Commercial banks in Pakistan posted 23%YoY increase in profit after tax during first quarter of 2020

Topline Securities has prepared a review of performance of commercial banks listed at Pakistan Stock Exchange (PSX) during first quarter of 2020 (1QCY20). This covers 17 banks, out of a total listed 20, representing 98% of the banking sector’s capitalization at the PSX.

While profit after tax increased by 23%YoY in 1QCY20, profit before tax remained largely stagnant. On a QoQ basis, profits are down by one percent, where the effective tax rates are also more comparable.

The effective tax rate remained within its normal range at 41% in 1CY20. However, the effective tax rate last year was abnormally high at 50% because of retrospective recognition of Super Tax relating to the Tax Year 2017.

The increase in Net Interest Income (NII) by 18%YoY and the rise in Non-Interest Income by 14%YoY during 1Q2020 have been offset by increase in Provisioning and 16YoY higher Operating Costs.

The cumulative absolute increase in NII and Non-Interest Income are Rs26 billion and Rs6 billion (total Rs31.8 billion) respectively, whereas Provisions and Operating Costs increased by Rs16 billion and Rs14 billion, respectively (total Rs29.6 billion).

The highest quarterly profit has been earned by MCB (Rs6.6 billion) followed by MEBL (Rs4.9 billion) and UBL (Rs4.9 billion).

The highest increase was recorded by BOK (up 156%UoY), followed by BIPL (up 77%YoY), MEBL (up 47%YoY), SCBPL (up 30%YoY), SBL (up 24%YoY) and MCB (up 23%YoY).

The highest contraction in Profit Before Tax was recorded by SNBL (down 40%YoY), followed by BAFL (down 21%YoY), NBP (down 20%YoY), UBL (down 16%YoY) and HBL (down 15%YoY).

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