NBP Maintains Strong Capital Amid Focus on Low-Cost Deposits

National Bank of Pakistan’s management affirms solid capital base, plans digital expansion, and prioritizes current accounts to sustain profit growth

Topline had a management meeting with the senior management of National Bank CEO, Mr. Rehmat Ali Hasnie and CFO, Mr. Abdul Wahid Sethi on the recent financial results and outlook.

 Regarding the Shariah conversion of all banks, the banks stated that they are well on their way to starting the transformation and have already submitted their plans.NBP-Fund using ‘NBP’s Wheel Logo’ without IPO-Pakistan Registeration

 However, the government and the central bank will need to resolve certain issues, particularly those related to making government securities investments Shariah-compliant.

The structure of bank balance sheets shows that a significant portion of their assets consists of government securities. Therefore, the conversion process will largely depend on resolving this matter.

Management does not expect any slowdown in profit growth and expects current trend to continue considering the current interest rate environment.

 While explaining the growth in Net Interest Income (NII), management stated that the expansion of current accounts contributed positively through low-cost deposits. However, for 2Q2025, NII declined on QoQ basis due to a reduction in policy rate.

 On the borrowing front, management mentioned that they reduced their borrowings by Rs400bn over the past six months. Their strategy remains focused on increasing low-cost deposits. They also indicated that leverage ratios remain at adequate levels, and they are satisfied with the current size of their balance sheet. The focus will continue to be on growing current accounts to enhance NII.

 Management added that they have a decent exposure to equities, acquired at lower index levels, and they plan to continue with the same strategy as in 1H2025 so their OCI income will remain higher and will be contributing to equity.

 Regarding digital transformation, management stated that the bank has not expanded its branch network recently, as efforts are primarily directed toward transitioning customers to digital platforms, which has increased digital usage. They have also developed a separate portal for corporate customers to further strengthen their digital agenda.

The bank has recorded transaction volumes of Rs4.7tr over the past five years and generated Rs13bn in Non-Funded Income (NFI) revenue.

On the matter of lower credit lending to customers, management was on view that in a high interest rate environment, credit demand remains subdued as there is limited appetite in the market. Although interest rates have declined significantly, the perception among corporates is that they may fall further, which is making borrowers reluctant to take on new loans.

Regarding dividends, management noted that the bank holds a very strong capital position, with a Capital Adequacy Ratio (CAR) of 27%. Excessive availability of capital and accumulation may effect ROE hence bank have sufficient liquidity for dividend payouts in the coming years while robust profitability may continue to enhance equity and CAR. To highlight, Banks regulatory requirement for CAR has increased to 14%.