Bank Alfalah Limited (PSX: BAFL) has announced a cash dividend of Rs2.50 per share (25%) for the first half of the calendar year 2025, following the release of its unaudited financial results for the six-month period ending June 30, 2025. Despite a significant decline in profitability, the board opted to reward shareholders, underlining the bank’s stable capital position and sustained top-line growth.
According to the results, Profit After Tax (PAT) for the six-month period decreased by 25.8% year-on-year (YoY), dropping to Rs15.27 billion, down from Rs20.60 billion during the same period in 2024. This drop in profitability was accompanied by a decline in Earnings Per Share (EPS) from Rs13.06 to Rs9.68, a fall of 25.9% YoY.
Interestingly, the bank’s Net Mark-up / Interest Income (NII) showed resilience, increasing by 8% YoY to Rs67.58 billion, driven by a sharper fall in interest expenses (-38.3%) compared to the reduction in interest earned (-27.1%).
On the non-funded income front, Non-Mark-up / Interest Income (NMI) grew robustly by 18.4% to Rs24.05 billion, largely supported by a 160.7% jump in gains on securities, which climbed to Rs8.39 billion, and a 25.5% increase in dividend income. Foreign exchange income held steady at Rs5.29 billion, but fee and commission income experienced a notable drop of 23.7%, falling to Rs7.65 billion.
Meanwhile, the bank reported a loss of Rs388.6 million from derivatives, a reversal from the Rs1.37 billion gain in the same period last year. On the other hand, other income surged by 360.8%, rising to Rs874 million, indicating gains in ancillary banking services.
Total income for the period stood at Rs91.64 billion, reflecting a healthy 10.6% YoY growth. However, the improved income figures were offset by a substantial increase in expenses. Non-Mark-up / Interest Expenses surged by 39.4% to Rs56.81 billion, led by a 41.3% rise in operating expenses, which reached Rs55.98 billion—a figure that significantly narrowed the bank’s profit margins.
Provisions for credit losses declined by 31.4%, providing some relief to the bottom line, while taxation expenses dropped by 7.6% YoY to Rs18.66 billion. Profit Before Tax (PBT) for the period came in at Rs33.93 billion, down 16.8% from Rs40.80 billion in H1 2024.
Bank Alfalah’s performance in H1 2025 reflects a mixed outlook. While income growth—particularly from securities and dividends—remained robust, rising operational costs and lower fee-based revenues constrained overall profitability. Nonetheless, the bank’s decision to issue a cash dividend signals confidence in its liquidity position and long-term earnings capacity, even amid short-term profitability pressures.
Investors and analysts will be closely watching how the bank manages operating efficiency in the second half of the year, particularly as macroeconomic conditions evolve and competition intensifies in Pakistan’s banking landscape.