Askari Bank profit falls 8% to Rs6.58bn in Q1 2026

April 27, 2026 (MLN): Askari Bank Limited (PSX: AKBL) reported a 8% decline in its profit after taxation for the first quarter ended March 31, 2026, falling to Rs6.58bn from Rs7.16bn recorded in the same period last year.

The dip in bottom-line profitability came despite a meaningful expansion in non-funded income, as a sharp surge in operating expenses eroded the gains and weighed heavily on the bank's earnings base.

On the funded side, mark-up/return/interest earned edged down marginally by 1.66% year-on-year to Rs74.68bn.

The cost of funds mark-up/return/interest expensed also declined, albeit at a slightly faster pace of 2.75%, settling at Rs52.53bn.

As a result, net mark-up/interest income inched up a modest 1.04% to Rs22.15bn from Rs21.92bn in the prior-year period, offering a thin layer of resilience on the core lending side.

In a sharp contrast to the funded side, non-funded income emerged as the standout performer for the quarter.

Total non-mark-up/interest income surged 45.34% to Rs5.39bn from Rs3.71bn in Q1 2025.

The primary driver behind this exceptional performance was a 135.58% explosion in gain on securities, which more than doubled to Rs1.95bn from Rs828.68m in the same quarter last year showing the bank's active positioning in the fixed-income market amid a shifting rate environment.

Fee and commission income also delivered a strong showing, climbing 25.22% to Rs2.21bn, while foreign exchange income rose 18.28% to Rs836.87m.

Dividend income registered a modest uptick of 5.89% to Rs247.85m. However, other income contracted by 17.48% to Rs143.55m, partially offsetting the broader non-funded income gains.

Buoyed by the surge in non-funded income, total income expanded 7.45% to Rs27.54bn from Rs25.63bn in Q1 2025.

However, the gains were significantly eroded by a steep rise in operational overheads.

Operating expenses surged 38.14% to Rs13.74bn, while total non-mark-up/interest expenses climbed 37.35% to Rs13.87bn a pace of cost growth that considerably outstripped the revenue expansion and materially compressed margins.

Crushed between modest income growth and a dramatic cost escalation, profit before credit loss allowance declined 12.00% to Rs13.67bn from Rs15.53bn in the prior-year period.

A meaningful silver lining came from credit provisioning, where the bank posted a reversal of credit loss allowance and write-offs of Rs81.52m, compared to a charge of Rs255.80m in Q1 2025, providing a tangible buffer to the pre-tax bottom line.

Profit before taxation still registered a 10.00% decline, settling at Rs13.75bn against Rs15.27bn a year earlier.

After accounting for a taxation charge of Rs7.16bn down 11.77% year-on-year the bank closed the quarter with a net profit after taxation of Rs6.58bn.

Basic and diluted earnings per share fell to Rs4.54 from Rs4.94, a year-on-year erosion of 8.10%.

The bank's Board of Directors also declared an interim cash dividend of Rs2.0 per share (20%) for the quarter ended March 31, 2026, reaffirming its commitment to delivering shareholder returns.

Copyright Mettis Link News