NBP pensioners entitled to government increases after court rejects bank appeal

Retired employees of National Bank of Pakistan (NBP) have become entitled to government-announced pension increases after the Federal Constitutional Court dismissed the bank’s appeal in a long-running pension dispute, NBP said in a notice to the Pakistan Stock Exchange on Thursday.

In a material information notice dated September 17, NBP said the court announced its reserved judgment on September 16 in Civil Appeal No. 1688/2021, National Bank of Pakistan and others vs. Khawaja Abdul Hameed Nasir and others.

“The court dismissed the Bank’s appeal, thereby entitling its pensioners to receive government increases in their pension,” NBP said.

The bank said it informed the PSX in accordance with the exchange’s material-information requirements.

What could the pension ruling cost NBP?

Muhammad Waqas Ghani, head of equity research at JS Global, said the financial impact would depend on how many pensioners are covered, the applicable period of the increases and any arrears or other payments that become payable.

NBP had previously faced claims from retired employees seeking pension increases beyond the group covered by the earlier Supreme Court ruling, for which the bank recognized a PKR 57.5 billion past-service cost in 2024, according to NBP’s financial statements and JS Global research.

The Lahore High Court had earlier directed NBP to pay the increases, but that order was subsequently suspended by the Supreme Court. The Supreme Court’s earlier ruling also limited the benefit of those increases to pensioners who were parties to the litigation.

The dismissal resolves NBP’s appeal in the pending dispute, although the financial impact will depend on the scope and implementation of the ruling.

How much has NBP already recognized for pension costs?

NBP recorded a PKR 57.5 billion past-service cost in 2024 in connection with an earlier pension case, according to JS Global.

The brokerage estimates that about PKR 15 billion of that amount remains unutilized and could provide a buffer against claims arising from the latest ruling.

NBP has also said it has already incorporated the financial impact of pending pension claims in its financial statements as a precaution, according to the research note.

JS Global said an adverse outcome falling within the scope already recognized by the bank would largely result in a cash outflow, with limited additional impact on profit and loss.

“The key risk is a wider scope of beneficiaries, a longer arrears period or any mark-up component,” Ghani said, according to the brokerage’s assessment.

What could the ruling mean for NBP earnings and capital?

JS Global estimated that if additional pension-related charges reached PKR 22 billion, the net charge after accounting for the unutilized amount would be around PKR 7 billion.

That could reduce NBP’s earnings per share by an estimated PKR 1.58, equivalent to about 3.9% of its 2025 EPS, according to the brokerage.

JS Global also estimated that every additional PKR 10 billion charge could reduce NBP’s capital adequacy ratio by about 0.3 percentage point from the 22.1% reported for the first half of 2026.

The final financial impact will depend on implementation of the ruling, including the number of pensioners covered, the applicable period of the increases and any arrears or other payments determined to be due.

The case forms part of a long-running series of service and pension proceedings involving NBP and retired employees. Court records list Civil Appeal No. 1688/2021 as a service and pension matter involving NBP and the heirs of Khawaja Abdul Hameed Nasir.