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The profitability of KSE-100 Index grew 51% in 2023 to over Rs1.5 trillion on a year-on-year basis as banks and exploration and production (E&P) companies led the growth during the calendar year, reported brokerage house Arif Habib Limited on Tuesday.

The growth in 2023 is much higher than of 9.4% the KSE-100 companies witnessed in 2022.

“The growth in profitability during the period [2023] was attributable to an enormous surge of 82%, 60%, 55% and 47% YoY growth in Banks, E&Ps, Power and Fertilizers,” the brokerage house report stated.

In 2023, index-heavy commercial banks’ profitability posted 82% YoY growth to Rs550 billion amid higher net interest income due to elevated interest rates, followed by oil and gas exploration sector whose profitability was up by 60% YoY to Rs480 billion amid currency depreciation, taxation reversal on depletion allowance, and exchange gains during the period.

The power sector’s net profit climbed up by 55% YoY to PKR 77 billion.

“The major contribution to this growth comes from HUBC amid i) the addition of local coal-based plants, ii) a higher share of profit from associates and joint ventures, and iii) PKR depreciation,” the report added.

KSE-100 index companies: PAT increases by 16pc on YoY

Similarly, fertiliser sector grew 47% YoY to Rs94 billion owed to 50% higher urea prices alongside a jump in DAP sales by 31%, the brokerage house said.

Other sectors such as cement, chemical, auto assembler, refinery, engineering (steel), food and personal care witnessed 38%, 34%, 72%, 8%, 186%, and 6% growth in 2023, respectively.

“We have based our analysis on the KSE-100 index and have included the results of 72 companies. The companies that have been included in our analysis represent almost 83.4% of the market capitalization of the benchmark bourse,” the brokerage house said.

On a quarter basis, according to the report, KSE-100 profitability climbed up by 46% YoY to Rs393 billion in 4QCY23, attributable to growth in earnings of banks, E&Ps, and fertiliser.

‘Dividends amounted to Rs547 billion in CY23’

According to the report, dividends of KSE-100 companies increased by 42% YoY to Rs547 billion in 2023.

Commercial banks’ sector dividend posted a surge of 80% YoY to Rs240 billion amid robust profitability growth.

Fertiliser sector witnessed a dividend growth of 43% YoY to Rs75 billion.

“The rise in dividends is witnessed due to a 52% higher dividend announced by EFERT followed by 42% growth in ENGRO dividend. The dividend of FFC also increased by 28% YoY during CY23,” the report said.

KSE-100 companies post 22% higher profit in FY22, but index struggles

The dividend of the E&P sector witnessed a growth of 13% YoY to Rs86 billion. The rise in dividends was witnessed due to the 2.7x higher dividends announced by PPL followed by 21% growth in POL’s dividends, according to the report.

Cement sector dividends experienced a growth of 75% YoY during CY23 on the back of a 100% YoY rise in CHCC ’s dividend. Moreover, LUCK announced a dividend of PKR 18/share during CY23, it added.

Power sector dividends went up 4% YoY during CY23. The uptick was due to a 27% YoY increase in KAPCO’s dividend.

Meanwhile, dividends from the automobile sector surged by 202% YoY due to a robust 6.6x increase in dividend from MTL alongside a 93% YoY higher dividend from INDU, the brokerage house mentioned.

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