Posted by: Tania Farooq
Post Date: September 1, 2025
Pakistan’s Banks Post Solid Growth in 2Q CY25
Pakistan’s banking sector has experienced a strong second quarter of 2025, indicating that the industry remains resilient despite ongoing economic challenges.
Profits are up
- Listed banks earned Rs168 billion in profits during 2QCY25.
- That’s a 22% increase compared to the same period last year (YoY).
- On a quarterly basis, profits dipped slightly by 3%, but the overall trend is still positive.
What’s driving the profits?
- Higher Interest Income:
- Lower Costs:
- Financial charges fell as interest rates eased.
- This reduced the pressure on banks’ earnings.
- Other Income Sources:
- Fee income, foreign exchange dealings, and investments also supported earnings.
Dividends stay attractive
- Most banks continued to pay good dividends, rewarding shareholders.
- For example, dividend yields remained in double digits for leading names.
Key concerns
- Slow Loan Growth: Advances (loans to businesses and individuals) dropped compared to the industry average.
- Rising Competition in Remittances: Some banks faced pressure on income from remittances due to heavy competition.
- High Taxation: The effective tax rate for banks is still on the higher side, affecting net profits.
Outlook
Analysts expect banks to remain profitable, supported by:
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- Strong deposit growth, especially in current accounts.
- Lower interest rates reduce borrowing costs.
- Continued focus on efficiency (cost-to-income ratios improving).
Pakistan’s banks are demonstrating resilience, with strong earnings growth, attractive dividend yields, and improving operational efficiency. However, loan growth and competition in remittances remain areas to watch.
⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →
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