Pakistan’s listed banks post record PKR 510B after-tax profit

Pakistan’s listed banks reported their highest-ever nine-month profit after tax, earning PKR 510 billion in the first nine months of 2025, marking a 12.4% increase from the same period last year, according to reports by Topline Securities and Arif Habib Ltd.

In the third quarter alone, the banking sector posted a profit after tax of PKR 169 billion, up 6% year-over-year, driven by balance sheet expansion and stronger non-interest income. Analysts said the performance reflects the sector’s resilience amid a stabilizing macroeconomic environment and declining interest rates.

Topline Research said net interest income (NII) rose 6% from a year earlier, led by United Bank Ltd. (UBL), National Bank of Pakistan (NBP), and Bank of Punjab (BOP). UBL’s net interest income jumped 78% to PKR 92 billion, NBP’s increased 74% to PKR 61 billion, and BOP’s climbed 61% to PKR 23 billion.

“Few banks managed to grow their NII on a quarterly basis due to higher volumetric growth and a favorable shift in the deposit mix,” the report said.

Non-interest income also strengthened, rising 13% year-over-year to PKR 146 billion in the third quarter, aided by higher fee income, foreign exchange gains, capital gains, and provisioning reversals.

Sector-wide provisions recorded a reversal of PKR 3.1 billion in the third quarter, compared with a charge of PKR 26.9 billion in the same period last year, as banks reduced reserves after assessing lower credit risks.

According to Arif Habib Ltd., the sector’s cost-to-income ratio rose slightly to 47.9% in the third quarter, from 45.9% in the previous quarter, mainly due to higher non-interest expenses and remittance-related costs. The effective tax rate remained elevated at 53%.

Among individual banks, UBL led profitability with earnings of PKR 35.4 billion for the quarter, followed by Meezan Bank (PKR 23.4 billion), NBP (PKR 23.3 billion), Habib Bank Ltd. (PKR 16.9 billion), and MCB Bank (PKR 15.2 billion).

Several banks posted record performance and payouts during the period. HBL declared a cash dividend of PKR 5 per share — its highest since 2015 — while BAFL announced its largest-ever nine-month payout at PKR 7.5 per share. AKBL reported record quarterly profit and declared an interim dividend of PKR 1.25 per share.

Meezan Bank recorded the sector’s highest return on equity at 36.3% by September, supported by strong asset quality and record deposits of PKR 3.18 trillion, up 23% year-to-date. UBL’s deposits reached a record PKR 4.7 trillion, while HBL became the first bank in Pakistan to surpass PKR 5 trillion in deposits.

The sector has also significantly outperformed the broader market.

The KSE all-share banking index gained 86% in 2025 to date, compared with 36% for the KSE-100 index.

The Bank of Punjab led with a 279% return, followed by NBP (252%), Askari Bank (170%), Bank of Khyber (167%), and Bank Islami (137%).

Topline Securities said the banking sector remains attractively valued, trading at a 2025 estimated price-to-earnings ratio of 7.3 times and a price-to-book ratio of 1.6 times, with an average return on equity of 23%.

“We maintain a ‘market weight’ stance on the sector,” the report said, highlighting MCB Bank, Bank Alfalah, and HBL as top picks for investors.