According to PACRA’s latest rating announcement dated June 23, 2026, the bank’s outlook remains Stable, reflecting confidence in its ability to maintain financial strength despite changing economic conditions and moderating profitability.
PACRA Reaffirms Bank’s Strong Financial Profile
PACRA stated that Bank AL Habib continues to benefit from a strong market presence built over more than three decades of operations. The agency highlighted the bank’s conservative lending strategy, sound governance practices, and consistent financial performance across multiple economic cycles.
The rating agency noted that the bank’s leadership in trade finance, high-quality asset portfolio, and resilient funding base continue to support its position among Pakistan’s most highly rated commercial banks.
The reaffirmation also indicates PACRA’s confidence in the bank’s capacity to manage risks while maintaining adequate capital buffers and liquidity.
Branch Network Continues to Expand
Bank AL Habib significantly expanded its nationwide presence during calendar year 2025.
The bank added 102 new branches, increasing its total branch network to 1,323 branches by the end of the year.
The expansion has continued into the first quarter of calendar year 2026, with the network reaching 1,329 branches, strengthening the bank’s footprint across Pakistan.
The continued branch expansion reflects the bank’s long-term strategy of increasing customer accessibility while supporting business growth in both urban and emerging markets.
Islamic Banking Becomes a Key Growth Driver
PACRA noted that Islamic banking is becoming an increasingly important contributor to Bank AL Habib’s future growth strategy.
The bank now operates 392 dedicated Islamic banking branches, providing Shariah-compliant financial products and services to a growing customer base.
As demand for Islamic banking continues to rise across Pakistan, the segment is expected to play a larger role in the bank’s expansion plans and long-term profitability.
Investment Portfolio Remains Focused on Government Securities
Bank AL Habib further strengthened its investment portfolio during CY25.
The bank’s total investment portfolio increased to Rs2.03 trillion, compared with Rs1.92 trillion in the previous year.
PACRA noted that these investments remain predominantly concentrated in government securities, reflecting the bank’s conservative investment strategy and focus on maintaining a strong liquidity profile while minimizing credit risk.
Capital Position Remains Strong
The bank continued to strengthen its capital base during the year.
Shareholders’ equity, excluding revaluation surplus, increased by 8.7% to Rs141.8 billion.
Meanwhile, total equity reached Rs171.3 billion, providing additional financial resilience.
PACRA stated that the bank’s capital adequacy ratio remains comfortably above the minimum regulatory requirements, supporting future business growth and enhancing its ability to absorb potential economic shocks.
Loan Portfolio Contracts Amid Conservative Lending Strategy
While investments increased, Bank AL Habib reduced its lending exposure during the year.
Gross advances declined to Rs792.1 billion, compared with Rs910.9 billion in CY24.
According to PACRA, the reduction reflects management’s deliberate decision to consolidate the loan portfolio by avoiding financing opportunities where the risk-return profile did not meet the bank’s internal standards.
This disciplined lending approach continues to support the bank’s strong asset quality and prudent risk management framework.
Recoveries Improve Asset Quality
The bank also reported a significant improvement in credit quality during CY25.
Bank AL Habib recorded net reversals of credit loss allowances amounting to Rs2.4 billion, compared with a provisioning charge of Rs14.9 billion in the previous year.
The improvement was mainly driven by recoveries on previously provisioned loans, highlighting the effectiveness of the bank’s recovery efforts and the resilience of its loan portfolio.
Profit Declines as Interest Rates Ease
Despite maintaining strong financial fundamentals, Bank AL Habib reported lower profitability during CY25.
The decline largely reflected the impact of lower policy interest rates, which compressed banking sector margins.
Net mark-up income decreased to Rs130.6 billion, compared with Rs156.2 billion recorded in CY24.
As a result, profit after tax declined 23.1% to Rs30.6 billion, down from Rs39.9 billion in the previous year.
Although earnings moderated, PACRA believes the bank’s overall financial profile remains robust, supported by strong capitalization, stable funding, prudent risk management, and consistent operational performance.