Islamabad: Despite an anticipated drop in earnings per share, Pakistan's banking sector is expected to maintain its dividend payments in the second quarter of CY2024. The banks are set to report a 16% decline in bottom-line performance compared to the first quarter, influenced by higher taxes and reduced asset depreciation relief.

According to JS Global, the upcoming financial results for the second quarter will likely see banks sustaining their core income levels, following a significant decrease in the previous quarter. Net Interest Income (NII) is projected to increase by 5% quarter-on-quarter, although the growth in fee income might decelerate as the benefits from securities sales and foreign exchange income return to normal levels.

The report suggests that the slowing inflation rate could moderate the rise in operating expenses, helping to stabilize the Cost to Income ratio at around 43%, slightly up from 42% in the first quarter. United Bank Limited (UBL) might be an exception, potentially maintaining a dividend payout ratio above 100% if it continues its current dividend strategy. However, the possibility of one-time gains, similar to those recorded in the first quarter, could keep UBL’s payout ratio below the threshold.