NBP Deposits Jump 22% as Bank Maintains Strong Capital Buffer

National Bank of Pakistan reports robust 1H2025 results with strong deposit growth, resilient earnings, and a 27.28% capital adequacy ratio, despite higher market risk weights.

The National Bank of Pakistan (NBP) on Monday briefed investors on its half-year financial results for 2025, highlighting strong growth in deposits, robust capital adequacy, and resilience in earnings despite regulatory changes that increased market risk weights. The management emphasized that the bank remains well-capitalized and positioned for growth, even as advances declined due to subdued corporate demand.NBP Records Rs49bn Pension Cost

NBP reported that total deposits reached Rs4,704 billion as of June 2025, marking a 21.7% increase compared to Rs3,866 billion in December 2024. A striking feature of this growth was that 89% of the increase came from current deposits, pushing the bank’s CASA (current and savings accounts) ratio to 82.9%, up from 79.5% at year-end 2024. This strong deposit mobilization underscores customer confidence and provides a stable funding base for the bank.

On the earnings side, management noted that profitability remains underpinned by both equity and fixed-income investments. The bank has recorded sizeable unrealized gains, while Rs6 billion in realized gains were classified under other comprehensive income (OCI) in line with new IFRS regulations. However, changes in market risk weightings imposed by the State Bank of Pakistan (SBP) have pressured capital ratios. The central bank increased risk weights on FPOCI (fair value through other comprehensive income) investments to 50% for 2025, rising to 75% in 2026 and 100% by 2027. NBP applied the full 50% adjustment in the first half, reducing its capital adequacy ratio (CAR) by around 300 basis points.

Despite this adjustment, NBP’s CAR stood at a comfortable 27.28% in 1H2025, more than double the regulatory minimum of 13%. The bank also reported a leverage ratio of 3.7%, above the SBP requirement of 3%, providing further evidence of a solid capital buffer. Management reiterated that dividend payouts will be evaluated in light of capital needs, but the current position offers considerable flexibility.

On the expense side, the bank has already booked Rs5 billion in pension costs for 1H2025. Management said the cost-to-income ratio now fully reflects this adjustment, giving investors a clearer picture of recurring costs.

NBP’s lending portfolio reflected subdued economic activity. Net advances dropped 6.9% to Rs1,307 billion in June 2025 compared to Rs1,405 billion in December 2024, with weak corporate demand cited as the main reason. The bank maintains a strong agricultural loan book of Rs120 billion, about Rs50 billion of which is secured by gold. Non-performing loans in the agri segment remained low, with the 2022 floods leading to defaults of only 1.5% of the agri portfolio. Management added that it is still too early to assess the impact of the latest floods, but historical experience suggests that losses are unlikely to be significant.

In terms of investments, NBP’s portfolio is heavily weighted toward government securities. About 53% of the book is held in floating-rate Pakistan Investment Bonds (PIBs) with a weighted average maturity of 4.13 years, while 18% is in fixed-rate PIBs with a maturity of 2.36 years. Treasury bills make up 29% of the portfolio, with an average maturity of just 0.38 years, ensuring liquidity. Additionally, the bank holds Rs70 billion in Eurobonds and Sukuks, with a significant portion maturing in FY2026.

On monetary operations, the bank has reduced its open market operation (OMO) exposure given expectations of interest rate adjustments. It has also ceased offering minimum deposit rates (MDR) to corporates since December 2024, which has supported net interest margins (NIMs).

Digital transformation remains a key focus for NBP. Over the past five years, the bank recorded Rs4.7 trillion in transaction value through its digital channels and generated Rs13 billion in non-funded income (NFI) revenue. Management emphasized that further investments in digital banking will support customer acquisition, efficiency, and fee-based revenue growth.

Looking ahead, NBP expects growth to be driven by equity investments and foreign bonds, particularly as its Eurobond holdings mature in FY2026. The bank’s strategy combines maintaining a strong capital buffer with selective investments in higher-yielding assets while pursuing digital expansion.

The strong half-year results reflect both opportunities and challenges. On one hand, deposit growth and a solid capital base position NBP well for future expansion. On the other, reduced advances highlight weak credit demand in the corporate sector and broader economic headwinds. Market risk weight increases will also test capital resilience in the years ahead.

Nevertheless, management expressed confidence that the bank’s diversified investment portfolio, strong liquidity, and digital focus will sustain earnings growth. With CASA ratios improving and costs fully accounted for, NBP remains among the strongest capitalized banks in the country, offering stability amid macroeconomic uncertainty.

NBP’s position, with deposits nearing Rs5 trillion, a CAR of 27.28%, and continued digital expansion, underscores its central role in Pakistan’s banking sector and its ability to weather regulatory and economic pressures.