AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Lahore: The Bank of Punjab (BOP) reported a significant 41% year-on-year increase in its unconsolidated profit for the first half of the calendar year 2025, reaching PkR6.8 billion, as revealed in an analyst briefing held today. This growth is attributed to strategic financial maneuvers, including the removal of Minimum Deposit Rate (MDR) on corporate and public sector deposits, a 40% growth in average Current Account (CA) deposits, and improvements in spreads and volumes on advances and investments.
BOP’s net interest income surged 2.2 times compared to the previous year, bolstered by the elimination of MDR and a 40% increase in fee and commission income. The management anticipates maintaining this growth rate throughout the year.
A significant portion of Term Deposit Receipts (TDRs), accounting for 40% of total deposits as of June 2025, was repriced, enhancing the bank’s returns. Management projects further repricing by the end of the year, which is expected to further improve financial outcomes.
Despite the recent floods, the bank reported that only 0.4% of its loan portfolio is at risk, thanks to strategic risk mitigation measures such as first-loss guarantees and insurance. The management predicted a reduction in the share of deposits subject to MDR regulation from 25% to 15% by the end of the year.
As of June 2025, BOP’s deposits grew by 13.8% from December 2024, reaching PkR1.95 trillion, with CA deposits rising to 24% of total deposits. The bank aims to increase this composition to 33% by 2028.
Investments rose by 7.9% to PkR1.4 trillion, with a substantial portion in Floating PIBs, which are due for repricing in the third quarter of 2025. The bank’s cost-to-income ratio improved to 65.7% in the second quarter, reflecting anticipated revenue growth.
In a significant move, BOP declared its first-ever interim cash dividend of PkR1.0 per share for the first half of 2025 and expressed intent to introduce quarterly dividends in the medium term. Management also hinted at the possibility of a share buyback if the stock is undervalued.
Looking ahead, management believes that the policy interest rates are nearing a low point, with a potential maximum reduction of 125 basis points expected by the first quarter of 2026. The bank’s Capital Adequacy Ratio stood at 17.42% as of June 2025, well above the regulatory requirement.
In a bid to expand its footprint, the bank plans to open 100 new branches over the next two years.