Karachi: National Bank of Pakistan (NBP) has reported a 30% year-on-year decrease in its earnings for the third quarter of 2026, with consolidated earnings standing at Rs16.1 billion, translating to earnings per share (EPS) of Rs7.57. This performance, though a decline, exceeded expectations primarily due to lower-than-anticipated operating expenses.

According to JS Global, the bank's results surpassed forecasts as it did not incorporate an expected Rs6 billion additional pension expense following a constitutional court decision. This adjustment contributed to a 9-month cumulative earnings of Rs48.6 billion, showing a 26% year-on-year decline. During the quarter, non-interest expenses rose by 5% year-on-year to Rs32.5 billion but showed a quarter-on-quarter reduction of 12%, adjusting the cost-to-income ratio to 48% from 40% in the same quarter last year and 54% in the previous quarter.

Net interest income (NII) experienced an 8% year-on-year decline, reaching Rs56.0 billion, although it showed a 16% increase on a quarterly basis, largely due to asset repricing. In contrast, non-interest income fell sharply by 32% year-on-year and 46% quarter-on-quarter to Rs11.1 billion, impacted by reduced fee and commission income, dividends, and foreign exchange earnings, with capital gains decreasing to Rs4.5 billion from Rs5.8 billion in the preceding quarter.

The bank recorded a reversal of Rs0.8 billion in the third quarter, a decrease from the Rs3.9 billion reversal in the same period last year and Rs1.8 billion in the previous quarter. The effective tax rate for the quarter was 54%, slightly up from 53% a year ago and 51% in the second quarter of 2026.

On the balance sheet, NBP's deposits saw a 6% year-on-year and 5% quarter-on-quarter decline to Rs4.0 trillion as of September 2026. Advances increased by 8% year-on-year and 4% quarter-on-quarter to Rs1.36 trillion, while investments rose by 15% year-on-year but decreased by 5% quarter-on-quarter to Rs5.37 trillion. Borrowings surged by 88% year-on-year and 3% quarter-on-quarter to Rs2.91 trillion. The bank did not declare any dividend due to regulatory requirements concerning year-end dividends. Despite these financial results, JS Global maintains a buy recommendation on NBP, with the stock trading at an estimated 2026 price-to-earnings ratio of 4.8x and a price-to-book value ratio of 0.7x.