The bank reported profit after tax of PKR 21 billion for 1HCY26, representing a 40% increase compared to the same period last year. Hence, earnings per share (EPS) for 2QCY26 and 1HCY26 clocked in at PKR 3.22 and PKR 6.70 respectively. Total deposits grew by 16%, while average current account balances rose by 21%. Current accounts are 43% of deposits, while CASA mix is approximately 71%.
The advances book closed at PKR 1.1 trillion, a 10% YoY growth. SME and agriculture segments posted significant growth of over 30% YoY. Consumer finance achieved 33% growth YoY, with the bank leading the market in home and auto loans. NPL ratio remained in check at 3.9% with a robust coverage ratio of 105%. BAFL maintains a strong Capital Adequacy Ratio of 17.41%, well above regulatory requirements.
They recently issued a PKR 20 billion Tier-2 instrument to bolster this position. Total digital throughput for the first six months was 11.8 trillion PKR, up 36% YoY. Alfa app accounted for PKR 5 trillion of the total throughput, with 1.5 million 30-day active users. The bank has achieved a 93% digital migration ratio. Despite digital growth, the bank maintains 1,200 branches across 245 cities and over 284,000 total touchpoints, including ATMs and POS machines.
Management is experimenting with “Sales and Service Centers” to provide 24/7 banking with minimal manpower. The investment book is comprised of 50% T-bills, with the remaining half split equally between fixed and floating-rate PIBs. Fixed-rate PIBs are yielding approximately 12.4%–12.5%, while fixed-rate Sukuks are at 14.4%–14.5%.
The average duration for the fixed portfolio is 1.25 to 1.5 years. Despite a strategic drop in remittance market share to optimize returns, FX income was high (PKR 4.2 billion) due to increased trade volumes $2.5 billion in 2QCY26. Management noted that future remittance costs will rise as banks begin bearing rebate costs previously covered by government schemes. The withdrawal of the government’s remittance rebate scheme is expected to increase administrative costs for banks. Management clarified that Banks will now bear the costs previously covered by the rebate scheme. While the MDR adjustment may partially offset these costs, it is not expected to be a significant mitigator.
Going forward, the bank expects the policy rate to remain at 11.5% through the end of 2026. Management maintained cost-to income guidance of 60% to 64% for 2026. The bank targets an advances growth trajectory of 10% to 15% over the next 12 months, focusing on Consumer and Agri sectors. The bank remains committed to the Pakistan Remittance Initiative (PRI) to ensure balanced foreign exchange flows.
Important Disclosures
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