National Bank of Pakistan

CREDIT RATING REPORT | Jun-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
23-Jun-25 AAA A1+ Stable Maintain -
22-Jun-24 AAA A1+ Stable Maintain -
23-Jun-23 AAA A1+ Stable Maintain -
25-Jun-22 AAA A1+ Stable Maintain -
25-Jun-21 AAA A1+ Stable Maintain -
About the Entity

National Bank of Pakistan (NBP), Pakistan's second largest public sector commercial Bank, operates over 1,503 branches domestically and 16 branches internationally as of Dec'24. Majority-owned by the Government of Pakistan through the State Bank of Pakistan, NBP manages approximately 12.16% of the country's total deposits and plays a key role in government treasury operations. Mr. Rehmat Ali Hasnie, with over 27 years in Investment Banking and Risk Management, is the CEO/President since May 2022.

Rating Rationale

The assigned ratings reflect that National Bank of Pakistan (NBP) demonstrates a strong position within the domestic commercial banking sector, supported by a sound financial risk profile and a significant share of the national deposit base. Its substantial risk absorption capacity and systemic importance contribute meaningfully to its high credit ratings. Additionally, the ratings are reinforced by its strong ownership structure, with the Government of Pakistan (GoP) holding a majority stake. National Bank of Pakistan (NBP) has undertaken a comprehensive digital transformation, including the upgrade of its Core Banking Application, deployment of robust cybersecurity across 6,000+ network points, and replacement of obsolete equipment. The Bank has expanded its digital offerings through new ATMs, mobile apps (conventional and Islamic), EMV/contactless debit cards, Roshan Digital Accounts, Huawei Pay, and API development. Additionally, NBP enhanced its digital infrastructure with an Internet Payment Gateway and became the first Bank to go live on SBP’s RAAST instant payment system. As of December 2024, the Bank's total deposits increased by 5%, reaching PKR 3,865 billion compared to PKR 3,674 billion at the end of 2023. A substantial portion of the Bank’s funding 94% is derived from stable customer deposits. Current deposits stood at PKR 1,948 billion, representing 50.4% of total deposits, supporting the Bank’s strong liquidity position. The Bank maintained a high CASA ratio of 79.5%. The Bank’s advances rose slightly and reached at PKR 1,405 billion from PKR 1,398 billion in 2023. This growth was broad-based across key segments, including SME and commercial, agriculture, Islamic, consumer finance, and lending to women, as well as women-owned and managed enterprises. As a result, the advances-to-deposits ratio was 43.3% at year-end 2024. Non-performing loans (NPLs) increased by 21.9%, reaching PKR 269 billion (2023: PKR 221 billion), leading to an infection ratio of 16.1%. This increase was primarily attributable to a single large borrower, which is expected to regularize shortly and does not require provisioning. With credit loss allowances of PKR 225.8 billion, the Bank maintained a strong NPL coverage ratio of 83.9%. The Bank's investments grew by nearly 5% to PKR 4,612 billion, supported by a well-diversified portfolio aligned with its effective yield, interest rate risk, and liquidity management strategy. The Bank’s equity base grew by 19% to PKR 457 billion, up from PKR 383 billion in the previous year, supported by a robust Capital Adequacy Ratio (CAR) of 27.8% the highest in the industry. NBP has enhanced its cybersecurity framework and is in the process of upgrading and implementing a new core banking application in 2025. The Bank currently operates on the "Fidelity Information Services" (FIS) core banking platform. These developments reflect NBP’s continued focus on operational resilience, technological advancement, and prudent financial management. Collectively, they position the Bank to sustain its leadership in Pakistan’s commercial banking sector while navigating emerging risks and opportunities.

Key Rating Drivers

Bank demonstrated significant revenue growth through effective management of its assets, maintaining or improving profit margins will be crucial for sustainable financial health in the future.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

National Bank of Pakistan

rating analysis

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Profile
Structure

National Bank of Pakistan (NBP) was incorporated as a public limited Company, under NBP Ordinance 1949 and is listed on Pakistan Stock Exchange (PSX).


