Peshawar — The Bank of Khyber (BOK) reported a significant decline in profitability for the first quarter ended March 31, 2026, with unconsolidated profit after tax falling nearly 37% year-on-year.

According to the bank’s unaudited financial statements, profit after tax stood at Rs1.01 billion in the January-March 2026 quarter, compared with Rs1.60 billion in the same period last year. Earnings per share also declined to Rs0.87, from Rs1.38 a year earlier.

The bank’s consolidated results showed a similar trend, with profit after tax reaching Rs1.02 billion, down from Rs1.60 billion in the corresponding quarter of 2025. Consolidated earnings per share stood at Rs0.88, compared with Rs1.38 last year.

Lower Mark-Up Income Weighs on Earnings

The main pressure on BOK’s earnings came from a decline in net mark-up income. The bank earned Rs11.37 billion in mark-up, return and interest income during the quarter, compared with Rs13.50 billion a year earlier.

At the same time, mark-up, return and interest expenses fell to Rs7.16 billion from Rs8.39 billion. As a result, net mark-up income declined to Rs4.22 billion, compared with Rs5.11 billion in the first quarter of 2025.

Non-mark-up income also weakened sharply. Total non-mark-up/interest income fell to Rs467.3 million from Rs899.9 million, mainly reflecting lower gains on securities. The bank recorded gains on securities of Rs66.2 million during the quarter, against Rs520.7 million in the same period last year.

Expenses Rise Despite Profit Pressure

Operating expenses increased to Rs2.93 billion during the quarter from Rs2.72 billion a year earlier. This pushed profit before credit loss allowance down to Rs1.75 billion, compared with Rs3.28 billion in the first quarter of 2025.

However, the bank benefited from a larger reversal of credit loss allowance and write-offs. The reversal stood at Rs357.1 million, compared with Rs118.0 million in the same quarter last year. This helped lift profit before taxation to Rs2.11 billion, although it remained well below the Rs3.40 billion recorded a year earlier.

Balance Sheet Shows Growth in Investments

Despite the weaker earnings performance, BOK’s balance sheet expanded during the quarter. Unconsolidated total assets increased to Rs489.21 billion as of March 31, 2026, compared with Rs453.30 billion at the end of December 2025.

Investments rose to Rs312.24 billion from Rs274.96 billion, while advances increased modestly to Rs129.37 billion from Rs126.71 billion.

On the funding side, deposits and other accounts declined to Rs363.54 billion from Rs378.12 billion. In contrast, borrowings increased substantially to Rs89.51 billion, compared with Rs35.70 billion at the end of 2025.

No Dividend Declared

The bank’s April 27, 2026 communication to the Pakistan Stock Exchange stated that the Board recommended no cash dividend, bonus shares or right shares for the quarter ended March 31, 2026.

Cash Flow Remains Positive

BOK generated Rs35.81 billion in net cash from operating activities during the quarter, although this was lower than Rs53.81 billion in the corresponding period of 2025.

The bank invested heavily in securities, resulting in Rs40.05 billion of net cash used in investing activities. Overall, cash and cash equivalents declined by Rs4.44 billion during the quarter to Rs24.18 billion at March 31, 2026.

Overall, Bank of Khyber began 2026 with a weaker earnings profile, largely due to lower net mark-up income, reduced non-mark-up income and higher operating expenses. While the bank continued to expand its asset base and investments, the sharp year-on-year decline in profit highlights the pressure on its core earnings during the quarter.