BAFL

⚡ Flash Summary

Bank Alfalah’s unaudited condensed interim financial statements for the period ended September 30, 2025, reveal a profit after tax (PAT) of PKR 21.44 billion, resulting in earnings per share (EPS) of PKR 13.59. While revenue saw a YoY increase of 4.9%, reaching PKR 136.70 billion, profitability faced headwinds from declining benchmark rates and higher remittance-related promotional expenses. However, growth in average deposits and an improved current account (CA) mix offered some support, showcasing the bank’s efforts to balance challenges and opportunities.

📌 Key Takeaways

• 💰 PAT decreased to PKR 21.44 billion, impacted by declining benchmark rates.
• 📉 EPS declined to PKR 13.59 due to higher tax rates.
• ⬆️ Total revenue increased by 4.9% YoY to PKR 136.70 billion.
• ➕ Net Markup income grew by 4.5%, driven by cost of funds optimization.
• ⚠️ Fee and Commission Income decreased by 13.5% due to pricing pressures.
• 🏦 Customer deposits reached PKR 2.17 trillion, focus on current accounts.
• 📈 Gross advances increased by 23.9% YoY.
• ✔️ Infection ratio maintained at 4.0% through strong underwriting.
• ✅ Non-performing loans fully covered with a coverage ratio of 110.2%.
• 🛡️ CAR remained adequately capitalized at 17.94%.
• 💸 Interim cash dividend declared at PKR 2.50 per share (25%), a total of PKR 7.50 per share YTD.
• ⭐ Entity rating reaffirmed at ‘AAA’ (long-term) and ‘A1+’ (short-term) by PACRA.
• 📊 KSE-100 reached an all-time high of 165,494 points due to economic stability.
• 🌍 Pakistan’s credit rating upgraded to Caal from Caa2 by Moody’s
• 🌧️ Floods impacted Punjab and Northern areas, potentially affecting GDP growth and inflation.

🎯 Investment Thesis

Based on current results, a HOLD recommendation is warranted, as the announcement reflects both challenges and opportunities. The decline in profitability necessitates caution, although strong asset growth and capital position are positive. A price target can’t be accurately determined without a full assessment of market conditions, projected earnings and risk factors. Time horizon is medium term. More information about the bank’s outlook will be essential.