KARACHI: Pakistan listed banks profitability increased to record Rs 126 billion, up 56 percent on year-on-year basis in the first quarter of 2023.

This was primarily driven by higher Net Interest Income (NII) amid high interest rates, and strong balance sheet growth, Sunny Kumar an analyst at Topline Securities said.

NII of the sector clocked in at Rs 358 billion in the first quarter of 2023 versus Rs 220 billion, up 63 percent on YoY as average policy rates during the first quarter of 2023 remained at 19.0 percent versus 9.75 percent in the first quarter of 2022.

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Non-interest income of the sector improved by 10 percent to Rs 75 billion driven by FX income and fee, commission and brokerage income. On other hand, non-markup expense was up 30 percent to Rs 200 billion due to higher admin expense.

On a quarter-on-quarter basis, banking sector profitability was up 25 percent to Rs 126 billion led by higher NII (up 6 percent QoQ) and lower provisions (down 68 percent QoQ).

In the first quarter of 2023, Bankislami (BIPL), and Soneri Bank (SNBL) reported highest earnings growth of 244 percent YoY and 174 percent YoY, respectively. On other hand, Bank of Punjab (BOP) reported earnings decline of 45 percent YoY followed by Summit Bank (SMBL) which reported loss of Rs 935 million.

In terms of NII growth, Standard Chartered (SCBPL), Bankislami (BIPL) and Bank Alfalah (BAFL) reported highest growth of 95-140 percent YoY. On other hand, Bank of Punjab (BOP) reported decline of 4 percent YoY in NII.

Copyright Business Recorder, 2023