Bank Makramah Limited has reported a consolidated net loss of Rs4.68 billion for the six months ended June 30, 2026, reversing a profit of Rs704.47 million recorded in the same period of 2025.
The bank’s latest unaudited interim financial statements highlight continued pressure on earnings and capital ratios, while also showing progress on a capital restructuring plan aimed at strengthening its financial position.
Earnings come under pressure
According to the consolidated results, Bank Makramah’s loss before tax stood at Rs5.58 billion, compared with a profit before tax of Rs1.45 billion in the corresponding period last year. After taxation, the loss reached Rs4.68 billion, translating into a loss per share of Rs4.62, against earnings per share of Rs0.70 a year earlier.
The bank’s unconsolidated results tell a similar story. Mark-up and interest income fell sharply to Rs4.09 billion during the first half of 2026 from Rs10.33 billion in the same period of 2025. At the same time, mark-up and interest expense amounted to Rs6.42 billion, resulting in a net mark-up/interest expense of Rs2.33 billion.
Non-mark-up income also declined, while operating expenses remained significant. These factors contributed to a substantial deterioration in overall profitability.
Deposits grow despite difficult earnings environment
Despite the losses, the bank recorded growth in its deposit base. On a standalone basis, deposits and other accounts increased to Rs190.78 billion as of June 30, 2026, compared with Rs169.17 billion at the end of December 2025.
Investments also expanded considerably, reaching Rs102.67 billion, compared with Rs86.28 billion at the end of 2025. Lending to financial institutions increased to Rs21.51 billion from Rs14.20 billion. However, net advances declined to Rs25.03 billion from Rs26.13 billion.
The figures indicate that while the bank has been able to strengthen deposits and expand its investment portfolio, its core earnings remain under pressure.
Capital ratios remain a major concern
One of the most significant disclosures in the financial statements relates to Bank Makramah’s capital position.
The bank met the required Minimum Capital Requirement (MCR) as of June 30, 2026, but its Capital Adequacy Ratio (CAR) fell to 1.77%, substantially below the regulatory requirement of 11.50%. Its leverage ratio stood at 0.36%, also below the required 3%.
The consolidated group reported a CAR of 2.14% and a leverage ratio of 0.44%, likewise below the applicable thresholds.
These figures underline why fresh capital has become a central part of the bank’s restructuring efforts.
Sponsor commits Rs10 billion
There is, however, a potentially important development on the capital front.
Bank Makramah said its sponsor, His Excellency Nasser Abdulla Hussain Lootah, has committed to inject a further Rs10 billion into the bank. The Board of Directors approved the proposal at its meeting held on August 18, 2026.
The financial statements state that Rs4 billion had been received at the time of approval of the accounts, improving the bank’s CAR to 10.25%. Once the full Rs10 billion is received, the bank expects to become compliant with the required CAR.
The proposed amount will initially be recorded as an advance against share subscription, pending the necessary regulatory and corporate approvals for the issuance of shares to the sponsor.
TFC liabilities converted into equity
Another major step in the restructuring process was the settlement of the bank’s outstanding rated and unsecured subordinated Term Finance Certificates.
The bank converted the outstanding TFC liability and accrued profit into equity through the issuance of 27.89 million fully paid-up ordinary shares to TFC holders. The consolidated statements show the extinguishment of a liability of approximately Rs3.31 billion through the share issuance.
The move reduces the bank’s outstanding subordinated debt while increasing its equity base.
The road ahead
Bank Makramah’s first-half results present a mixed picture. The bank continues to face substantial profitability and capital challenges, with accumulated losses reaching nearly Rs1.97 billion on a consolidated basis by June 30, 2026.
At the same time, higher deposits, the conversion of TFC liabilities into equity and the sponsor’s planned Rs10 billion capital injection provide important support for the restructuring effort.
The immediate focus will likely remain on restoring capital adequacy, improving earnings and rebuilding financial strength. If the committed capital is fully injected and the bank succeeds in improving its underlying profitability, the restructuring could provide a stronger platform for its next phase of operations.
