Bank Islami Pakistan Limited (PSX: BIPL) reported a profit after tax of Rs6.00 billion for the year ending December 31, 2025, representing a sharp 49.26 percent year-on-year decline compared to Rs11.83 billion in 2024. Earnings per share (EPS) dropped in line with net profitability, falling to Rs5.42 from Rs10.67, marking a 49.20 percent reduction over the same period. Despite the decline, the bank declared a final cash dividend of Rs1.25 per share, adding to the Rs1.50 interim dividend already distributed, bringing total shareholder payouts for the year to Rs2.75 per share, or 27.5 percent of face value.
The decline in overall profitability stems largely from a 34.19 percent drop in profit or return earned, which fell to Rs74.24 billion from Rs112.80 billion in 2024. This reduction reflects the impact of lower interest rates and compressed yields on earning assets during the year. However, the bank managed to partially offset this through a steeper 41.95 percent decrease in profit or return expensed, which fell to Rs38.55 billion from Rs66.41 billion, highlighting reduced funding costs across its deposit base. The resulting gross profit contracted 23.07 percent to Rs35.68 billion from Rs46.39 billion, demonstrating the asymmetric impact of rate changes on assets and liabilities during the rate transition period.
Bank Islami experienced notable growth in non-markup income, which surged 107.27 percent to Rs9.51 billion. Fee and commission income rose by 48.19 percent to Rs3.43 billion, while dividend income surged 278.84 percent to Rs255 million. Foreign exchange income grew modestly by 5.76 percent to Rs1.37 billion, and gain on securities net skyrocketed 495.19 percent to Rs4.17 billion from Rs701 million, reflecting strategic investment gains. Other income also rose sharply by 122.91 percent to Rs381 million. Nevertheless, the total income for the year declined 11.34 percent to Rs45.20 billion, as the contraction in net financing income outweighed gains in non-markup revenue.
Operating expenses increased significantly, climbing 41.96 percent to Rs31.46 billion amid ongoing business expansion and inflationary pressures. Other charges rose by 260.06 percent, while the Workers’ Welfare Fund contribution declined 45.30 percent to Rs285 million. As a result, total other expenses surged 40.28 percent to Rs31.86 billion. Profit before credit loss allowance and taxation dropped 52.82 percent to Rs13.33 billion, reflecting the combined impact of lower income and rising costs. A net reversal of credit loss allowance of Rs632 million, compared to a charge of Rs2.73 billion in 2024, indicated improved asset quality and reduced provisioning requirements.
Consequently, profit before taxation fell 45.29 percent to Rs13.97 billion from Rs25.53 billion, while taxation declined 41.87 percent to Rs7.96 billion, culminating in the reported PAT of Rs6.00 billion. The bank’s financial results for CY25 highlight the challenges posed by macroeconomic conditions, particularly lower interest rates and compressed yields, while demonstrating resilience through growth in non-markup income and effective cost management. These figures underscore the importance of diversified revenue streams and disciplined expense control in sustaining profitability during periods of rate transition.
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