BankIslami Pakistan Limited (PSX: BIPL) just announced a massive 65% decline in its consolidated profit after taxation for the first quarter. Profit plunged to Rs. 903.88 million, down heavily from Rs. 2.61 billion during the same period last year. Consequently, earnings per share (EPS) took a severe hit, falling 65% to Rs. 0.82. Overall, total income contracted by 20% to Rs. 9.83 billion.
Shrinking Core Income & Surging Costs
The bank faced severe headwinds across all operations. Core funded income took a significant blow. Profit earned dropped by 16% year-on-year to Rs. 16.68 billion. Fortunately, the cost of funds declined faster at 22%, settling at Rs. 8.25 billion. Nevertheless, net profit still contracted by 9% to Rs. 8.43 billion.
Furthermore, operational overheads aggressively squeezed margins. Operating expenses spiked 20% to Rs. 8.49 billion amid intense inflationary pressures. As a result, total other expenses climbed 17% to Rs. 8.54 billion. Crushed between falling revenues and rising costs, the profit before credit loss allowance nosedived by 74% to just Rs. 1.30 billion.
Collapse in Non-Funded Operations
The most drastic blow came from non-funded income. Total other income plummeted 55% to Rs. 1.40 billion. A staggering 97% collapse in net gains on securities drove this massive fall. These gains vanished from Rs. 2.11 billion in Q1 2025 to a mere Rs. 64.16 million this quarter.
Additionally, the bank recorded a loss of Rs. 44.18 million from shariah-compliant alternatives of forward foreign exchange contracts. However, foreign exchange income surged 240% to Rs. 451.36 million. Similarly, fee and commission income rose 15% to Rs. 846.87 million, which partially mitigated the heavy losses.
BankIslami Q1 2026 Financial Highlights
Profit before taxation registered a steep 66% decline to Rs. 1.88 billion. The bank finalized the quarter with a net profit of Rs. 903.88 million after accounting for a proportionally lower taxation expense of Rs. 974.56 million. Credit loss allowance also increased by 45% to Rs. 579.13 million.
Consolidated Statement of Profit or Loss (Q1 2026 vs Q1 2025):
| Description | Q1 2026 (PKR) | Q1 2025 (PKR) | Change % |
|---|---|---|---|
| Profit / Return Earned | 16,679,593 | 19,765,960 | -16% |
| Profit / Return Expensed | (8,248,215) | (10,544,609) | -22% |
| Net Profit / Return | 8,431,378 | 9,221,351 | -9% |
| Total Other Income | 1,403,480 | 3,148,612 | -55% |
| Gain on Securities (Net) | 64,158 | 2,107,651 | -97% |
| Foreign Exchange Income | 451,357 | 132,890 | 240% |
| Operating Expenses | (8,492,794) | (7,053,329) | 20% |
| Profit Before Taxation | 1,878,445 | 5,491,099 | -66% |
| Profit After Taxation | 903,881 | 2,613,726 | -65% |
