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Express Tribune
12-07-2025
- Business
- Express Tribune
PSX marks 2nd week of record highs
Listen to article The KSE-100 index of the Pakistan Stock Exchange (PSX) surged 2,351 points, or +2% week-on-week (WoW), to close at 134,300, marking a second week of gains driven by a strong earnings outlook, record remittances and positive macro news. Major boosts came from a US-Pakistan trade deal, $2 billion investment from Azerbaijan and rising Panda bond expectations. The State Bank's foreign currency reserves hit a 39-month high at $14.5 billion. Commercial banks led gains, adding 1,329 points, while cement, auto and textile sectors followed. UBL, Meezan Bank and MCB Bank were the top gainers while Bank AL Habib and Engro Fertilisers were the major drags. Average daily turnover fell 2% to 947.8 million shares and foreign investors sold $5.76 million worth of equities, but it was offset by local buying. Among FY25 highlights were remittances hitting $38.3 billion (+27%), auto sales higher by 43% and early retiring of Rs1.5 trillion worth of debt. Analysts see continued momentum with room for profit-taking. The index trades at 6.8x forward price-to-earnings ratio, offering a 7.4% dividend yield. Top picks include OGDC, Pakistan Petroleum, Meezan Bank, MCB Bank, PSO, Hubco and Systems Limited. On a day-on-day basis, the PSX extended its rally on Monday as the bullish momentum persisted, with the index surging 1,421 points (+1.08%) to 133,370, backed by encouraging macroeconomic signals. On the second trading day, the market shot up to a new peak above 134,000 points in intra-day dealings but it could not sustain the momentum and closed almost flat as investors offloaded their holdings to book profit. On Wednesday, the bourse witnessed volatile trading as the benchmark KSE-100 index recorded a decline of 826 points. The market entered a phase of consolidation following recent strong rallies, fluctuating between intra-day high of 133,566 and intra-day low of 132,326. The following day, the PSX had a positive session, gaining 1,205 points in the backdrop of historic high remittances at $38 billion for FY25 and $1 billion in Islamic financing from a Dubai Islamic Bank-led consortium, marking the return to Middle Eastern markets after two years. Consolidation continued at the market on Friday, when the index floated in both directions and ultimately closed at 134,300, reflecting a gain of 517 points. Arif Habib Limited (AHL), in its weekly commentary, noted that the KSE-100 index continued its upward trajectory, rising steadily from 131,949 to 134,300, marking a weekly gain of 2,351 points, or 2%. Among key developments, media reports suggested that Pakistan and the US had reached a trade and tariff deal framework ahead of the July 9 deadline, aimed at preserving market access and attracting US investment. Separately, Pakistan and Azerbaijan signed a $2 billion investment agreement during the 17th Economic Cooperation Organisation (ECO) Summit, with the final deal expected during Azerbaijan president's upcoming visit, AHL said. In the energy sector, OGDCL reported a production boost at the Rajian-05 well following ESP installation. Meanwhile, workers' remittances hit a record high of over $38 billion, up 27%. In the auto sector, FY25 sales rose 43% to 148k units, with June sales reaching a 36-month high of 21.8k units, caused by a proposed sales tax hike. The State Bank's foreign exchange reserves increased $1.77 billion to $14.5 billion – a 39-month high. The sectors that contributed positively were commercial banks (1,329 points), cement (304 points), auto assemblers (150 points), textiles (147 points) and pharmaceuticals (124 points). Meanwhile, sector-wise negative contributions came from E&P (82 points), miscellaneous (78 points), fertiliser (56 points), technology (47 points) and OMCs (39 points). Scrip-wise, positive contributions came from UBL (417 points), Meezan Bank (297 points), MCB Bank (171 points), Habib Metropolitan Bank (150 points) and Bank Alfalah (148 points). Scrip-wise, negative contributors were Bank AL Habib (103 points), Engro Fertilisers (86 points), Pakistan Services (78 points), Mari Petroleum (60 points) and Pakistan Petroleum (54 points). Foreign selling was witnessed during the week, which came in at $5.76 million compared to net selling of $15.33 million last week. Major selling was noted in commercial banks ($3.8 million), followed by fast moving consumer goods (FMCG) companies ($1.2 million). On the local front, buying was reported by mutual funds ($30.9 million) and individuals ($14.1 million), AHL added. Syed Danyal Hussain of JS Global observed that the KSE-100 index extended its bullish run during the outgoing week, gaining 2,351 points to close at 134,300. The rally was driven by several positive developments, including a surge in remittances, which reached an all-time high at $38.3 billion in FY25. Investor sentiment was further supported by reports of a potential understanding between Pakistan and the US on reciprocal tariffs, alongside news that a Dubai-based bank arranged a $1 billion financing for Pakistan.