Background

NBP is the second-largest lending institution in the country and provides banking services to all types of consumers in all elds of the economy. NBP is authorized to act as an agent of the State Bank of Pakistan (SBP) and handles treasury operations for the Government of Pakistan (GoP)


Operations

With 1,503 branches – including 207 Islamic branches – the Bank has the second largest branch network in Pakistan with all branches online with Core Banking Application (CBA). NBP also operates 16 overseas branches to cater the needs of locals as well as expatriates. The registered head office of the Bank is situated at I.I. Chundrigar Road, Karachi. The Bank is engaged in providing commercial banking and related services in Pakistan and overseas. The Bank also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP).


Ownership
Ownership Structure

NBP is majorly owned (75.6%) by the Government of Pakistan (GoP), mainly through the SBP (75.2%). Other major shareholders include Foreign Companies (7.03%), Public Sector Companies (5.59%), and the general public (5.44%) and remaing captured by others.


Stability

Being the largest public sector commercial Bank, NBP is of strategic importance to the GoP. An implicit guarantee is provided against liabilities (deposits) of NBP under the Bank’s (Nationalization) Act, 1974.


Business Acumen

SBP, which has a major stake in NBP on behalf of GoP, provides it with industry-specicific working knowledge and strategic capability as it has a holistic view of the entire industry.


Financial Strength

The GoP has assisted the Bank in the past and shall continue to support it as an implicit guarantee is provided against liabilities (deposits) of NBP under The Bank’s (Nationalization) Act, 1974. Apart from NBP, the parent Bank (SBP) has a fully owned subsidiary with the name SBP Banking Services Corporation (SBP-BSC), the operational arm of the central Bank work with 16 cities across Pakistan.


Governance
Board Structure

According to BNA, 1974, the Bank is required to have a minimum of five members on board at any point in time. The President / CEO is only Executive Director. The remaining Board consists of one non-executive director and seven independent directors including one independent director representing minority shareholders as required by the Code of Corporate Governance. With directors nominated by the GoP, the risk of political intervention remains.


Members’ Profile

The Board carries diversified experience including the financial sector, particularly banking, civil services, and other businesses. The majority of the directors have above two decades of experience. The directors having requisite experience and education are exempt from, SECP’s Code of Corporate Governance.


Board Effectiveness

During CY24, "13" Board meetings (CY23: 15) were held; the attendance of directors remained high. Relatively, a large number of meetings reflect continuous monitoring of affairs of overseeing operations


Financial Transparency

The Bank has joint External Auditors; BDO and A.F Ferguson and Co. chartered accountants. The Joint auditors expressed an unqualified opinion on the Bank’s financial statements for the year ended December 31, 2024.


Management
Organizational Structure

NBP has a lean organizational structure that clearly defines responsibilities, authority, and reporting lines with proper monitoring and compliance mechanism. NBP has divided its functions into 20 departments, each of which reports directly to the President, except the Audit & Inspection, which reports to the Board Audit Committe.


Management Team

NBP’s senior management team comprises experienced bankers. Mr. Rehmat Ali Hasnie is the acting president and CEO of the Bank. He is serving in NBP since 2010 and has been the group chief of the Inclusive Development Group (IDG) since 2019. Mr. Abdul wahid Sethi is the Chief Financial Officer of the Bank.He is a fellow member of the ICAP and holds an MBA Finance Degree from Imperial College Lahore. He has also served the Bank as SEVP/Chief Internal Auditor of the Bank. Prior to joining NBP in 2009, he worked at senior positions with various reputed Organizations. Mr. Haroon Zameer is Chief Risk officer, he has over three decades of experience of banking and finance in Pakistan, Singapore, Britain, and the Middle East. During his career he has worked in different leadership roles in corporate relationship management, leveraged finance, venture capital, banking operations, and risk management in American, European, Pakistani, and Japanese Organisations. Mr. Amin Manji is serving as Group Cheif information Technology, the Bank’s CTO, brings more than 30 years of IT experience in Financial Services. Prior to joining NBP, Amin has held a variety of technology roles at various large Banks. With expertise in IT Strategy, Technology & Digital Transformation and Disaster Recovery, he has a track record of developing high performance teams and strategically utilising technology to deliver complex IT solutions in a globally interconnected and culturally diverse environment. Mr. Muhammad Ismail currently serves as Group Cheif treasury and capital markets, Thirty years experienced treasury professional and in his current position, as the Group Chief Treasury & Capital Markets Group, he manages interest rate, foreign exchange and liquidity risks of the Bank. Ismail is an IBA graduate and joined NBP Treasury in 2004.


