Pakistan’s banking industry underwent a period of uncertainty and challenges in the first half of 2020 due to the pandemic, but the latter half of the year had surprisingly ushered in a period of record-breaking profitability for the banks.
As the outbreak of the pandemic affected various parts of the country, the operations of the banks had remained restricted at their branches, and the business activities of the majority of the branches had received shocks.
Additionally, the policy rates were staggeringly reduced by 625 basis points to seven percent, and various relief schemes were also introduced on the directives of the State Bank of Pakistan (SBP).
Furthermore, numerous financing schemes were introduced to revive businesses through banks, which also helped the banking sector along with their investments in different avenues to make windfall profits.
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Interestingly, a few banks made all-time high records while others registered a decline in their profitability, also depicting the competition in the industry.
Here are the details of the twelve most profitable banks of Pakistan in 2020.
1. Habib Bank Limited (HBL)
HBL attained the number 1 position as the most profitable bank after a period of 3 years marked with immense crises and challenges. It made a profit of Rs. 30.9 billion in 2020 and jumped from the fifth to the first position during the last year while in close competition with the National Bank of Pakistan (NBP).
During this period, HBL scaled up its local operations and strengthened its lucrative avenues of profit. It also upgraded its operations with technological features and wound up its unattractive overseas operations that included branches and subsidiaries.
It served the government as the distributing agent of the Ehsaas program to deserving individuals and the affectees of the pandemic and went the extra mile to financially support its staff members in challenging times.
After achieving significant milestones and record profitability in the outgoing year, HBL is now the first bank to have come into the limelight for the introduction of the novel printing fee of the ATM receipts that gave it a bad reputation.
2. National Bank of Pakistan (NBP)
The NBP secured the second rank in the industry after going neck and neck with HBL. It had maintained the top position in terms of profitability throughout the three quarters of 2020 but was left behind in the last quarter.
The NBP had a tremendous business year in 2020 with its highest-ever profit of Rs. 30.6 billion and year-on-year (YoY) growth of 93.3 percent. It had previously set a profit benchmark as its highest at Rs. 23 billion in 2017.
However, it managed to improve its ranking from the fourth position in 2019 to the second position in 2020.
3. MCB Bank
MCB Bank slipped from the first to the third position after retaining it for the last two consecutive years. It made an all-time high profit of over Rs. 29 billion in 2020 with YoY profit growth of 21 percent.
This translated into Earnings per Share (EPS) of Rs. 24.5 against an EPS of Rs. 20.23 posted in 2019. Since then, MCB Bank has continued to consolidate its business and footprints across the country.
4. Meezan Bank
Meezan Bank has continued its climb in the Pakistani banking industry and grabbed the fourth position in 2020 from the fifth position in 2019. It made the highest ever profit of Rs. 22.6 billion in 2020 and left behind one of the biggest banks of the country — United Bank Limited — in terms of profitability, which is a huge transformation in the banking industry.
Meezan Bank has been the market leader in the Islamic banking industry, and boasts of recently becoming the leading contributor of the government’s Sukuks and having the highest deposits of overseas Pakistanis in the Roshan Digital Accounts. It is also part of the Rs.1 trillion deposits and assets club.
5. United Bank Limited (UBL)
United Bank Limited (UBL) slipped from the fourth to the fifth position by the end of 2020. It made a profit of Rs. 20.8 billion in 2020 against its profit of 2019 that had stood at Rs. 19.13 billion, showing a modest growth of over nine percent. It did not seem to make a handsome growth in profitability as the competition among the banks is one of its drawbacks.
UBL had once achieved profitability of Rs. 25 billion in 2015, and is now gradually moving back to its former glory. It had remained the most profitable bank in the industry in 2017.
In 2020, UBL expanded its balance sheet and become the third bank to achieve the asset value of Rs. 2 billion after HBL and the NBP.
6. Allied Bank Limited
Allied Bank Limited (ABL) has made a good comeback after a long time after having improved its ranking from the seventh to the sixth position in terms of profitability.
It recorded an all-time high profit of Rs. 18 billion in 2020, with YoY growth of 27.7 percent as compared to Rs. 14.11 billion in 2019.
ABL’s management is working to improve its presence in various potential areas of the business while strengthening its operations, including technology enablement and customer experience.
7. Bank Al Habib
Bank Al Habib made a strong comeback in 2020, moving up from the ninth to the seventh position in the banking industry. It is one of the banks with remarkable financial performance in 2020 while cashing in on the opportunities from the pandemic and making a profit growth of around 60 percent in 2020.
It made a profit of Rs. 17.81 billion as compared to a profit of Rs. 11.1 billion recorded in 2019, which was an increase of over Rs. 6 billion in profit in just one year, and is also a member of Rs. 1 trillion clubs for deposits and assets.
8. Standard Chartered Bank
Standard Chartered Bank had a letdown in 2020. It had attained the position of the third most profitable bank in 2019 but had a steep drop in its ranking due to a decline in profitability.
It also had a transition in its leadership as its former CEO, Shahzad Dada, moved to UBL.
Standard Chartered Bank, with its controlled operations footprint, failed to sustain its profit growth amid intense competition with the market players.
9. Habib Metro Bank
Habib Metropolitan Bank had initially made its debut on the list of Pakistan’s top 10 banks. In recent years, it has been in close competition with other mid-tier banks like Askari Bank, Faysal Bank, and the Bank of Punjab.
It has reported the highest-ever profit of Rs. 12 billion, with outstanding growth in profitability by 82 percent YoY, and is the ninth bank in Pakistan that can provide the facility of Roshan Digital Accounts (RDAs) to overseas Pakistanis.
10. Askari Bank
Askari Bank is the second bank that had made its debut on the list of Pakistan’s most profitable banks, and stands in close competition with Bank Alfalah.
It showed an impressive financial performance with profit growth of 53.9 percent in 2020 as compared to its profit of 2019. Its overall profit surged to Rs. 10.8 billion in 2020 as compared to Rs. 7.03 billion that had been recorded in the previous year, which was its highest-ever profitability.
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11. Bank Alfalah
Bank Alfalah slipped from the eighth to the eleventh position in 2020, and reported a reverse trend in profitability that dropped in double-digits by 17.5 percent on a YoY basis. It also reported a profit of Rs. 10.47 billion as compared to Rs. 12.69 billion in 2019.
The subjective provisioning and general provision buildup against advances contained the profit of the bank.
12. Bank of Punjab
The Bank of Punjab lost its position at number 10 from 2019 to stand at number 12 in 2020 owing to the profit of the banks that had decreased by 17 percent on a YoY basis.
It announced a net profit of Rs. 6.88 billion for 2020. The primary reason for the yearly contraction in its earnings was the massive jump in provisions while hardly any capital gains as compared to the previous year had contributed to the sequential decline.
What’s Next for 2021?
The competition among the banks will continue to intensify amid the emerging avenues of business, particularly the financing schemes for boosting businesses countrywide.
The profit growth is likely to shrink on the balance sheets of the banks this year, and some may register a decline in profitability as well.
Overall, the business of the banking industry will retain its healthy growth in various dimensions, and the good part is that the contribution of the banking sector is increasing business, which is a positive sign for the economy.
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