Pakistan’s listed commercial banking sector maintained a stable financial performance during the first half of calendar year 2026, with profitability continuing to grow despite changing interest rate conditions and rising operating costs. The 13 listed commercial banks covered in the latest sector review recorded combined net profit of Rs331.8 billion in 1HCY26, compared with Rs320.18 billion during the same period of 2025, representing a 4% year-on-year increase. The results indicate that the sector was able to preserve overall earnings growth even as higher expenses placed pressure on margins.
United Bank Limited (UBL), Meezan Bank Limited (MEBL), and Habib Bank Limited (HBL) accounted for half of the total profitability generated by the covered banks during the period. UBL was the largest contributor, generating Rs85.0 billion in earnings and representing 26% of total sector profit. MEBL contributed Rs48.9 billion, equivalent to 15% of sector profitability, while HBL recorded Rs33.5 billion, accounting for 10% of the total. Together, the three banks represented 50% of the combined earnings of the 13-bank group.
The overall increase in profitability came alongside a 4% year-on-year rise in interest earned, which reached Rs2,743.3 billion in 1HCY26 from Rs2,637.3 billion in the corresponding period of 2025. UBL remained the largest contributor to interest revenue, generating Rs665.0 billion and accounting for 24% of the sector’s total interest earned. National Bank of Pakistan (NBP) followed with Rs361.7 billion, representing 13%, while HBL generated Rs348.5 billion, also accounting for 13% of the sector’s interest revenue.
Non-markup income provided additional support to overall revenue during the period. Fee and commission income increased 11% year-on-year to Rs134.2 billion, compared with Rs120.4 billion a year earlier. Foreign exchange income recorded a stronger increase, rising 40% year-on-year to Rs68.9 billion from Rs49.3 billion. Supported by these non-markup income streams, total income of the covered banks expanded 6% year-on-year to Rs1,296.9 billion, compared with Rs1,226.4 billion in 1HCY25.
At the same time, higher costs continued to weigh on the sector’s margins. Interest expenses increased 7% year-on-year to Rs1,755.3 billion from Rs1,643.6 billion, resulting in a 1% decline in net interest income to Rs988.0 billion from Rs993.7 billion. Operating expenses also increased considerably, rising 16% year-on-year to Rs595.2 billion from Rs512.2 billion. HBL recorded the largest operating expenses among the covered banks at Rs93.2 billion, equivalent to 16% of the sector total, followed by UBL with Rs84.1 billion, representing 14%.
The pressure on expenses was also reflected in profit before tax, which declined 2% year-on-year to Rs694.1 billion from Rs706.0 billion. However, lower taxation helped support the final earnings figure. The sector paid Rs362.3 billion in taxes during 1HCY26, down 6% from Rs385.9 billion in the same period of 2025. After taxation, combined profit after tax reached Rs331.8 billion, up from Rs320.2 billion a year earlier.
The individual performance of banks varied during the period. While UBL, MEBL and HBL accounted for a substantial share of sector profitability, NBP recorded a 25% year-on-year decline in half-year earnings to Rs32.4 billion. Standard Chartered Bank Pakistan Limited also reported a decline, with net profit falling 29% year-on-year to Rs11.8 billion. The results therefore show different earnings trends across the banking sector despite the overall increase in combined profitability.
The broader economic environment remained an important factor for banks during the first half of 2026. Economic activity was described as conservative, while real gross domestic product growth recovered to 3.7%, its highest level in four years, amid the implementation of structural reforms under International Monetary Fund programmes. The banking sector’s future performance will therefore remain linked to developments in economic activity, credit demand, deposits, investment portfolios, exchange rates and financial market conditions.
Banks also provided their views on the operating environment and future business priorities. Meezan Bank said its strategy includes balanced and sustainable growth, stronger digital customer acquisition and continued transformation toward a fully Shariah-compliant financial system. National Bank of Pakistan said the operating environment is expected to become more activity-driven and market-driven rather than being predominantly influenced by interest rates, with future earnings increasingly dependent on credit recovery, deposit mobilisation, investment portfolio optimisation and capital and fixed-income market performance.
Habib Bank Limited pointed to robust remittance inflows and continued adherence to the International Monetary Fund-supported reform programme as factors supporting its outlook. The bank also highlighted expansion of its digital presence and international footprint, while noting that inflation, global commodity prices and external sector developments would remain important factors for monetary policy and macroeconomic stability. The Bank of Punjab similarly said the banking sector could benefit from strong deposit growth and stable yields, while improving private sector confidence could support credit expansion.
The economic outlook remains linked to foreign exchange reserves, remittance flows, inflation and monetary conditions. The sector review noted foreign exchange reserves of around $22 billion and workers’ remittances of $41.6 billion as supporting factors for economic resilience, while real gross domestic product growth is projected to reach 4.0% in fiscal year 2027 and average inflation is projected at 8.2%. Energy costs, global commodity prices and disruptions to critical maritime routes were also identified as variables that could influence inflation and economic activity. Against this backdrop, the first-half results show that Pakistan’s listed commercial banks maintained overall profit growth while managing higher funding and operating costs.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.