Karachi: Bank Alfalah (BAFL) conducted a corporate briefing session to discuss its financial performance and future outlook, revealing expectations of rising interest rates due to escalating geopolitical tensions. The bank reported a 17% increase in deposits, reaching Rs2.5 trillion in 2025, and detailed its strategic focus on average current account balances.
According to JS Global, the briefing highlighted the management's belief that interest rates had bottomed out before the US-Iran conflict, with the current situation reinforcing expectations of rate hikes in upcoming monetary policy meetings, potentially in April or June. The bank's investment strategy includes a diversified allocation, with 27% in fixed-rate instruments and 40% in variable-rate instruments, among others.
Administrative expenses rose by 38% year-over-year in 2025, primarily due to branch expansion and staff compensation, although marketing expenses for home remittances are projected to decline significantly. Management plans to open 50 new branches, contingent on ongoing developments, and maintains a buy stance on BAFL, with a projected 2026 earnings ratio of 5.8 times and a price-to-book value of 0.8 times.
The bank's capital adequacy ratio stands at 15.87%, and the non-performing loan ratio at 4.1%, with strong coverage. BAFL's earnings for the year were Rs27.8 billion, alongside a final cash dividend announcement and a planned 2-for-1 stock split set for April.
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