Karachi: On March 31, 2025, Standard Chartered Bank (Pakistan) Limited (SCBPL) released its Directors' Report, accompanied by un-audited interim financial statements for the period ended March 31, 2025. The report highlights the bank's resilient financial performance and strategic initiatives amid an emerging economic recovery in Pakistan.
The Pakistani economy exhibited a nascent recovery with a GDP growth of 2.5% in FY24, driven by robust agricultural performance, prudent policy management, reduced inflation, and a stable exchange rate. The third quarter of FY25 continued to show positive developments as most economic indicators improved, setting the stage for sustained growth and moderate inflation in the upcoming months.
On the external front, Pakistan's current account showed a surplus of USD 1.90 billion in the first nine months of FY25, compared to a deficit of USD 1.70 billion in the previous year. This improvement was primarily attributed to a significant 33% increase in remittances and an 8% rise in exports, which counterbalanced the 11% increase in imports during the period.
Pakistan reached a staff-level agreement with the International Monetary Fund (IMF) for a 37-month Extended Fund Facility Arrangement amounting to USD 7 billion, with USD 1.10 billion already disbursed. Additionally, a new 28-month arrangement under the Resilience and Sustainability Facility for USD 1.30 billion was agreed upon, further bolstering market confidence and exchange rate stability. Foreign direct investment also saw a 14% year-on-year increase to USD 1.64 billion during the same period.
The State Bank of Pakistan (SBP) reported improved foreign exchange reserves, rising from USD 9.4 billion at the start of the fiscal year to USD 10.6 billion as of April 11, 2025. Consumer Price Index (CPI) average inflation substantially declined to 5.3% in the first nine months of FY25 from 27.1% a year earlier, supported by easing global prices, a stable exchange rate, and targeted government policies. Consequently, the SBP reduced the policy rate by 850 basis points since the start of FY25 to 12%.
According to information available from the Pakistan Stock Exchange (PSX), banks in Pakistan, including SCBPL, continue to be well-capitalized and liquid, with an industry-wide Capital Adequacy Ratio of 20.6% and advances to deposit ratio of 49.7%. The banking industry remains profitable with a Return on Equity (after tax) of 21.5%, while Non-Performing Loans stood at 6.3% at the end of CY24.
SCBPL reported a profit before tax of PKR 17.0 billion, down from PKR 24.7 billion in the corresponding period last year. The decrease in revenue by PKR 6.4 billion was primarily due to a sharp reduction in interest rates. Despite this, the impact of margin compression on revenue was partially offset by an increase in non-funded income and a decrease in the cost of funds. Operating expenses increased by 14% due to inflation and investment in personnel and infrastructure.
On the liabilities side, the bank's total deposits stood at PKR 726 billion, a decrease of 13% from the start of the year. However, the deposit mix improved, with current accounts comprising 54% of the deposit book, compared to 48% last year. On the assets side, net advances increased by PKR 54 billion, or 31%, during the first quarter of 2025, reflecting a pick-up in economic momentum.
The bank is investing in digital capabilities and infrastructure to enhance client experience through innovative solutions. SCBPL remains committed to sustained growth by focusing on clients and product suites, while maintaining a prudent approach to building a profitable, efficient, and sustainable portfolio.
Looking ahead, SCBPL acknowledges the challenging external environment, with the pace of economic recovery dependent on improvements in external flows, domestic and geopolitical factors, and global commodity prices. Nonetheless, the bank remains well-equipped to manage risks, capital, and liquidity effectively, positioning itself to seize future opportunities.
The Pakistan Credit Rating Agency (PACRA) has maintained SCBPL's long-term and short-term ratings at "AAA" (Triple A) and "A1+" (A One Plus), respectively, indicating a strong capacity for timely payment of financial commitments.
SCBPL expressed gratitude to its clients, business partners, the State Bank of Pakistan, and its associates and staff for their continued support and commitment.