Karachi, April 29, 2026 — National Bank of Pakistan (NBP) reported a 26% year-on-year (YoY) decline in earnings for the first quarter ended March 31, 2026, as lower income weighed on profitability.
The bank posted earnings of Rs16 billion, translating into earnings per share (EPS) of Rs7.58 in 1QCY26. Profitability also fell 17% on a quarter-on-quarter (QoQ) basis, reflecting continued pressure on margins.
Lower Income Drives Earnings Decline
According to analysts at Arif Habib Limited, the contraction in earnings was primarily driven by a decline in total income, although provisioning reversals offered partial support.
NBP’s Net Interest Income (NII) stood at Rs51.9 billion during the quarter, registering a 25% YoY decline and a marginal 1% drop on a QoQ basis. The decrease was mainly due to a sharp fall in interest earned, which declined 16% YoY to Rs178 billion, while interest expenses fell 12% YoY to Rs126 billion.
Non-Funded Income Under Pressure
Non-funded income declined 20% YoY, largely due to capital losses of Rs469 million. Additional pressures came from losses on associates amounting to Rs423 million and losses on derecognized assets totaling Rs491 million.
Provisioning and Cost Pressures
On the provisioning side, the bank recorded a net reversal of Rs3.5 billion in 1QCY26, compared to Rs6.4 billion in the same period last year and Rs7.1 billion in the previous quarter.
Operating expenses rose modestly by 6.8% YoY. However, the decline in total income pushed the bank’s cost-to-income ratio to 50%, significantly higher than 35% recorded in the corresponding period last year.
Taxation and Balance Sheet Trends
The effective tax rate remained elevated at 53% during the quarter, unchanged from 1QCY25 but higher than 46% in 4QCY25.
In terms of balance sheet performance, deposits increased by 6% YoY to Rs4.1 trillion. Investments rose 8% YoY to reach a record Rs5.2 trillion, while advances remained flat at Rs1.3 trillion.
This resulted in an Investment-to-Deposit Ratio (IDR) of 126% and an Advances-to-Deposit Ratio (ADR) of 31% for the quarter.
Outlook
The latest results highlight ongoing challenges for NBP, with declining income and elevated costs impacting profitability. Analysts expect margin pressures to persist amid evolving economic conditions and interest rate dynamics.