KARACHI: The profitability of Pakistan’s banking sector declined to Rs31.6 billion during the third quarter of 2018, down by 27 per cent YoY (adjusted for penalty on HBL).
To recall, New York State Department of Financial Services had levied a penalty of Rs23.7 billion on HBL in 3Q2017.
The decline in sector profits is primarily owed to Rs6.8 billion total provision charge, lower non-interest income and higher non-interest expense during the outgoing quarter.
Net Interest Income (NII) of the banks improved by 9 per cent YoY to Rs122 billion in 3Q2018, led by higher interest rates and better deposit mix. However, on a sequential basis, NII is down 2 per cent despite higher rates due to lower asset base, as well as differences in the re-pricing period of assets and liabilities, post the change in the policy rate.
It is pertinent to mention that SBP had raised the policy rate by 275bps in 2018, 100bps of which were raised at the beginning of 3Q2018.