Bank Alfalah Eyes 15%+ Deposit Growth
Staff Report
Bank Alfalah (BAFL) has hoped over 15% deposit growth and sees no change in interest rate in 2025.
held its Corporate Briefing Session on August 8, 2025, where management discussed financial performance and the outlook ahead.
Currency Converter
Management expects no change in interest rates going forward. Reflecting this view, the bank has reduced its borrowing position from Rs1.1 trillion in December 2024 to Rs556 billion in June 2025 by trimming its OMO exposure.
Remittance expenses remained elevated as the previous incentive formula favored smaller banks. As the second-largest player in remittances, BAFL spent more to maintain market share. From July 2025 onwards, the new incentive formula provides a level playing field, which is expected to lower remittance-related expenses in the coming quarters. MSCI Adds Faysal Bank to Frontier Index in 2025
The bank projects a cost-to-income ratio of 55–58% and expects overall deposit growth above 15%, with even higher growth in current accounts.
Within its investment portfolio, 36% is in fixed-rate instruments—PIBs yielding 13.7% and Sukuks yielding over 14%—while 64% is in floating-rate assets, with significant repricing expected in 2H2025.
BAFL opened 33 new branches in 1H2025. For the remainder of the year, the net branch network may not expand, with focus shifting to branch optimization, including relocations. Islamic banking branches account for 38% of the network.
In 2Q2025, the bank recorded higher provisions due to subjective changes in one sector but expects the credit environment to improve. Capital Adequacy Ratio (CAR) stands at 17.67%, well above the regulatory minimum.
The NPL ratio improved to 4.1% in 2Q2025 from 4.4% in 1Q2025, with coverage at 107.6% compared to 113% previously.
BAFL reported consolidated earnings of Rs8 billion (EPS Rs5.07) in 2Q2025, down 33% YoY, and announced a second interim cash dividend of Rs2.5/share. We maintain a buy stance on BAFL, with the stock trading at a 2025E P/E of 4.4x and a P/BV of 0.7x.,” topline research said.
