Banks Report Billions in Equity Lost After Paying Dividends to Shareholders

Pakistan’s listed banking sector recorded a sharp decline in equity balances during March 2026 after high market yields and heavy dividend payouts erased investment gains accumulated over previous quarters.

According to sector data illustrated by Topline Securities, total equity across listed banks fell by roughly 9 percent quarter-on-quarter (QoQ).

The decline came primarily after banks announced and distributed dividends while simultaneously facing higher secondary market yields, which reduced unrealized investment surpluses on government securities portfolios.

The impact was uneven across institutions, with some of the country’s largest banks experiencing massive erosion in equity buffers. National Bank of Pakistan posted the biggest drop at around 18.6 percent, followed by United Bank Limited with a decline of approximately 16.4 percent.

Other heavily affected institutions included Bank of Khyber, Bank AL Habib Limited, and Sindh Bank Limited, each reporting notable equity contractions as investment revaluations turned negative.

The decline can be attributed to Pakistan’s high-interest-rate environment. As bond yields rose in secondary markets, the market value of previously accumulated fixed-income investments declined which reversed gains that had supported bank balance sheets in previous quarters.

Despite the equity drop, it does not necessarily mean that there’s solvency stress. Instead, it reflects valuation adjustments combined with aggressive dividend distributions that reduced retained capital levels. Things could get better in coming quarters.