Karachi: Bank Alfalah has announced its second-quarter 2026 financial results, revealing a notable year-over-year increase in earnings, driven by higher net interest income and substantial capital gains. The bank reported a consolidated earning of Rs10.1 billion, translating to an earnings per share (EPS) of Rs3.22, marking a 27% increase compared to the same period last year, though down 8% from the previous quarter.

According to JS Global, the results exceeded industry expectations due to a 6% year-over-year rise in net interest income, which amounted to Rs36 billion for the quarter. This growth was attributed to volumetric expansion and elevated interest rates. Additionally, Bank Alfalah's total deposits saw a significant increase of 16% year-over-year, with current account deposits growing by 21%.

Despite the strong year-over-year performance, the earnings experienced a quarter-over-quarter decline due to a lower capital gain in the second quarter of 2026 compared to the first quarter. Non-interest income also saw a 10% year-over-year increase, reaching Rs16.5 billion, although it decreased by 12% from the previous quarter.

The bank's non-interest expenses rose modestly by 3% year-over-year, but decreased by 3% on a quarterly basis, largely due to reduced marketing and compensation expenses. The cost-to-income ratio improved to 58% from 60% in the same quarter last year.

Provision expenses fell to Rs814 million in the second quarter of 2026 from Rs1,364 million in the same period last year. The effective tax rate for the quarter was recorded at 53%, consistent with the first quarter of 2026 but lower than the 57% in the second quarter of 2025.

In line with its financial results, Bank Alfalah declared a cash dividend of Rs1.5 per share, bringing the half-year cash dividend to Rs3.0 per share. Despite the quarterly decline in earnings, JS Global maintained a buy stance on the bank, reflecting confidence in its future performance.