Bank Alfalah Reports Mixed 1QCY25 Results with Strong Cash Payout

Karachi: Bank Alfalah Limited (BAFL) disclosed its financial outcomes for the first quarter of the calendar year 2025, revealing a mixed performance with a notable cash payout. The bank reported a profit of PkR7.0 billion, translating to earnings per share of PkR4.5. This marks a 29% decrease year-on-year, yet a 50% increase quarter-on-quarter. Despite the decline, the bank announced an interim cash payout of PkR2.5 per share, surpassing market expectations.

Net interest income rose to PkR33.2 billion, reflecting a 6% increase year-on-year and a 7% rise quarter-on-quarter. This growth was primarily due to a significant reduction in mark-up expenses, which offset the decline in mark-up earned. Mark-up earned fell by 27% year-on-year to PkR95.1 billion, attributed to reduced yields on investments and advances. Consequently, the bank’s net interest margin (NIM) decreased to 4.3% from 4.6% in the same period last year, although it showed sequential improvement.

Non-interest income for the bank increased to PkR9.1 billion compared to PkR8.0 billion in the previous year. The increase was largely driven by a substantial rise in dividend income, which grew by over twofold, despite a decrease in fee and foreign exchange income.

The bank also reported a provisioning reversal of PkR468 million, an improvement from a reversal of PkR207 million in the same quarter last year and an expense of PkR103 million in the previous quarter. Non-markup expenses rose to PkR27.4 billion, up 38% year-on-year, driven by increased staff costs due to branch expansion.

Effective tax rates for the quarter increased to 54.2%, compared to 49.7% and 71.8% in the previous year’s first quarter and the last quarter of 2024, respectively. This rise is attributed to changes in effective tax rates for banks introduced last year.

Bank Alfalah’s consistent dividend payout reflects a stable approach amidst fluctuating earnings. Analyst recommendations maintain a ‘BUY’ stance on BAFL, projecting a target price of PkR120 per share by December 2025, with a dividend yield of 11% over the same period.