Higher Interest Expenses and Weak Non-Funded Income Weigh on Quarterly Profitability
Karachi: National Bank of Pakistan (NBP) reported earnings of Rs16 billion (EPS: Rs7.57) for the third quarter of CY26, marking a 30% year-on-year (YoY) and a 2% quarter-on-quarter (QoQ) decline, according to financial analysts at Arif Habib Limited.
Cumulative profit for the nine-month period reached Rs48.6 billion (EPS: Rs22.8), representing a 26% contraction YoY. The earnings decline was primarily driven by elevated interest expenses pressing Net Interest Income (NII), alongside a sharp reduction in total Non-Funded Income (NFI).
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The bank’s NII stood at Rs56 billion, reflecting an 8% YoY drop, although it expanded 16% sequentially. Sequential growth was aided by asset repricing following the April 2026 policy rate increase, which offset rising interest costs on borrowing balances. Conversely, lower investment yields relative to the same period last year pulled down YoY NII performance.
Non-funded income fell 32% YoY, hampered by reduced foreign exchange income (Rs642 million, -48% YoY) and lower fee income (Rs5.7 billion, -11% YoY), despite support from Rs4.5 billion in realized capital gains.
NBP recorded a net provisioning reversal of Rs775 million during 3QCY26. Meanwhile, operating expenses dropped 12% sequentially to Rs32 billion. However, with total income down 13% YoY, the cost-to-income ratio rose to 51%. Deposits fell 5% QoQ to Rs4 trillion, while total advances edged up 4% QoQ to Rs1.4 trillion.
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