Salman Khan
Salman Khan

KARACHI: Commercial banks listed on the Pakistan Stock Exchange posted cumulative profits of Rs268 billion for 2021, up 15 per cent from 2020.

According to a recent research note released by Topline Securities, the jump in profitability of banks was driven by lower provisions, which are losses on loans that banks book in advance. Provisions declined 79pc last year to Rs25bn, thanks to macro-recovery and imp­roved quality of assets such as loans. Net interest income for the entire sector clocked in at Rs777bn in 2021 versus Rs780bn in 2020.

The primary reason for almost flat net interest income was that the average policy rate in 2021 was 7.42pc against 8.92pc in 2020.

In contrast, non-interest income of the sector went up 10pc to Rs248bn on the back of a jump in fee, commission and brokerage income. On the other hand, non-markup expenses increased 9pc to Rs547bn due to higher administrative costs. In the last quarter of 2021 alone, the banking sector’s profits saw an increase of 41pc on a yearly basis to Rs68bn.

Published in Dawn, March 11th, 2022

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