Karachi: Bank Alfalah (BAFL) provided an analysis of its financial performance and future outlook during a corporate briefing session focused on the second quarter of 2026. The briefing highlighted the bank's strategic allocations within its investment portfolio, a notable increase in deposits, and expectations for interest rate stability.

According to JS Global, the bank's investment book is divided evenly, with 50% allocated to T-bills and the rest between fixed-rate and floating-rate instruments. Fixed-rate Pakistan Investment Bonds (PIBs) are yielding approximately 12.5%, while Sukuks offer around 14.5%. The floating-rate instruments maintain a spread of about 100 basis points over T-bills. The management addressed a compression in the net interest margins (NIMs) due to a policy rate hike in April 2026, with expectations of improvement as repricing occurs later in the year.

The bank's deposits reached Rs2.66 trillion in the second quarter, marking a 16% year-on-year increase. Current account deposits grew by 21% year-on-year, bringing the current account mix to 43.2% and capturing a market share of 6.1%. Bank Alfalah reported a 10% year-on-year growth in advances to Rs1.1 trillion, with corporate contributions at 69%, consumers at 16%, small and medium-sized enterprises at 9%, and other sectors filling the remainder.

The briefing also highlighted a growth in trade volume by 6% year-on-year to US$4.4 billion, despite a decline in remittance volumes by 8.8% during the first half of 2026. The bank's management anticipates that higher trade volumes will support foreign exchange income.

In terms of operational efficiency, the cost-to-income ratio was reported at 56.6% for the second quarter, a slight improvement from the 57.4% recorded in the first quarter. The bank's future branch expansion plans are contingent upon market conditions and opportunities, with the current branch network standing at 1,200.

Bank Alfalah reported consolidated earnings of Rs10.1 billion, reflecting a 27% year-on-year increase, and declared a second interim cash dividend of Rs1.5 per share. The management reaffirmed its commitment to maintaining consistent dividend payouts, while decisions remain at the discretion of the Board.