Express Tribune
11-07-2025
- Business
- Express Tribune
Banks' profits to drop 14% QoQ
Listen to article Pakistan's banking sector is expected to report a subdued financial performance for the second quarter of 2025 (2QCY25), with profitability likely to decline by around 1% year-on-year (YoY) and 14% quarter-on-quarter (QoQ) for major banks following a drop in yields and a 100-basis-point (bps) cut in policy rate by the State Bank in May. "We estimate profitability of ISL coverage banks – HBL, UBL, MCB Bank, Meezan Bank and Bank Alfalah – to decline by 1% YoY and 14% QoQ," noted Insight Securities. "The decline is primarily attributable to the falling yield, resulting in net interest margins (NIMs) compression along with moderation in capital gains." Additionally, non-markup income is projected to decline due to normalisation of capital gains, which were elevated in the previous quarters. Despite margin pressures, some support to earnings is expected from volumetric growth and a stronger focus on mobilising zero-cost deposits. Banks are also expected to maintain healthy dividend payouts, aided by decent profitability and strong capital buffers. According to estimates, HBL, UBL, MCB Bank, Meezan Bank and Bank Alfalah are projected to post earnings per share (EPS) of Rs9.5, Rs11.3, Rs9.9, Rs11.4 and Rs4.9, respectively. Dividend per share (DPS) forecasts for the same banks stand at Rs4.5, Rs7, Rs9, Rs7 and Rs2.5, with UBL likely to stand out due to robust earnings and above-average deposit growth. Sector-wide trends show banking deposits reaching Rs35 trillion, marking a significant increase of 12.5% YoY and 10.7% QoQ. Notably, a sharp 7% week-on-week growth was observed in the latest data. However, advances declined 4.1% QoQ to Rs12.9 trillion, pulling down the sector's advances-to-deposit ratio (ADR) by roughly 570 bps. On the other hand, investments grew 12.8% QoQ to Rs36.5 trillion, reflecting continued preference for government securities, while borrowings remained stable at around Rs14.8 trillion. Provisioning expenses are expected to rise sequentially, reversing the trend from the previous quarter, when banks booked reversals after trimming advances to meet end-of-year ADR thresholds. Despite the uptick in provisioning, the sector's overall financial health remains sound and banks are expected to continue rewarding shareholders with steady dividends. However, Topline Securities expects banks under its coverage – Bank Alfalah, Bank AL Habib, HBL, MCB Bank, Meezan Bank and UBL – to post 7% YoY earnings growth in 2Q2025, led by higher net interest income (NII) and non-interest income. Despite a drop in average policy rate from 21.5% to 11.3%, NII is projected to rise 12% YoY to Rs303 billion, supported by strong deposit growth and higher returns on older investments. Non-interest income is expected to grow 14% YoY to Rs84 billion, driven by increased fee income and gains on securities. Expenses are forecast to rise 8% YoY to Rs161 billion, in line with inflation and branch expansion. Provisions are likely to jump up to Rs9.1 billion from Rs5.9 billion last year. Among individual banks, UBL is projected to lead with 148% YoY earnings growth, followed by HBL with 4% growth. However, sector earnings are expected to decline 5% QoQ due to lower NII and higher provisions, noted Topline. For 1H2025, cumulative earnings are estimated at Rs210 billion, up 10% YoY. Dividend payouts are expected to remain strong, with UBL's DPS likely rising to Rs8 from Rs5.5 in the previous quarter. Topline maintains a market-weight stance on the sector, with HBL and Bank Alfalah being preferred picks. Meanwhile, after hitting decade-low levels, Pakistan's banking sector has witnessed a strong and consistent rebound in its price-to-book (P/B) ratio since late 2023, reflecting improved investor sentiment and sector performance, according to Optimus Capital Management. As of June 2025, the sector's P/B ratio climbed to 1.24 times, crossing its historical average and median of 1.0 times for the first time in years. The recovery signals growing investor confidence, underpinned by strong profitability metrics, stabilising macroeconomic conditions and a more favourable interest rate environment. The rebound marks a sharp reversal from the sustained downward trend seen over the past decade, which was driven by inflationary pressures, regulatory tightening and macroeconomic uncertainty.
