Pakistan Listed Banks Profit Up 16%QoQ – OpEd

Pakistan’s listed banks profit was reported at PKR158 billion, down by 1% YoY, but up 16%QoQ at end 3QCY24. Despite the decline in interest rates, the sector’s net interest income (NII) was reported at PKR507 billion, up 6%YoY and 13%QoQ in the quarter under review, led by volumetric growth and favourable repricing impact. Interest income was up 17%YoY and 2%QoQ to PKR1.9 trillion, whereas interest expense was up by 21%YoY, but down by 2%QoQ to PKR1.4 trillion.

Non-interest income of the sector was up by 55%YoY and 2%QoQ to PKR129 billion, primarily due to gain on securities, higher FX and fee income.

A against this, non interest expense up 21%YoY and 5%QoQ to PKR273 billion due to higher admin expense which was in line with inflation trend.

Cost to Income ratio of the sector was reported at 43% in 3QCY24 as compared to 41% in 3QCY23 and 45% in 2QCY24.

Despite lower interest rates, the sector recorded a provisioning charge of PKR27 billion in 3QCY24, as compared to a provisioning charge of PKR21 billion in 3QCY23 and a reversal of PKR1 billion in 2QCY24. This increase is primarily due to the implementation of IFRS-9 and some stress in sectors like textile and steel.

The higher effective tax rate was due to some banks incurring additional charges due to low Gross to ADR ratios, while others recorded higher taxes resulting from the sale of their subsidiaries.

For 9MCY24, the profitability of banks increased by 7%YoY to PKR447 billion, mainly driven by a 11% growth in NII to PKR1.4 trillion and a 56% jump in Non-Interest Income.

For the analysis, Topline Securities has taken all listed banks that have announced their financial results except for Silk Bank (SILK), which has not yet announced its results. 

Bank wise, highest profits were posted by Meezan Bank (PKR25.8 billion), United Bank (PKR18.7 billion), MCB Bank (PKR18.1 billion), Habib Bank (PKR14.2 billion), and Bank Alfalah (PKR13.3 billion) during 3Q2024.

Only Bank Makramah (BML) recorded loss of PKR1.7 billion in 3QCY24.

In terms of NII growth, JS Bank (54%), United Bank (30%), Bank of Khyber (28%), Bank of Punjab (25%), and Bank Al Habib (24%) recorded highest YoY growth.

However National Bank (29%), Samba Bank (22%), Standard Chartered Bank (7%), Habib Metropolitan (5%), Habib Bank (2%) recorded YoY fall in NII.

For 3QCY24, most banks maintained their dividend payouts. Moving forward, the brokerage house expects this trend to continue amid the sector’s healthy profitability.

In the case of NBP, the brokerage house anticipates the bank will resume dividend payouts in 4QCY24 after clarification on the pension case.