Bank Alfalah Limited (PSX: BAFL) has reported a profit after tax of Rs27.80 billion for the year ended December 31, 2025, marking a 30.3% decline compared to Rs39.86 billion recorded in the previous calendar year. The drop in earnings reflects the combined impact of lower policy rates, compressed asset yields, elevated operating costs, and significantly higher provisioning charges during the period.
Earnings per share fell to Rs17.62 from Rs25.27 last year, mirroring the contraction in bottom-line performance. Despite the decline in profitability, the board announced a final cash dividend of Rs3 per share, equivalent to 30%, in addition to three interim cash dividends of 25% each that had already been paid during the year. This brings the total payout for CY25 to 105%, underscoring the bank’s continued commitment to shareholder returns.
The bank’s mark-up, return, and interest earned declined by 29.6% year-on-year to Rs356.95 billion from Rs507.12 billion, reflecting the effect of lower benchmark rates and reduced asset yields across the sector. However, mark-up and interest expensed fell at a sharper pace of 41.9% to Rs221.07 billion from Rs380.25 billion, as funding costs eased during the year. The steeper reduction in interest expenses enabled net mark-up and interest income, effectively gross profit, to increase by 7.1% year-on-year to Rs135.88 billion compared to Rs126.87 billion in the preceding year, indicating improved spreads despite a softer rate environment.
Total non-mark-up and interest income rose 3.7% to Rs47.39 billion from Rs45.68 billion. Within this segment, fee and commission income declined 8.2% to Rs16.41 billion, while dividend income surged 111.1% to Rs2.80 billion. Foreign exchange income increased 26.6% to Rs12.09 billion, contributing positively to overall non-funded income. Income from derivatives fell 36.8% to Rs864.1 million, and gain on securities declined 8.2% to Rs12.87 billion. Share of profit from associates rose 4.8% to Rs1.29 billion, and other income registered a notable jump of 233.4% to Rs1.07 billion.
As a result, total income increased 6.2% year-on-year to Rs183.27 billion from Rs172.56 billion. However, expense growth outpaced revenue expansion. Total non-mark-up and interest expenses rose sharply by 35.6% to Rs117.99 billion from Rs87.04 billion. Operating expenses climbed 36.9% to Rs116.52 billion, reflecting inflationary pressures and business expansion-related costs. Workers’ Welfare Fund expense declined 18.4% to Rs1.38 billion, while other charges dropped 58.2% to Rs93 million.
Profit before credit loss allowance decreased 23.7% to Rs65.27 billion from Rs85.52 billion, as higher expenses offset gains in net interest income. The bank recorded a net credit loss allowance and write-offs charge of Rs3.31 billion, significantly higher than Rs271.2 million in the previous year, indicating elevated provisioning requirements. Consequently, profit before taxation fell 27.3% to Rs61.96 billion from Rs85.25 billion.
Taxation expense decreased 24.9% to Rs34.09 billion from Rs45.38 billion, but the reduction was insufficient to counterbalance the fall in pre-tax earnings. After accounting for a minor loss from discontinued operations of Rs75.39 million, profit after taxation stood at Rs27.80 billion, down 30.26% year-on-year.
The CY25 results reflect a banking environment shaped by easing interest rates, cost pressures, and higher provisioning, even as net interest margins showed resilience and dividend payouts remained robust.
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