Pakistan’s Banking Sector Sees 8% Profit Rise in 3Q2025

Karachi: Pakistan’s listed banks reported an 8% year-on-year increase in profitability, reaching Rs170 billion in the third quarter of 2025. The growth was primarily driven by a 6% rise in Net Interest Income (NII), led by United Bank Limited (UBL), National Bank of Pakistan (NBP), and Bank of Punjab (BOP).

UBL’s NII surged by 78% year-on-year to Rs92 billion, while NBP and BOP saw increases of 74% and 61%, respectively. However, excluding these banks, the sector’s NII fell by 10% compared to the previous year.

On a quarterly basis, the NII remained largely flat as gains in some banks were offset by declines in others. Askari Bank (AKBL) posted an 11% quarterly growth in NII, followed by BOP with 9% and MCB Bank (MCB) with 3%. Conversely, Bank Islami (BIPL), Habib Metropolitan Bank (HMB), and Meezan Bank (MEBL) experienced declines.

Non-interest income rose by 13% year-on-year to Rs146 billion, supported by capital gains and higher fee and foreign exchange income. Meanwhile, non-interest expenses increased by 19% year-on-year, bringing the sector’s cost-to-income ratio to 47.9%.

The sector recorded a provisioning reversal of Rs3.1 billion, attributed to a decline in interest rates and previously booked provisions. The effective tax rate stood at 53% for the quarter.

Looking forward, most banks maintained their dividend payouts, except for a few like BOP and Bank of Khyber. Analysts expect this trend to continue due to the sector’s robust profitability and strong capital adequacy ratios.