JS Bank Limited (PSX: JSBL) has announced a significant drop in its profitability for the nine months ended September 30, 2025, reporting a net profit after tax of Rs6.09 billion, reflecting a 52% decline compared to Rs12.69 billion earned during the same period last year. The earnings per share fell sharply to Rs2.26 from Rs4.93 in 9MFY24, representing a decline of 54%.
The financial results released by the bank highlight a challenging operating environment characterized by compressed net interest margins and rising operational costs. The bank’s mark-up or interest income fell 34% year-on-year to Rs112.18 billion from Rs169.46 billion, primarily reflecting lower yields during the period. On the other hand, mark-up or interest expenses dropped 43% to Rs65.34 billion compared to Rs115.44 billion in the previous year, providing some cushion to margins.
Despite this, the bank’s net mark-up or interest income contracted by 13% to Rs46.84 billion, down from Rs54.02 billion a year earlier. The decline in net interest income was one of the main contributors to the overall fall in profitability, reflecting tighter spreads and lower lending activity.
However, non-mark-up income provided some support to the bank’s overall revenue stream. Fee, commission, and brokerage income grew 35% to Rs8.61 billion, reflecting increased transactional activity and improved service-based revenue streams. Dividend income also rose by 26% to Rs426.8 million, while gains on securities surged more than 2.4 times to Rs5.95 billion compared to Rs1.76 billion in the previous year.
On the downside, foreign exchange income dropped 35% to Rs2.68 billion from Rs4.11 billion, reflecting reduced trading gains amid a more stable currency environment. The bank also reported a Rs54.7 million loss from Shariah-compliant alternatives of forward foreign exchange contracts, which was not present in the prior year. Despite these challenges, total non-mark-up income increased 43% year-on-year to Rs18.24 billion from Rs12.76 billion, driven by strong gains on securities and higher fee income.
In contrast, total income decreased slightly by 3% to Rs65.07 billion from Rs66.78 billion last year, as gains in non-mark-up income were offset by contraction in net interest income. Operating expenses rose sharply by 26% to Rs46.65 billion from Rs37.15 billion, reflecting inflationary pressures, technology investments, and branch network expansion. Additionally, other charges surged 4.5 times to Rs431.4 million, while the workers’ welfare fund declined 34% to Rs358.1 million.
Profit before credit loss allowance fell 39% to Rs17.63 billion from Rs29.01 billion, while credit loss allowances and write-offs declined 45% to Rs2.39 billion, showing some improvement in asset quality and risk management. The bank reported no extraordinary or unusual items during the period.
As a result, profit before taxation dropped 38% to Rs15.24 billion from Rs24.68 billion in the same period last year, while taxation decreased by 24% to Rs9.15 billion from Rs11.99 billion. After accounting for taxes, the net profit stood at Rs6.09 billion, representing a net profit margin of 9.4%, significantly lower than 19.0% recorded in 9MFY24.
The decline in profitability was mainly attributed to the contraction in net mark-up income and higher operating expenses, although this was partially offset by robust gains on securities, improved contribution from associates, and strong growth in fee-based income.
Despite the decline, JS Bank continues to focus on strengthening its digital banking infrastructure, optimizing cost efficiency, and diversifying income streams to sustain long-term profitability in a highly competitive banking environment.
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