BOP Shareholders Approve Punjab Government’s PKR 30bn Equity Injection

LAHORE, September 8, 2026: Shareholders of The Bank of Punjab (BOP) have unanimously approved an equity injection of up to PKR 30 billion by the Government of Punjab.

The approval came at an Extraordinary General Meeting held on Tuesday. The new shares will be issued to the provincial government outside a rights issue.

BOP President and CEO Zafar Masud also addressed questions raised by shareholders. The bank said the responses satisfied those attending the meeting.

Capital to Support Business Expansion

BOP said the additional capital will strengthen its ability to expand its balance sheet.

The bank currently has Tier-1 capital of PKR 99.9 billion against total assets of PKR 2.95 trillion. It remains among the lower-capitalised banks within Pakistan’s 10 largest banks.

The proposed equity injection will allow BOP to mobilise a larger deposit base. It will also support lending across several business segments.

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These include corporate and commercial banking, SMEs, agriculture, housing and digital banking. The capital will also support Islamic banking and a proposed overseas wholesale banking unit.

According to the bank, stronger capital will also improve its ability to compete for low-cost deposits.

Punjab Government Backs BOP Growth

The Government of Punjab’s decision reflects its confidence in the bank, BOP said.

The bank has paid more than PKR 15 billion in dividends to the provincial government since 2021. This includes PKR 3 billion during the first six months of 2026.

Over the same period, the value of the government’s investment has increased approximately seven-fold, according to BOP.

The bank also noted that its stock was the best-performing banking share in Asia in 2025.

BOP said the proposed injection is intended as general growth capital. Any government-related business will remain subject to the bank’s normal credit, risk, pricing and profitability standards.

Why BOP Chose a Direct Subscription

The bank said a rights issue of this size could have created uncertainty over subscription and completion.

It also pointed to recent rights issues on the Pakistan Stock Exchange. According to BOP, around 80% of recent rights issues were priced at a discount.

Of the 10 rights issues launched since November 2024, only two were priced at a premium, the bank said. Both were significantly smaller than the proposed BOP offering.

A direct subscription by the Punjab government will provide committed capital, according to the bank.

It will also reduce uncertainty over the amount and timing of the investment. Moreover, the shares will be issued at a premium to the market price and break-up value.

Bank Says Financial Position Remains Strong

BOP said it comfortably meets regulatory capital and leverage requirements.

The bank also holds an AAA long-term credit rating.

Its non-performing loan ratio has declined from 9.7% in 2021 to 4.8% in the first half of 2026.

Meanwhile, its weighted obligor risk rating has improved to 3.6. The figure was above 4.0 three years ago.

Government of Punjab schemes currently total around PKR 182 billion. This represents approximately 18% of BOP’s portfolio.

More than 17% of these schemes are covered by government guarantees, according to the bank.

BOP said these schemes account for only 3% of its total non-performing loans. Recovery rates on major programmes range from 97% to 100%.

The bank therefore described the equity injection as a growth measure rather than a response to portfolio stress.

Shares to Be Issued at a Premium

Under the approved proposal, shares will be issued at the higher of PKR 38.20 per share or the prevailing market price plus a 5% premium.

The PKR 38.20 floor price was determined by independent valuer KPMG Taseer Hadi & Co.

It is approximately 20% above BOP’s audited break-up value of PKR 31.83 per share.

Therefore, the shares cannot be issued below PKR 38.20 or at a discount to the prevailing market price.

The premium will be added to the bank’s net assets, benefiting all shareholders, BOP said.

Following the full injection at the floor price, the Punjab government’s stake would rise from 57.47% to 65.71%.

Minority shareholders would remain above the principal statutory thresholds. The bank also said the transaction would not give the majority shareholder any new powers.

Earnings Impact Expected to Be Temporary

BOP acknowledged that earnings per share and return on equity could face a short-term mechanical reduction.

This could occur if the new shares are counted before the additional capital is fully deployed.

However, the bank said the capital would be raised in phases and deployed into profitable, risk-adjusted growth.

The resulting additional earnings are expected to absorb the initial dilution. BOP said it expects to maintain competitive post-injection returns on equity.

The bank also expects book value per share to increase rather than decline.

The new shares will rank equally with existing shares for dividends declared after issuance.

First Investment Expected by December

Subject to regulatory approvals, BOP expects to issue shares against cash subscriptions of PKR 15 billion to PKR 20 billion by December 31, 2026.

The remaining PKR 10 billion to PKR 15 billion is expected to be invested by June 30, 2027.

No shares will be issued until all statutory and regulatory requirements have been completed.

Commenting on the development, BOP President and CEO Zafar Masud said the transaction represented growth capital for the bank.

He said BOP was well capitalised, liquid and financially sound.

Masud added that the new capital would create capacity for the scale of business the bank plans to undertake.

He also said any initial shareholder dilution would be temporary, while the additional capital and earnings capacity would provide longer-term benefits.