Bank Alfalah Limited has reported a significant 26% year-on-year decline in profit after tax for the calendar year ended December 31, 2025, even as its overall income recorded steady growth. The financial results, submitted to the Pakistan Stock Exchange, reflect mounting operating expenses that outweighed gains in core revenue streams.
For CY25, the bank posted a net profit of Rs28.34 billion, compared to Rs38.32 billion recorded in the previous year. The contraction in profitability also translated into lower earnings per share (EPS), which fell to Rs17.97 from Rs24.30 in CY24. The results indicate that while revenue momentum remained intact, cost pressures substantially impacted the bottom line.
The board of directors, in a meeting held on February 13, 2026, in Abu Dhabi, approved a final cash dividend of Rs3 per share. This is in addition to three interim cash dividends already distributed at 25% each during the year, bringing the total payout for CY25 to 105%. The dividend decision signals continued shareholder returns despite the decline in annual profit.
On the income front, Bank Alfalah posted growth across its primary segments. Net interest income rose to Rs135.85 billion in 2025, up from Rs126.82 billion in the preceding year. The increase reflects improved performance in lending and investment portfolios. Non-interest income also advanced, reaching Rs47.51 billion compared to Rs44.41 billion in CY24. As a result, total income climbed to Rs183.36 billion, up from Rs171.23 billion a year earlier.
However, the upward trajectory in income was overshadowed by a sharp escalation in operating costs. Operating expenses surged to Rs116.24 billion in 2025 from Rs84.37 billion in the prior year. This substantial increase drove total expenses to Rs117.72 billion, compared with Rs86.28 billion recorded in CY24. The widening gap between revenue growth and expense expansion significantly compressed profit margins.
The bank’s income tax payment provided partial relief, declining to Rs34 billion in CY25 from Rs44.78 billion in the previous year. While the lower tax outflow supported net earnings to some extent, it was insufficient to offset the scale of the increase in operating expenditures.
Market observers attribute the profit contraction primarily to the sharp rise in operating expenses, which diluted the positive impact of higher net interest and non-interest income. The results underscore the importance of cost discipline and operational efficiency in maintaining profitability, particularly in a competitive and evolving banking landscape.
As the banking sector navigates changing economic conditions and digital transformation initiatives, expense management is expected to remain a central focus area for institutions seeking to stabilize margins. For Bank Alfalah, restoring earnings momentum may depend on balancing revenue growth with tighter cost controls in the upcoming financial year.
The CY25 results reflect a year of mixed performance: revenue growth and sustained dividend payouts on one hand, and margin compression driven by rising operational costs on the other. Stakeholders will be closely watching how the bank recalibrates its strategy to improve profitability while sustaining shareholder returns in 2026.
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