Bank AL Habib Limited (PSX: BAHL) reported a 22.1% year-on-year decline in consolidated net profit for the half-year ended June 30, 2026, with profit after taxation falling to Rs15.41 billion from Rs19.79 billion in the corresponding period of 2025. The bank also announced an interim cash dividend of Rs3.50 per share alongside its financial results. Basic and diluted earnings per share attributable to shareholders declined to Rs13.85 during 1HCY26 from Rs17.80 recorded in the same period last year, reflecting the pressure on the bank’s bottom line during the six-month period.
The decline in profitability was primarily linked to a 2.1% contraction in net mark-up income and a substantial increase in operating expenses, although stronger non-mark-up income provided some support to overall earnings. Mark-up or interest earned decreased by 5.9% to Rs167.56 billion during the period from Rs178.13 billion in 1HCY25, while mark-up or interest expensed fell by 8.2% to Rs102.47 billion from Rs111.62 billion. As a result, net mark-up income declined to Rs65.10 billion from Rs66.51 billion, representing a reduction of approximately Rs1.41 billion compared with the same period last year.
Despite the decline in core mark-up income, Bank AL Habib recorded stronger performance across several non-mark-up revenue streams. Total non-mark-up income increased by 20.1% to Rs19.95 billion from Rs16.61 billion in 1HCY25. Foreign exchange income was a major contributor to the increase, rising 80% to Rs6.40 billion from Rs3.55 billion. The bank’s share of profit from associates also more than doubled, increasing 106.5% to Rs902.93 million from Rs437.26 million. Dividend income rose 5.4% to Rs372.24 million, while other income increased 7.8% to Rs629.55 million. Net losses on securities also narrowed to Rs319.14 million from Rs433.65 million in the corresponding period.
The increase in non-mark-up income helped lift Bank AL Habib’s total income by 2.3% to Rs85.04 billion during 1HCY26 compared with Rs83.12 billion in the first half of 2025. However, the improvement in total income was outweighed by higher operating costs. Operating expenses increased 16.1% to Rs52.18 billion from Rs44.93 billion, reflecting higher costs associated with the bank’s operations, including branch expansion and broader inflationary pressures. Total non-mark-up or interest expenses consequently increased 15.5% to Rs52.88 billion from Rs45.78 billion in the corresponding period.
The increase in expenses significantly reduced the benefit from higher non-mark-up income and pushed profit before credit loss allowance down 13.9% to Rs32.16 billion from Rs37.34 billion in 1HCY25. The bank’s workers’ welfare fund expense declined 15.3% to Rs694.74 million from Rs820.04 million, while other charges fell 77.9% to Rs6.77 million from Rs30.60 million. These reductions, however, were not sufficient to offset the substantial rise in operating expenses during the period.
The bank’s financial performance was further affected by a major change in credit loss allowance compared with the previous year. Bank AL Habib recorded a net credit loss allowance and write-offs charge of Rs18.83 million in 1HCY26, compared with a net provision reversal of Rs2.65 billion in 1HCY25. The movement from a significant reversal in the previous year to a credit loss charge in the latest period placed additional pressure on earnings below the pre-provision profit line. Consequently, profit before taxation declined 19.6% to Rs32.14 billion from Rs39.98 billion a year earlier.
The reduction in pre-tax profit was partially offset by a lower taxation charge during the period. Bank AL Habib’s taxation expense declined 17.1% to Rs16.73 billion from Rs20.19 billion in 1HCY25. The lower tax expense provided some support to the final earnings figure, although it was not enough to prevent a substantial year-on-year decline in profit after taxation. The bank ultimately recorded consolidated profit after taxation of Rs15.41 billion for the six months ended June 30, 2026, compared with Rs19.79 billion in the same period of 2025.
The latest results show a mixed performance for Bank AL Habib during the first half of 2026. While the bank benefited from strong growth in foreign exchange income, higher share of profit from associates and overall non-mark-up revenue, the gains were outweighed by weaker net mark-up income, increased operating expenses and the shift from a credit loss provision reversal to a net credit loss charge. The Rs3.50 per share interim cash dividend announced with the results nevertheless provides a distribution to shareholders alongside the bank’s six-month financial performance.
With total income increasing by 2.3% but expenses rising at a substantially faster pace, the bank’s profitability remained under pressure during 1HCY26. The financial results indicate that non-mark-up revenue provided an important source of support, but the combination of higher operating costs and changes in credit loss provisions had a significant effect on earnings. Bank AL Habib closed the half-year with profit after taxation of Rs15.41 billion and earnings per share of Rs13.85, compared with Rs19.79 billion and Rs17.80 per share, respectively, in the first half of 2025.
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