S&P Global Ranks Pakistani Banks as Asia-Pacific’s Top Performers

Pakistan’s Banking Sector Outshines Regional Peers

Pakistan’s banking sector has outperformed all of Asia-Pacific in the third quarter of 2025, according to new data released by S&P Global Market Intelligence. The report highlights how Pakistani banks delivered the highest total returns in the region, buoyed by strong investor confidence, stock market rallies, and improving macroeconomic stability.

The standout performer, The Bank of Punjab (BOP), secured the top position among all publicly traded banks in the Asia-Pacific with a market capitalization exceeding $100 million. The Bank of Khyber (BOK) followed closely behind, ranking second overall with a staggering total return of 108.2% during the quarter.

Other Pakistani banks that made it into the top 15 list include the National Bank of Pakistan (NBP), JS Bank Ltd., Askari Bank Ltd., and Habib Bank Ltd. (HBL) — further cementing Pakistan’s dominance in the regional banking landscape.

A Historic Quarter for Pakistan’s Banking Stocks

The rally in banking stocks comes amid a period of renewed optimism in Pakistan’s financial markets, with the KSE-100 Index posting strong gains for five consecutive months. Improved investor sentiment, driven by economic reforms, foreign investment prospects, and easing geopolitical tensions, played a crucial role in driving bank valuations upward.

According to S&P Global data, the KSE-100 Index gained 11% in July and 11.4% in September 2025, underscoring sustained investor interest in Pakistani equities. Analysts attribute this performance to a series of positive developments, including the resolution of a border standoff with India and renewed diplomatic engagement with the United States, particularly meetings between Pakistani leadership and former U.S. President Donald Trump.

Top Performers Across Asia-Pacific

While Pakistani banks led the region, several other Asia-Pacific institutions also posted strong gains. Indonesia’s PT Allo Bank Indonesia Tbk secured the third spot with a total return of 89.2%, reflecting the strength of Indonesia’s digital banking sector.

In Vietnam, three banks — including Vietnam Prosperity Joint Stock Commercial Bank (VPBank), which boasts the largest market capitalization among the top 15 at $9.34 billion — also featured prominently. These institutions benefited from a robust domestic economy and rising credit growth across Southeast Asia.

Why Pakistani Banks Are Leading the Region

Experts believe several key factors contributed to Pakistan’s banking sector boom in Q3 2025:

1. Stock Market Rally:
   The sustained rise in the KSE-100 Index boosted investor wealth and confidence, prompting large inflows into bank stocks.

2. Stable Monetary Policy:
   The State Bank of Pakistan (SBP) maintained a balanced monetary policy, stabilizing interest rates and improving banking margins.

3. Strong Financial Results:
   Pakistani banks posted solid quarterly earnings, reflecting strong loan growth, controlled non-performing loans (NPLs), and improved fee-based income.

4. Digital Transformation:
   Banks like JS Bank and HBL continued to expand their digital banking networks, reducing operational costs and increasing customer reach.

5. Government Support and Reforms:
   The government’s Special Investment Facilitation Council (SIFC) and fiscal reforms helped create a favorable investment climate, drawing both local and foreign investors into the financial sector.

These elements combined to position Pakistani banks as attractive investment options in the Asia-Pacific region, where several other markets continue to grapple with economic slowdowns.

Regional Comparison: Who’s Falling Behind

While Pakistan and Southeast Asia saw impressive performances, the story was starkly different in other parts of the region. Chinese and Indian banks dominated the list of the worst-performing banking stocks during Q3 2025.

According to S&P Global’s report, seven out of the 15 worst-performing banks were Chinese, led by Bank of Jiujiang Co. Ltd., which suffered a negative total return of 18.2%. Other struggling institutions included China Everbright Bank, Bank of Beijing, Hua Xia Bank, Bank of Shanghai, Industrial Bank, and Bank of Jiangsu.

In India, five banks were listed among the worst performers: Aavas Financiers Ltd., Dhanlaxmi Bank Ltd., IndusInd Bank Ltd., Equitas Small Finance Bank Ltd., and Bajaj Holdings & Investment Ltd. Analysts cited credit quality concerns and valuation pressures as key drivers of underperformance.

Meanwhile, Indonesia’s PT Bank Nationalnobu Tbk was ranked the worst-performing bank stock in Asia-Pacific, with a negative 31.9% return for the quarter. Bangladesh’s Midland Bank PLC, which had led the region in the previous quarter, slumped to third-worst with a 20.9% decline, followed by South Korea’s KakaoBank Corp., which posted a negative 20.8% return.

Pakistan’s Financial Market Outlook

With Pakistani banks now leading Asia-Pacific’s financial sector, market analysts are optimistic about continued growth in Q4 2025 and beyond. Improved liquidity, stable inflation, and upcoming reforms in banking regulation are expected to sustain investor confidence.

Economists also predict that Pakistan’s credit rating outlook could improve if macroeconomic stability continues and fiscal reforms remain on track. Increased foreign participation in the Pakistan Stock Exchange (PSX) and successful Eurobond repayments have already strengthened Pakistan’s financial credibility internationally.

Expert Opinions

Financial analyst Khurram Schehzad noted that Pakistani banking stocks’ exceptional performance underscores “a renewed sense of stability and growth optimism in the country’s economy.” He emphasized that consistent returns across multiple banks reflect sector-wide health, not just isolated success stories.

Conclusion

The S&P Global Market Intelligence report has reaffirmed what many investors have sensed — that Pakistan’s banking sector is entering a new era of growth and global relevance. With multiple institutions ranking among Asia-Pacific’s top performers, the country’s financial system is showing resilience, adaptability, and renewed investor appeal.