Allied Bank Limited (PSX: ABL) reported a profit after taxation of Rs6.60 billion for the first quarter ended March 31, 2026, marking an 8% decline compared to Rs7.18 billion in the same period of 2025. Earnings per share (EPS) edged down to Rs5.77 from Rs6.27 a year earlier.
The bottom-line pressure came from a combination of contracting core lending margins and a sharp rise in operating expenses, although the bank benefited from significantly lower credit loss provisions and a reduced tax burden.
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Profit After Taxation | Rs6.60bn | Rs7.18bn | -8% |
| Earnings Per Share (EPS) | Rs5.77 | Rs6.27 | -8% |
| Net Mark-up/Interest Income | Rs23.49bn | Rs25.32bn | -7% |
| Total Income | Rs32.01bn | Rs33.14bn | -3% |
| Operating Expenses | Rs13.37bn | Rs11.81bn | +13% |
Core Income Faces Margin Pressure
Mark-up/return/interest earned grew by a modest 2% to Rs70.77 billion, while mark-up/return/interest expensed increased at a slightly faster pace of 4% to Rs47.28 billion. Consequently, net mark-up/interest income contracted by 7% to Rs23.49 billion from Rs25.32 billion, reflecting the impact of a declining interest rate environment on asset yields relative to funding costs.
| Income/Expense Category | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Mark-up/Interest Earned | Rs70.77bn | Rs69.24bn | +2% |
| Mark-up/Interest Expensed | Rs47.28bn | Rs43.92bn | +4% |
| Net Mark-up Income | Rs23.49bn | Rs25.32bn | -7% |
Non-Funded Income Shows Mixed Performance
Total non-mark-up/interest income edged up 2% to Rs8.52 billion. Fee and commission income grew 5% to Rs5.85 billion, while foreign exchange income rose 3% to Rs1.56 billion. However, gain on securities fell 12% to Rs812 million, and dividend income declined 8% to Rs218 million, partially offsetting the gains.
| Non-Markup Component | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Fee & Commission Income | Rs5.85bn | Rs5.57bn | +5% |
| Foreign Exchange Income | Rs1.56bn | Rs1.52bn | +3% |
| Gain on Securities | Rs812m | Rs923m | -12% |
| Dividend Income | Rs218m | Rs237m | -8% |
Operating Expenses Rise Sharply
Operating overheads escalated during the quarter, with total non-mark-up expenses increasing by 13% to Rs15.96 billion. Operating expenses alone rose 13% to Rs13.37 billion, reflecting ongoing investments in technology, branch expansion, and inflationary pressures. Workers’ Welfare Fund and other charges also increased, further pressuring the bottom line.
Asset Quality Provides Relief
A significant positive development was the bank’s asset quality. Allied Bank booked a net reversal of credit loss allowance and write-offs of Rs1.27 billion, compared to a reversal of just Rs385 million in Q1 2025. This substantial improvement provided a meaningful cushion to profitability.
Profit and Taxation
Profit before taxation stood at Rs12.45 billion, down 30% from Rs17.78 billion in Q1 2025. However, taxation expense fell by 38% to Rs5.85 billion from Rs9.46 billion, reflecting a lower effective tax rate. This tax relief helped contain the final net profit decline to 8%.
About Allied Bank Limited
Allied Bank Limited (PSX: ABL) is one of Pakistan’s largest commercial banks, offering a comprehensive range of banking products and services to retail, corporate, and institutional clients. With a nationwide network of branches and a strong focus on digital transformation, the bank is committed to delivering sustainable value to its stakeholders.
