Karachi: Bank Alfalah (BAFL) reported a significant increase in earnings for the first quarter of 2026, surpassing industry expectations with a consolidated net income of Rs10.9 billion and earnings per share (EPS) of Rs3.48, marking a 55% year-on-year increase. The bank attributed this performance to substantial capital gains and effective cost management.

According to JS Global, the bank's results were driven by a remarkable capital gain of Rs10.8 billion, compared to Rs2.8 billion in the previous quarter and Rs626 million in the same quarter last year. Bank Alfalah also managed to reduce its borrowing significantly to Rs133 billion in March 2026 from Rs832 billion in December 2025, contributing to a decline in its investment book to Rs1,329 billion.

The bank's Net Interest Income (NII) rose by 4% year-on-year to Rs34 billion, while non-interest income saw a substantial increase of 100% year-on-year to Rs18.7 billion, largely due to gains on securities. Non-interest expenses grew by 14% year-on-year, yet the cost-to-income ratio improved to 59% from 64% in the first quarter of 2025.

Bank Alfalah also recorded a reversal of Rs1,393 million, contrasting with a provision expense of Rs1,362 million in the previous quarter. The bank's effective tax rate was reported at 53%, slightly lower than the previous year's first quarter and the last quarter.

In conjunction with the earnings announcement, the bank declared a dividend of Rs1.5 per share, exceeding expectations. Additionally, a stock split was announced, reducing the face value from Rs10 to Rs5. JS Global maintains a buy rating on the bank, citing a promising price-to-earnings ratio and dividend yield.