the provisioning charge for the sector decreased by 9.0%
year-on-year to Rs 14.7 billion in Q3CY23, primarily due to robust asset
quality.
On a quarter-on-quarter basis, listed banks' profitability
increased by 24% in Pakistani Rupees and 22% in US dollars. This substantial
quarter-on-quarter earnings growth was largely due to the absence of higher
taxes recorded in the second quarter of 2023, which was associated with the implementation
of a 10% super tax announced in the Federal Budget for FY24. The effective tax
rate for the third quarter of 2023 was 48%, improved from 52% in the second
quarter of 2023.
BankIslami
Pakistan’s profit growth surges 196% in first three quarters of 2023
Over the first nine months of 2023, the sector's earnings
rose by 102% year-on-year to reach Rs 421 billion, with a 44% year-on-year
increase to $1.5 billion. This impressive profit growth was driven by higher
NII, which increased by 69% year-on-year. Furthermore, a lower effective tax
rate of 48% in the first nine months of 2023, compared to 55% during the same
period in 2022, also contributed to higher profitability.
It's worth noting that all banks that have reported their
financial results have been included in this analysis, except for Silk Bank
(SILK), which has not yet released its results.
On a bank-by-bank basis, Meezan Bank (MEBL), MCB Bank (MCB),
Habib Bank (HBL), United Bank (UBL), and Standard Chartered (SCBPL) achieved
the highest profits of Rs 25.5 billion, Rs 19.7 billion, Rs 16.6 billion, Rs
15.0 billion, and Rs 12.7 billion, respectively during the third quarter of
2023. In contrast, Summit Bank (SMBL) reported a loss of Rs 2.1 billion in the
same quarter.
Sindh
Bank's mounting losses amidst banking industry prosperity
Regarding NII growth, Bank of Khyber (BOK), Soneri Bank
(SNBL), JS Bank (JSBL), Standard Chartered (SCBPL), and BankIslami (BIPL)
demonstrated the highest growth rates, with increases of 154%, 134%, 131%,
106%, and 104% respectively during the third quarter of 2023. Surprise
dividends were observed from a few banks in the third quarter, which supported
the share prices of listed banks. Looking ahead, a robust dividend payout is
expected to continue due to the sector's strong profitability.
Source: Business Recorder