Bank Alfalah reported a 9% quarter-on-quarter decline in profit after tax to PKR 9.3 billion in the third quarter of calendar year 2026, as weakening non-interest income weighed on overall revenue. Earnings per share fell to PKR 2.94 from PKR 3.23 in the preceding quarter.
Total revenue declined 12% sequentially to PKR 46.7 billion. Despite the softer earnings performance, the bank maintained its quarterly cash dividend at PKR 1.50 per share.
Non-Interest Income Declines on Securities and Dividend Earnings
Non-interest income fell 34% quarter-on-quarter, emerging as the main source of pressure on the bank’s financial performance. Gains on the sale of securities shifted from a substantial positive contribution in the June quarter to a small loss in the September quarter.
Dividend income also declined 34% sequentially, further weighing on non-funded earnings. These declines offset improvements in other income streams.
Fee income offered some support, increasing 25% from the previous quarter, while foreign exchange income rose 6%. Net interest income remained broadly stable, slipping just 1% quarter-on-quarter.
However, the improvement in fee and foreign exchange income was insufficient to offset the decline in non-interest income, resulting in lower overall revenue.
Operating Costs and Provisions Influence Quarterly Earnings
Bank Alfalah’s operating expenses decreased 3% compared with the June quarter, providing limited relief amid weaker revenues. However, costs declined more slowly than income, pushing the cost-to-income ratio up to 63.2%.
Provisions supported the bottom line during the quarter. The bank recorded a net reversal in the September quarter, compared with a provision charge in the preceding period, helping cushion the decline in profitability.
Profit before tax fell 9% quarter-on-quarter, in line with the decline in profit after tax. The effective tax rate remained broadly stable at around 53%.
Bank Alfalah Maintains Quarterly Dividend at PKR 1.50
The bank declared a cash dividend of PKR 1.50 per share for the third quarter, maintaining the same payout as in the previous quarter. The dividend represented a payout ratio of approximately 51%.
Cumulative dividends for the first nine months of 2026 reached PKR 4.50 per share, exceeding the payout recorded during the corresponding period last year.
Year-on-Year Profit Growth Remains Strong
Despite the sequential decline, Bank Alfalah’s quarterly earnings remained significantly higher than a year earlier. Profit after tax increased 51% year-on-year in the third quarter of 2026.
The results highlight a mixed performance, with strong year-on-year earnings growth and a stable dividend offset by sequential revenue pressure. The decline in securities gains and dividend income weighed on quarterly profitability, while fee income growth and a favourable movement in provisions provided partial support.