Bank AL Habib posts lower half-year profit, announces Rs3.5 dividend

WEB DESK: Bank AL Habib Limited (PSX: BAHL) has reported a decline in earnings for the half year ended June 30, 2025. The bank’s profit after tax fell 8.66 percent to Rs19.79 billion compared to Rs21.66 billion in the same period last year.

The bank also declared an interim cash dividend of Rs3.5 per share, or 35 percent, in addition to an earlier payout of the same amount. Earnings per share came in at Rs17.8, down from Rs19.49 a year earlier, showing a decrease of 8.67 percent.

Weaker interest income weighs on earnings

The main drag on profitability came from a drop in net mark-up income, which slipped 10.97 percent to Rs66.50 billion. This was the result of a 26.91 percent fall in mark-up earned to Rs178.13 billion, while mark-up expenses declined 33.96 percent to Rs111.62 billion. On the positive side, non-markup income rose nearly 10 percent year-on-year, reaching Rs16.60 billion.

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This was driven by a 17.29 percent rise in fee and commission income to Rs12.11 billion, a 2.59 percent increase in foreign exchange income to Rs3.55 billion, and a 6.73 percent improvement in other income to Rs583.8 million. Dividend income and profit from associates, however, saw declines, while the bank also booked a higher loss on securities.

Expenses continue to rise

Total income for the half year stood at Rs83.12 billion, down 7.54 percent from Rs89.89 billion last year. At the same time, expenses kept rising. Operating costs increased 12.28 percent to Rs44.93 billion, while overall non-markup expenses were up 11.46 percent to Rs45.78 billion.

This pushed profit before credit loss allowances down 23.53 percent to Rs37.33 billion. A reversal in provisions provided some relief, but profit before taxation still slipped 3.5 percent to Rs39.98 billion.

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After taxation of Rs20.19 billion, the profit attributable to equity holders was Rs19.78 billion, reflecting an 8.68 percent year-on-year decline. Earnings per share dropped to Rs17.8 from Rs19.49.

Despite the weaker earnings, Bank AL Habib has maintained steady shareholder returns through its dividend payout. However, the pressure from shrinking interest income and rising expenses continues to weigh on the bank’s overall performance.