KSE-100 earnings rise 8.8% to Rs1.24tr in 9MFY26

Banks, OGMCs, refineries drive growth; E&P and fertiliser sectors decline

KARACHI:

Pakistan's benchmark equity market, the KSE-100 index, delivered a steady earnings performance during the first nine months of FY26, with aggregate profitability rising 8.8% year-on-year (YoY) to Rs1.243 trillion. The growth comes despite mixed macroeconomic conditions and uneven sectoral performance, reflecting resilience in key industries and the impact of easing financial costs across the board.

A detailed report issued by Arif Habib Limited (AHL) covers 82 listed companies representing approximately 88% of the KSE-100 index's total market capitalisation, providing a comprehensive snapshot of corporate earnings trends. AHL highlighted that while some sectors faced headwinds from declining global commodity prices and demand constraints, others benefited significantly from cost efficiencies, improved margins and favourable policy dynamics.

"KSE-100 companies have posted an exceptional earnings performance, with profitability reaching a record Rs457 billion in 3QFY26 and Rs1,243 billion in 9MFY26, reflecting the strength of the ongoing corporate earnings cycle. This growth is broad-based, led by key sectors including banks, fertilisers, E&Ps, OGMCs, cements and refineries," AHL economist Sana Tawfik told The Express Tribune.

She said the surge was driven by margin expansion in cyclical sectors, higher non-funded income and provisioning reversals in banks, along with improved crack spreads and volumetric gains in energy, signalling resilient earnings.

The banking sector, which holds the largest weight in the index, remained a key pillar of profitability, posting earnings of Rs483 billion during the nine-month period, a 3% YoY increase. The growth was largely attributed to a strategic shift towards current deposits, which significantly reduced interest expenses by 19% YoY. On a quarterly basis, banks recorded an 8.7% increase in profits to Rs173 billion, indicating improving momentum towards the latter part of the period.

Among other major contributors, the cement sector posted a 7% YoY rise in profits to Rs65 billion (excluding Lucky Cement), driven by a 14% decline in coal prices and a 10% increase in dispatch volumes. Lower finance costs further supported margins, although reduced other income in a declining interest rate environment limited upside potential. The oil and gas marketing companies (OGMCs) emerged as standout performers, recording a robust 58% YoY increase in earnings to Rs63.1 billion, compared with Rs40 billion in the same period last year. This surge was primarily driven by inventory gains, particularly during the third quarter, along with higher average product prices and reduced borrowing costs.

Similarly, the auto assembler sector witnessed a strong recovery, with profits increasing 25% YoY to Rs48 billion (excluding select companies). The growth was fuelled by improved sales volumes, new model launches, a gradual revival in auto financing and stronger balance sheets that enhanced other income streams.

On the other hand, several sectors faced notable declines. The exploration and production (E&P) segment reported a 9% YoY drop in profitability to Rs226 billion, impacted by lower international oil prices.