AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi: Bank Alfalah Limited (BAFL) held a corporate analyst briefing today, outlining its financial performance and future strategies. The bank reported a significant decline in quarterly profit, with a 53% year-on-year drop to Rs6.16 billion, translating to an earnings per share (EPS) of Rs3.91. Despite this, the bank announced a dividend per share (DPS) of Rs2.50 for the quarter.
BAFL management expressed optimism for stronger net interest income (NII) growth in 2026, attributing this to stable interest rates and increased earning assets. The bank maintains a strong presence in the auto and home finance sectors, with market shares of 21% and 22%, respectively.
The briefing highlighted an expected deposit growth of 15-20% for 2026, focusing on current accounts. Despite a 5% quarter-on-quarter decline in deposits due to market contraction, the bank improved its current account mix to 43.4% by targeting low-cost deposits.
BAFL’s investment strategy includes a significant allocation to fixed-rate Pakistan Investment Bonds (PIBs), comprising 40% of its portfolio, with an 8-10% exposure to T-Bills. The average duration of fixed-rate PIBs is between 2 to 2.5 years, with yields on floating PIBs averaging 12-12.5% compared to 13.5-14% on fixed-rate PIBs.
The bank’s revaluation surplus rose by 46% year-on-year, benefiting from favorable positions in fixed income and equities. BAFL also expanded its network with over 115 new branches in the past year, 38% of which are Islamic banking branches, and plans to add 35-40 more branches next year.
The cost-to-income ratio was reported at 67.4%, influenced by branch expansion and remittance-related expenses. The bank projects this ratio to stabilize at around 65% in the coming year.
BAFL, as the second-largest player in remittances, faced challenges due to central bank incentives last year. However, recent adjustments by the central bank are expected to stabilize the impact from the next quarter.
The bank’s advances-to-deposits ratio (ADR) stood at 49.7% as it focuses on loan growth amid improving economic conditions and declining yields on government securities. The capital adequacy ratio (CAR) was reported at 18% as of the end of September 2025.