Retired employees of National Bank of Pakistan (NPB) have become entitled to receive government-announced pension increases after the Federal Constitutional Court (FCC) dismissed the bank’s appeal in a long-running pension dispute, the bank said in a letter sent to the Pakistan Stock Exchange (PSX) on Thursday.
In a material information notice dated Sept. 17, the NBP said the FCC, in its judgment reserved in Civil Appeal No. 1688/2021, National Bank of Pakistan and others vs. Khawaja Abdul Hameed Nasir and others, dismissed the bank’s appeal. “The court dismissed the Bank’s appeal, thereby entitling its pensioners to receive government increases in their pension,” read the letter.
The bank said it had informed the PSX in accordance with the stock exchange’s material-information requirements.
Muhammad Waqas Ghani, head of research at JS Global, said the ruling could have financial implications for NBP, although the extent would depend on the scope of pensioners covered and the period for which increases and related payments are applicable.
NBP had previously faced claims from retired employees seeking pension increases beyond the roughly Rs. 60 billion covered by an earlier Supreme Court ruling in March 2024, according to JS Global research.
The Lahore High Court had earlier directed NBP to pay the pension increases, but the order was subsequently suspended by the Supreme Court. The Supreme Court’s earlier ruling also limited the benefit of such increases to pensioners who were parties to the litigation. The latest court ruling changes the position of the pending dispute, with the bank now required to comply with the entitlement established by the Federal Constitutional Court.
Financial impact
NBP recorded a Rs. 57.5 billion past-service cost in 2024 in connection with an earlier pension case, according to JS Global research. The brokerage estimates about Rs. 15 billion of that amount remains unutilized and could provide a buffer against claims arising from the latest ruling.
NBP has also said it has already incorporated the financial impact of the pending pension claims in its financial statements as a matter of caution, according to the research note.
JS Global said an adverse outcome within the scope already recognized by the bank would largely translate into a cash outflow, with limited additional impact on profit and loss. “The key risk is a wider scope of beneficiaries, a longer arrears period or any mark-up component,” Ghani said, according to the brokerage’s assessment.
JS Global estimated that if additional pension-related charges were as high as Rs. 22 billion, the net charge after accounting for the unutilized amount would be about Rs. 7 billion. That would reduce NBP’s earnings per share by an estimated Rs. 1.58, or about 3.9% of its 2025 EPS, the brokerage said.
The brokerage also estimated that every additional Rs. 10 billion charge could reduce NBP’s capital adequacy ratio by about 0.3% from 22.1% reported for the first half of 2026.
The final financial impact will depend on the implementation of the court ruling, including the number of pensioners covered, the applicable period of pension increases and any arrears or other payments determined to be due.
The Federal Constitutional Court case is part of a long-running series of service and pension proceedings involving NBP and its retired employees. Court records list Civil Appeal No. 1688/2021 as a service/pension matter involving NBP and the heirs of Khawaja Abdul Hameed Nasir.