The Bank of Punjab (BOP) reported sustained gains in profitability, margins, and balance sheet strength at its Analyst briefing held on 14th November, 2025 for Institutional investors & Research Analysts, underscoring the continued progress of its multi-year turnaround. The session was led by President & CEO Mr. Zafar Masud, accompanied by Chief Financial Officer Mr. Nadeem Amir and senior members of the management team, including Group Chief Consumer Banking Mr. Asif Riaz, Chief Digital Officer Mr. Nofel Daud, Chief Risk Officer Mr. Arslan M. Iqbal, Group Head Treasury & Capital Markets Mr. Qasim Nadeem, Group Head Corporate & Investment Banking Mr. Umer Khan, and Company Secretary Mr. Kamran Hafeez. The leadership provided an in-depth review of the Bank’s operating results for the nine months ended September 30, 2025, asset quality trends, liquidity and funding position, and strategic focus for the coming years.
Management reported another strong quarter, reflecting the continuation of BOP’s multi-year transformation. Profit After Tax for 9MCY25 increased by 37% compared to the same period last year, supported by sustained growth in core income, improvement in deposit quality, and disciplined cost management. Operating profit rose by 156% year-on-year, while Net Interest Income grew by 91% amid margin expansion and a favorable shift toward low-cost deposits. Profit Before Tax increased by 81% over the corresponding period, and Fee and Commission income recorded a 31% rise due to higher transaction volumes in trade, cash management, and digital channels. The Bank also reported a sharp improvement in its cost-to-income ratio, consistent with its strategic focus on digitization and operational efficiency.
A key area of discussion during the briefing was the impact of this year’s floods on the Bank’s lending portfolios. Management clarified that the overall effect has been minimal, with only approximately PKR 650 million of the Bank’s exposure located in flood-impacted regions. The majority of this portfolio is covered through government first-loss guarantees and collateralized lending structures. In the Agriculture segment, 70% of exposures fall under government-backed schemes, while more than 95% of the remaining 30% are fully secured. Only 2% of Agri borrowers were affected by floods, and nearly all of these are protected through credit-loss guarantees. In the SME portfolio, just 0.74% of borrowers are situated in impacted areas, representing 1.09% of the total SME book by value, and most of this exposure is similarly secured or covered through government programs. Management emphasized that the Bank’s prudent underwriting, collateralization levels, and institutional guarantee structures ensure that the impact of climate-related shocks on asset quality remains negligible.
The management also explained that of the PKR 1.76 billion additional Expected Credit Loss (ECL) booked during the quarter, approximately PKR 1.19 billion (68%) relates to proactive and temporary portfolio movement based (IFRS-9 mandated) adjustments, while only PKR 574 million (32%) reflects actual credit slippage – representing a very small 0.06% of the total advances book. This demonstrates that the Bank’s credit quality remains fundamentally strong and firmly under control. They further highlighted BOP’s exceptional NPL recovery performance, with PKR 31 billion recovered over the past three years-one of the highest totals in the banking industry-reflecting the effectiveness of the Bank’s long-standing NPL recovery strategy. While recoveries on the remaining legacy cases are expected to moderate due to their age and litigation status, management underscored that these exposures are well-provided for and will continue to be handled proactively.
The briefing also covered deposit trends, with analysts seeking clarity on the quarter’s decline in total deposits and current accounts. Management explained that the dip is consistent with seasonal patterns typically observed toward the end of the government’s financial cycle and does not reflect any structural weakness. Despite the decline in balances, the average current account base rose by 13.3%, and average non-MDR deposits increased by 10.5%, both contributing meaningfully to margin improvement. The Bank’s average current account ratio continued to show improvement as of September 2025, and management reaffirmed its medium-term objective of increasing this ratio to industry levels. Current accounts have doubled since 2021, reflecting deliberate efforts to expand the low-cost funding base.
Importantly, the quarter saw continued progress on the repricing of high-cost term deposits. Management said that 85% of their high-cost TDRs had matured from Q1 to Q3, and the pricing of TDR had moved downward from 18.39% to 9.65% by the end of Q3. The remaining balances are expected to mature shortly, and management highlighted that this repricing is materially lowering the cost of funds and strengthening net interest margins. Management added that exposure to the Treasury Single Account regime remains minimal, with less than PKR 1 billion at potential risk.
BOP’s investment strategy remained another area of interest during the session. The Bank’s investment portfolio is primarily composed of floating-rate PIBs, which account for roughly 60%-65% of the total book and currently earn a spread of 75-80 basis points over benchmark rates, with an average maturity of 2.5 years. About 20%-22% of the remaining portfolio comprises fixed-rate PIBs and T-bills, with fixed PIBs yielding close to 12% at a duration of around two years, and T-bills yielding 11.20%-11.30%. Management indicated that the Bank does not intend to take an aggressive leverage position in OMOs, citing narrower arbitrage spreads and potential capital adequacy implications.
In agriculture and SME lending, the Bank reaffirmed its position as an industry leader. The flagship Kissan Card portfolio was in its second cycle with impressive recovery rate despite the maturity deadline not being reached. The Bank anticipates the Kissan Card portfolio to grow to PKR 100 billion within the next two years. In the SME segment, government-backed programs such as Assan Karobar Finance and PM Youth Business Loans continue to contribute significantly to portfolio expansion while showing excellent recovery performance around 99-100%.
Discussing the Bank’s network expansion, management noted that BOP currently operates 900 branches and plans to open 100 additional Islamic branches by 2027, with 140 new Islamic Banking Windows scheduled for rollout next year. The Bank views rural and agri-intensive regions as high-potential markets, where it already enjoys a competitive advantage.
Commenting on the Bank’s performance, President & CEO Zafar Masud stated: “Our direction is clear: a stronger balance sheet, a more efficient digital-first operating model, and a sharper focus on priority sectors that directly support Pakistan’s economic agenda. We will continue to strengthen our deposit mix, enhance customer experience, and support sustainable growth across agriculture, SMEs, and the broader economy.”
The management reiterated the Bank’s commitment to transparency, timely disclosure, and active engagement with the analyst community, noting that open dialogue has played an important role in strengthening market confidence throughout the Bank’s transformation. They also highlighted the progress made on the human capital front, where BOP has steadily shifted toward a merit-driven, pay-for-performance culture supported by structured performance improvement mechanisms and competitive incentive frameworks.
BOP also reaffirmed its commitment to maintaining its dividend policy, noting that the Board remains confident in the Bank’s financial strength and is evaluating the option of quarterly dividend payouts.