Effectiveness

NBP has an effective mix of management committees that are established to monitor performance and assure adherence to the policies and procedures. The Committees are 01) Audit Committee, 02)HR & Remuneration Committee, 03) Inclusive Development Committee , 04) Risk & Compliance Committee ,05) Strategy Committee and 06) Technology & Digitalization Committee


MIS

NBP has strengthened its cybersecurity framework and is in the process of upgrading and rolling out its core banking application in 2025. The Bank is currently operating on the "Fidelity Information Services" (FIS) core banking system.


Risk Management Framework

NBP’s risk management framework resides with Risk Management Group (RMG). RMG develops risk management policies and tools in line with SBP guidelines while ensuring implementation by respective departments.


Business Risk
Industry Dynamics

During the year, Pakistan's commercial Banking sector's total assets posted growth of ~15.8% YoY whilst investments surged by ~14.5% to PKR ~29.4trln (endDec23: PKR ~25.6trln). Gross Advances of the sector recorded growth of ~29.78% to stand at PKR ~16.914trln (end-Dec23: PKR ~13.101trln). Non-performing loans witnessed an increase of 7.35%% YoY to PKR ~1,067bln (end-Dec23: ~994bln). The CAR averaged at 20.4% (end Dec23: 19.4%). Looking ahead, given the expected monetary rate cut and high cost environment, Banks are likely to sustain some dilution in profitability by CY25. Source: SBP Compendium.


Relative Position

NBP maintained its position as the second largest commercial Bank in the country in terms of customer deposits with a market share of 12% at end Dec24 (end-Dec23:19%)


Revenues

During December 2024, the Bank's mark-up income posted a notable year-on-year increase of 6.3%, rising to PKR 1,089.6 bln from PKR 1,024.6 bln in December 2023. This growth reflects the Bank's improved capacity to generate interest income from its lending and investment operations.


Performance

In December 2024, NBP witnessed a decline in both its asset yield and cost of funds, reflecting the challenging macroeconomic conditions and the Bank’s internal financial management approach. The asset yield declined to 18.2%, down from 19.2% in December 2023, indicating that the Bank did not fully capitalize on opportunities to generate higher returns through more lucrative lending. However, this decline was partially offset by a notable reduction in the cost of funds, which fell to 15.8% from 16.3% over the same period. This reduction was primarily driven by a higher share of low-cost deposits and the impact of relatively lower policy rates on borrowing costs.


Sustainability

Moving forward, NBP will prioritize the expansion of its lending book, with a particular focus on the LSM sectors of textiles, power and gas, and metal products. In addition, the management intends to explore opportunities in international operations to grow the deposit base, trade business, and FI lending resulting in improvements in both funded and non-funded income.


