The banking industry witnessed surprising profitability in 2020 despite a drastic reduction in the policy rates by 6.25 percent and severe challenges to operate businesses during the lockdown. The majority of the commercial banks capitalized on the opportunity provided by COVID-19 with the support of the State Bank of Pakistan (SBP), which pushed these companies to shore up the businesses on the brink of collapsing.
During the closing year, banks exhibited their strengths and strategies, including technology and facilitating the customers, which resulted in a stellar performance in terms of profitability. The balance sheet of the banks saw outstanding profit growth, including consistent growth in deposits and assets.
However, a few banks also recorded a drop in profitability in the same scenario. Most of the banks generated revenue streams through interest income and huge gains from securities investment. Below is a review of three-quarters of the top ten leading banks, which varied their rankings in terms of profitability from the last year.
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National Bank of Pakistan
National Bank of Pakistan maintained its top position in the banking industry. It made a profit of Rs. 26.13 billion, which is almost Rs. 10 billion or 60 percent higher than the profit the bank secured during the same period of the last year.
The bank made its revenue streams from interest income and securities gain primarily.
Its share value surged substantially to 5.14 from 2.46 during the same period. On the contrary, the overall value of deposits and assets, reduced to Rs. 2.17 trillion and Rs.2.7 trillion, respectively.
Habib Bank Limited
HBL made a strong comeback from the last year. It stood at the second among the most profitable banks in 2020, whereas it stood at the eighth position last year.
It made the highest profit growth of 187 percent in the banking industry, which surged its profitability to Rs. 25.3 billion as against the profit of Rs. 8.82 billion recorded in the same period last year. The earnings of the bank per share increased to Rs. 17.17 compared to Rs. 5.89 by the end of the third quarter of 2020.
HBL is one of the two banks acting as a government agency to disburse financial assistance under the “Ehsaas Cash Emergency Program” to underprivileged people who were hit severely by COVID-19.
MCB Bank
MCB Bank dropped from the second position to third, despite its outstanding performance this year.
The bank maintained high growth in profitability, which saw an increase of 41 percent for the nine months ended September to Rs. 22.94 billion. It had booked a profit of Rs. 16.28 billion in the same period last year.
The earnings per share (EPS) translated into Rs. 19.35 against an EPS of Rs. 13.74 posted in the corresponding period of 2019.
Meezan Bank
Meezan Bank jumped to the fourth position in the ranking. It rose from its position from 5th in 2019 and 8th in 2018.
The bank made a profit of Rs. 18.078 billion from January to September 2020, against a profit of Rs. 10.940 billion last year, registering a stellar growth of 65 percent.
Its earnings per share surged to Rs. 12.78 from Rs. 7.73 per share.
The bank played a leading role in financing issued by the government Sukuk during 2020.
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United Bank Limited
UBL maintained its double-digit profitability by the end of the third quarter of 2020.
The bank profit surged to over Rs. 16 billion from January to September as compared to Rs. 14.4 billion of the corresponding period of 2019, showing an increase of 12 percent year on year. Its earnings per share (EPS) rose Rs. 13.13 as against Rs. 11.77 in the previous year.
The bank also slipped to fifth from the third position in the overall ranking of the banking industry.
Bank AL Habib
Bank Al-Habib recorded staggering profit growth of 87 percent in the nine-month of 2020 compared with a similar period of last year. The bank improved its position from 9th in 2019 to 6th position in 2020.
According to the financial results, the bank recorded a healthy profit of Rs. 13.13 billion from January to September 2020 compared to Rs. 7 billion profit recorded in the corresponding period of 2019.
Allied Bank Limited
Allied Bank Limited posted a profit of Rs. 12.410 billion for the nine months as compared to Rs. 9.40 billion in the corresponding period of 2019, registering a growth of 32 percent.
Consequently, the earning per share (EPS) of ABL stood at Rs. 10.84 per share as against an EPS of 8.21 per share in the corresponding period of 2019. The bank also dropped from the sixth position in 2019 to the seventh in 2020.
Standard Chartered Bank
Standard Chartered Bank (SCB) made a profit of Rs. 11.9 billion in the first nine months of 2020 with a slight growth of 4 percent year-on-year. The earnings per share (EPS) of the Bank stood at Rs. 3.05. The bank slipped its ranking from fourth to seventh.
It witnessed a transition in leadership with the new CEO taking over the helm of affairs. It is one of the banks offering a service of Roshan Digital Account to overseas Pakistanis.
Bank Alfalah
Bank Alfalah slipped to the ninth position from the seventh. The bank’s profit decreased to Rs. 8.33 billion from January to September compared to Rs. 9.24 billion recorded in the similar period of the last year. The share value of the bank also decreased from Rs. 5.20 to Rs. 4.69.
Bank Alfalah also became the first market maker for debt securities in Pakistan.
Habib Metro Bank
Habib Metro Bank is one of the banks which surprised the banking industry with its financial performance. The bank, for the first time in the known history, placed among the top profitable banks of the country. Last year, the bank stood at eleventh among the leading banks in terms of profitability.
It made a profit of Rs. 8.26 billion profit during the period of January to September 2020 as compared to Rs. 4.14 billion profit recorded in the similar period of last year, showing almost 100 growth in the profitability.
The bank’s earnings per share surged to Rs. 7.89 from Rs. 3.96 during the comparing periods.
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Other Banks
Askari Bank also showed significant profitability in the ninth month of 2020. It made a profit of Rs. 8.1 billion in the said period as compared to Rs. 4.37 billion reported in the same period of the last year.
Bank of Punjab dropped its position from tenth to twelfth. Its profit stood at 5.8 billion. Faysal Bank’s also stood closely behind the Bank of Punjab with a profit of Rs. 5.5 billion reported in the nine months of 2020.
Most of the banks report the highest profit of the year in the remaining quarter of the year. Therefore, the full-year result will further vary the ranking of the banks in terms of their profitability.
