The Bank of Khyber (PSX: BOK) posted a sharp 36.65% decline in profit after taxation for the first quarter ended March 31, 2026, falling to Rs1.02 billion compared to Rs1.60 billion in the same period last year.
The earnings drop came amid sustained pressure on both core lending margins and non-funded income, reflecting the broader impact of a declining interest rate environment across Pakistan’s banking sector.
Core income under pressure
The bank’s mark-up/return/interest income fell 15.75% to Rs11.37 billion, while interest expenses also declined by 14.88% to Rs7.15 billion. However, this was not enough to prevent a 17.18% contraction in net interest income, which dropped to Rs4.23 billion.
Non-funded income sharply weakens
The steepest decline came from non-mark-up income, which plunged 48.08% to Rs467.26 million. This was largely due to an 87.28% crash in gains on securities, which fell to just Rs66.23 million.
The bank also recorded a net loss of Rs29.69 million on derecognition of financial assets, compared to a gain last year.
Partially offsetting the decline, fee and commission income rose 33.35%, foreign exchange income increased 26.90%, and other income grew 28.83%.
Rising costs add pressure
Operating expenses increased 8.11% to Rs2.94 billion, further squeezing profitability. As a result, total income dropped 21.81% to Rs4.70 billion.
Profitability impact
Profit before credit loss allowance plunged 46.58% to Rs1.75 billion. Although credit loss reversals improved significantly, they were not enough to offset the decline.
Profit before taxation fell 37.94% to Rs2.11 billion, while net profit after taxation stood at Rs1.02 billion, down sharply from Rs1.60 billion a year earlier.
Earnings per share also declined to Rs0.88 from Rs1.38, reflecting a 36.23% erosion.
