NBP leads Pakistan’s banks in shareholder value surge

By MG News | July 08, 2025 at 11:55 AM GMT+05:00
July 08, 2025 (MLN): National Bank of Pakistan (PSX: NBP) has emerged as the undisputed leader among listed banks in creating shareholder value, delivering a staggering 74.1% total return to shareholders in the first half of 2025, outpacing peers by a wide margin.
The stock’s momentum has pushed year-to-date returns to 92% as of July 4, closing in on the billion-dollar market capitalization mark at $909 million.
NBP’s performance has eclipsed that of major competitors, including UBL, Meezan, MCB, HBL, ABL and Bank Alfalah, which shows investor confidence in the bank’s strengthened capital buffers and strategic repositioning following the resolution of a decade-long pension litigation.
Pension drag resolved
The state-run lender turned a major corner last year when the Supreme Court dismissed appeals tied to its legacy pension liabilities, disputes originating from the 1977 conversion of employee retirement plans.
The finalisation in June 2024 resulted in a one-off charge of Rs49 billion and annual recurring charges of Rs8.5bn from 2024 onwards. This removed a persistent overhang on valuations, allowing NBP to accelerate its balance sheet revamp.
Today, NBP’s capital adequacy ratio (CAR) stands at a robust 28.19%, among the highest in the industry, equipping it to recalibrate its deposit mix, optimize lending portfolios, and enforce tighter operational KPIs across segments.
Profits double, margins widen on rate cuts
The bank’s financial momentum carried into 2025 with a profit after tax (PAT) of Rs21.45bn for 1Q25, a near 100% jump from Rs10.72bn a year earlier.
Margin expansion, amid policy rate cuts, and a rebound in non-markup income contributed to this surge.
Scale, digital pivot and broader ambitions
NBP boasts the largest domestic branch footprint after HBL, with 1,500+ branches, including over 200 dedicated to Islamic banking, and holds a 10.8% share of Pakistan’s deposit market.
Its deposit per branch growth has outpaced the peer average by 9% over the past two years, a trend set to accelerate as it incentivises low-cost deposit mobilisation through retail banking, while gradually disfavoring high-cost savings and fixed-term deposits.
The bank also plays a critical public sector role, managing treasury operations as the Government of Pakistan’s agent to the State Bank.
Recent strategic priorities include deeper penetration into microfinance, agri-finance, and digital banking, aligning with national objectives of financial inclusion and SME development.
NBP has invested heavily in core banking modernization, cybersecurity, and customer platforms, reflecting a pivot to operational efficiency and superior service.
Governance structures remain firm, supported by a sovereign ownership profile, vigilant board oversight, and enhanced ESG integration.
Ratings reaffirmed, outlook stable
VIS Credit Rating Company reaffirmed NBP’s long-term entity rating at ‘AAA’ and short-term at ‘A1+’, with a stable outlook, signifying the highest credit quality and strongest likelihood of timely repayments, closely mirroring sovereign risk levels.
Positioned for long-term value creation
Pakistan’s stabilizing macro environment is fueling optimism at NBP, where management sees scope for a gradual economic revival.
The bank is set to tighten risk practices, deepen its reach into underserved markets, and accelerate digital transformation, creating a strong foundation for sustainable growth and enhanced shareholder value.
With solid capital buffers, a clear strategic direction, and renewed investor confidence following the resolution of its pension litigation, NBP is well-placed to maintain its lead in generating returns, redefine shareholder value, and contribute meaningfully to Pakistan’s broader economic goals.
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