Seven Pakistani banking stocks emerged among the top-performing lenders in the Asia-Pacific region in 2025, driven by low base valuations, improving profitability, elevated interest rates, balance-sheet clean-up, and renewed investor confidence in Pakistan’s macroeconomic outlook.
According to data compiled by S&P Global Market Intelligence, Pakistani banks dominated the rankings of best-performing Asia-Pacific bank stocks based on total shareholder return as of December 31, 2025. The Bank of Punjab (BOP) led the list with a return of 333.8%, followed by the National Bank of Pakistan (NBP) at 301.3%. Askari Bank Limited secured third place with a return of 194.2%, while Bank of Khyber ranked among the top four performers.
Other Pakistani lenders featured in the top 15 included United Bank Limited (UBL), Bank Makramah Limited, and Faysal Bank, highlighting the sector’s strong performance relative to regional peers.
“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,” said Ali Najib, Deputy Head of Trading at Arif Habib Limited, in comments to The Express Tribune. He added that smaller and mid-sized banks generally outperformed larger peers as part of a broader valuation re-rating cycle.
The Asia-Pacific rankings also included several Japanese regional banks, which posted triple-digit returns despite relatively small market capitalisations. Their gains were largely supported by expectations of monetary policy normalisation, improving net interest margins, and restructuring initiatives within Japan’s regional banking sector.
The strong showing of banking stocks coincided with a broader rally in Pakistan’s equity market. The benchmark KSE-100 Index rose 52% in rupee terms during 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 select 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 underpinned performance across several banks.
Despite the strong rally, analysts cautioned that the surge reflects a recovery from previously depressed valuations rather than a definitive re-rating based on structural reforms. They noted that the key test for the sector will be its ability to sustain profitability and asset quality as interest rates decline and macroeconomic risks potentially re-emerge.
