Pakistan’s Banks Post Solid Growth in 2Q CY25

banking sector
Posted by: Tania Farooq 0

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?

  1. Higher Interest Income:
    • Banks made more money from lending and investments.
    • Net Interest Income (NII) grew 19% YoY, with strong performances from UBL, NBP, and BOP.
    • UBL’s NII, for example, jumped a massive 213% YoY to Rs91 billion.
  2. Lower Costs:
    • Financial charges fell as interest rates eased.
    • This reduced the pressure on banks’ earnings.
  3. 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:


📢 Announcement: We're on WhatsApp – Join Us There! 

 

whatsapp group ksestocks


 

  • 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 →

Share this post

Leave a Reply

Your email address will not be published. Required fields are marked *