Bank Al Habib 2025 Profit Falls 23% Amid Higher Expenses and Lower Policy Rate

Bank Al Habib (PSX: BAHL) announced its 2025 financial results, reporting a consolidated profit-after-tax (PAT) of Rs. 32.46 billion, down 23 percent year-on-year (YoY). The decline was mainly attributed to lower policy rates and higher operating expenses.

The bank also declared a final cash dividend of Rs. 4.5 per share for 4Q2025, bringing the total dividend per share (DPS) for 2025 to Rs. 15, compared to Rs. 17 in 2024.

4Q2025 Earnings

For the fourth quarter of 2025, Bank Al Habib posted consolidated earnings of Rs. 5.8 billion (EPS: Rs. 5.20), down 23 percent YoY and 16 percent quarter-on-quarter (QoQ). Analysts from Topline Securities noted that the results fell below industry expectations due to higher operating expenses.

Key highlights:

• Non-interest expenses rose 22% YoY and 4% QoQ, largely due to increased marketing for remittances, pushing the cost-to-income ratio to 67% in 4Q2025.
• Net Interest Income (NII) dropped to Rs. 31.4 billion, down 21% YoY and 5% QoQ, following a decline in asset yields.
• Interest earned fell 32% YoY to Rs. 77 billion, while interest expense decreased 38% YoY to Rs. 45 billion.
• Non-interest income grew 3% YoY to Rs. 7.4 billion, driven by higher foreign exchange income, but declined 8% QoQ due to securities losses.
• The effective tax rate stood at 55% in 4Q2025, compared to 63% in 4Q2024.

Market Position

Bank Al Habib is currently trading at a 2026 estimated PE ratio of 7.2x, a PBV ratio of 1.2x, and offers a dividend yield of 9.0%, making it attractive for dividend-focused investors.

Analysts suggest that the bank’s future profitability will depend on interest rate trends, effective cost management, and growth in non-interest income streams such as remittances and foreign exchange services.