KARACHI: After tax profitability of banks in Pakistan have increased by 15 per cent Year on Year (YoY) to 307 billion in 2022.
Despite record high interest rates, slowdown in profit growth is primarily due to higher provisions and taxation, analysts said at Topline Securities.
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Pre-tax profitability (PBT) was up 42 per cent YoY in 2022 while Pre-tax profits before provisioning was up 50 per cent YoY.
In US$ terms listed banks PAT fall 8 per cent YoY to US$1.5 billion while PBT up 13 per cent YoY to US$3.1 billion.
Net Interest Income (NII) of the sector clocked in at Rs 1.1 trillion in 2022 vs. Rs 758 billion in 2021 as average policy rates during 2022 clocked in at 13.52 per cent vs. 7.42 per cent in 2021.
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Non-interest income of the sector improved by 27 per cent to Rs307 billion driven by growth in Foreign exchange income. On other hand, non-markup expenses were also up 27 per cent to Rs658 billion due to higher admin expense.
Provision expense clocked in at Rs69 billion in 2022 up 3x from Rs22 billion recorded in 2021 primarily on the back of Eurobond repricing as per the IFRS-9.
Tax expense of sector were up 81 per cent YoY to Rs334 billion in 2022 from Rs185 billion in 2021 where effective tax rate clocked in at 52 per cent in 2022 vs 41 per cent in 2021. To recall in federal budget government increased tax rate from 39 per cent to 49 per cent (including super tax) along with higher tax on low Advance to Deposit Ratio (ADR).
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In terms of NII growth, all banks reported growth except for Summit Bank (SMBL) whereas BankIslami (BIPL), Meezan Bank (MEBL), Standard Chartered Bank (SCBPL), and Bank Alfalah (BAFL) reported highest growth of 67-86 per cent.
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In 2022, BIPL, and MEBL and reported highest earnings growth of 128 per cent and 59 per cent respectively. On other hand, (SMBL) and Samba Bank (SBL) reported loss of Rs3.2 billion and Rs428 million respectively while Soneri Bank (SNBL) and Bank of Punjab (BOP) reported earnings decline of 34 per cent and 14 per cent, respectively in 2022.
