BankIslami Pakistan Limited (PSX: BIPL) recorded a 54% year-on-year decline in consolidated profit after taxation during the half year ended June 30, 2026, as lower total income, weaker other income and higher operating expenses weighed on the bank’s financial performance.
According to the bank’s financial results, profit after taxation fell to Rs2.03 billion in 1HCY26 from Rs4.41 billion in the corresponding period of the previous year. Basic and diluted earnings per share also declined to Rs1.83 from Rs3.98 in 1HCY25, reflecting a 54.02% decrease. The Board of Directors of BankIslami has declared an interim cash dividend of Rs1.50 per share, equivalent to 15%, for the half year ended June 30, 2026.
The bank’s total income declined by 12.31% year-on-year to Rs20.54 billion during the period, compared with Rs23.42 billion in the same period last year. The decline was primarily linked to weaker profit and return earned as well as a substantial reduction in other income. Profit or return earned stood at Rs34.37 billion during 1HCY26, down 11.64% from Rs38.90 billion in the corresponding period of 2025. At the same time, profit or return expensed declined at a faster rate of 18.07% to Rs16.69 billion from Rs20.37 billion.
As a result, net profit or return decreased by 4.57% to Rs17.68 billion from Rs18.52 billion in the prior-year period. Although the reduction in expenses partly cushioned the decline in earnings, it was not sufficient to offset the pressure from other income and rising operating costs.
Total other income dropped 41.62% to Rs2.86 billion from Rs4.90 billion. Fee and commission income declined 4.39% to Rs1.70 billion, while dividend income increased 20.47% to Rs133.90 million. Foreign exchange income provided a significant positive contribution during the period, rising more than fourfold to Rs1.08 billion from Rs246.61 million in 1HCY25. Other income also increased 15.23% to Rs92.08 million from Rs79.91 million.
However, these gains were outweighed by losses in other areas. BankIslami recorded a net loss on securities of Rs139.71 million during the half year, compared with a gain of Rs2.39 billion in the same period last year. This represented a major reversal in one of the bank’s other income components.
The bank also recorded a loss of Rs8.95 million from the Shariah-compliant alternative of forward foreign exchange contracts, compared with income of Rs287.60 million in the corresponding period of the previous year. On the expenditure side, operating expenses increased 14.16% to Rs17.14 billion from Rs15.01 billion. The increase in operating costs added further pressure to the bank’s profitability during the six-month period.
Workers’ Welfare Fund declined 51.86% to Rs87.98 million, while other charges fell sharply by 92.35% to Rs14.29 million. Despite these reductions, total other expenses increased 12.08% to Rs17.24 billion from Rs15.38 billion. The combined impact of lower income and higher expenses resulted in profit before credit loss allowance falling 59% to Rs3.30 billion from Rs8.04 billion in the first half of 2025.
BankIslami also recorded a net charge of Rs1.03 billion related to reversal of provisions, credit loss allowance and write-offs, compared with a charge of Rs919.05 million in the corresponding period last year. The 12.22% increase in the charge placed additional pressure on earnings.
Consequently, profit before taxation declined 51.69% to Rs4.33 billion from Rs8.96 billion a year earlier. Taxation also decreased during the period, falling 49.49% to Rs2.30 billion from Rs4.55 billion. The reduction in tax expense provided some relief to the bank’s bottom line, but the lower tax charge was not sufficient to offset the decline in pre-tax earnings. As a result, profit after taxation fell by 53.97% to Rs2.03 billion for the six months ended June 30, 2026.
The results show that while BankIslami benefited from a substantial increase in foreign exchange income and higher dividend and other income, these gains were more than offset by the sharp reversal in securities income, weaker overall income and higher operating expenses. The decline in profitability during the first half of 2026 also translated into lower earnings available to shareholders, with basic and diluted EPS falling to Rs1.83 from Rs3.98. Despite the weaker earnings performance, the bank’s board approved an interim cash dividend of Rs1.50 per share for shareholders for the period.
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