Karachi, October 14, 2022 (PPI-OT): 3QCY22: Higher yields to pump banks’ profitability

We preview 3QCY22 results for Pakistan banks under our coverage, where we expect double-digit Net Interest Income (NII) growth to continue (+27% QoQ) as assets continue re-pricing on higher yields. On expenses front, sequential increase expected in administrative expenses and credit charge would likely be balanced out by normalized taxes this quarter.

Resultantly, we expect sector’s bottom-line to grow two folds compared to 2QCY22, with bigger banks reporting a higher bottom-line growth owing to higher taxes in 2QCY22 and hence lower base set on a sequential basis.

On adequacy levels, we believe banks would receive much support from higher profits this quarter, shielding CAR from mark-to-market losses to some extent, hence broadly maintaining regular dividend payouts.