These Banks Will Gain the Most From SBP’s Latest Deposit Rule Change

Habib Bank Limited (PSX: HBL), United Bank Limited (PSX: UBL), Meezan Bank Limited (PSX: MEBL), Bank AL Habib (PSX: BAHL), and MCB Bank Limited (PSX: MCB) are expected to see the biggest profitability gains after the State Bank of Pakistan (SBP) removed the Minimum Deposit Rate (MDR) requirement on Trusts, Private limited businesses and Individual deposits (exceeding Rs. 1 crore).

The banking sector is expected to save 50 basis points in deposit costs and generate up to Rs. 20-45 billion in additional annual gross income, according to Topline Securities.

The impact is expected to be strongest for banks with a large base of affluent customers and high savings deposits.

HBL, which has around 133,000 Prestige Banking customers with deposits of Rs. 386 billion, is among the key beneficiaries.

Meezan Bank, UBL, Bank Alfalah, and Askari Bank are also expected to benefit from their sizeable premium banking franchises, while Meezan Bank, Bank AL Habib, Allied Bank, and MCB have relatively high retail and savings deposit mixes.

The overall impact is likely to remain moderate, as affluent customers are generally well-informed about financial products and are expected to move their funds to institutions offering the most competitive returns and services.