Pakistani banks have made a significant mark in the Asia-Pacific (APAC) region, securing six spots in the top 15 best-performing banking stocks in 2024, according to the latest data from S&P Global Market Intelligence. This strong showing highlights the resilience and potential of Pakistan’s financial sector, even in the face of past economic challenges.
The standout performer was United Bank Ltd. (UBL), which ranked second among the region’s top bank stocks. The bank saw a remarkable total stock return of 159.7% in 2024, boosting its market capitalization to $1.68 billion. This impressive performance put UBL just behind Indonesia’s PT Bank Artha Graha Internasional Tbk, which posted a return of 193.2%.
Alongside UBL, three other Pakistani banks secured positions in the top 10: the National Bank of Pakistan (NBP) with a return of 108.4%, Bank Alfalah Limited at 107.1%, and the Bank of Punjab with 98.4%. These returns demonstrate the strength of Pakistan’s banking sector, which continues to recover and adapt to economic shifts. Furthermore, Allied Bank Limited (ABL) and Habib Metropolitan Bank Limited (HMB) rounded out the top 15, with returns of 94.5% and 93.2%, respectively.
The data from S&P Global Market Intelligence, which ranks Asia-Pacific lenders with market capitalizations over $100 million as of December 31, 2024, paints a picture of a dynamic and evolving banking landscape in Pakistan. The country’s banking sector had faced a slump in share prices due to economic instability and inflationary pressures, but the situation has improved in recent months, thanks in part to Pakistan’s agreement with the International Monetary Fund (IMF) for a 37-month Extended Fund Facility (EFF) in July 2024.
The IMF deal provided a much-needed boost to the country’s economy, helping to stabilize the financial markets and restore investor confidence. As noted by Awais Ashraf, Director of Research at AKD Securities Ltd., the implementation of fiscal and monetary policies under the IMF’s guidance, along with the smooth transition of the government and timely external debt payments, played a key role in the rebound of the local stock market.
The recovery in the stock market is also reflected in the performance of the Pakistan Stock Exchange (PSX), which saw significant growth in 2024. The benchmark KSE-100 Index surged by 85% in Pakistani Rupee (PKR) terms, and 87% in US Dollar (USD) terms, ending the year at 115,259. Despite this remarkable growth, the market remains below its peak level from 2017, indicating that there is still room for further growth and development.
The strong performance of Pakistani banks is a testament to the resilience of the sector and its ability to bounce back from tough economic conditions. The banking sector’s recovery is also a positive sign for the country’s broader economic outlook, as it signals renewed investor confidence and highlights the potential for further growth in the coming years. However, experts have pointed out that the successful implementation of necessary reforms remains critical for ensuring sustainable economic recovery and addressing poverty reduction, as highlighted by the World Bank in its October 2024 report.
As Pakistan continues to recover economically, its banking sector is poised to play a central role in the country’s financial future. With a growing focus on digital banking and financial inclusion, Pakistani banks are well-positioned to lead the charge in transforming the country’s financial landscape.