Bank Alfalah targets current account growth as credit outlook improves

Management tells investors at Pakistan Day Conference 2025

Karachi, August 21 — Bank Alfalah Limited (BAFL) expects current account deposits to drive growth in the coming quarters, as management highlighted an improving credit environment and a stable capital position during its session at the Pakistan Day Conference 2025, organized by Topline Securities.

Senior management told investors that interest rates appear close to bottoming out, prompting the bank to adjust its strategy. BAFL has reduced its borrowing position in open market operations from Rs1.1 trillion in December 2024 to Rs556 billion by June 2025. This shift came through liquidation of government securities and booking capital gains, instead of maintaining large carry positions.

Remittance-related expenses remained high during the period, as the previous incentive formula favored smaller banks. As the second-largest player in Pakistan’s remittance market, BAFL said it opted to absorb higher costs to protect its market share and support trade-related transactions, particularly imports.bank alfalah personal loan

The bank forecast deposit growth of over 15% in 2025, with current accounts expected to expand at a faster pace. Management noted that current accounts already comprised 41.5% of the total deposit mix by June 2025, reflecting a strategy aimed at boosting low-cost funding sources.

Within its investment portfolio, BAFL said 36% of holdings are fixed-rate instruments—comprising Pakistan Investment Bonds (PIBs) yielding 13.7% and sukuks yielding above 14%—while the remaining 64% are floating-rate. The repricing of floating instruments in the second half of 2025 is expected to reduce investment yields by 75 to 100 basis points.

As of June 2025, yields on advances and investments stood at 12.2% and 12.4% respectively, compared to 12.1% and 13.4% in March 2025, and 14.5% and 15.3% in December 2024.

The bank reported higher provisions in the second quarter of 2025 due to sector-specific adjustments but said no significant credit risks are anticipated going forward, given signs of economic recovery. BAFL currently holds Rs3.8 billion in general provisioning, set aside during the high-rate environment, which management suggested may no longer be necessary.

The infection ratio improved to 4.1% in June 2025 from 4.4% in March and 4.8% in December 2024. The coverage ratio stood at 108% by June, compared to 113% in March and 111% in December. The bank’s Capital Adequacy Ratio (CAR) remained strong at 17.67%, well above the regulatory minimum.

BAFL highlighted its market leadership in consumer finance, holding a 30% share in credit cards, 21% in home loans, and 19% in auto loans. Its overall deposit market share stood at 6%.

Management reiterated confidence in Pakistan’s financial sector outlook, citing improved collections, falling infection ratios, and stable capital buffers. With an emphasis on deposit mobilization—particularly current accounts—BAFL said it is positioned to strengthen its balance sheet while benefiting from a more favorable credit environment.