Allied Bank Limited (PSX: ABL) announced its financial results for the year ended December 31, 2025, reporting a profit after tax (PAT) of Rs36.33 billion, reflecting an 18.2% decline compared with Rs44.39 billion recorded in 2024. The bank’s earnings per share (EPS) dropped to Rs31.73 from Rs38.77 last year, signaling some compression in profitability amid a challenging macroeconomic and interest rate environment.
The board approved a final cash dividend of Rs4 per share (40%) to complement interim dividends of Rs12 per share (120%) already paid, bringing the total payout for the year to 160%. This dividend strategy underscores the bank’s commitment to rewarding shareholders even in a year of declining net income.
ABL’s mark-up, return, and interest earned decreased by 21.1% year-on-year (YoY) to Rs297.32 billion from Rs376.91 billion in 2024, primarily due to lower policy rates and reduced yields on assets. Interest expenses also fell 26.5% YoY to Rs192.22 billion from Rs261.54 billion, reflecting lower funding costs. Net mark-up and interest income, which represents gross profit, stood at Rs105.10 billion, down 8.9% YoY from Rs115.36 billion, indicating moderate pressure on spreads.
Non-mark-up income showed a slight increase of 2.4% YoY to Rs31.07 billion from Rs30.33 billion. Fee and commission income was the key driver, rising 17.8% to Rs19.05 billion, while dividend income declined slightly by 3.8% to Rs2.90 billion, and foreign exchange income fell 22.4% to Rs5.19 billion. Gains on securities dropped 15.2% to Rs2.92 billion, while other income remained relatively flat at Rs1 billion. Share of profit from associates decreased 18.7% to Rs671.3 million, contributing modestly to total income. Overall, total income for 2025 declined 6.5% YoY to Rs136.18 billion from Rs145.70 billion in the previous year.
On the expense side, non-mark-up/interest expenses rose 15.4% YoY to Rs68.70 billion from Rs59.52 billion. Operating expenses increased 15.7% to Rs66.82 billion, the Workers’ Welfare Fund rose 5% to Rs1.52 billion, and other charges increased 10.9% to Rs354 million, reflecting inflationary pressures and ongoing business expansion. Profit before credit loss allowances dropped 21.7% YoY to Rs68.15 billion from Rs87 billion. Credit loss provisions surged to Rs7.64 billion, compared with Rs2.71 billion in 2024, highlighting elevated provisioning requirements.
Profit before taxation decreased 15.5% YoY to Rs75.79 billion from Rs89.71 billion, while taxation declined 12.9% to Rs39.46 billion. The resulting net profit after tax stood at Rs36.33 billion, confirming the overall downward trend in profitability.
The 2025 results highlight the challenges faced by banks in balancing declining interest income with higher provisions, while managing operational expenses and sustaining dividend payouts. Allied Bank’s performance reflects broader trends in Pakistan’s banking sector, where macroeconomic conditions and policy rates significantly influence net interest margins and overall profitability. The bank’s focus on fee-based income, prudent provisioning, and shareholder returns demonstrates its strategy to navigate a complex financial environment while maintaining investor confidence.
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