Listed banks’ profits rise to Rs597bn in 2024 despite higher taxes

The profitability of Pakistan’s listed banks grew by 5% year-on-year (YoY) to Rs597 billion in 2024, driven by a 9% increase in Net Interest Income (NII) to Rs1.9 trillion and a 50% surge in Non-Interest Income to Rs560 billion, according to Topline Securities.

However, the effective tax rate for the fourth quarter of 2024 rose to 56%, up from 53% in the third quarter, following an increase in the overall tax rate for banks from 49% to 54% by the end of the year. 

In the last quarter, listed banks’ profitability declined by 1% YoY and 2% quarter-on-quarter (QoQ), with profits amounting to Rs153 billion.

Despite the decline in interest rates, the sector’s NII increased by 5% YoY and 4% QoQ to Rs523 billion in Q3 2024, supported by volumetric growth and favorable re-pricing impact. However, total interest income fell by 4% YoY and 13% QoQ to Rs1.6 trillion, while interest expenses declined by 8% YoY and 20% QoQ to Rs1.1 trillion.

Non-interest expenses rose sharply by 30% YoY and 42% QoQ to Rs329 billion in Q4 2024, primarily due to NBP’s one-time pension expense of Rs57 billion. This pushed the sector’s cost-to-income ratio to 47%, compared to 40% in Q4 2023 and 42% in Q3 2024.

Banks also recorded a provisioning charge of Rs34 billion in Q4 2024, marking an increase of 39% YoY and 29% QoQ, attributed to the implementation of IFRS-9 and financial stress in textile and steel sectors.

Among individual banks, Meezan Bank (MEBL), United Bank (UBL), MCB Bank (MCB), Habib Bank (HBL), and Standard Chartered Bank (SCBPL) reported the highest profits in 2024, earning Rs101.5 billion, Rs75.8 billion, Rs63.5 billion, Rs57.8 billion, and Rs46.1 billion, respectively. In contrast, Bank Makramah (BML) posted a Rs5.2 billion loss, the only bank to do so.

In terms of NII growth, Meezan Bank (MEBL), Bank Al Habib (BAHL), JS Bank (JSBL), United Bank (UBL), and BankIslami (BIPL) recorded YoY increases of 27%, 26%, 22%, 16%, and 15%, respectively.

Most banks maintained their dividend payouts, with NBP resuming dividend payments after seven years, announcing a record Rs8 per share. Analysts expect this trend to continue as the sector remains profitable.