Allied Bank Limited (ABL) has announced its financial results for the first half of 2025, reporting a notable decline in profitability as monetary easing and higher operating expenses weighed on earnings. The Bank posted an after-tax profit of Rs18 billion for the six months ending June 30, 2025, a 25 percent drop compared to Rs24 billion recorded in the same period last year. The earnings per share also fell to Rs15.71 from Rs21, reflecting pressure on the bottom line.
The results were approved by the Board of Directors in a meeting held on Thursday, during which an interim cash dividend of Rs4 per share was recommended for the quarter ended June 30. This payout comes in addition to the Rs4 per share already disbursed earlier in the year, underscoring the Bank’s commitment to delivering shareholder value despite financial challenges.
A breakdown of the financial statement reveals that net mark-up and interest income stood at Rs51.73 billion, significantly lower than Rs58.52 billion reported last year. The reduction is largely attributed to the State Bank of Pakistan’s (SBP) sharp monetary easing, which saw the policy rate reduced from 22 percent to 11 percent over the past year. This steep cut in rates compressed margins across the banking sector, with Allied Bank being no exception.
Non-mark-up income, however, provided a degree of resilience to the earnings profile. Fee and commission income surged to Rs9.87 billion compared to Rs7.35 billion a year ago, signaling Allied Bank’s strategic focus on expanding services beyond traditional lending. This growth highlights increasing activity in payments, digital banking, and advisory services. On the other hand, foreign exchange income slipped to Rs2.96 billion from Rs4.08 billion, partly offsetting the benefits from fee-based income.
The cost side of the business also proved to be a challenge. Operating expenses rose to Rs32 billion from Rs28 billion in the same period last year, reflecting inflationary pressures, technology investments, and expansion in customer-facing services. As a result, profit before tax came in at Rs38 billion, down from Rs47 billion previously. Income tax charges amounted to Rs20 billion, compared to Rs23.14 billion last year, further shaping the final net profit figure.
The Bank’s performance underscores the broader shifts in Pakistan’s financial ecosystem, where lower interest rates are reducing lending profitability for commercial banks. At the same time, rising operating costs are compelling institutions to innovate and diversify their income streams. Allied Bank’s emphasis on non-interest revenue suggests a long-term strategy to adapt to the evolving dynamics of the financial services sector.
While the profit decline highlights the immediate challenges of monetary easing and expense growth, the dividend declaration reflects management’s confidence in maintaining stability and rewarding shareholders. For investors and analysts, the results point to a sector in transition, where adaptability and diversification will determine future resilience.