Bank Al Habib’s Profit Drops 23% to Rs32.46bn Amid Lower Policy Rate

Bank AL Habib (PSX: BAHL) has reported a consolidated profit after tax of Rs. 32.46 billion for 2025, reflecting a 23 percent year-on-year decline primarily attributed to the lower policy rate and elevated operating expenses.

The bank also announced a final cash dividend of Rs. 4.5 per share for the fourth quarter of 2025, bringing the total dividend per share for the year to Rs. 15.0, compared to Rs. 17.0 in 2024.

For 4Q2025, BAHL posted consolidated earnings of Rs. 5.8 billion, with earnings per share of Rs. 5.20, marking a decrease of 23 percent YoY and 16 percent quarter-on-quarter. According to Topline Securities, the results fell short of industry expectations due to higher-than-anticipated operating costs.

Non-interest expenses rose by 22 percent YoY and 4 percent QoQ, largely driven by increased marketing expenditure on remittance services, pushing the bank’s cost-to-income ratio to 67 percent during the quarter. Net Interest Income stood at Rs. 31.4 billion, down 21 percent YoY and 5 percent QoQ amid declining asset yields. Interest earned dropped 32 percent YoY to Rs. 77 billion, while interest expenses decreased 38 percent YoY to Rs. 45 billion.

Meanwhile, non-interest income grew 3 percent YoY to Rs. 7.4 billion, supported by higher foreign exchange earnings, though it declined 8 percent QoQ due to losses on securities. The bank’s effective tax rate was recorded at 55 percent in 4Q2025, compared to 63 percent in the same period last year.

Currently, BAHL is trading at a projected 2026 price-to-earnings ratio of 7.2x, a price-to-book value of 1.2x, and offers a dividend yield of approximately 9.0 percent.