The financial sector performed admirably in 2023, setting new records. One of the main highlights was the significant increase in dividends, which increased by an astonishing 84% over the previous year.
The industry enjoyed record-breaking profitability growth, with great pricing performance allowing the banking sector to outperform the PSX, having an astonishing 85 percent return vs the index’s 55 percent in 2023.
According to Arif Habib Limited, the huge improvement in profitability was driven by an astonishing 85% YoY growth in interest income. This increase can be attributable to a number of causes, including a 600 basis point increase in the policy rate and a 24% increase in deposits over the year.
Unfortunately, banks’ role in providing credit to the private sector is confined to stimulating economic activity in the real sector. As a result, the majority of banks made record profits in the previous year, while also contributing significantly to the national exchequer despite paying historically high values due to multiple taxes.
Banks are planning to expand their foreign exchange activities by establishing independent subsidiaries to generate new revenue streams for their bottom line.
Here are the top ten profitable Pakistani banks:
1- Meezan Bank
Meezan maintained its position as Pakistan’s most profitable bank. As the premium Islamic bank, it earned an exceptional profit of Rs. 84.5 billion in 2023, compared to Rs. 45 billion in 2022, representing an 87 percent year-on-year increase.
2- MCB Bank
MCB Bank maintained its second place. Its profitability increased by 89 percent, reaching Rs. 65.3 billion from Rs. 34.45 billion in 2022. The bank also increased its stake in the asset management company to 81 percent, which greatly boosted the bank’s profits. Earnings per share (EPS) grew to Rs. 50.1 from Rs. 27.6 reported prior year. The bank distributed Rs. 21 per share in dividends to shareholders.
3- Habib Bank Ltd
Habib Bank Limited reported its highest-ever profit of Rs. 57.8 billion in 2023, representing a 68 percent increase over the previous year. The bank recorded its highest-ever asset and deposit values, totaling more over Rs. 5 trillion and Rs. 4.1 trillion, respectively. Earnings per share in 2023 climbed to Rs. 39.32 from Rs. 23.23 in 2022. The bank paid dividends of Rs. 9.25 per share to its shareholders.
4- United Bank Ltd
United Bank Limited recorded its highest-ever year profit after tax of Rs. 56.47 billion in 2023, up 74% from the same period last year. The bank continued to provide significant dividends to stockholders, with the highest value of Rs. 44 per share in a calendar year. The bank’s share value grew to 47 from 25.4 in a year. By the end of 2023, the bank’s assets had risen to more over Rs. 5 trillion, while its deposits had reached nearly Rs. 2.2 trillion. In the same year, the bank’s management began working actively to establish its currency exchange business. In 2023, the bank retained its fourth place, as it did in 2022.
5- National Bank of Pakistan
The National Bank of Pakistan (NBP) also saw a significant increase in profitability, with its bottom line reaching a record high of Rs. 53.3 billion. The bank’s earnings increased by 72 percent compared to the previous year’s profit of Rs. 30.9 billion.
6- Standard Chartered Bank
Standard Chartered Bank had the biggest year-over-year profit growth of any of the major banks, at 115%. Its profitability climbed to Rs. 45.6 billion in 2023 from Rs. 19.8 billion in 2022, marking the bank’s all-time record profit.
The bank’s assets now total Rs. 1 trillion. Its deposits also increased to Rs. 720 billion. The bank’s earnings per share increased by more than 100 percent, to 11 from 5.1. The bank advanced one position to become Pakistan’s sixth most profitable bank.
7- Allied Bank of Pakistan
Allied Bank of Pakistan (ABL), one of Pakistan’s oldest banks, reported a 91% profit rise in 2023 compared to the previous year. In 2023, the bank’s profitability climbed to Rs. 40.6 billion from Rs. 21.9 billion the previous year. The bank recorded earnings of 35.53 per share. At the conclusion of the quarterly results, it announced a dividend income of Rs. 12 per share for the entire year. Despite historically strong profit growth, the bank’s position fell from fifth to sixth place.
8- Bank Alfalah
The bank announced an after-tax profit of Rs. 36.456 billion, up from Rs. 18.206 billion the previous year, representing a more than 100% increase. The earnings per share (EPS) are Rs. 23.12, up from Rs. 10.27.
In 2023, it paid a total dividend of Rs. 8 per share.
The bank has established a lifestyle banking branch with digital solutions. It also purchased more than 7% of the stock in a BNPL business. The bank has achieved important milestones, including 1,000 branches and Rs. 2 trillion in deposits.
9- Bank Al Habib
Bank Al Habib’s profits grew by 113% in 2023. The bank’s profit grew to Rs. 35.3 billion in 2023 from Rs. 16.5 billion in 2022, which was also the bank’s largest profit to date. The bank’s earnings per share also increased, reaching 31.7. Throughout the year, the bank paid its stockholders a dividend of Rs. 14 per share. In 2023, the bank’s rating remained unchanged from the previous year.
10- Habib Metro Bank
Habib Metro Bank also recorded its highest-ever profit in 2023, at Rs. 25.2 billion, up from Rs. 14.92 billion in 2022. The bank’s earnings per share climbed to Rs. 23.4. Shareholders’ dividends increased significantly by Rs. 10.50 per share. Like its peers, the bank gained authority to establish its exchange company as a subsidiary of the bank.