Bank Of Khyber’s Profit Soars, Interim Dividend Announced Amid Flood Concerns

Islamabad: The Bank of Khyber (BOK) reported a remarkable 2.2-fold year-on-year surge in profit for the first half of the fiscal year 2025, reaching PkR3.4 billion (earnings per share: PkR2.91). This impressive growth was primarily attributed to a 28% rise in net interest revenue, following the elimination of Minimum Deposit Rate (MDR), coupled with enhanced non-interest revenue.

The institution’s interest income saw a 19% year-on-year decline to PkR27.6 billion due to diminishing yields. Conversely, interest expenses dropped by 32% year-on-year, thanks to the removal of MDR on government deposits, which constitute 55.5% of total deposits as of June 2025. Non-interest revenue witnessed a substantial 2.7-fold year-on-year increase to PkR2.4 billion, predominantly due to a significant rise in capital gains, reaching PkR1.5 billion compared to PkR8 million in the same period last year.

Administrative costs increased by 14% year-on-year to PkR5.7 billion in the first half of 2025, compared to PkR5.0 billion in the same period last year. However, the cost-to-income ratio improved to 46.4% from 58.1% in the same period last year. Deposits experienced a 38% growth since December 2024, reaching PkR382 billion. The Current Account Savings Account (CASA) mix decreased to 72% in June 2025 from 75% in December 2024. Islamic deposits grew significantly, representing 48% of total deposits, up from 32% in December 2024.

Investments also saw a 24% increase since December 2024, amounting to PkR352 billion, largely allocated to floating-rate instruments and Shariah-compliant investments. Average investment yield was 12.8% during the first half of 2025, with a weighted average maturity of approximately three years. Advances decreased by 21% since December 2024, reaching PkR116 billion as of June 2025. Government and corporate lending accounted for 48% and 38% of the portfolio, respectively. Average lending yield reached 13.16% during the first half of 2025.

The non-performing loan (NPL) ratio increased to 9.77% as of June 2025 from 8.33% in December 2024. However, the overall infection coverage improved to 97.2% from 95.8% over the same period. Capital Adequacy Ratio (CAR) also improved, reaching 21.20% as of June 2025 from 17.81% in December 2024.

In a first, the financial institution declared an interim cash payout of PkR1.5 per share for the first half of 2025. The leadership expressed commitment to continued interim disbursements and a dividend payout ratio between 50% and 60% going forward. Regarding monetary policy, the organization’s management anticipates no rate cuts by the end of 2025 due to uncertainties stemming from recent floods. However, they foresee potential rate reductions in 2026, once conditions stabilize and food inflation risks subside.

The bank aims for complete conversion of all its branches to Islamic banking by December 2026, with 36 branches already converted during the first half of 2025. As of June 2025, 167 out of 246 branches operated under Islamic principles, while 79 remained conventional.