National Bank of Pakistan Projects Robust Growth Amidst Regulatory Shifts

Karachi: The National Bank of Pakistan (NBP) convened a corporate briefing to outline its financial performance for the first half of 2025 and to discuss future strategies. The bank’s management expressed confidence in maintaining strong earnings and capital positions, despite regulatory adjustments affecting market risk weights and capital adequacy.

NBP reported a significant increase in deposits, climbing by 21.7% to Rs. 4,704 billion as of June 2025. The growth was largely driven by a rise in current account deposits, with CASA deposits increasing to 82.9%. However, net advances saw a decline of 6.9%, largely attributed to reduced demand in the corporate sector.

The briefing highlighted NBP’s strategic adjustments in response to new regulations. The central bank’s decision to raise market risk weights on FPOCI investments will gradually reach 100% by 2027. NBP has already adjusted to a 50% market risk weight for the current year, impacting its Capital Adequacy Ratio (CAR) by approximately 300 basis points.

NBP’s investment portfolio remains diversified, with a significant portion in Pakistan Investment Bonds (PIBs) and Treasury bills. Investments in Eurobonds and Sukuks are expected to mature in the fiscal year 2026, potentially boosting future growth.

The bank also reported a pension expense of Rs5 billion for the first half of 2025, which is already reflected in its expenses. Despite this, the cost-to-income ratio remains stable. Additionally, the bank has ceased providing Merchant Discount Rates (MDR) to corporates since December 2024, which supports Net Interest Margins (NIMs).

NBP is steering towards digital transformation, having recorded a transaction value of Rs4.7 trillion over the past five years, contributing Rs13 billion in Non-Funded Income (NFI) revenue. This digital focus is anticipated to play a critical role in the bank’s growth strategy.

Looking ahead, NBP plans to leverage equity investments and foreign bond maturities to drive future growth. Despite the regulatory changes, the bank’s CAR remains robust at 27.28%, significantly above the regulatory threshold of 13%, indicating a strong buffer for future capital needs.