Allied Bank Limited (PSX: ABL) reported an 11.2% year-on-year decline in consolidated profit after taxation for the half year ended June 30, 2026, with earnings falling to Rs15.97 billion from Rs17.98 billion in the corresponding period of 2025. Alongside the financial results, the bank’s Board of Directors declared an interim cash dividend of Rs4 per share for the six-month period. The decline in profitability came despite growth in core net mark-up income and non-mark-up revenue, as higher operating expenses and a shift in credit loss provisioning placed pressure on earnings.
The bank’s basic and diluted earnings per share declined to Rs13.95 in 1HCY26 from Rs15.71 in the same period last year, reflecting an 11.2% reduction. Allied Bank’s overall revenue remained relatively resilient during the period, with total income increasing 4.1% to Rs69.94 billion from Rs67.19 billion. Mark-up, return and interest earned increased 19.4% to Rs171.58 billion from Rs143.65 billion, while mark-up, return and interest expensed rose at a faster rate of 28.8% to Rs118.41 billion from Rs91.92 billion. As a result, net mark-up income increased by a modest 2.8% to Rs53.16 billion from Rs51.73 billion.
The bank also recorded growth across several non-mark-up revenue streams during the first half of 2026. Total non-mark-up and interest income rose 8.5% to Rs16.78 billion from Rs15.46 billion in the corresponding period. Fee and commission income increased 4.5% to Rs9.48 billion from Rs9.07 billion, while dividend income jumped 47.2% to Rs2.02 billion from Rs1.37 billion. Foreign exchange income also increased 15.9% to Rs3.43 billion from Rs2.96 billion, providing additional support to the bank’s revenue. Other income recorded a substantial 263.1% increase to Rs1.36 billion from Rs375.29 million.
These gains were partly offset by a sharp decline in gains on securities. Net gain on securities fell 70.9% to Rs490.08 million from Rs1.69 billion in 1HCY25. Despite the substantial reduction in securities gains, the increase in other revenue categories helped Allied Bank maintain growth in total income during the period. The performance indicates that the bank’s broader non-mark-up revenue base provided some support as its core net mark-up income remained under pressure from higher mark-up expenses.
On the expenditure side, Allied Bank recorded a 12% increase in operating expenses, which reached Rs35.83 billion compared with Rs31.99 billion in the same period last year. The increase reflects higher costs associated with the bank’s expanding operations and contributed to a rise in total non-mark-up and interest expenses. These expenses increased 11.5% to Rs36.74 billion from Rs32.95 billion in the first half of 2025. Workers’ Welfare Fund expenses declined 8.1% to Rs695.25 million, while other charges increased slightly by 3.9% to Rs216.19 million.
The bank also recorded a decline in its share of profit from associates, which fell 22.5% to Rs194.42 million from Rs250.71 million. Following the increase in expenses and the lower contribution from associates, profit before credit loss allowance declined 3.2% to Rs33.40 billion from Rs34.49 billion in the corresponding period. Although the reduction at this stage was relatively limited, the bank’s financial performance faced a more significant impact below the pre-provision line.
Allied Bank recorded a net credit loss allowance and write-offs charge of Rs924.33 million during 1HCY26, compared with a net reversal of Rs3.31 billion recorded in the same period of 2025. This represented a significant year-on-year change in credit provisioning and was a major factor behind the decline in pre-tax earnings. The shift from a substantial provision reversal to a credit loss charge reduced the bank’s profit before taxation by a considerable amount.
As a result, profit before taxation declined 14.1% to Rs32.47 billion from Rs37.80 billion in the corresponding period of the previous year. The impact of the lower pre-tax earnings was partly moderated by a reduction in the bank’s taxation expense. Taxation fell 16.8% to Rs16.50 billion from Rs19.82 billion in 1HCY25, providing some support to the final bottom line.
After accounting for taxation, Allied Bank closed the first half of 2026 with consolidated profit after taxation of Rs15.97 billion, down from Rs17.98 billion a year earlier. The 11.2% decline in net profit was therefore considerably smaller than the 14.1% fall in pre-tax earnings due to the lower tax expense recorded during the period. The bank’s EPS moved in line with the decline in profitability, falling to Rs13.95 from Rs15.71.
Despite the weaker earnings, Allied Bank’s Board approved an interim cash dividend of Rs4 per share for the half year ended June 30, 2026. The dividend provides a direct return to shareholders as the bank manages the impact of higher operating costs and changes in credit provisioning on its financial results.
The first-half results show that Allied Bank continued to generate growth in total income, supported by higher net mark-up income and stronger non-mark-up revenue. However, the benefit from these revenue streams was reduced by rising operating expenses, lower securities gains, a decline in profit from associates and the shift from a large credit loss reversal to a net provision charge. These factors ultimately resulted in lower pre-tax and after-tax earnings despite the bank’s continued revenue growth.
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