The Bank of Khyber has reported a substantial 36.65 percent decline in its consolidated profit after taxation for the first quarter ending March 31, 2026. According to the financial results submitted to the Pakistan Stock Exchange, the bank’s net earnings fell to 1.02 billion rupees, a sharp drop from the 1.60 billion rupees recorded during the corresponding period last year. This downturn reflects a challenging start to the year for the institution as it navigates a shifting interest rate environment and significant volatility in its non-funded income streams.
The bank’s core funded operations faced considerable pressure throughout the quarter. Interest and mark-up earned decreased by 15.75 percent year-on-year, settling at 11.37 billion rupees. Although the bank managed to lower its cost of funds by 14.88 percent to 7.15 billion rupees, the pace of the reduction in interest expenses was slower than the decline in earnings. Consequently, the net mark-up income contracted by 17.18 percent, falling to 4.23 billion rupees. This compression of margins suggests a more restrictive lending environment and a realignment of the bank’s asset portfolio in response to broader macroeconomic shifts.
The most severe impact on the bank’s bottom line came from its non-funded operations, where total income plummeted by 48.08 percent to 467.26 million rupees. The primary cause of this collapse was a staggering 87.28 percent crash in gains on securities, which evaporated from 520.72 million rupees in the first quarter of 2025 to just 66.23 million rupees this quarter. Additionally, the bank recorded a net loss of 29.69 million rupees on the derecognition of financial assets, a stark reversal from the gains reported a year earlier. These setbacks highlight the bank’s sensitivity to market fluctuations in the fixed-income and securities sectors.
Despite the heavy losses in trading and securities, some segments of the non-funded income stream provided a modest buffer. Fee and commission income delivered a robust performance, growing by 33.35 percent to 304.17 million rupees, while foreign exchange income rose by 26.90 percent to reach 91.83 million rupees. Other income also registered a growth of 28.83 percent. However, these gains were insufficient to offset the massive decline in core margins and securities income, leading to an overall contraction of 21.81 percent in total income, which fell to 4.70 billion rupees.
Operational overheads further strained the bank’s profitability during the quarter. Operating expenses climbed by 8.11 percent to 2.94 billion rupees, reflecting the persistent inflationary environment and the costs associated with maintaining a diverse branch network. This combination of dwindling revenues and rising costs resulted in the profit before credit loss allowance nosediving by over 46 percent. A significant silver lining was found in credit provisioning, where the bank recorded a reversal of credit loss allowance amounting to 357.13 million rupees, a substantial increase from the previous year’s reversal, which helped cushion the pre-tax profit.
After accounting for a taxation charge of 1.10 billion rupees—which was 39.09 percent lower than the prior year due to reduced earnings—the Bank of Khyber concluded the quarter with a net profit of 1.02 billion rupees. Basic and diluted earnings per share fell to 0.88 rupees, compared to 1.38 rupees in the same period of 2025. As the bank looks toward the remainder of the 2026 fiscal year, its ability to stabilize its core interest margins and manage operational costs will be critical in restoring the high growth levels seen in previous cycles.
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