Pakistan Banks: Higher Spreads Drove Sector’s Profitability in 9MCY19 – By Shajar Research

<ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">Banking Sector profitability surges by 48% YoY in 3QCY19 as July&rsquo;s Policy Rate hike of 100bps help spreads rising to five year high of 6.17% in September. Headline spreads averaged around 6.03% in 3QCY19 vs 4.86% in 3QCY18. Moreover, we expect spreads to rise further as advances continue to reprice given certain advances are on a half-yearly/annual reset.</span></li><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">In 3QCY19 NII rose by a healthy 33% YoY whereas non-interest income surged by 17% YoY on back of 15% YoY increase in FX income. Highest growth in EPS during 3QCY19 was witnessed by HBL (up 222% YoY) and Meezan bank (up 72.2% YoY). Moreover, cumulative industry profits for 9MCY19 grew by ~20% YoY to reach PKR...