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Banking Sector of Pakistan on 75th Anniversary of Nation: A Snapshot

On the diamond jubilee of Pakistan's inception, GVS looks at the banking sector of Pakistan and the crucial role it plays in the nation's economy.

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The effect of the recent downturn in the economy – with a worldwide rise in commodity prices, spiraling energy costs and political instability since the “No Confidence Motion” in March 2022 followed by the sudden fall of an elected government – on the banking sector has yet to be understood and documented. However, the banking sector till the end of 2021 looked promising. Despite the 2019-21 pandemic, banking assets grew, driven by record remittances, a construction boom and the sale of cars, tractors, and other automobiles. The pandemic saw an increase in mobile banking. At the end of 2020, the Capital Adequacy Ratio of Pakistani banks was around 18.6 percent, well above the required 11.5 percent.

The State Bank of Pakistan (SBP) is the Central Bank of Pakistan. It is responsible for regulating the monetary and credit system of the country and is instrumental in securing monetary stability and reasonable utilization of the country’s productive resources. Pakistan’s banking sector, regulated under the State Bank of Pakistan, comprises Commercial Banks, Foreign Banks, Islamic Banks, Development Financial Institutions and Microfinance Banks. By the end of 2021, the banking industry constituted around 31 banks, of which five were Public Sector Banks, 22 were Private Banks, and 4 were Foreign Banks.

Overview of top six banks in Pakistan

Habib Bank Limited was the largest Bank by assets at the end of 2021. It operates through its wide network of 1,751 branches and 2,007 ATMs and provides services in the areas of Branch Banking, Corporate Banking, Retail Financing, SME, and Investment Banking. It is headquartered in the financial capital of Pakistan i.e., Karachi. The Bank has branches in various countries, including Europe, Australia, the Middle East, America, Asia, and Africa. The shares of the Bank are listed on the Karachi Stock Exchange.

Read more: HBL – A ‘Technology Company with a Banking License’

Originally established in 1941, HBL moved its operations to Pakistan in 1947 at the request of Muhammad Ali Jinnah, the nation’s founder, hence becoming the first commercial bank to lay its foundation in the new country. Embarking on a progressive journey, HBL continued to grow and expand in successive years. The Bank’s first international branch opened in Colombo, Sri Lanka, in 1951, while the iconic HBL Plaza building commenced its operations on 4th September 1971 – for quite a while, it was the country’s tallest building attracting tourists from all over the nation and represented confidence of a generation.

With a sizeable domestic share, HBL was nationalized in 1974 by the Bhutto government. The Bank became a trendsetter in the banking industry, acquiring the lion’s share in inward foreign remittances and a major market share in loans to small industries, traders and farmers. In February 2004, the Bank was privatized, and management control was handed over to AKFED. By April 2015, the Government of Pakistan divested its entire shareholding of 41.5 percent through the Privatization Commission of Pakistan, making HBL Pakistan’s largest private Bank.

HBL has not just been a pioneer in the banking industry but has also been a platform that has enabled dreams for millions of people. It has time and again proven to be a catalyst for change by initiatives that have elevated Pakistan’s image and reputation. From bringing back international cricket to Pakistan through HBLPSL to helping strengthen the economy of the country through historic initiatives such as the Ehsaas Emergency Cash Program, HBL continues to enrich lives. In the ongoing economic crunch, instead of downsizing as many industries have done, HBL has launched a new credit initiative for its employees; you can find details in the GVS story, “HBL, Bank with a Soul, – stands hand in hand with its employees” (August Magazine)

National Bank of Pakistan, founded in 1949, is the largest state-owned bank operating in Pakistan and second in terms of its overall assets. It has an extensive branch network of over 1,509 branches in Pakistan, a global presence in 11 countries, and representative offices in China and Canada. The Bank acts as a trustee of public funds and agents to the SBP. It is headquartered in Karachi. It provides commercial and public sector banking services and is a leading player in the debt-equity market, investment banking, agriculture financing, retail financing, and treasury services. The Bank is majorly owned by the State Bank of Pakistan, which holds 75.20 percent voting rights as per the shareholding pattern as of December 2017.

Meezan Bank, third in the overall list of top banks, is Pakistan’s first and largest Islamic Bank which commenced its operations in 2002 after being issued the first-ever Islamic Commercial Banking license by the State Bank of Pakistan. It operates under the principle of Islamic Shariah and is recognized for its product development capability, Islamic Banking research, and advisory services. It provides a wide range of Islamic banking products and services through its wide retail branch network of more than 815 branches across Pakistan.

Read more: A move towards digital banking

Bank Alfalah is the fifth largest private Bank in Pakistan and commenced banking operation on 1st November 1997. It operates with more than 719 branches across Pakistan and has an international presence in Afghanistan, Bangladesh, Bahrain, and a representative office in UAE. The Bank is owned and operated by the Abu Dhabi Group. MCB Bank Limited is one of the oldest and top banks in Pakistan. Founded in 1947 and was nationalized in 1974 as part of the Government of Pakistan’s economic reform movement and was later privatized in 1991. The Bank has been conferred with the prestigious Euromoney Award for Best Investment Banks in Pakistan for two years (2016 and 2017). It provides commercial banking and related products and services in Pakistan, South Asia, the Middle East, and Eurasia. The Bank has a customer base of approximately 4 million and total assets of around PKR 1.91 trillion in 2021 and operates through a wide branch network of more than 1,400 branches. The Bank is headquartered in Lahore, Pakistan.

United Bank Limited, founded in 1959, is one of the oldest and largest commercial banks in the private sector in Pakistan. It operates through a wide network of more than 1,390 branches across Pakistan and has an overseas presence in more than 19 countries. The Bank is engaged in commercial banking and related services and is headquartered in Karachi, Pakistan.

UBL’s shares are listed on all three stock exchanges of Pakistan, and its Global Depository Receipts (GDR) are listed on the London Stock Exchange. The Bank employs more than 10,000 people and is committed to providing the best banking experience to its clients.

Read more: Digital banking for a digital Pakistan

Pakistan’s Banking Sector comprises Commercial Banks, Foreign Banks, Islamic Banks, Development Financial Institutions and Microfinance Banks. The industry constitutes around 31 banks, of which five are public sector banks, 22 are private banks, and 4 are foreign banks. A scheduled bank – a term originally in use since the pre-partition India – is one that maintains a paid-up capital of Rs. 500 million.

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