Pakistan’s banking sector is expected to report a 10 percent quarter-on-quarter decline in earnings during the second quarter of 2026, primarily due to the absence of large capital gains that boosted profits in the previous quarter.
According to Topline Securities, the sector’s profit after tax (PAT) is projected to decline to Rs121.9 billion in 2Q2026 from Rs135.5 billion in the first quarter. Compared with the same period last year, earnings are expected to edge down by 1 percent, reflecting higher operating costs and the return of provisioning expenses after provision reversals in 2Q2025.
Profit before tax (PBT) is estimated at Rs254.2 billion, down 10 percent year-on-year and 11 percent quarter-on-quarter. A lower effective tax rate of 52 percent is expected to cushion part of the decline.
Despite weaker headline earnings, banks are likely to post stronger core operating performance. Net interest income (NII) is forecast to rise 5 percent year-on-year to Rs409.4 billion, supported by loan growth, policy rate adjustments, and the repricing of earning assets. On a quarterly basis, NII is expected to increase 4 percent.
However, non-interest income is projected to fall sharply to Rs84 billion, down 13 percent year-on-year and 31 percent from the previous quarter, mainly because capital gains are expected to normalize after an exceptionally strong first quarter.
Provisioning is also expected to weigh on profitability. Banks are forecast to book Rs8.5 billion in provision expenses, compared with a Rs1.3 billion reversal in the same period last year. Provision charges are also expected to be 6.5 times higher than those recorded in the first quarter.
Among major banks, Meezan Bank is expected to post the highest earnings per share (EPS) at Rs13.7, up 2 percent from a year earlier. United Bank Limited (UBL) is projected to report Rs13.6 EPS, representing the strongest annual growth of 19 percent, while Habib Bank (HBL) is expected to post relatively stable earnings with EPS of Rs12.2.
On the other hand, Bank Alfalah is expected to record the sharpest decline, with EPS falling 26 percent year-on-year to Rs1.9. National Bank of Pakistan (NBP) and Bank AL Habib are also expected to report earnings declines of 15 percent and 14 percent, respectively.
Topline Securities expects dividend payouts to remain largely unchanged, supported by strong capital positions. MCB Bank and UBL are forecast to maintain some of the highest quarterly cash dividends at Rs9 and Rs8 per share, respectively. The brokerage also expects banks’ revaluation reserves to remain stable, supported by firmer secondary market bond prices and the repricing of floating-rate Pakistan Investment Bonds.
