Karachi: Bank Al-Habib Limited (BAHL) has reported a significant decline in its net profit after tax (NPAT) for the third quarter of 2025, as the bank grapples with decreased net interest income and non-interest income. The bank posted a NPAT of PkR6.1 billion, translating to earnings per share of PkR5.5, marking a 49% decrease from the previous year and a 33% drop from the previous quarter. The earnings fell short of analyst expectations.
The bank's net interest income (NII) for the third quarter was recorded at PkR32.9 billion, reflecting a 23% year-on-year decline, although it showed a marginal 1% increase from the previous quarter. The decrease was attributed to a decline in yields.
Mark-up earned by the bank fell to PkR82.5 billion, down 33% from the previous year and 3% from the previous quarter. Meanwhile, mark-up expensed was reported at PkR49.4 billion, marking a 39% decrease year-on-year and a 5% decrease quarter-on-quarter. The bank's net interest margin (NIM) shrank to 4.7% from 6.5% a year ago, though it improved slightly on a sequential basis.
Non-interest income increased by 27% year-on-year to PkR6.8 billion, driven by a substantial rise in foreign exchange income and gains from the sale of securities. However, on a quarter-on-quarter basis, non-interest income declined by 10%, mainly due to significant decreases in fee income and dividends.
Operating expenses rose to PkR24.9 billion, an 18% increase from last year and a 7% rise from the previous quarter. This increase contributed to a higher cost-to-income ratio of 62.6%, compared to 57.9% and 43.7% in the third quarter of 2024 and the second quarter of 2025, respectively.
The bank reported a credit-allowance/provisioning expense of PkR449 million, a sharp decline from the PkR4.5 billion expense recorded in the same period last year and a reversal of PkR1.5 billion in the prior quarter.
The effective tax rate for the quarter was 57.9%, up from 50.7% a year ago and 46.9% in the previous quarter.
Despite the challenges, analysts at AKD Securities Limited maintain a 'Buy' stance on BAHL, citing the bank's expansion of its low-cost deposit base, robust asset quality, and higher share in trade business as key factors for this outlook. The target price for June 2026 is set at PkR290.0 per share.