Smaller banks in Pakistan and Japan delivered the highest total returns to investors among Asia Pacific lenders in 2025, riding on rallies in their respective equity markets.
Bank of Punjab topped the regional rankings with total returns of 333.8% for its investors in 2025, according to S&P Global Market Intelligence data covering Asia Pacific banks with market capitalization exceeding US$ 100 million.
National Bank of Pakistan, headquartered in Karachi, ranked second with total returns of 301.3%. Pakistani banks accounted for six of the top 10 positions in the regional performance rankings.
Askari Bank Ltd. and The Bank of Khyber rounded off the top four spots, with gains of 194.2% and 177.4% respectively.
The strong performance of Pakistani lenders was driven by the country’s benchmark KSE 100 stock index, which gained 51.2% in 2025 to end the year at a record high. This marked the third consecutive year of gains for the index.
Improved economic indicators, fiscal management and political stability fueled investor confidence in Pakistan’s equity markets throughout the year.
The International Monetary Fund estimated that Pakistan’s economy grew by 10.5% in 2025, compared with 10.4% in the prior year. Inflation stood at 3.2%, down sharply from a 12.6% increase in prices in 2024.
More than half of the top 10 gainers in the analysis had market capitalizations below US$ 1.0 billion, the data showed.
Japanese banks also featured prominently among top performers. Tochigi Bank Ltd. of Japan ranked fifth with an annual gain of 165.6% at a market capitalization of US$ 0.48 billion. Ogaki Kyoritsu Bank Ltd. followed with a 151.0% gain in 2025.
Hokuhoku Financial Group Inc. and Yamanashi Chuo Bank Ltd. also ranked among the top 10 lenders. The Bank of Japan raised its benchmark interest rate by 25 basis points to 0.75% on December 19, the highest level in three decades. The move raised expectations of improved profit outlooks for Japanese banks amid widening spreads between lending and deposit rates.
“Given that real interest rates are at significantly low levels, the Bank, in accordance with improvement in economic activity and prices, will continue to raise the policy interest rate and adjust the degree of monetary accommodation,” the Bank of Japan said in its statement.
The central bank’s actions, along with economic policies of Prime Minister Sanae Takaichi’s government, have boosted Japan’s equity markets.
In contrast, midsized Indian lenders were among the worst performers by total returns in 2025. Utkarsh Small Finance Bank Ltd.’s total returns dropped 48.6% for its shareholders. Punjab & Sind Bank posted a 42.1% decline, while ESAF Small Finance Bank’s total returns fell 36.6%.
The Reserve Bank of India cut its key policy rate by 25 basis points to 5.25% in December, the lowest level since July 2022, bringing the aggregate cut for the year to 125 basis points. Policy rate cuts generally shrink banks’ interest margins, as asset yields typically fall faster than funding costs.
“With inflation staying below target and growth expected to moderate, we see scope for another 25 basis points cut in the first quarter of 2026,” ING Group said in a December 5 note.
The biggest loss among regional peers came from China’s Bank of Jiujiang Co. Ltd., down 66.9%, as shares of the Jiangxi-based lender fell ahead of its announcement of an equity fundraising plan in late October 2025.