Banking sector keeps its balance in 1HCY26

September 18, 2026 (MLN): The commercial banking sector showed stable performance in the first half of calendar year 2026, as it continued to demonstrate financial resilience despite shifting interest rate dynamics and operational cost pressures.

The 13 listed commercial banks covered recorded a 4% YoY growth in net profits, which clocked in at Rs332bn as against Rs320bn in the same period last year (1HCY25).

UBL, MEBL, and HBL collectively represented 50% of the covered banking sector's total profitability in 1HCY26.

UBL stood out as the leading contributor, accounting for 26% (Rs85.0bn) of total sector earnings. MEBL contributed 15% (Rs48.9bn) to sector profits, while HBL rounded out the top three, accounting for 10% (Rs33.5bn) of sector earnings.

Conversely, NBP saw its half-year earnings drop 25% YoY to Rs32.4bn, while SCBPL recorded a 29% drop in net profits to Rs11.8bn.

Fiscal year 2026 has so far remained largely conservative on the economic front, with GDP growth recovering to 3.7% the highest in four years while structural reforms under International Monetary Fund (IMF) programs led to widespread impact.

As per the results compiled of the income statements of the thirteen commercial banks tracked by Mettis Global (comprising ABL, AKBL, BAHL, BAFL, FABL, HBL, HMB, MCB, MEBL, NBP, BOP, SCBPLB, and UBL), the sector saw a growth of 4% YoY in its interest earned, worth Rs2,743.3bn as compared to Rs2,637.3bn in SPLY.

United Bank Limited remained the market leader in revenue generation, contributing 24% of total sector turnover with interest earned of Rs665.0bn, while National Bank of Pakistan and Habib Bank Limited followed with 13% (Rs361.7bn) and 13% (Rs348.5bn) shares respectively.

Non-markup income channels provided significant momentum to overall revenue.

Fee and commission income rose 11% YoY to Rs134.2bn, while foreign exchange (FX) income registered a sharp surge of 40% YoY, climbing to Rs68.9bn. Driven by these non-markup streams, total income expanded 6% YoY to Rs1,296.9bn.

On the cost front, interest expenses grew by 7% YoY to Rs1,755.3bn, which compressed the net interest income by 1% YoY to Rs988.0bn in 1HCY26.

On the expense side, the sector's operating expenses rose 16% YoY to Rs595.2bn. Habib Bank Limited accounted for the largest share of operating expenses at Rs93.2bn (16% of sector total), followed by United Bank Limited at Rs84.1bn (14% of sector total).

The sector's profit before tax fell by 2% YoY and stood at Rs694.1bn as compared to Rs706.0bn in SPLY.

On the tax front, the sector paid lower tax worth Rs362.3bn against the Rs385.9bn paid in the corresponding period of last year, depicting a drop of 6% YoY.

Banking Sector’s Financial Highlights (Rupees in Bn)

Outlook

Pakistan’s economic outlook remains cautiously optimistic, supported by improving macroeconomic fundamentals, continued engagement with the International Monetary Fund (IMF), and the government’s commitment to structural reforms.

A relatively stable exchange rate, strengthening foreign exchange reserves reaching $22 billion, and sustained inflows of workers’ remittances reaching $41.6 billion provide a foundation for economic resilience.

Real GDP growth is projected to pick up further to 4.0% in FY2027, while average inflation is projected at 8.2%, creating room for eventual monetary recalibration.

"While ongoing geopolitical tensions in the Middle East present potential challenges, including market volatility and inflationary pressures, the Bank’s robust capital base, prudent risk management, and diversified operations position it to maintain resilience," said Meezan Bank Limited (PSX: MEBL).

The bank noted that its strategy is centered on achieving balanced and sustainable growth, enhancing digital customer acquisition, and advancing the transformation towards a fully Shariah-compliant financial system.

However, energy costs and global commodity price fluctuations remain key variables affecting overall economic activity.

Escalation in geopolitical tensions in the Middle East, high fuel costs, and potential choking of critical maritime routes may exert upward pressure on headline inflation.

National Bank of Pakistan (PSX: NBP) stated that the operating environment is expected to become increasingly activity-driven and market-driven rather than predominantly rate-driven.

"With the major phase of monetary easing largely behind us, earnings dynamics will increasingly depend on the pace of credit recovery, deposit mobilisation, investment portfolio optimisation, and the performance of capital and fixed-income markets," the bank noted.

Meanwhile, Habib Bank Limited (PSX: HBL) projected a positive outlook supported by robust remittance inflows and adherence to the IMF-supported reform programme.

The bank highlighted its focus on expanding its digital presence and international footprint, stating: "The policy outlook will largely depend on the trajectory of inflation, global commodity prices, and external sector developments, with policymakers continuing to prioritize macroeconomic stability".

Similarly, The Bank of Punjab (PSX: BOP) highlighted that against this backdrop, the banking sector is well positioned to benefit from strong deposit growth and stable yields, while credit expansion will be supported by improving private sector confidence.

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