BOP Shareholders Unanimously Approve PKR 30 Billion Equity Injection by Government of the Punjab

Lahore, September 8, 2026: Shareholders of The Bank of Punjab ('BOP' or 'the Bank'), at an Extraordinary General Meeting held today, unanimously approved the proposed equity injection of up to PKR 30 billion by the Government of the Punjab ('GoPb') through the issuance of ordinary shares, otherwise than by way of a rights issue. The President and CEO, Mr. Zafar Masud, addressed the questions raised by shareholders, which were answered to their satisfaction. BOP is currently the lowest-capitalised bank among Pakistan's ten largest banks, with Tier-1 capital of PKR 99.9 billion against total assets of PKR 2,952 billion, and would remain ninth even after the full equity injection. A bank's ability to grow its balance sheet depends on both the strength of its Tier-1 capital and its capacity to mobilise low-cost deposits. These are closely linked, as deposits can only be deployed into earning assets within applicable capital adequacy and leverage requirements. The additional equity will therefore enable BOP to mobilise and deploy a larger deposit base safely and productively across its corporate, commercial, SME, agriculture, housing, digital and Islamic banking businesses, as well as its proposed overseas wholesale banking unit. It will also strengthen the Bank's ability to compete with larger banks, particularly in mobilising low-cost deposits. GoPb's decision reflects its confidence in a Bank that has become a significant contributor to the provincial exchequer. BOP has paid more than PKR 15 billion in dividends since 2021, including PKR 3 billion in the first six months of 2026 alone. Over the same period, the value of GoPb's investment has increased approximately seven-fold, while BOP was the best-performing banking stock in Asia in 2025. The proposed injection represents general growth capital. All deployment of this capital, including toward Government-related business, will remain subject to the Bank's normal credit, risk, pricing and profitability standards. A rights issue of this scale would have required fresh funds from all shareholders and would have introduced uncertainty regarding subscription, timing and completion. Approximately 80% of recent rights issues on the Pakistan Stock Exchange were priced at a discount. Of the ten rights issues since November 2024, only two were priced at a premium, and both were substantially smaller than BOP's proposed offering. GoPb's direct subscription provides committed capital with greater certainty of amount, timing and execution. It will also be issued at a premium to both the market price and break-up value, resulting in fewer new shares and lower dilution. Minority shareholders are not required to invest additional funds, yet will participate fully in the benefits of a better-capitalised Bank. The Bank comfortably meets its regulatory capital and leverage requirements and carries 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, while the weighted obligor risk rating has improved to 3.6 from above 4.0 three years ago. Government of the Punjab schemes amount to PKR 182 billion, or approximately 18% of the portfolio, of which more than 17% is covered by Government guarantee. These schemes account for only 3% of the Bank's total non-performing loans, while recovery rates on the major programmes range from 97% to 100%. The equity injection is therefore a proactive growth-capital measure, not a recapitalisation driven by portfolio stress. Shares will be issued at the higher of PKR 38.20 per share or the prevailing market price at the time of issuance plus a 5% premium. The PKR 38.20 floor price is the base-case value determined by KPMG Taseer Hadi & Co., as independent valuer, and is approximately 20% above the audited break-up value of PKR 31.83 per share. Accordingly, shares cannot be issued below PKR 38.20 or at a discount to the prevailing market price. The premium will accrue to the Bank's net assets for the benefit of all shareholders. Following the full injection at the floor price, GoPb's shareholding would increase from 57.47% to 65.71%, while minority shareholders would remain above all principal statutory thresholds. The issuance does not create any new powers for the majority shareholder. A short-term mechanical reduction in earnings per share and return on equity may arise if the new shares are counted before the additional capital is fully deployed. However, the capital will be raised in phases and deployed into profitable, risk-adjusted growth. The resulting incremental earnings are expected to absorb the initial dilution and keep post-injection return on equity competitive with the industry. Book value per share will be enhanced rather than diluted, while the new shares will rank pari passu for dividends declared after issuance. Subject to all requisite regulatory approvals, shares against cash subscriptions of PKR 15 billion to PKR 20 billion are expected to be issued to GoPb by December 31, 2026, with the remaining PKR 10 billion to PKR 15 billion expected by June 30, 2027. No shares will be issued until all statutory and regulatory requirements have been fulfilled. Commenting on the development, Mr. Zafar Masud, President and CEO of The Bank of Punjab, said: 'This is growth capital for a growing bank. The Bank of Punjab is well capitalised, liquid and sound; we are creating the capacity required for the scale of business we intend to undertake. The pricing is transparent and market-linked, and the premium accrues to the Bank. Any dilution shareholders may see on paper is temporary; the capital, capacity and earnings it enables are enduring.' About The Bank of Punjab The Bank of Punjab is one of Pakistan's leading financial institutions, providing a comprehensive range of corporate, commercial, retail, Islamic, agriculture, SME and digital banking services. The Bank remains committed to financial inclusion, responsible banking and supporting Pakistan's sustainable economic development.