In the country’s banking sector, the July-September quarter produced the highest-ever three-month profits, according to a study of earnings data from 16 commercial banks released on Wednesday.
According to Shameer Alam Zaidi, analyst at Ismail Iqbal Securities Ltd, bank profits in July–September were Rs 85 billion, up 26% over the same period last year. The record-breaking earnings were mostly driven by increasing interest rates, robust fees, and foreign exchange revenue.
“Provisions have increased but (they’re) still on the lower side, especially on loan portfolios… banks have so far remained largely unscathed from the Covid-19 and interest rate shocks,” he said.
The sole downer was a change in the tax code that resulted in an effective tax rate of 52 percent as opposed to 41 percent a year before.
Due to the delayed effect of the asset repricing, the sample banks’ net interest income jumped 17 percent on a quarterly basis from July to September.
On the individual bank level, Standard Chartered Bank Ltd (42pc), Habib Metropolitan Bank Ltd (35pc), Askari Bank Ltd (34.9pc), Meezan Bank Ltd (32.2pc) and BankIslami Pakistan Ltd (25pc) were top performers while the Bank of Punjab Ltd (-9.5pc) and National Bank of Pakistan Ltd (0.7pc) remained underperformers.
Non-markup income fell 5 percent quarter over quarter throughout the sector, mostly due to a minor reduction in both fees and foreign exchange income. Foreign exchange revenue “remained solid and showed just a tiny fall of 2.7pc quarter-on-quarter,” he added, “despite the anticipation of major normalization.”
The banking sector’s deposits increased 15% year over year, and the assets-to-deposits ratio (ADR) increased to 48.6% from 47.7% in June and 46.9% at the same time last year. Quarterly deposit losses by Habib Bank Ltd. of 10% increased its ADR to over 50%.
On the contrary side, United Bank Ltd. had a 9.5 percent growth in deposits from the previous quarter, which caused its ADR to drop below 40 percent and caused the effective tax rate to climb to 59 percent.