These Were the Top Most Profitable Banks in Pakistan in Q1 2025

Pakistan’s listed banks’ profitability clocked in at Rs. 173 billion, up by 149 percent year-on-year (YoY) and 12 percent quarter-on-quarter (QoQ) in 1Q2025. Bank-wise, United Bank (UBL) led the sector with the highest earnings of Rs. 36.1 billion in 1Q2025, followed by Meezan Bank (MEBL) at Rs. 22.4 billion, National Bank (NBP) at Rs. 22.1 billion, Habib Bank (HBL) at Rs. 16.6 billion, and MCB Bank (MCB) at Rs. 14.7 billion. On the other hand, only Bank Makramah (BML) recorded a loss of Rs. 0.9 billion in 1Q2025. In terms of NII growth, United Bank (UBL) recorded the highest growth of 200 percent YoY, followed by National Bank (NBP) at 139 percent YoY, Bank of Punjab (BOP) at 75 percent YoY, Askari Bank (AKBL) at 70 percent YoY, and Bank of Khyber (BOK) at 45 percent YoY in 1Q2025. Despite the decline in interest rates, the sector’s net interest income (NII) clocked in at Rs. 536 billion, up 23 percent YoY and 2 percent QoQ in 1Q2025, led by volumetric growth, favourable repricing, and higher yield of repo borrowings, said Topline Securities. Interest income declined by 19 percent YoY and 13 percent QoQ to Rs. 1.4 trillion, whereas interest expense declined by 32 percent YoY and 20 percent QoQ to Rs. 0.9 trillion. Non-interest income of the sector increased by 6 percent YoY but declined by 28 percent QoQ to Rs. 133 billion in 1Q2025. The QoQ decline is due to a fall in capital gains and fees & commission income. On the other hand, non-interest expense rose by 19 percent YoY but declined by 19 percent QoQ to Rs. 293 billion in 1Q2025. The YoY increase is attributed to the inflationary impact and branch expansions. However, the QoQ decline is mainly due to the absence of a one-time pension expense recorded by NBP. This takes the sector’s cost-to-income ratio to 44 percent in 1Q2025, compared to 44 percent in 1Q2024 and 51 percent in 4Q2024. The sector recorded a provisioning charge of Rs. 6 billion in 1Q2025, down 36 percent YoY and 83 percent QoQ. This decline is primarily due to the absence of provisioning charges following the implementation of IFRS-9 and improved asset quality, according to our channel checks. The effective tax rate for 1Q2025 stood at 53 percent, compared to 50 percent in 1Q2024 and 56 percent in 4Q2024. To recall, at the end of 2024, the government removed the ADR-related tax while increasing the overall tax rate from 49 percent (including super tax) to 53 percent (including super tax) for calendar year 2025. In 1Q2025, most banks maintained their dividend payouts. Moving forward, we expect this trend to continue amid the sector’s healthy profitability. Topline Banking Universe is trading at compelling valuations, with 2025E P/E and P/BV of 5.9x and 1.1x, respectively, having a return on equity (ROE) of 19.96 percent.