Home - Business - Combined earnings of 20 banks rose to Rs46.6 billion during Jul-Sept: Report

Combined earnings of 20 banks rose to Rs46.6 billion during Jul-Sept: Report

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20 listed Pakistani banks during the period of July-September earned up to Rs46.6 billion collectively, which is 19% up from the same three-month period of the last year.

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In the light of the date fetched by Topline securities, all listed commercial banks, leaving BankIslami, earned growth of 13% in Jul-Sep over its prior quarter. The increase in earnings is just fetched by a betterment in banks’ net interest income, which also shot up by 19% to Rs112.8 billion in Jul-Sept year by year.

The growth in banks’ earnings in the previous nine months – up 20% on a yearly basis – is rather unexpected due to prolonging decrease in interest rate.

The benchmark interest rate lingers at a surprising low of 6% after the central bank lessened it consistently since 2014 to lower inflation. This also caused in smallest banking smearing recorded during the last 10 days.

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Research analysts Umair Naseer stated that banks have invested massively in long-term Pakistan Investment Bonds (PIBs), which given them a protection against falling interest rates. Investments in the banking sector, were the same as 71% of their total deposit at the conclusion of the third quarter of 2015. On the contrary, the investments-to-deposits ratio (IDR) stood at 56% comparing to period of the preceding year.

Naseer stated that the quarterly increase of 13% in after-tax profitability of these 20 banks was in the wake of a substantial fall in the effective tax rate during the third quarter. The effective tax rate during Jul-Sept was 35% as opposed to 52% in the preceding quarter when banks must pay a one-off super tax of 4% on their outcome.

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