Pakistan listed banks’ profitability increased to record Rs 163 billion, up 95 percent year-on-year (YoY) in 3Q2023. According to Topline Securities, this was primarily driven by a significant jump in Net Interest Income (NII) amid high interest rates, and balance sheet growth. In US$ terms listed banks profit was also up 50 percent YoY to $560 million in 3Q2023.
NII of the sector clocked in at Rs 481 billion in 3Q2023 versus Rs 283 billion in 3Q2022, up 70 percent YoY as average policy rates during 3Q2023 remained at 22 percent versus 15 percent in 3Q2022. Interest income was up by 79 percent YoY to Rs 1.6 trillion, whereas interest expense was up by 84 percent YoY to Rs 1.1 trillion.
Non-interest income of the sector was down by 5 percent YoY to Rs 79 billion in 3Q2023 mainly due to loss on securities and a decline in FX income. On other hand, non-markup expense was up 30 percent YoY to Rs 229 billion in 3Q2023 due to higher admin expense which is in line with inflation. Cost to Income ratio of the sector improved to 41 percent in 3Q2023 versus 48 percent in 3Q2022. Interestingly despite high interest rates, provisioning charge of sector declined by 9 percent YoY to Rs 14.7 billion in 3Q2023 mainly due to strong asset quality. https://tinyurl.com/mzchm9dr
Source: IBP