Bank of Punjab Reports Positive Financial Adjustments and Strategic Growth Plans

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LAHORE: The Bank of Punjab (BOP) announced several key financial adjustments and strategic targets during its recent corporate briefing. The bank’s management reported a provision charge of Rs1.8 billion for September 2025, aligning with IFRS-9 standards. Despite the recent floods, the management assured that the bank’s asset quality would remain largely unaffected.

A significant development noted was the maturity of 85% of BOP’s high-cost Term Deposit Receipts (TDRs) in the second and third quarters. This has resulted in a reduction of the average TDR rate to approximately 9-9.5%, down from 16% the previous year.

The bank experienced a seasonal decline in deposits, but the average current account balance saw a 13.33% increase in September 2025 compared to June 2025. On an annual basis, there was a 36% improvement in October 2025, amounting to an increase of approximately Rs 100 billion compared to the same period last year.

BOP aims to end the year with a current account mix of 24%, and it has set a target of 27% for next year, with a four-year goal of reaching the current industry average of 33%. The current account mix has been influenced by a reduction in public sector deposits, now comprising 50% of the deposit mix, down from over 70%.

The bank’s non-MDR deposits saw a 10% improvement in September 2025 compared to June 2025. Additionally, BOP’s focus will remain on core banking, with routine capital gains anticipated alongside gains on the book, maintaining Net Interest Margins (NIMs). The bank reported fixed-income capital gains of approximately Rs3 billion in the first nine months of 2025.

Non-performing loans (NPLs) were stable at 6.4% in September 2025, a decrease from 7.5% previously. The management does not foresee significant growth in NPLs, having already recovered Rs31 billion over the past four years.

Regarding the impact of floods, the management highlighted that 70% of their portfolio is covered by first-loss guarantees, and 95% of the remaining 30% is collateralized, minimizing potential impacts.

BOP also announced plans for a historic annual dividend, with intentions to introduce a quarterly dividend. The bank’s investment portfolio consists of 60-65% floating PIBs, with the remainder divided between fixed PIBs and T-bills.

Looking ahead, BOP is planning to open 50 new branches in 2026 and another 50 in 2027. The bank’s Capital Adequacy Ratio (CAR) stands at 17.4% as of September 2025, comfortably above the regulatory requirement.