KARACHI: Pakistan’s listed banks profitability clocked in at Rs 158 billion, down by 1.0 percent YoY while up 16 percent QoQ in the third quarter of 2024.
Despite the decline in interest rates, the sector’s NII clocked in at Rs 507 billion, up 6 percent YoY and 13 percent QoQ in the third quarter of 2024, led by volumetric growth and favourable repricing impact, analyst said.
Interest income was up by 17 percent YoY and 2 percent QoQ to Rs 1.9 trillion, whereas interest expense was up by 21 percent YoY and down by 2 percent QoQ to Rs 1.4 trillion.
Non-interest income of the sector was up by 55 percent YoY and 2 percent QoQ to Rs 129 billion in 3Q2024 primarily due to gain on securities, higher FX and fee income, Sunny Kumar at Topline Securities said.
On other hand, non interest expense up 21 percent YoY and 5 percent QoQ to Rs 273 billion in 3Q2024 due to higher admin expense which is in line with inflation trend, he added.
Cost to Income ratio of the sector clocked in at 43 percent in 3Q2024 against 41 percent in 3Q2023 and 45 percent in 2Q2024. Moreover, despite lower interest rates, the sector recorded a provisioning charge of Rs 27 billion in 3Q2024, compared to a provisioning charge of Rs 21 billion in 3Q2023 and a reversal of Rs 1.0 billion in 2Q2024.
“This increase is primarily due to the implementation of IFRS-9 and some stress in sectors like textile and steel”, Sunny Kumar said.
Effective tax rate for 3Q2024 clocked in at 53 percent against 49 percent in 3Q2023 and 2Q2024. This higher effective tax rate is due to some banks incurring additional charges due to low Gross-to-ADR ratios, while others recorded higher taxes resulting from the sale of their subsidiaries, he said.
In 9M2024, the profitability of banks increased by 7.0 percent YoY to Rs 447 billion, mainly driven by 11 percent growth in NII to Rs 1.4 trillion and 56 percent jump in Non-Interest Income.
“For this analysis, we have taken all listed banks that have announced their financial results except for Silk Bank (SILK), which has not yet announced its results”, he said.
Bank wise, Meezan Bank (MEBL), United Bank (UBL), MCB Bank (MCB), Habib Bank (HBL), and Bank Alfalah (BAFL) posted highest profits of Rs 25.8 billion, Rs 18.7 billion, Rs 18.1 billion, Rs 14.2 billion and Rs 13.3 billion, respectively during 3Q2024.
In terms of NII growth, JS Bank (JSBL), United Bank (UBL), Bank of Khyber (BOK), Bank of Punjab (BOP), and Bank Al Habib (BAHL), recorded highest YoY growth of 54 percent, 30 percent, 28 percent, 25 percent and 24 percent, respectively in 3Q2024.
Copyright Business Recorder, 2024