Karachi: Bank Alfalah Limited (BAFL) held a corporate briefing to discuss its financial performance and future outlook, reporting a 26% year-over-year decline in profit after tax for the calendar year 2025, totaling Rs28 billion, and earnings per share of Rs17.97. Despite the drop in profit, the bank declared a dividend of Rs10.50 per share for the year and announced a stock split to take effect in April 2026.
According to JS Global, the bank's net interest income increased by 7% year-over-year to Rs136 billion, despite a sharp decline in interest rates during 2025. This was attributed to BAFL's strategic shift to long-term bonds and building a fixed-rate PIB portfolio, allowing the bank to sustain higher yields. Non-interest income showed broad strength, although fee and commission income fell due to changes in home remittance pricing by the State Bank of Pakistan and a shift in BISP-related income. Total income rose by 7% year-over-year, bolstered by other income streams.
BAFL's deposit base grew by 17% year-over-year to Rs2.5 trillion, with a focus on low-cost Current Accounts, maintaining a strategic CASA ratio of 69.5%. The bank maintained its leadership in the auto and home finance segments, holding market shares of 21.2% and 21.4%, respectively. Administrative expenses increased by 38% year-over-year, influenced by waivers in the home remittances market. The bank's management expressed concerns that remittances from the GCC could decline by 20% in 2026 if geopolitical conflicts continue.
The bank's digital leadership was highlighted by a 90% digital transaction ratio and Rs18 trillion in digital throughput. However, physical expansion and high marketing costs in the remittance sector elevated the Cost-to-Income ratio to 63.4%. The bank's Capital Adequacy Ratio stood at 15.9%, providing a buffer for growth. Management noted a comfortable credit position due to limited movements in the bond investment portfolio, which comprises a mix of PIBs, T-bills, and sukuk. The bank anticipates potential interest rate hikes by the end of 2026, driven by geopolitical tensions and possible inflationary pressures.