Bank Makramah Limited (PSX: BML) reported a net loss of Rs4.68 billion for the half year ended June 30, 2026, marking a sharp reversal from the restated net profit of Rs704.47 million recorded during the corresponding period last year. The bank’s latest financial results reflect pressure on its core mark-up position, weaker non-mark-up income and a significant change in credit loss provisions compared with the same period of 2025.
The bank’s basic loss per share stood at Rs4.62 for the six month period, compared with earnings per share of Rs0.70 in the first half of 2025. The deterioration was primarily linked to a substantial decline in mark-up or interest earned, which fell 60.5% year on year to Rs4.08 billion from Rs10.32 billion. Although mark-up or interest expense also declined by 40% to Rs6.41 billion from Rs10.68 billion, the reduction in income was considerably larger, resulting in a net mark-up expense of Rs2.33 billion compared with Rs358.79 million previously.
Bank Makramah’s non-mark-up income also weakened during the period, falling 56% to Rs1.02 billion from Rs2.32 billion in the first half of 2025. The decline was largely caused by a 93.3% reduction in gains on securities, which dropped to Rs102.37 million from Rs1.52 billion. Other income also fell 91.4% to Rs10.16 million from Rs117.61 million. These declines were partly offset by foreign exchange income, which increased 241.6% to Rs388.67 million from Rs113.78 million.
Other components of non-mark-up income also recorded mixed results. Fee and commission income declined 8.7% to Rs512.92 million from Rs561.65 million, while dividend income increased 48.5% to Rs6.27 million from Rs4.22 million. Despite the increase in foreign exchange and dividend income, the overall decline in securities gains and other income resulted in a substantial contraction in the bank’s total non-mark-up revenue.
The weaker mark-up position combined with lower non-mark-up income pushed the bank’s total income into negative territory. Bank Makramah recorded a total loss of Rs1.31 billion during the period, compared with total income of Rs1.96 billion in the corresponding period of 2025. The deterioration in the income position was followed by higher operating costs, adding further pressure to the bank’s financial performance during the six months ended June 30, 2026.
Operating expenses increased 9.8% to Rs4.59 billion from Rs4.18 billion in the same period last year. Other charges also rose 76.3%, although the amount remained relatively small at Rs647,000 compared with Rs367,000 previously. As a result, total non-mark-up or interest expenses reached Rs4.59 billion, compared with Rs4.18 billion a year earlier.
The combination of negative income and higher operating expenses resulted in a loss before credit loss allowance of Rs5.90 billion, compared with a loss of Rs2.22 billion in the first half of 2025. The bank’s position was further affected by credit loss allowance and write offs, which amounted to a charge of Rs321.91 million during the latest reporting period. This was a major change from the Rs3.67 billion provision reversal recorded in the corresponding period last year.
Following the credit loss charge, Bank Makramah recorded a loss before taxation of Rs5.58 billion, reversing from a pre tax profit of Rs1.45 billion in the first half of 2025. Taxation during the latest period stood at Rs898.43 million, compared with a tax credit of Rs742.54 million in the previous year. After accounting for taxation, the bank reported a loss after taxation of Rs4.68 billion for the six months ended June 30, 2026.
The financial results show that Bank Makramah’s performance during the first half of 2026 was affected by several factors at the same time. Lower mark-up income reduced the bank’s core earnings position, while the sharp decline in gains on securities weakened non-mark-up revenue. At the same time, operating expenses increased and the shift from a large credit loss provision reversal in 2025 to a credit loss charge in 2026 added further pressure to the bottom line.
With its earnings position moving from a profit of Rs704.47 million to a loss of Rs4.68 billion, Bank Makramah ended the first half of 2026 under significantly greater financial pressure than in the corresponding period of the previous year. The results underline the impact of changes in interest income, investment gains, operating costs and credit provisions on the bank’s overall profitability during the reporting period.
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