Samba Bank Limited (SBL) has reported a substantial decline of 53% in its profit-after-tax (PAT) for the first quarter of 2025, compared to the same period in the previous year. The bank disclosed its financial results through an official notice to the Pakistan Stock Exchange (PSX), signaling a challenging quarter amidst broader transformations within the institution.
According to the statement, Samba Bank posted a PAT of Rs166.85 million for the January–March 2025 period. This marks a steep fall from Rs358.68 million recorded in Q1 2024, reflecting the ongoing pressures in the financial sector and changes in the bank’s strategic direction.
Earnings per Share (EPS) also mirrored this downturn, falling to Re0.17 per share from Re0.36 in the corresponding period last year. This drop reflects weaker profitability and narrower returns to shareholders over the three-month window.
The decline in profitability is primarily attributed to a reduction in net interest income, which dropped to Rs1.56 billion during the quarter, compared to Rs1.86 billion in Q1 2024. Net interest income remains a key driver of bank earnings and this decrease indicates mounting challenges in lending margins and interest rate spreads.
Despite the overall dip in earnings, there were some positive indicators within the financials. SBL’s foreign exchange income showed modest growth, increasing from Rs216.77 million in Q1 2024 to Rs231.59 million in Q1 2025. This uptick suggests that the bank’s treasury operations and currency trading activities have maintained a stable performance amid volatile market conditions.
Total income for the bank during the quarter also declined by 10%, falling to Rs1.94 billion from Rs2.18 billion recorded in the same period of the previous year. This broader revenue shrinkage underlines the operational pressures and market dynamics impacting Samba Bank’s core and non-core income streams.
This financial performance comes at a pivotal moment for the bank, as it embarks on a strategic overhaul. Last month, Samba Bank announced its intention to transition from a conventional banking model to a fully Shariah-compliant Islamic banking framework. This move is part of a growing trend in Pakistan’s banking sector, as institutions respond to shifting customer preferences and regulatory encouragement for Islamic finance.
“The board of Samba Bank Limited has, in-principle, approved the plan to convert from conventional to Islamic bank,” the bank stated in its earlier filing to the PSX. SBL added that a tentative conversion plan would be submitted to the State Bank of Pakistan (SBP) for review and approval.
While the profitability drop raises short-term concerns, the bank’s longer-term focus on transformation could potentially open new growth avenues, especially given the rising demand for Islamic banking services in Pakistan. However, such a shift also entails significant structural, regulatory, and operational adjustments.
As the bank navigates this transformation, stakeholders will be closely monitoring both its financial trajectory and its execution of the Islamic banking conversion strategy. The coming quarters will be crucial in determining whether SBL can successfully reverse its profit slide while building a sustainable model within the Islamic finance ecosystem.