Bank Alfalah Limited (PSX: BAFL) has announced its financial results for the nine months ended September 30, 2025, reporting a profit after tax (PAT) of Rs21.40 billion, marking a significant 39.22% decline compared to Rs35.21 billion in the same period last year. The earnings per share (EPS) stood at Rs13.56, compared to Rs22.32 a year ago, reflecting a notable dip in profitability amid a challenging macroeconomic and regulatory environment.
Despite this steep drop in earnings, the Board of Directors has declared a third interim cash dividend of Rs2.50 per share (25%) for the quarter ended September 30, 2025. With this announcement, the cumulative payout for the nine months of FY25 stands at 75% (Rs7.50 per share), maintaining Bank Alfalah’s consistent track record of strong shareholder returns.
During the review period, the bank’s net mark-up or interest income grew modestly by 4.55% to Rs101.51 billion, up from Rs97.09 billion last year. The bank managed to offset the 30.82% decline in mark-up or return earned (Rs270.84 billion) through a sharper 42.48% fall in mark-up or return expensed (Rs169.33 billion). This reduction highlights improved liability management and funding efficiency, even as yields on assets remained under pressure due to the declining interest rate environment.
Fee and commission income fell 14.41% to Rs11.96 billion, down from Rs13.97 billion in the same period last year. This drop was attributed to weaker transaction-based revenues, particularly from home remittances, card services, and the Benazir Income Support Programme (BISP) commissions. The bank attributed this to pricing pressures and subdued consumer activity but expects recovery in the coming quarters following regulatory changes in the Pakistan Remittance Initiative (PRI) mechanism.
Foreign exchange income, on the other hand, rose 14.98% to Rs8.94 billion, supported by increased volatility in currency markets and higher trading activity. Dividend income also grew by 79.47% to Rs2.02 billion, while other income surged an impressive 278.45% to Rs939.55 million, demonstrating gains from non-core sources. However, income from derivatives fell 37.19% to Rs933.80 million, and gains on securities dropped 17% to Rs10.06 billion due to challenging market conditions.
Total non-mark-up or interest income climbed 5.41% year-on-year to Rs36.07 billion, while overall income reached Rs137.57 billion, an increase of 4.77% compared to Rs131.31 billion in the same period last year.
Operating expenses surged 41.80% to Rs86.58 billion, up from Rs61.06 billion, primarily due to rising inflation, branch network expansion, and continued investments in digital transformation and marketing. The bank noted that the increase also reflected higher costs linked to technology upgrades and strategic initiatives focused on customer acquisition and operational efficiency.
Credit loss allowances and write-offs increased significantly to Rs1.95 billion, up 834.53% from Rs208.40 million last year. This sharp rise reflects a cautious approach to provisioning amid economic uncertainty and asset quality challenges.
As a result, profit before taxation (PBT) dropped to Rs47.94 billion, down 29.97% from Rs68.45 billion in the corresponding period last year. The taxation expense decreased 20.39% to Rs26.47 billion, bringing the net profit after taxation to Rs21.40 billion.
The bank also reported a small loss of Rs75.39 million from discontinued operations, compared to a marginal loss of Rs636 in the same period last year. The total comprehensive income for the nine months therefore stood at Rs21.40 billion, showing a 39.21% decline year-on-year.
Bank Alfalah continues to focus on expanding its digital ecosystem and branch network while maintaining a strong capital position. Despite pressures from declining interest margins, inflation, and provisioning costs, the bank’s consistent dividend payout underscores its resilience and commitment to shareholder value.
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