Karachi: Earnings estimates for major Pakistani banks, including UBL, HBL, and BAFL, have been revised upwards, reflecting stronger-than-anticipated balance sheet growth and non-funded income. The upgrades, ranging from 11% to 30% for 2026 and 2027, highlight robust capital gains and FX income as key contributors.
According to JS Global, the revisions are based on insights from analyst briefings, recent quarterly results, and an optimistic interest rate outlook. The analysis underscores a significant shift in income streams, particularly in non-funded income, which has outpaced initial estimates.
For UBL, earnings projections have been increased by 13% to 17%, with expected earnings per share reaching Rs59.5 for 2026 and Rs62.6 for 2027. UBL's deposit growth is projected at 32% in 2026, following an impressive 96% growth in 2025. An improved current account mix and growth in non-funded income are seen as primary earnings drivers. UBL's stock is currently valued at Rs425 per share, with a 2027 forecasted P/E ratio of 6.8 and a P/B ratio of 1.8, offering an 8% dividend yield.
HBL has seen an upgrade in earnings estimates by 11% to 15%, attributed to an improved deposit mix and increased non-funded income. For 2026, non-funded income is expected to grow by 12% annually to Rs96 billion, driven by fee, commission, and FX income. Despite anticipated moderation in 2027, HBL remains a strong performer, trading at Rs300 per share with a 2027 P/E ratio of 5.8 and a P/B ratio of 0.8, and providing an 8% dividend yield.
BAFL's earnings estimates have been revised up by 24% to 30%, reflecting stronger current account growth, higher FX income, and enhanced treasury management. The bank's cost-to-income ratio is expected to fall to 62% in 2026 from 64% in 2025. BAFL's stock trades at Rs59 per share, with a 2027 P/E ratio of 5.1 and a P/B ratio of 0.9, delivering a 10% dividend yield.
The analysis retains UBL and MEBL as preferred picks in the sector, with the Topline Banking universe trading at a 2027 forecasted P/E ratio of 7.0 and a P/B ratio of 1.4, alongside an average return on equity of 21% and an 8% dividend yield.