PESHAWAR: The Bank of Khyber (BoK) maintained strong balance sheet growth during the first six months of 2026, although its profitability remained under pressure compared with the same period last year.

According to the bank’s condensed interim financial information for the six-month period ended June 30, 2026, profit after tax stood at Rs1.466 billion, compared with Rs3.365 billion in the corresponding period of 2025. Profit before tax declined to Rs3.185 billion from Rs7.194 billion a year earlier. Earnings per share also fell to Rs1.27, compared with Rs2.91.

The bank attributed the weaker profitability mainly to movements in market interest rates, which affected comparative net yields and contributed to lower net interest income and gains on securities. Profitability in the second quarter was also moderated by lower net markup income, higher non-markup expenses and credit loss provisions. Non-markup expenses increased 13% year-on-year, reflecting higher business activity and inflationary adjustments.

Balance sheet expands significantly

Despite the decline in earnings, BoK recorded substantial growth in its key balance-sheet indicators.

Total assets rose to Rs597.4 billion as of June 30, 2026, compared with Rs453.3 billion at the end of December 2025. Deposits increased to Rs486.7 billion from Rs378.1 billion, while gross advances reached Rs182.6 billion. Net advances climbed to Rs171.0 billion, up from Rs126.7 billion at year-end 2025. Net investments also increased to Rs353.2 billion from Rs275.0 billion.

The improvement in asset quality was another positive development. The bank reduced its net non-performing loans from Rs12.53 billion at December 31, 2025 to Rs11.70 billion at June 30, 2026. It also recorded a net reversal of credit loss allowance of Rs292 million during the period.

Islamic banking continues to grow

Islamic banking remains a central part of BoK’s strategy. During the first half of 2026, the bank converted another 11 conventional branches into Islamic banking branches.

By June 30, the bank had 256 branches nationwide, including 212 dedicated Islamic banking branches. Deposits generated through Islamic banking operations reached Rs259.3 billion, representing a 28% increase from December 2025.

The financial statements also show the scale of the Islamic banking business, with Islamic financing and related assets and investments representing a substantial portion of the bank’s operations.

Strong liquidity and capital position

BoK continued to maintain a solid liquidity and capital position. Its Liquidity Coverage Ratio stood at 205.10%, while its Capital Adequacy Ratio was 15.46% at June 30, 2026, both reported as being above regulatory requirements.

The bank’s ratings also remained strong. Its June 2026 disclosures show long-term ratings of AA- from both VIS and PACRA, while its short-term ratings remained in the A1/A-1 category.

New currency exchange subsidiary

Another development during the period was the establishment of BOK Currency Exchange Company (Private) Limited, a wholly owned subsidiary.

The Securities and Exchange Commission of Pakistan issued its certificate of incorporation on January 19, 2026, and BoK injected Rs1 billion as paid-up capital. The subsidiary was still completing regulatory formalities and obtaining the required approvals to begin foreign exchange operations at the reporting date.

Focus shifts to quality growth

Looking ahead, BoK said it would remain focused on sustaining its growth momentum while improving service quality and expanding technology-driven banking services.

The bank plans to pursue prudent growth in advances across economic sectors and diversify its financing portfolio by targeting high-quality private-sector borrowers. It also intends to focus on ancillary businesses and trade finance opportunities.

Overall, BoK’s first-half results present a mixed picture: profitability declined sharply, but deposits, assets, advances and Islamic banking operations recorded strong expansion. The reduction in non-performing loans, robust liquidity position and continued shift toward Islamic banking provide important positives as the bank moves into the second half of 2026.