Karachi: Bank Alfalah Limited (BAFL) has reported a significant decline in its third-quarter earnings for the calendar year 2025, attributing the downturn to increased administrative expenses, particularly in marketing. The bank's net profit after tax (NPAT) stood at PkR6.2 billion, marking a 53% decrease compared to the same period last year and a 25% decline from the previous quarter.
The bank's net interest income (NII) fell slightly to PkR34.0 billion, a 1% decrease both year-on-year and quarter-on-quarter. This was primarily due to a drop in mark-up earned, despite a reduction in mark-up expenses.
A notable decrease was observed in mark-up earned, which dropped by 38% year-on-year and 12% quarter-on-quarter to PkR82.4 billion. This decline was largely due to reduced yields on investments and advances. The bank's net interest margins (NIMs) remained steady at 4.9% compared to the same period last year but experienced a slight decrease of 5 basis points sequentially.
Non-interest income was recorded at PkR11.0 billion, down 15% year-on-year and 26% quarter-on-quarter. The decline was attributed to lower gains on the sale of securities, which amounted to PkR2.1 billion, a significant decrease of 67% year-on-year and 73% quarter-on-quarter. However, fee and foreign exchange income saw an increase.
Provisioning expenses rose to PkR1.1 billion, compared to PkR439 million in the same quarter last year and PkR1.4 billion in the previous quarter.
The bank's non-markup expenses increased by 44% year-on-year and 4% quarter-on-quarter, reaching PkR30.6 billion, primarily due to higher marketing and advertisement costs. Marketing expenses alone surged to PkR4.6 billion, a substantial increase from PkR788 million in the same period last year. Consequently, the cost-to-income ratio escalated to 68% from 45% in the third quarter of the previous year and 60% in the preceding quarter.
Despite the earnings decline, there remains a positive outlook on Bank Alfalah's growth, with a 'BUY' recommendation from analysts, who anticipate the bank will sustain growth through a focus on retail-driven, low-cost deposits to support balance sheet expansion.