Financial Risk
Credit Risk

The Bank’s earning assets – mainly comprising advances and investments – constitute 66.1% of total assets. Given the increase in loan demand in the private sector, gross advances of the Bank stood at PKR 1,404bln at the end Dec-24 and as compared to Dec-23 it is at 1,398bln. As of the end of December 2024, the infection ratio rose to 16.1%, up from 13.5% in the same period last year, driven by an increase in non-performing loans (NPLs), which surged to PKR 43bln from PKR 17bln a year earlier


Market Risk

In December 2024, NBP’s investment portfolio expanded by approximately 5% year-over-year, reaching PKR 4,612bln, up from PKR 4,403bln in December 2023. Around 95% of this portfolio was allocated to government securities, including T-Bills, PIBs, and Ijara Sukuks. This growth, supported by increased deposits, highlights the Bank’s prudent and risk-averse investment strategy, focused on capital preservation and delivering stable, predictable returns.


Liquidity and Funding

In December 2024, the Bank's liquidity ratio increased to 77.6%, up from 66.9% in December 2023. This improvement was primarily driven by significant growth in both customer deposits and borrowings. The Bank's total deposits grew by 5.1% year-over-year, reaching PKR 3,865bln compared to PKR 3,674bln in December 2023. The enhanced liquidity position indicates a stronger capacity to meet short-term obligations and provides a solid foundation to support the Bank's future lending and investment initiatives.


Capitalization

The Bank’s capitalization remained healthy with equity to total assets at 6.8% at end-Dec24 (end-Dec23: 5.8%); in line with peers. The CAR of the bank reported at the end of Dec-24 was 27.8% (CY:23 25.47%).
 
 

Jun-25

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National Bank of Pakistan

financial summary

(PKR mln)

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Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Stage I | Advances - net 1,372,221 1,384,887 1,218,401
2. Stage II | Advances - net (10,809) 0 0
3. Stage III | Non-Performing Advances 269,289 220,826 205,307
4. Stage III | Impairment Provision (225,833) (207,636) (193,187)
5. Investments in Government Securities 4,369,891 4,193,233 3,306,789
6. Other Investments 242,284 210,131 170,565
7. Other Earning Assets 86,653 248,676 56,825
8. Non-Earning Assets 640,223 602,590 475,724
Total Assets 6,744,048 6,652,707 5,240,424
6. Deposits 3,865,565 3,674,359 2,666,184
7. Borrowings 1,945,787 2,186,008 1,948,754
8. Other Liabilities (Non-Interest Bearing) 475,775 409,584 324,639
Total Liabilities 6,287,127 6,269,952 4,939,577
Equity 456,951 382,756 300,848
B. INCOME STATEMENT
1. Mark Up Earned 1,089,415 1,024,658 503,310
2. Mark Up Expensed (918,527) (855,910) (386,484)
3. Non Mark Up Income 65,426 40,606 36,683
Total Income 236,314 209,354 153,510
4. Non-Mark Up Expenses (177,379) (93,632) (78,173)
5. Provisions/Write offs/Reversals (2,258) (14,469) (12,601)
Pre-Tax Profit 56,677 101,253 62,737
6. Taxes (29,811) (49,413) (32,327)
Profit After Tax 26,866 51,840 30,410
C. RATIO ANALYSIS
1. Performance
Net Mark Up Income / Avg. Assets 2.6% 2.8% 2.6%
Non-Mark Up Expenses / Total Income 75.1% 44.7% 50.9%
ROE 6.4% 15.2% 10.4%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 6.8% 5.8% 5.7%
Capital Adequacy Ratio 27.8% 25.5% 21.6%
3. Funding & Liquidity
Liquid Assets / (Deposits + Borrowings Net of Repo) 77.6% 66.9% 63.6%
Net Financial Assets to Deposits Ratio [(Total Finances - net + Non-Performing Finances - net) / Deposits] 36.34% 38.05% 46.15%
Current Deposits / Deposits 50.3% 53.6% 49.1%
Saving Deposits / Deposits 29.1% 25.2% 30.3%
4. Credit Risk
Impaired Loan Ratio | [Stage III | Non-Performing Advances / Gross Advances] 16.1% 13.5% 14.3%

Jun-25

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National Bank of Pakistan

rating scale

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Jun-25

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National Bank of Pakistan

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
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    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
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    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
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  5. Monitoring and Review
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  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
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Jun-25

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