April 27, 2026 (MLN):  BankIslami Pakistan Limited (PSX: BIPL) reported a massive 65% decline in its consolidated profit after taxation for the first quarter ended March 31, 2026, plunging to Rs903.88m compared to Rs2.61bn in the corresponding period last year.

The bank faced significant headwinds across both its core and non-core operations.

On the funded side, profit/return earned dropped by 16% year-on-year to Rs16.68bn.

While the cost of funds (profit/return expensed) also declined at a faster pace of 22% to Rs8.25bn, the net profit/return still contracted by 9%, settling at Rs8.43bn down from Rs9.22bn in the prior year.

The most severe blow to the bank's profitability came from its non-funded income.

Total other income plummeted by 55% to Rs1.40bn from Rs3.15bn last year.

This collapse was primarily driven by a staggering 97% drop in net gains on securities, which vanished from a massive Rs2.11bn in Q1 2025 to a mere Rs64.16m this quarter.

The bank also recorded a loss of Rs44.18m from shariah-compliant alternatives of forward foreign exchange contracts, reversing a gain of Rs106.41m last year.

However, these losses were partially mitigated by a 3.4x surge in foreign exchange income (Rs451.36m) and a 15% increase in fee and commission income (Rs846.87m).

Dragged down by the steep drop in non-core gains and shrinking core margins, total income contracted by 20% to Rs9.83bn.

Operational overheads compounded the pressure, surging significantly amid an inflationary environment.

Operating expenses spiked by 20% to Rs8.49bn, pushing total other expenses up by 17% to Rs8.54bn. Crushed between falling revenues and rising costs, the profit before credit loss allowance nosedived by 74% to just Rs1.30bn.

Profit before taxation registered a steep 66% decline, settling at Rs1.88bn. After accounting for a proportionally lower taxation expense of Rs974.56m (down 66% year-on-year), the bank finalized the quarter with a net profit of Rs903.88m.