Karachi: JS Bank Limited has released its financial results for the first quarter of 2025, demonstrating resilience in a period marked by notable macroeconomic changes in Pakistan. The bank reported a Profit Before Tax of PKR 2,738 million and a Profit After Tax of PKR 1,289 million, reflecting a decrease from the previous year's figures of PKR 3,743 million and PKR 1,718 million, respectively.
The broader economic environment in Pakistan has shown signs of stabilization, with key indicators pointing towards a recovery. In March 2025, the headline Consumer Price Index (CPI) inflation hit a six-decade low of 0.7%, contributing to an average quarterly inflation rate of 1.5%, a significant drop from the 24% recorded during the same period last year. This decline was mainly due to reduced food and energy prices, as well as fiscal consolidation efforts that led to a primary surplus and a narrowed fiscal deficit.
On the external front, the current account registered a cumulative surplus of USD 691 million over the first eight months of the fiscal year 2025, bolstered by a 33% year-on-year increase in workers' remittances. Exports and imports rose by 8.4% and 7.6% year-on-year, respectively. Investor confidence is reflected in the positive performance of the Pakistan Stock Exchange. According to information available from the Pakistan Stock Exchange (PSX), these developments are paving the way for sustained growth and moderate inflation moving forward.
In the financial sector, the State Bank of Pakistan (SBP) paused its monetary easing in March 2025 after a 100 basis points rate cut in January, maintaining the policy rate at 12%, a substantial reduction from the 22% rate in March 2024. This has implications for the banking sector, which is experiencing margin compression due to the repricing of high-yielding assets at lower rates. However, the sector's capital adequacy ratios remain robust, exceeding regulatory requirements.
For JS Bank, deposits at the end of March 2025 reached PKR 534.3 billion, marking a 4% year-on-year growth. The bank's non-remunerative deposits increased by 11%, improving the deposit mix to PKR 179.9 billion. This growth underscores the confidence of the bank's clientele and the diligent efforts of its staff.
In terms of revenue, JS Bank maintained stability, recording PKR 10,610 million for the first quarter of 2025, slightly down from PKR 10,812 million in the previous year. Despite a lower non-mark-up income of PKR 3,179 million, down by 14% year-on-year, the bank's Net Interest Income rose by 5% to PKR 7,431 million. This was achieved despite a significant reduction in interest rates, attributed mainly to improved deposit mix averages.
Operating expenses increased by 13% year-on-year, driven by higher staff costs and investments in information technology, signaling the bank's commitment to enhancing its human resources and digital infrastructure. The cost-to-income ratio improved to 67% from 71% at the end of December 2024.
The bank's Non-Performing Loan (NPL) ratio slightly increased to 10.02%, although the NPL Coverage Ratio improved to 72.4%. The Capital Adequacy Ratio was reported at 13.15%, reflecting a slight decrease from 13.24% at the end of 2024 due to changes in Risk Weighted Assets.
On a consolidated basis, including subsidiaries BankIslami Pakistan Limited, JS Global Capital Limited, and JS Investments Limited, JS Bank recorded a Profit Before Tax of PKR 7,489 million and a Profit After Tax of PKR 3,101 million for the quarter, compared to PKR 9,360 million and PKR 4,214 million, respectively, in the previous year. The earnings per share for the quarter stood at PKR 1.18, down from PKR 1.66 in the prior year, with a Consolidated Capital Adequacy Ratio of 17.92%.
In terms of credit ratings, the Pakistan Credit Rating Agency Limited (PACRA) has affirmed JS Bank's long-term rating at "AA" and its short-term rating at "A1+", indicating very high credit quality and a strong capacity for timely financial commitments.