Express Tribune
03-07-2025
- Business
- Express Tribune
In record-breaking streak, PSX hits 130k
Listen to article Pakistan Stock Exchange (PSX) extended its remarkable ascent on Wednesday as the benchmark KSE-100 index smashed past the 130,000 milestone for the first time in history, gaining 2,145 points day-on-day. The bourse saw robust buying by big investors while low returns on bonds pushed more market players to build their investment portfolios. The upbeat investor sentiment provided the rally a strong support, driving stock prices higher across key sectors such as banking and communications. Subsequently, the KSE-100 index closed the day higher by 1.67% at an unprecedented level of 130,344.03. "Increase in tax rates on income from debt securities, along with the shift in mutual fund taxation to a proportionate investment holding structure, prompted a shift in flows from fixed income to equities," AKD Securities' Director Research Muhammad Awais Ashraf told The Express Tribune. Additionally, with inflation falling to a nine-year low in FY25, the likelihood of further interest rate cuts strengthened the outlook for equities and boosted investor confidence, he added. KTrade Securities wrote in its market review that the banking sector continued to deliver strong performance, propelling the index to new record levels over the past two sessions. Wednesday's rally was primarily fuelled by robust gains in stocks of UBL, MCB Bank, Bank AL Habib, Meezan Bank, HBL and National Bank of Pakistan. Arif Habib Limited (AHL) reported that the index hit the intermediate-term target of 130,000 on Wednesday. Some 61 shares advanced while 39 declined as UBL (+5.51%), MCB Bank (+5.66%) and Bank AL Habib (+4.65%) contributed the most to index gains. Conversely, Pakgen Power (-4.56%), Cherat Cement (-1.57%) and Lucky Cement (-0.27%) dragged the index down, it said. Among economic news, Pakistan's trade deficit stood at $2.32 billion in June 2025, showing a 9.4% improvement compared to May. Meanwhile, Mari Energies and Ghani Chemical Industries signed a term sheet to explore the feasibility of processing vent and exhaust gases from the Sachal Gas Processing Complex, located in Daharki, Sindh. Following a strong 12% rise from the June lows, the index reached the key target level of 130,000, AHL said, anticipating that the momentum would continue, with support rising to 127,000. Topline Securities observed in its review that bulls went on a rampage as the KSE-100 index shattered records, storming past the 130,000 milestone. The index hit intra-day high of 2,346 points before closing at 130,344, up by a solid 2,145 points. Fuelled by aggressive institutional buying and a wave of fresh fiscal year optimism, the rally showed no signs of cooling. With fixed-income yields offering little excitement, investors were rotating into equities in search of alpha, giving the market a powerful tailwind, it said. Banks led the charge where blue-chip names including UBL, MCB Bank, Bank AL Habib, Meezan Bank, Habib Bank and National Bank of Pakistan stole the limelight and collectively pumped 1,286 points into the index. In an interesting move, the pharma sector made a comeback. Searle Pakistan hit its upper lock, while Citi Pharma, Haleon Pakistan and Abbott Laboratories saw healthy investor appetite, added Topline. Overall trading volumes slipped to 1.026 billion shares compared with Tuesday's tally of 1.033 billion. The value of shares traded was Rs49.3 billion. Shares of 473 companies were traded. Of these, 256 stocks closed higher, 192 fell and 25 remained unchanged. WorldCall Telecom was the volume leader with trading in 89.9 million shares, gaining Rs0.08 to close at Rs1.61. It was followed by The Bank of Punjab with 89.5 million shares, rising Rs0.62 to close at Rs11.54 and Kohinoor Spinning Mills with 46.3 million shares, losing Rs0.27 to close at Rs6.12. Foreign investors sold shares worth Rs698 million, the National Clearing Company reported.
Business Recorder
23-04-2025
- Business
- Business Recorder
MCB: Back to bonds
The banking results season has kicked off right on cue. MCB Bank reported a 10 percent year-on-year dip in pretax profits for 1QCY25, while staying true to its reputation as a dividend-friendly stock, announcing a Rs9/share first interim payout. Yet, it's the balance sheet that grabs attention—just two quarters apart, but seemingly from two different banking eras, as the industry has decisively returned to its old habit: ditching private credit for government securities. After the ADR sprint of 4QCY24, where banks scrambled to dodge penal taxation, 1QCY25 brought a quick relapse. MCB's ADR tumbled from 54 percent to the 30s, comfortably settling back into familiar territory. It's not that the asset mix was ever skewed in favour of advances—but the speed of investment build-up was striking. From the sharpest quarter-on-quarter rise in ADR last quarter to one of the steepest declines this time—the ephemeral nature of credit growth has rarely been more evident. MCB's investment portfolio surged by Rs650 billion (56 percent) over the previous quarter, pushing the IDR to a record 87 percent. Advances, on the other hand, shrank by Rs282 billion or 27 percent, taking the outstanding book to Rs760 billion—levels last seen at the close of 2022. Unsurprisingly, the ADR collapsed to 36 percent. The retreat in advances is not MCB-specific—it's an industry-wide phenomenon. Total advances for the banking sector dipped 15 percent over December 2024 to settle at Rs15 trillion. Interestingly, NBFIs, which account for just 8 percent of the banking sector's loan book, contributed to a third of the Rs2.4 trillion quarterly decline, thanks to the temporary lending surge in the ADR-fuelled dash last quarter. On the liabilities side, MCB made up for the Rs140 billion deposit outflow seen in 4QCY24, recovering to the same level as end-3QCY24. Deposits grew by 9 percent over December 2024, outpacing the industry's 4 percent growth during the period. The significant shift in the interest rate outlook played a role in the drop in markup income. On the non-markup front, a modest uptick was seen, with fee, dividend, commission, and FX income contributing the bulk. However, administrative expenses rose sharply, outpacing headline inflation and pressuring the cost-to-income ratio, which fell over 8 percentage points year-on-year. With inflation cooling and the external account holding steady, interest rate cut expectations have returned to the chatter. Yet, industrial output remains sluggish, and the farm economy is sending mixed signals, leaving little hope for a significant revival in private sector credit appetite in the near term.
