BOP eyes higher earnings as NIMs to improve in 2H2025
The Bank of Punjab (BoP) has projects for further improvement in net interest margins in the second half of 2025 as the repricing of term deposits continues. The strong deposit growth and portfolio management bolster earnings.
The management of BOP revealed during a corporate briefing.
The improvement in NIMs is expected to continue in 2H2025 as a few more TDRs have matured/repriced till Aug, and the remaining will be repriced/matured in 4Q2025. Due to this repricing/maturity, the bank will save around 4-5% spread on the TDR portfolio.
The bank recorded 116% YoY growth in Net Interest Income (NII) in 1H2025 compared to the corresponding period last year. Management attributed 25% of this growth to MDR while 75% to initiatives such as higher current account balances, repricing of term deposits, and stronger yields on lending.
Average current account balances improved by 40%, while 64% of TDRs matured by Jun-25, both contributing to the increase in NII.
On the deposit side, the company is targeting to cross the Rs2tr mark this year, with a goal of reaching Rs2.5tr in the next three years. The Bank carries unrealized gains of Rs6.0bn on its books, which, if realized, would have further boosted earnings.
The bank announced its payout policy earlier this year with a commitment to pay interim dividends. However, going forward, the bank may also start focusing on quarterly dividends.
On reducing share float, management said, the Bank preferred to pay shareholders through dividends; however, in the future, the bank may choose a hybrid option of dividends and buybacks.
The bank has reduced its borrowing positions as the currently available spread is lower than last year. Considering this, the position was trimmed.Pakistan Stock Market: Serious Investors Come To Rescue
In the Investment mix, 23% is T-bills, 18% is PIBs fixed and 53% is floating PIBs. The floating PIBs spread is 80bps with a maturity of 2.5 years, while the fixed bond yield is almost 12%.
One-third of the Bank’s exposure is in the Agri & SME portfolio, of which 76.9% is covered by first-loss guarantees. Overall, a very small portion of the total portfolio is considered at risk due to floods.
In the deposit mix earlier, over 60% used to comprise public sector deposits which is now as low as 33%. Regarding branches, management said they will focus on quality over quantity.
The bank’s CAR currently stands at 17.4%, as of Jun-25, against the regulatory requirement of 11.5%. Furthermore, the bank’s majority equity portfolio is based on the market risk, and CAR is truly reflective of this.
