KARACHI – Pakistani commercial banks reported slowdown in profit growth in first quarter of 2025, showing tough market conditions and declining investment yields. Despite surge in interest income and some non-markup revenue, several major banks saw a decline in profitability compared to the same period last year.
Meezan Bank Q1 2025 Earnings
Meezan Bank witnessed decline by 10.6% year-on-year, falling to Rs22.42 billion. The commercial bank cited a major drop in earnings from Islamic financing and related assets, which fell by 9.7%, alongside reduced returns from investments.
As the commercial bank experienced a boost in fee and commission income and foreign exchange gains, it was unable to offset the declines in dividend income and securities gains, which fell by 69% and 81%, respectively.
The drop in profitability follows broader market trends of reduced banking sector spreads and lower investment yields, highlighting the challenges the sector faces in a tough economic environment.
| Banks | Q1 2025 Profit | YoY Change |
| Meezan Bank | Rs 22.42 billion | -10.6% |
| Bank Islami | Rs 2.61 billion | -18.72% |
| Bank of Punjab (BOP) | Rs 1.79 billion | +6% |
Bank Islami’s Earnings Decline
Bank Islami Pakistan Limited also remained on same boat, experiencing decline in profit growth, with its after-tax profit falling by 18.72%, from Rs3.21 billion in 2024 to Rs2.61 billion this year.
Despite 6.34% surgein total income, the bank’s earnings from core operations took a hit, with a 33.90% decrease in profit, and return earned. The drop in profit growth was partly offset by a sharp increase in gains on securities, which rose by 874.65%.
Meanwhile, foreign exchange income plummeted by 66.78%, contributing to the overall reduction in profitability. The sharp rise in operating expenses and other charges further pressured the bank’s bottom line.
Bank of Punjab reports modest growth
As above mentioned banks struggled with declining profits, Bank of Punjab (BOP) saw 6pc increase in profit after tax, rising to Rs1.79 billion. However, this growth was modest compared to the significant surge in net interest income, which rose by 75%.
Despite these gains, BOP also faced challenges in other areas, particularly with foreign exchange income, which saw a considerable increase but not enough to dramatically boost overall profitability.
The dip in profit growth across these banks reflects a broader trend in Pakistan’s banking sector. Despite higher interest income, banks are grappling with decreased investment returns and tighter margins. With increasing operational costs and volatility in foreign exchange income, the future profitability of banks remains uncertain as they continue to adjust to the country’s fluctuating economic conditions.
Most Profitable Pakistani Banks’ List is out now; Check Profit and Growth Details Here
