Pakistani banks report Rs173 billion profit in first quarter of 2025
Pakistan’s listed banks posted a 14% year-on-year increase in profits in
the first quarter of 2025 (1Q2025), reaching Rs173 billion, according to
Topline Securities. The growth was primarily driven by higher net interest
income (NII) and improved asset quality.
UBL Leads Earnings, Followed by Meezan and NBP
United Bank Limited (UBL) recorded the highest quarterly earnings at
Rs36.1 billion, followed by Meezan Bank (Rs22.4 billion) and National Bank of
Pakistan (NBP) (Rs22.1 billion). Other major performers included Habib Bank
(Rs16.6 billion) and MCB Bank (Rs14.7 billion). Bank Makramah (BML), however,
reported a loss of Rs0.9 billion.
Strong NII Growth Amid Interest Rate Changes
The sector’s NII rose 23% YoY to Rs536 billion, supported by volume
growth, favorable repricing, and better returns on repo borrowings. Despite a
decline in interest rates, NII rose 2% quarter-on-quarter. Meanwhile, interest
income fell 19% YoY to Rs1.4 trillion, and interest expenses declined more
sharply by 32% YoY to Rs0.9 trillion.
Read More HBL announces highest-ever annual profit for the year 2023
Non-Interest Income and Expense Trends
Non-interest income grew 6% YoY to Rs133 billion but fell 28% QoQ,
largely due to lower capital gains and reduced fee income. Non-interest
expenses increased 19% YoY to Rs293 billion, reflecting inflation and branch
expansion, but dropped 19% QoQ due to the absence of one-off pension expenses
at NBP.
Improved Asset Quality and Lower Provisioning
Provisioning charges fell 36% YoY to Rs6 billion, with an 83% QoQ drop
attributed to better asset quality and IFRS-9 implementation. The sector’s
cost-to-income ratio remained stable YoY at 44%, but improved significantly
from 51% in 4Q2024.
Taxation and Regulatory Environment
The effective tax rate rose to 53% in 1Q2025 from 50% a year earlier,
mainly due to the elimination of the ADR-related tax benefit and a higher
statutory tax rate. This was still lower than the 56% seen in 4Q2024.
Read More SBP issues profit-sharing rules for Islamic banks
Top Performers in NII Growth
UBL led in NII growth with a 200% YoY increase, followed by NBP (139%),
Bank of Punjab (75%), Askari Bank (70%), and Bank of Khyber (45%).
Outlook and Sector Positioning
Despite macroeconomic challenges, most banks maintained dividend payouts.
Topline Securities maintains a "market weight" stance on the sector,
favoring Meezan Bank and Habib Bank as top picks.
Source: Profit Pakistan