KARACHI: Net earnings of listed banks increased 28 per cent year-on-year to Rs80.7 billion for January-March, a research report by Topline Securities showed on Thursday.

The increase in profitability was 19pc on a quarter-on-quarter basis. According to the brokerage’s associate director of research Umair Naseer, the rise in the sector’s overall income was driven by net interest income (NII) that grew 21pc on an annual basis to Rs220bn, thanks to rising asset yields.

Mark-up interest earned on earning assets was up 48pc to Rs564bn whereas mark-up interest expense on interest-bearing deposits and liabilities went up 72pc to Rs344bn.

“We expect NII of the sector to remain strong in the second and third quarters of 2022 as asset repricing is likely to complete by July-September given the recent hike in Karachi interbank offered rate and treasury bill/Pakistan Investment Bond rates,” he said.

A sharp drop in the provisioning expense also supported the sector’s profitability. The provisioning expense declined 80pc to Rs1.6bn on the back of macro recovery and improved asset quality.

With the sector’s coverage ratio close to 100pc, the risk of an abrupt increase in the provision charge going ahead is minimal, he added.

Non-interest expense of the sector went up 19pc with major contributions coming from Habib Bank Ltd (up 27pc to Rs31bn), National Bank of Pakistan Ltd (up 16pc to Rs17bn) and Bank AL Habib Ltd (up 25pc to Rs11.9bn).

Standard Chartered Bank Pakistan Ltd and Meezan Bank Ltd posted the highest quarterly earnings growth of 119pc and 51pc on a year-on-year basis, respectively. On the other hand, Soneri Bank Ltd and Bank of Khyber registered an annual earnings decline of 31pc and 11pc, respectively.

Published in Dawn, May 13th, 2022