Karachi: Bank Alfalah has reported a 38% increase in its earnings per share for the fourth quarter of 2025, registering a consolidated earnings figure of Rs6.4 billion, or Rs4.07 per share. The bank's performance aligns with market expectations.
According to JS Global, the year 2025 saw Bank Alfalah's total earnings decline by 30% year-over-year to Rs28 billion, with an earnings per share of Rs17.63. The net interest income for the fourth quarter rose by 8% compared to the same period last year, reaching Rs34 billion, though it remained stable on a quarterly basis. Non-interest income experienced a marginal decline of 1% year-over-year, totaling Rs11.5 billion, bolstered by increases in fee and commission income and foreign exchange income, which grew by 20% and 68% respectively.
The bank's non-interest expenses increased by 13% year-over-year but fell by 1% from the previous quarter, amounting to Rs30.3 billion for the fourth quarter. This adjustment resulted in a cost-to-income ratio of 66% for the quarter, compared to 62% in the fourth quarter of 2024 and 67% in the third quarter of 2025. On an annual basis, operating expenses for 2025 rose by 36% to Rs118 billion, leading to a significant increase in the cost-to-income ratio to 64% from 50.4% in 2024. The rise in non-interest expenses was largely attributed to increased marketing, advertisement, and publicity costs related to remittances.
The bank recorded a reversal of Rs190 million in the fourth quarter, contrasting with a provision expense of Rs63 million in the same quarter of the previous year and Rs3,014 million in the third quarter of 2025. The effective tax rate for the bank stood at 54% in the fourth quarter, a decrease from 74% in the fourth quarter of 2024, resulting in an overall tax rate of 55% for 2025, compared to 53% in 2024.
In addition to these results, Bank Alfalah announced a dividend of Rs3.0 per share, surpassing expectations. This brings the total dividend per share for 2025 to Rs10.5. The bank maintains a buy recommendation, with its stock trading at a projected 2026 price-to-earnings ratio of 6.6, a price-to-book value ratio of 0.9, and a dividend yield of 8%.
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