Pakistani banks have been living large over the past few years. As the State Bank of Pakistan (SBP) cranked up policy rates consistently, banks started riding a wave of record profits. The banking sector—both conventional and Islamic—has raked in some serious cash.
But a closer look shows that Islamic Banks made profits that were a bit larger than what you would expect them to have made in this time. Meezan Bank, for example, made the highest profit after tax in 2023. The bank was able to earn net profits of more than Rs 85 billion while the next best result saw MCB earn Rs. 65 billion. Next in line are the three biggest banks of the country with Habib Bank, UBL and National Bank of Pakistan earning around Rs 57 billion, Rs 55 billion and Rs 53 billion respectively.
This is even more intriguing considering banks like National Bank, Habib Bank and UBL have asset bases which are over Rs. 5 trillion, Rs. 4.6 trillion and Rs. 3 trillion, respectively. On the other hand, Meezan Bank has a smaller asset base of Rs. 2.5 trillion, yet it was able to yield almost double the profits compared to these behemoths.Â
Perhaps that is why the eye-catching profitability of the Islamic Banking Sector raised some eyebrows at a recent meeting of a Senate Standing Committee, which expressed its doubts about how Islamic Banks managed this. But before we get into that, it is worth revisiting how the banks have done so well in the past few years. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
