Banks achieve 86% growth in profits
13 March 2024
Published in: The Express Tribune
Pakistan’s banks listed on the stock market have reported an outstanding growth of 86% in their net profit in the year ended December 2023, boosting total earnings to a record high of Rs572 billion amid a higher interest rate season in the country.
The banks have managed to achieve a record high profit despite economic slowdown and underperforming industrial activities in the country.
In a brief commentary, Topline Securities’ research analyst Sunny Kumar said, “This profit was primarily driven by a significant jump in net interest income (NII) amid high interest rates and balance sheet growth.”
In US dollar terms, listed banks’ profit was up 36% to $2 billion in 2023 compared to 2022.
In a recent report, Arif Habib Limited’s economist Sana Tawfik said that almost all the listed banks have recorded their historic high profits during the calendar year 2023.
“In calendar year 2023, the banking sector in the listed space witnessed significant profits (i.e., 86% year-on-year) driven mainly by policy rate hikes of 600 basis points coupled with volumetric growth in deposits (over 24% in 2023 compared to 2022),” she said.
The net profits were also “supported by 21% lower provisioning (bad loans or non-performing loans) and 16% higher non-interest income during the year.”
However, with rates likely to have peaked, she foresees the onset of a monetary easing cycle in the ongoing first half of 2024, leading to a decline in rates, down from the current record high of 22%.
Read more: https://tribune.com.pk/story/2459182/banks-achieve-86-growth-in-profits
