Soneri Bank Limited (PSX: SNBL) reported a 4% year-on-year decline in consolidated profit after taxation for the half year ended June 30, 2026, as a sharp reduction in net mark-up income and higher operating expenses outweighed strong growth in non-mark-up income. According to the bank’s financial results, profit after taxation stood at Rs2.40 billion in 1HCY26, compared with Rs2.50 billion in the corresponding period of 2025. The decline amounted to Rs101 million during the period. Basic and diluted earnings per share also decreased to Rs2.17 from Rs2.26 in the first half of the previous year.
The main pressure on Soneri Bank’s earnings came from net mark-up income, which declined by nearly 20% year-on-year to Rs11.44 billion from Rs14.26 billion. Mark-up, return and interest earned fell 7.2% to Rs40.38 billion from Rs43.53 billion, while mark-up, return and interest expensed decreased by only 1.1% to Rs28.95 billion from Rs29.27 billion.
The slower decline in mark-up expenses compared with mark-up income resulted in a significant compression in the bank’s core banking spread. Net mark-up income therefore fell by Rs2.82 billion during the six-month period, placing considerable pressure on the bank’s overall earnings.
Soneri Bank, however, recorded substantial growth in its non-mark-up revenue streams, which helped limit the impact of weaker core income. Total non-mark-up income increased 51% to Rs5.37 billion from Rs3.56 billion in the same period last year. A major contributor to this increase was gains on securities, which rose nearly 3.7 times to Rs1.39 billion from Rs374.16 million in 1HCY25. Foreign exchange income also more than doubled, increasing 118.7% to Rs1.33 billion from Rs608.79 million.
Fee and commission income recorded a more modest increase of 2.7%, reaching Rs2.43 billion compared with Rs2.36 billion a year earlier. Dividend income also increased 14.3% to Rs160.93 million from Rs140.85 million, while other income declined 16% to Rs56.26 million from Rs67.01 million.
The strong performance of non-mark-up income provided support to the bank’s total income, which declined by a relatively limited 5.7% to Rs16.80 billion from Rs17.81 billion in the corresponding period of 2025. Despite the increase in non-mark-up income, it was not sufficient to completely offset the reduction in net mark-up income. On the expenditure side, Soneri Bank’s operating expenses increased 18.8% year-on-year to Rs13.09 billion from Rs11.02 billion. The rise in operating costs contributed to a 17% increase in total non-mark-up and interest expenses, which reached Rs13.20 billion compared with Rs11.28 billion in the prior-year period.
Workers’ Welfare Fund expenses declined 28.3% to Rs95.89 million from Rs133.70 million, while other charges fell sharply by 91.5% to Rs10.61 million from Rs125.32 million. However, the reductions in these expenses were more than offset by the increase in operating expenses. As a result of lower total income and higher expenses, profit before credit loss allowance declined 44.8% to Rs3.61 billion from Rs6.53 billion in the first half of 2025.
The bank also recorded a significant increase in net credit loss allowance and write-offs during the period. The charge rose to Rs1.19 billion from Rs150.68 million in 1HCY25, representing an increase of 687%. This additional charge placed further pressure on profitability below the pre-provision line.
Profit before taxation stood at Rs4.79 billion during the half year, compared with Rs6.68 billion in the same period last year, representing a decline of 28.3%. Despite the significant reduction in pre-tax profit, the impact on the final bottom line was moderated by a lower taxation charge. Taxation declined 42.7% to Rs2.40 billion from Rs4.19 billion in the corresponding period. The reduction in tax expense helped cushion the decline in pre-tax earnings and contributed to the comparatively smaller 4% reduction in profit after taxation.
The latest results show that Soneri Bank’s first-half performance was marked by a substantial shift in the composition of income. While core net mark-up income came under pressure, stronger securities gains, foreign exchange earnings, fee income and dividend income helped support overall revenue. However, higher operating expenses and a significant increase in credit loss allowances continued to weigh on profitability. Despite these pressures, the bank managed to limit the decline in net profit to Rs2.40 billion for the six months ended June 30, 2026.
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