Branch expansion drive cuts into Soneri Bank’s margins

For Soneri Bank, 2025 was the sort of year that flatters a strategist more than a shareholder hunting for immediate gratification. The bank grew revenue, brought in deposits at a brisk clip, and added branches at a pace that would have been unthinkable for a mid-tier Pakistani lender just a few years ago. But the bill for that ambition came due at once. Operating expenses surged faster than income, the cost-to-income ratio deteriorated sharply, and profit after tax fell by nearly a quarter. The story of Soneri’s year, in other words, is not one of stagnation. It is one of expansion so aggressive that it overwhelmed the underlying improvement in the business.    

The headline numbers tell the tale. According to a Chase Securities briefing note, Soneri’s total income rose 11% in calendar year 2025 to Rs35.2 billion, up from Rs31.7 billion a year earlier, helped by an 8% rise in net mark-up income to Rs27.0 billion and a 20% increase in non-mark-up income to Rs8.1 billion. Fee and commission income rose 13%, while gains on securities gave the non-interest line an extra lift. Deposits rose 27% to Rs689 billion and investments climbed 25% to Rs479 billion. Yet operating expenses rose even faster, by 23%, to Rs23.6 billion, pushing the cost-to-income ratio up to 67% from 60.5% the year before. Profit before tax slipped 8% to Rs11.6 billion, and profit after tax dropped 23% to Rs4.56 billion. Earnings per share fell to Rs4.13 from Rs5.35, while the dividend was halved to Rs1.50 a share.