Pakistan Bank Earnings Face Pressure from Declining Yields

Karachi: Banks in Pakistan are bracing for a challenging third quarter of the calendar year 2025, with forecasts indicating a year-over-year decline in core income. This is attributed to the contraction in net interest margins (NIMs) amid declining yields, according to a preview of 3QCY25 results released by JS Global.

Despite the anticipated reduction in core income, there is an optimistic outlook for the banks’ overall earnings this quarter. The positive sentiment is driven by lower provisioning charges and robust support from non-interest income, which are expected to counterbalance the negative effects of reduced asset yields on quarterly profits.

Dividend strategies for the quarter are projected to remain consistent across the banking sector, providing further stability.

Within the banking sector, Habib Bank Limited (HBL) is an exception, expected to report an 18% year-over-year increase in earnings per share (EPS) to Rs11.6. Conversely, other banks such as Bank AL Habib Limited (BAHL) and Meezan Bank Limited (MEBL) are expected to see slight to moderate declines in their EPS.

Specifically, BAHL is projected to report an EPS of Rs7.0, reflecting a 1% decrease from the previous year. MEBL is anticipated to post an EPS of Rs12.11, marking a 17% decline year-over-year.

Other banks, including Faysal Bank Limited (FABL), MCB Bank Limited (MCB), Bank Alfalah Limited (BAFL), Askari Bank Limited (AKBL), and Habib Metropolitan Bank Limited (HMB), are also expected to report declines in their EPS, ranging from 8% to 38%.

As the banks navigate this period of financial pressure, stakeholders remain focused on the strategies employed to mitigate the impact of declining yields and uphold shareholder value.