September 06, 2023 (MLN): The banking sector's profitability surged nearly twofold to Rs257.5 billion in the first half of 2023, primarily due to higher interest rates.
It is worth mentioning that the average policy rates during 1HCY23 stood at 21.17%, whereas they were 11.5% in 1HCY22, which boosted the earnings of the sector.
Bank wise, Meezan Bank (MEBL), National Bank (NBP), MCB Bank (MCB), Habib Bank (HBL), and United Bank (UBL) posted highest profits of Rs32.92bn, Rs27.14bn, Rs28.67bn, Rs26.34bn and Rs27.52bn, respectively during 1HCY23. On the other hand, Summit Bank (SMBL) recorded a loss of Rs1.73bn in 1HCY23.
Going by the companies' results, Net Interest Income (NII) of the sector clocked in at Rs778.12bn in 1HCY23, depicting a growth of 68.15% YoY compared to NII of Rs462.71bn in 1HCY22.
In terms of the sector's non-interest income, there was a 3.94% YoY increase, totaling Rs161.79bn in 1HCY23, compared to Rs155.65bn during the same period last year.
While non-markup income showed growth, certain banks reported a significant decline in this aspect mainly due to a decline in FX income.
Moreover, due to higher administrative expenses in line with inflation, the non-interest expenses of the sector reported a 31.90% YoY increase, reaching Rs417.21bn in 1HCY23, compared to Rs316.33bn in the same period last year.
This reflects that the sector incurred a greater expense increase over income from the non-interest section.
Provisioning charge of the sector increased by 3.23x YoY to Rs28.5bn in 1HCY23 mainly due to high interest rates and macroeconomic conditions.
On a QoQ Basis, the listed Bank's profitability was only up 4% in PKR while down 5% in U.S. dollars.
This was mainly due to the implementation of a 10% super tax, announced in the Federal Budget FY24.
On the tax front, the sector accounted for a total of Rs236.60bn tax as against the Rs169.37bn paid in the corresponding period of last year, depicting an increase of 39.70% YoY.
The listed banks' profitability was further supported by a lower effective tax rate, which stood at 48% in 1HCY23, compared to around 58% in the same period last year.
| Consolidated Profit and Loss Account for the half-year ended June 30, 2023 ('000 Rupees) | |||
|---|---|---|---|
| Jun-23 | Jun-22 | % Change | |
| Net interest income | 778,121,000 | 462,761,000 | 68.15% |
| Non-interest income | 161,787,000 | 155,654,000 | 3.94% |
| Non-interest expense | 417,241,000 | 316,327,000 | 31.90% |
| Provision charge | 28,500,000 | 8,768,000 | 225.05% |
| Profit before tax | 494,098,000 | 293,380,000 | 68.42% |
| Tax | 236,601,000 | 169,369,000 | 39.70% |
| Profit after tax | 257,497,000 | 124,011,000 | 107.64% |
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Posted on: 2023-09-06T13:26:07+05:00
