Karachi, March 31, 2026 – Bank Alfalah Limited has indicated a possible upward trend in interest rates in the coming months, citing heightened geopolitical tensions stemming from the ongoing Iran conflict.
The bank shared its outlook during a corporate briefing session, where management discussed financial performance and macroeconomic expectations. According to a report by Topline Securities Limited, Bank Alfalah believes that interest rates had already reached their lowest point prior to the escalation of tensions involving Iran. However, the current geopolitical environment has reinforced expectations of a rate hike by the State Bank of Pakistan (SBP), potentially in its upcoming monetary policy meetings in April or June 2026.
On the financial front, Bank Alfalah reported strong deposit growth, with total deposits reaching Rs2.5 trillion in 2025, reflecting a 17% year-on-year increase. The bank also maintained a robust five-year compound annual growth rate (CAGR) of 23% in deposits. Current account balances showed healthy growth, rising 17% during the year, with management emphasizing a strategy focused on improving average balances rather than end-period figures.
In terms of investments, 27% of the bank’s portfolio is allocated to fixed-rate instruments such as Pakistan Investment Bonds (PIBs) yielding around 13% and Sukuks offering returns above 15%. Another 40% is invested in variable-rate instruments, while 33% is held in treasury bills.
Administrative expenses rose by 38% in 2025 due to branch expansion, increased staff costs, and marketing expenses related to home remittances. However, excluding remittance-related spending, expenses grew by a more moderate 26%. With the remittance market stabilizing, the bank expects marketing costs to decline significantly to around Rs4.5–5 billion.
Looking ahead, Bank Alfalah plans to open 50 new branches, subject to economic and geopolitical conditions. The bank maintains a strong capital position, with a Capital Adequacy Ratio (CAR) of 15.87%, well above regulatory requirements.
Despite a 30% decline in annual profits to Rs27.8 billion, the bank announced a total dividend of Rs10.5 per share and a 2-for-1 stock split, signaling confidence in its long-term outlook.