The Companies’ Profit Swelled to Rs 1.6 Trillion in 2023
Staff Report
As many as 83 companies have earned a huge profit of Rs 1.6 trillion in 2023 despite the economic slump.
Profits of key companies listed at PSX have remained strong despite the economic challenges faced by Pakistan.
In the calendar year 2023, 83 companies (88% of market capitalization) of the KSE 100 index posted after-tax profits of Rs1.66 trillion, showing a remarkable growth of 45% over 2022.
In USD terms, the profits of these companies were US$5.94 billion, up 6.3%.
Banks contributed 34% to total profits in 2023. Excluding banks, total earnings were up 31% (-3.8% in US$).
Similarly, Oil and Gas Exploration (E&Ps) firms accounted for 29% of total profits in 2023.
Excluding E&Ps, earnings increased by 40% in 2023 (+2.5% in US$). Excluding these two major sectors, profits grew by 15% (-15.5% in USD) in 2023.
Many people are curious to know how profits posted such significant improvement despite the sluggish economy. Most individuals typically assess economic health through real GDP growth.
Pakistan’s real GDP declined 0.4% in 2023 based on figures for three quarters (March, June, and September).
However, nominal GDP grew approximately 25% in 2023. Corporate earnings usually follow the trend of nominal GDP growth, as inflation is passed on to consumers where possible.SBP imposes over Rs465m Penalties on Banks
Moreover, the profitability of the two heavyweight sectors (Banks and Exploration) is not directly linked to the overall economy.
Banks tend to earn more when interest rates are high and when deposit growth is driven by a higher money supply. Similarly, exploration firms earn more with rising global oil prices and a falling PKR against the US dollar,” Topline said in a report.
