National Bank of Pakistan (PSX: NBP) reported a 25% decline in unconsolidated profit after tax to Rs32.41 billion for the half year ended June 30, 2026, compared with Rs43.47 billion a year earlier.
Second-quarter profit dropped to Rs15.68 billion from Rs22.02 billion, while half-year earnings per share fell to Rs15.23 from Rs20.43.
The bank’s board also recommended no cash dividend, bonus shares or rights issue for the period.
Lower Interest Income Weighs On Profit
NBP’s core interest earnings came under pressure as interest rates moved lower.
Mark-up earned declined to Rs361.71 billion from Rs410.90 billion, while mark-up expense fell to Rs261.65 billion from Rs280.34 billion.
As a result, net interest income dropped 23% to Rs100.06 billion, compared with Rs130.56 billion in the same period last year.
Non-interest income provided limited support, rising slightly to Rs27.57 billion. However, fee and commission income fell to Rs13.64 billion from Rs14.75 billion.
Rising Expenses Add Pressure
The bank’s operating expenses increased to Rs65.52 billion from Rs59.11 billion.
Profit before provisions fell sharply to Rs62.09 billion from Rs98 billion, showing that weaker core income and higher expenses continued to affect profitability.
NBP did benefit from credit provisions, which moved to a net reversal of Rs8.26 billion, compared with a net charge of Rs4.77 billion a year earlier.
Without this reversal, the decline in underlying earnings would have been even more pronounced.
Deposits Decline As Borrowings Rise
NBP’s deposits and other accounts fell to Rs4.22 trillion, down from Rs4.43 trillion at the end of December 2025.
Advances also declined slightly to Rs1.31 trillion from Rs1.34 trillion.
At the same time, borrowings surged to Rs2.82 trillion from Rs1.69 trillion, while investments increased to Rs5.67 trillion from Rs4.92 trillion.
The figures indicate that the bank relied more heavily on borrowed funds while its deposit base contracted.
Stock Faces Pressure After Results
NBP shares also came under pressure following the results, with the stock falling from around Rs202 to approximately Rs188.80, a decline of more than 6% during the session.
The market reaction reflects concerns over weaker profitability, shrinking deposits and the absence of an interim dividend.
Dividend Decision Draws Attention
NBP had paid a Rs35 per-share dividend for 2025, but shareholders will receive no interim cash payout for the current half year under the board’s recommendation.
The decision is particularly notable as investors continue to assess banking stocks based on both earnings and dividend returns.
With profits down 25%, deposits declining and borrowings rising sharply, NBP’s latest results point to a more challenging operating environment for the state-owned bank.