Allied Bank Limited recently disclosed its financial performance for the first quarter ending March 31, 2026, revealing a resilient core business model in a challenging economic climate. The bank posted a consolidated profit after taxation of Rs8.31bn, representing a minor decrease of 2% compared to the Rs8.48bn recorded during the same period in the previous year. This slight contraction in the bottom line translated to a marginal dip in earnings per share, which moved to Rs7.26 from Rs7.40. Despite the minor earnings compression, the bank remains committed to shareholder returns, declaring a dividend of Rs4 per share for the quarter.
The primary engine of the bank’s revenue, its core lending operations, showed robust activity throughout the first three months of the year. Interest and mark-up earned by the institution climbed by 17% to reach Rs83.72bn. However, the period was characterized by a high cost of funding, as interest expenses grew at a faster clip of 21%, totaling Rs55.89bn. Even with these rising costs, Allied Bank managed to expand its net interest income by a healthy 10%, bringing in Rs27.83bn compared to Rs25.40bn in the prior year. This growth highlights the bank’s ability to maintain a positive spread despite shifting market rates.
The non-funded income stream presented a more varied performance during this quarter. Total non-mark-up income saw a 3% decline, settling at Rs7.65bn. This was largely influenced by volatility in the securities market, where the bank recorded a net loss of Rs215.94m, a sharp contrast to the significant gain achieved in the previous year. Additionally, income from foreign exchange transactions fell by 27% to Rs1.27bn. These specific headwinds somewhat dampened the impact of stellar growth in other areas, such as a 43% surge in dividend income and a massive jump in other income categories. Fee and commission income also maintained a steady upward trajectory, growing 9% to Rs4.84bn.
On the expenditure side, inflationary pressures continued to weigh on operating overheads. Total non-mark-up expenses rose by 10%, reaching Rs17.43bn as the bank managed rising costs associated with administration and operations. The profit before taxation stood at Rs16.95bn, reflecting a 4% year-on-year decrease. A significant factor in stabilizing the final net result was a 6% reduction in taxation expenses, which fell to Rs8.64bn. This lower tax burden served as a crucial buffer, preventing a steeper decline in the final profit after tax and allowing the bank to contain its earnings drop.
Looking at the broader statement of profit or loss, the bank’s total income actually increased by 7% to Rs35.48bn, suggesting that the underlying revenue generation remains strong. While the credit loss allowance and write-offs saw a net increase, the overall health of the balance sheet continues to support consistent dividend payouts. As Allied Bank navigates the rest of the 2026 fiscal year, the focus will likely remain on optimizing the cost of deposits and capitalizing on high-yield lending opportunities to sustain its growth momentum in a competitive banking landscape.
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