Pakistani Banks listed on the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index post record $1.16bln profit in 1HCY25

Karachi:Banks listed on thePakistan Stock Exchange’s (PSX)benchmark KSE-100 Index recorded their highest-ever half-year profitability in the first six months of 2025, according to a report released by Arif Habib Limited on Friday. The listed banks posted a combined profit after tax (PAT) ofRs326 billion (USD 1.16 billion)in 1HCY25, reflecting a19% year-on-year (YoY) growth. The strong momentum carried into the second quarter as profits surged toRs160 billion, up23% YoY, driven by balance sheet expansion and diversified income streams. At the core of the performance,Net Interest Income (NII)remained the main growth driver, reaching an unprecedentedRs1 trillion in 1HCY25, marking a22% YoY increase. In 2QCY25 alone, NII hitRs510 billion, up20% YoYon the back of expanding asset volumes. Meanwhile,non-markup incomealso rose toRs255 billion (+7% YoY)during the half year, with2QCY25 contributing Rs132 billion (+9% YoY). The sector also posted double-digit growth in deposits and advances as of June 2025.United Bank Limited(UBL)led with the fastest deposit growth of32% YoY to Rs4.3 trillion, whileHabib Bank Limited (HBL)maintained the largest deposit base atRs5.2 trillion. Overall, 11 of the 13 listed banks achieved record deposit levels. Despite inflationary pressures pushing operating expenses up by18% to Rs553 billion, the sector maintained cost efficiency, with thecost-to-income ratio at 46%, only slightly higher than the45.4% in 1HCY24. On the capital markets front, banks significantly outperformed the benchmark KSE-100, delivering a70% return year-to-date in 2025, compared to the index’s27% gain. The rally was supported by record profitability, resilient asset quality, and surprise dividend announcements that boosted investor confidence. National Bank of Pakistan (NBP)led stock market gains with a148% rise in share price, followed byUBL (111%)andAskari Bank (AKBL) (105%), each benefiting from robust earnings momentum and capital distribution. Dividend surprises further lifted sentiment, withBank of Punjab (BOP)announcing its first-ever interim dividend ofPKR 1/share, whileAKBLdeclaredRs2/share, its first such payout since 2014. In contrast,Islamic banks faced a profitabilitysqueeze, with profits slipping13% YoY to Rs57 billionin 1HCY25. The decline was attributed to lower interest rates and regulatory changes effective from January 2025. Conventional banks, however, continued to thrive, posting a strong29% YoY growthin profits during the same period. The banking sector remained a major contributor to government revenues, payingRs394 billion in taxesin 1HCY25, a sharp44% YoY increase, due to a higher effective tax rate of54%, compared to48% in 1HCY24. Source:Business Recorder