Bank Al Habib Limited (PSX:BAHL) reported a net profit of Rs32.47 billion for the fiscal year ended December 31, 2025, reflecting a 22.5% decrease compared to Rs41.92 billion recorded in FY2024. The bank also announced a dividend of Rs4.5 per share, while earnings per share fell to Rs29.19 from Rs37.70 over the same period.
The decline in profitability was primarily driven by a 29.4% drop in mark-up, return, or interest earned, which fell to Rs337.43 billion from Rs478.12 billion, highlighting the impact of a lower interest rate environment and reduced yields on earning assets. Correspondingly, interest expensed decreased by 35.8% to Rs206.46 billion from Rs321.65 billion, resulting in a net interest income of Rs130.97 billion, down 16.3% year-on-year. This compression underscores the significant challenges faced by the banking sector amid falling interest rates.
Non-mark-up income provided partial support to profitability, increasing 10.7% to Rs31.96 billion from Rs28.87 billion. Fee and commission income remained largely stable at Rs22.04 billion, a marginal 0.4% increase, while dividend income rose 7.6% to Rs391 million. Foreign exchange income surged 90.1% to Rs7.44 billion from Rs3.91 billion, becoming a key contributor to non-funded revenue. Conversely, the bank posted a net loss on securities of Rs252.1 million compared to a gain of Rs142.1 million in FY2024.
Total income for the year decreased by 12.1% to Rs162.93 billion from Rs185.34 billion. On the expense side, total non-mark-up expenditures increased 16.1% to Rs97.12 billion, driven by a 17.2% rise in operating expenses to Rs95.63 billion. Workers’ welfare fund contributions fell 21.4% to Rs1.38 billion, while other charges decreased sharply by 67.9% to Rs99.5 million.
Profit before credit loss allowance declined 35.3% to Rs65.81 billion from Rs101.67 billion. Notably, the bank recorded a net reversal of credit loss allowance and write-offs of Rs2.39 billion, compared to a charge of Rs14.89 billion in the previous year. This improvement in asset quality helped mitigate the impact of lower net income on overall profitability.
Profit before taxation stood at Rs68.20 billion, down 21.4% from Rs86.78 billion, while taxation expense decreased 20.3% to Rs35.74 billion, partially offsetting the decline in earnings.
The results highlight the challenges faced by Pakistan’s banking sector amid a low interest rate environment, while demonstrating the resilience provided by growth in non-funded income and improved asset quality. Bank Al Habib’s strategic focus on foreign exchange income and operational efficiency contributed to maintaining a stable dividend despite the overall decline in net profits.
The bank’s performance underscores ongoing structural pressures in the domestic banking market, reflecting how interest rate trends, cost management, and risk provisioning play critical roles in shaping annual financial outcomes for major Pakistani lenders.
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