BoP, NBP lead gains; analysts warn rally reflects recovery from depressed levels not definitive re-rating
Seven Pakistani banking stocks ranked among the top performers in the Asia-Pacific region in 2025, supported by a combination of low base valuations, improving profitability, a relatively high interest-rate environment, balance-sheet clean-up, and renewed investor confidence in Pakistan’s macroeconomic outlook during the year.
Pakistani banking stocks were led by the Bank of Punjab (BOP), the National Bank of Pakistan (NBP), Askari Bank Limited and Bank of Khyber in the top four spots according to data compiled by S&P Global Market Intelligence. This is followed by United Bank Limited (UBL), Bank Makramah Limited and Faysal Bank at different spots in a list of 15 banks.
As per the data on best-performing Asia-Pacific bank stocks based on total shareholder return as of December 31, 2025, BOP recorded the highest return at 333.8%, followed by NBP with a gain of 301.3%. Askari Bank placed third among Pakistani lenders with a return of 194.2%. The data highlights a strong showing by Pakistani lenders compared with peers across the Asia-Pacific region during the year.
“The performance reflects a combination of low base valuations, improvement in profitability, elevated interest rates, balance-sheet clean-up, and better investor sentiment toward Pakistan’s macroeconomic outlook during 2025,” Ali Najib, Deputy Head of Trading at Arif Habib Limited, told The Express Tribune. He added that smaller and mid-sized banks generally outperformed larger peers as part of a valuation re-rating cycle.
The list also included several Japanese regional banks, which posted triple-digit returns despite relatively small market capitalisations. Their performance was largely driven by expectations of monetary policy normalisation, improvement in net interest margins, and restructuring efforts within Japan’s regional banking sector.
The strong showing of banking stocks coincided with a broader rise in Pakistan’s equity market. The benchmark KSE-100 Index gained 52% in rupee terms in 2025, while total market capitalisation at the Pakistan Stock Exchange increased by 39% to Rs19.7 trillion, or approximately $70 billion.
According to Topline Securities, the banking sector remained a key focus for investors due to valuation catch-up, net interest income growth, and capital gains recorded by certain banks. In its Pakistan Strategy report for 2025, Topline identified commercial banks as one of the best-performing large-cap sectors, alongside cement and fertiliser.
On a sectoral basis, the market capitalisation of listed banks rose by 85% during the year, compared with increases of 81% in cement and 57% in fertiliser. Topline noted that earnings growth, dividend resumptions, and stronger balance sheets supported performance across select banks.
While the Asia-Pacific data places Pakistan’s banks at the top of the 2025 performance rankings, analysts caution that the rally reflects a recovery from depressed levels rather than a definitive re-rating based on structural reforms. The key test for the sector will be its ability to sustain profitability and asset quality as interest rates decline and macroeconomic risks re-emerge.
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