Standard Chartered is by far the most cost-efficient bank in Pakistan. But should this be celebrated?

As the earnings season draws to a close, we at Profit continue to be fascinated by the significant turnaround experienced by the banking sector in 2023. The rise in interest rates during the first half of the year led to strong markup income, ultimately boosting the overall earnings of commercial banks. 

While this publication has previously covered the risk arbitrage strategy utilised by financial institutions over the past twelve months, this time we explore a trend that is often overlooked when reporting on the financial results of commercial banks. 

The reference being made is to the cost-to-income ratio, and the bank that emerged as the most cost-efficient in the country is none other than Standard Chartered Bank Pakistan, a medium-sized bank, with a cost-to-income ratio of only 17%. The average cost-to-income ratio of other 15 banks analyzed stands at 44%. This indicates that Standard Chartered is not only efficient but miles ahead of its peers.