Pakistan’s banking sector posted its highest-ever annual profit in 2025, buoyed by strong growth in net interest income and provision reversals despite sharp interest rate cuts during the year, according to separate reports by Arif Habib Limited and Topline Securities.
Arif Habib Limited (AHL) said the sector’s profitability rose 11% year-on-year to PKR 671 billion in2025, compared with PKR 609 billion in 2024. The growth came even as the central bank slashed policy rates by a cumulative 250 basis points during the year.
The brokerage said net interest income (NII) surged 11% year-on-year as banks strengthened their balance sheets. Total interest expense fell 32% compared with a 21% decline in interest earned, supporting margins.
Non-funded income grew marginally by 1%, while operating expenses climbed 11% as banks expanded branch networks, pushing the sector’s cost-to-income ratio to 58% in 2025 from 49% a year earlier.
Banks recorded a net provisioning reversal of PKR 10.9 billion in 2025, compared with a provisioning charge of PKR 71.5 billion in 2024. The largest reversals were reported by Bank Makramah (PKR 21 billion), Allied Bank (PKR 7.6 billion) and MCB Bank (PKR 5.1 billion), AHL said.
Tax payments rose 18% year-on-year to PKR 791 billion, lifting the sector’s effective tax rate to 55% in 2025 from 51% in 2024.
Which bank posted the highest profit?
AHL said United Bank Limited led the sector with a record profit after tax of PKR 130 billion, followed by Meezan Bank Limited at PKR 92.1 billion and National Bank of Pakistan at PKR 85 billion.
National Bank posted the highest earnings growth of 227% year-on-year, supported by higher NII and the absence of a one-off pension charge booked in 2024. United Bank’s profit rose 73%, while Bank of Punjab recorded 18% growth.
Among dividend payers, MCB Bank Limited announced PKR 36 per share, National Bank PKR 35 per share and United Bank PKR 29.5 per share. National Bank also posted the highest payout ratio at 88%, followed by Standard Chartered Pakistan at 87% and MCB at 73%.
On the balance sheet side, Habib Bank Limited held the largest deposit base at PKR 5.5 trillion, followed by United Bank at PKR 5.1 trillion and Meezan Bank at PKR 3.3 trillion. United Bank also recorded the highest investment portfolio at PKR 9.9 trillion, up 69% year-on-year.
Quarterly profit
Separately, Topline Securities said listed banks posted profits of PKR 160 billion in the fourth quarter of 2025, up 3% year-on-year but down 6% from the previous quarter.
Quarterly NII rose 2% year-on-year to PKR 532 billion, though it slipped 2% sequentially. Non-interest income declined 20% year-on-year to PKR 147 billion, largely due to lower capital gains on investments.
The sector recorded a provisioning reversal of PKR 5.7 billion in the fourth quarter, compared with a charge of PKR 35 billion a year earlier, mainly due to a reversal by Bank Makramah. Excluding one-off items, banks would have booked provisions of around PKR 9 billion, Topline said.
For full-year 2025, Topline estimated sector profitability at PKR 666 billion, up 11% year-on-year, driven by 12% growth in NII to PKR 2.1 trillion and a swing to provision reversals from charges in 2024.
Topline said United Bank, Meezan Bank, National Bank, Habib Bank and MCB were the top five earners in 2025.
Looking ahead, AHL said its banking universe is trading at a forward price-to-book ratio of 1.4 times and price-to-earnings ratio of 7.3 times for 2026, with a projected return on equity of 19.3%.
Meanwhile, Topline estimated its banking universe trades at 7.9 times forward earnings and 1.7 times price-to-book value, with a return on equity of 23%.
Topline maintained a “market weight” stance on the sector, naming Meezan Bank and Habib Bank as its top picks.
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