Karachi: Bank Alfalah Limited (PSX: BAFL) has reported a 28.7% year-on-year decline in its consolidated profit after tax (PAT), clocking in at Rs7.07 billion (EPS: Rs4.49) for the quarter ended March 31, 2025, compared to Rs9.92 billion (EPS: Rs6.31) in the same period last year.
The bank also announced an interim cash dividend of Rs2.5 per share (25%). Following the announcement, the company’s stock price took an instant dip, dropping from an intraday peak of Rs 76.5 to Rs 74.5, marginally below the previous close.
The drop in profitability was largely attributed to a steep rise in non-mark-up/interest expenses, which surged nearly 38% YoY to Rs27.57 billion. This increase was mainly led by operating expenses that jumped 40.4% to Rs27.16 billion, reflecting growing cost pressures.
Despite the expense hike, Bank Alfalah’s Net Mark-up/Interest Income (NII) posted a modest 6.34% growth to Rs33.24 billion, aided by a significant 37.28% decline in interest expense — more than offsetting the 26.78% drop in interest earned.
On the non-mark-up side, income rose by 13.83% YoY to Rs9.46 billion, driven by substantial gains in other income (+1104%), derivatives income (+103%), dividend income (+196%), and gain on securities (+846%). However, fee and commission income declined 24% while foreign exchange income was down 6%.
Provisioning expenses more than doubled to Rs467.75 million, while taxation declined 14% to Rs8.53 billion, partially cushioning the bottom-line impact.
Analysts note that while the bank has benefited from treasury and market-related gains, the sharp increase in operating costs and drop in core fee-based income reflect underlying challenges. Nonetheless, the dividend payout signals management’s confidence in maintaining capital strength amid margin pressures.
