Bank AL Habib Limited (PSX: BAHL) has announced its financial results for the half year ending June 30, 2025, showing a profit after tax of Rs19.79 billion, down 8.66% compared to Rs21.66 billion recorded during the same period last year. The decline highlights the broader challenges faced by the banking industry as interest rate adjustments, rising costs, and tighter spreads continue to reshape the sector’s profitability outlook.
Earnings per share (EPS) for the period stood at Rs17.8, compared to Rs19.49 in 2024, reflecting an 8.67% fall. Despite the dip in profitability, the bank has declared an interim cash dividend of Rs3.5 per share, or 35%, which adds to the earlier payout of Rs3.5 per share already announced this year. This move underscores the bank’s continued commitment to shareholder value even in a constrained earnings environment.
The bank’s net mark-up and interest income dropped by 10.97% to Rs66.50 billion, compared to Rs74.70 billion a year earlier. This contraction was largely driven by a 26.91% decline in mark-up/interest earned, which slipped to Rs178.13 billion from Rs243.72 billion, reflecting lower yields in a high-liquidity yet lower spread environment. However, interest expense also declined by 33.96% to Rs111.62 billion, easing some of the pressure on margins.
Non-markup income provided some resilience, rising 9.74% year-on-year to Rs16.60 billion compared to Rs15.13 billion. This increase was primarily supported by a 17.29% rise in fee and commission income, which reached Rs12.11 billion, reflecting higher customer activity and transactional growth. Foreign exchange income also grew modestly by 2.59% to Rs3.55 billion. However, dividend income dipped slightly by 2.32%, while the share of profit from associates fell significantly by 33.92% to Rs437 million.
Meanwhile, losses on securities mounted, posting a 157.95% increase to Rs433.6 million against Rs168 million last year. Despite this, the bank recorded gains in other income categories, including a 6.73% increase in miscellaneous income.
On the expense front, the bank continued to grapple with rising costs. Operating expenses surged 12.28% to Rs44.93 billion, while overall non-markup expenses grew by 11.46% to Rs45.78 billion. These cost pressures, coupled with subdued revenue growth, weighed on the bottom line. Workers’ Welfare Fund contributions declined by 11.55% to Rs820 million, while other charges dropped sharply by 76.07% to Rs30.6 million.
Before tax, profit stood at Rs39.98 billion, marking a 3.50% decrease compared to Rs41.43 billion last year. After accounting for taxation of Rs20.19 billion, net profit closed at Rs19.79 billion, down from Rs21.66 billion. Of this, Rs19.78 billion was attributable to equity holders, while non-controlling interests amounted to Rs8.68 million.
Bank AL Habib’s financial performance reflects the challenges of operating in a volatile macroeconomic landscape where declining interest margins, rising cost structures, and market fluctuations continue to impact banks’ earnings. At the same time, growth in fee-based services and transactional income highlights an ongoing shift in revenue streams as banks diversify beyond traditional lending.
Going forward, the bank’s ability to navigate interest rate volatility, maintain asset quality, and manage costs effectively will be central to sustaining growth. The declared dividend payout signals confidence in long-term stability, despite short-term earnings pressure.