Profitability of listed banks jumps to Rs173bn
KARACHI: Pakistan's listed banks' profitability clocked in at Rs 173 billion, up by 14 percent YoY and 12 percent QoQ in the first quarter (Jan-March) of 2025 (1Q2025).
According to a report issued by the Topline Securities, despite the decline in interest rates, the sector's NII clocked in at Rs 536 billion, up 23 percent YoY and 2 percent QoQ in 1Q2025, led by volumetric growth, favourable repricing, and higher yield of repo borrowings. Interest income declined by 19 percent YoY and 13 percent QoQ to Rs 1.4 trillion, whereas interest expense declined by 32 percent YoY and 20 percent QoQ to Rs 0.9 trillion. For analysis, Topline have included all listed banks.
Non-interest income of the sector increased by 6 percent YoY but declined by 28 percent QoQ to Rs 133 billion 1Q2025. The QoQ decline is due to a fall in capital gains and fees & commission income.
Profitability of listed banks rises 5pc YoY
On the other hand, non-interest expense rose by 19 percent YoY but declined by 19 percent QoQ to Rs 293 billion in 1Q2025. The YoY increase is attributed to inflationary impact and branch expansions. However, the QoQ decline is mainly due to the absence of a one-time pension expense recorded by NBP. This takes the sector's Cost-to-Income ratio to 44percent in 1Q2025, compared to 44 percent in 1Q2024 and 51 percent in 4Q2024.
Sector recorded a provisioning charge of Rs6 billion in 1Q2025, down 36 percent YoY and 83 percent QoQ. This decline is primarily due to the absence of provisioning charges following the implementation of IFRS-9 and improved asset quality, according to our channel checks.
Effective tax rate for 1Q2025 stood at 53 percent, compared to 50 percent in 1Q2024 and 56 percent in 4Q2024. To recall, at the end of 2024, the government removed the ADR-related tax while increasing the overall tax rate from 49 percent (including super tax) to 53percent (including super tax) for calendar year 2025.
Copyright Business Recorder, 2025
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