Bank Islami Pakistan Limited (PSX: BIPL) has reported a significant decline in its profitability for the nine months ended September 30, 2025. The bank’s profit after taxation fell sharply by 50.1% to Rs5.07 billion, compared to Rs10.17 billion earned during the same period last year. The decline in earnings was mainly attributed to shrinking profit margins, lower yields, and higher operating expenses that eroded the bottom line despite improvements in non-core income streams.
Earnings per share (EPS) for the period dropped to Rs4.58, a steep fall from Rs9.18 in 9MFY24. The bank’s overall profitability was impacted by a 35.1% year-on-year reduction in profit or return earned, which fell to Rs56.09 billion from Rs86.44 billion. The decline was largely driven by lower yields prevailing during the period. In contrast, profit or return expensed decreased 43.4% to Rs29.73 billion compared to Rs52.54 billion in the same period last year, partially cushioning the fall in earnings.
Net profit or return contracted by 22.3% to Rs26.35 billion from Rs33.90 billion in 9MFY24. While the core income faced pressure, the bank managed to strengthen its fee-based revenue. Fee and commission income recorded an impressive 53.1% rise to Rs2.56 billion, while dividend income surged 2.6 times to Rs165.8 million from Rs64.1 million in the corresponding period last year.
However, not all areas reflected growth. Foreign exchange income declined 15.2% to Rs1.05 billion, while the bank reported a loss of Rs54.7 million from Shariah-compliant alternatives to forward foreign exchange contracts, widening from a loss of Rs13.3 million last year. Despite this, the bank benefited from a substantial increase in gains on securities, which jumped 7.5 times to Rs3.36 billion compared to Rs395.8 million a year ago, providing some relief to the overall earnings performance.
Total income, however, fell 10.2% year-on-year to Rs33.59 billion, down from Rs37.39 billion in the corresponding period of FY24. The rise in expenses further strained profitability. Operating expenses climbed 44.3% to Rs23.04 billion compared to Rs15.97 billion last year, reflecting higher administrative and infrastructure costs. The workers’ welfare fund contribution declined by 45.6% to Rs221.8 million, while total other expenses increased by 43.2% to Rs23.45 billion.
The bank’s profit before taxation fell 45.5% to Rs10.87 billion, down from Rs19.92 billion recorded in 9MFY24. Taxation expenses dropped 40.6% to Rs5.79 billion, in line with the overall decrease in earnings. As a result, the net profit margin for the period declined to 15.1%, a notable drop from 27.2% in the same period last year.
The management attributed the performance dip to a combination of tighter margins, elevated operational costs, and subdued yields in the Islamic banking sector. Nonetheless, the surge in gains from securities and a strong increase in fee and commission income indicate that the bank’s diversified income strategy continues to provide stability amid market challenges.
Bank Islami’s financial results reflect broader trends in Pakistan’s banking landscape, where institutions are navigating through high inflation, elevated policy rates, and economic uncertainty. The results also highlight how Islamic financial institutions are balancing profitability and compliance while operating in a competitive and evolving market environment.
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