BIPL

⚡ Flash Summary

BankIslami Pakistan Limited’s (BIPL) financial results for the quarter and nine months ended September 30, 2025, reveal a mixed performance. The bank reported a decrease in profit after taxation compared to the same period last year, despite an increase in total income. Operating expenses have increased, impacting profitability. The board has not recommended any cash dividend, bonus shares, or right shares for the period.

📌 Key Takeaways

• Profit after taxation decreased to PKR 5.07 billion for the nine months ended September 30, 2025, compared to PKR 10.17 billion in 2024. 📉
• Basic and diluted earnings per share significantly dropped to PKR 4.58 from PKR 9.18 in the same period. 📉
• Total income increased to PKR 33.59 billion, up from PKR 37.40 billion year-over-year. 📈
• Net profit/return increased to PKR 26.35 billion for the nine months ended September 30, 2025, compared to PKR 33.90 billion in 2024. 📈
• Operating expenses increased to PKR 23.04 billion, up from PKR 15.97 billion, impacting overall profitability. ⚠️
• The bank did not recommend any cash dividend for the period. ⛔
• No bonus shares were recommended, indicating a conservative approach to capital allocation. 🏦
• Total assets increased to PKR 751.81 billion as of September 30, 2025, compared to PKR 737.83 billion at the end of 2024. 📈
• Islamic financing, related assets and advances decreased to PKR 259.89 billion from PKR 296.10 billion at the end of 2024. 📉
• Investments decreased to PKR 352.40 billion as of September 30, 2025, compared to PKR 345.05 billion at the end of 2024. 📈
• Deposits and other accounts increased to PKR 604.44 billion, up from PKR 559.18 billion. 📈
• Cash flow from operating activities significantly decreased to PKR 24.19 billion from PKR 39.73 billion. ⚠️
• The bank’s net assets stands at PKR 47.51 billion as of September 30, 2025. 📊
• Right-of-use assets decreased slightly to PKR 3.88 billion from PKR 4.31 billion.
• The bank’s share capital remains stable at PKR 11.01 billion. 🏦

🎯 Investment Thesis

Based on the financial results, a HOLD recommendation is appropriate for BankIslami. The decrease in profitability and cash flow is concerning, but the increase in total assets and deposits provides some stability. A price target of PKR 10.00 with a time horizon of 12 months is set, pending further improvements in financial performance.

⚡ Flash Summary

BankIslami Pakistan Limited’s quarterly report for the period ended September 30, 2025, reveals a mixed financial performance. The bank achieved deposit growth of 8.29% since December 2024 and 9.7% since September 2024, signaling strong customer confidence. However, profitability suffered a setback due to a sharp reduction in policy rates, leading to a contraction in net spread earned by -22.27%. The bank maintains a comfortable CAR (Capital Adequacy Ratio), although it declined to 17.78% from 24.11% in December 2024, and a resilient CASA ratio exceeding 60%.

📌 Key Takeaways

• ✅ Deposit growth is positive, with an 8.29% increase since December 2024.
• 📈 Overall deposits portfolio reached PKR 605.5 billion.
• 💧 Current deposits increased by 20.9% since December 2024, indicating strong transactional activity.
• 💰 Savings deposits also saw a positive growth of 2.3% since December 2024.
• 📉 Term deposits consistently declined, shifting towards a more liquid deposit mix.
• 📊 CASA ratio improved to 68.6%, showing improved customer confidence.
• 🔻 Gross financing portfolio declined by 11.3% since December 2024 due to cautious lending.
• ⚠️ Advances-to-Deposit Ratio (ADR) reduced to 47.9% from 58.5% in December 2024.
• 🚧 Delinquent financing portfolio decreased by 8.7%, but the infection ratio increased to 7.6%.
• 🛡️ Coverage ratio strengthened to 111.9% from 105% at year-end 2024.
• ⬆️ Investment portfolio increased by 2.45% since December 2024.
• 📉 Capital Adequacy Ratio (CAR) decreased to 17.78% from 24.11% in December 2024.
• 📉 Operating profit before credit loss allowance decreased by 51.72% to PKR 10.148 billion.
• 📉 Profit after taxation decreased by 50.09% to PKR 5.077 billion.
• ⭐ Non-Funded Income (NFI) increased by 106.9%, offsetting core financing income challenges.

🎯 Investment Thesis

Given the challenging financial performance highlighted by decreased profitability and a declining CAR alongside deposit growth, my recommendation is HOLD. While BankIslami maintains a strong customer confidence and has made strategic investments, the headwinds from decreased policy rates and operational costs cannot be ignored. It’s difficult to issue a BUY rating without more clarity on how the bank expects to recover profitability. Given the uncertain environment, I prefer to revisit the recommendation after observing trends over the next 2-3 quarters. My price target is PKR 10, with a time horizon of 12 months.