KARACHI: Bank Makramah financial results for Q1 2026 show a Rs1.21 billion pre-tax loss, compared with Rs729 million in the same period last year, as declining investment income weighed on earnings despite improvements in capital position and advance yields.
The bank reported a loss after tax of Rs. 714 million against Rs. 870 million in the prior period, with loss per share improving to Rs. 0.71 from Rs. 0.87. Beneath the headline loss, several indicators point toward a bank actively consolidating its base and managing risk more deliberately.
Bank Makramah Financial Results Show Q1 Pressure
The most significant driver of the quarter’s revenue compression was a deliberate shrinkage of the arbitrage investment book. As the State Bank of Pakistan progressively cut the policy rate from an average of 12.33 percent in Q1 2025 to 10.50 percent in the current period management reduced average net investments from Rs. 154 billion to Rs. 81 billion, cutting both volume and yield. Investment income fell to Rs. 2.07 billion from Rs. 5.34 billion in the comparable period.
Net yields on advances climbed to 13.00 percent from 9.48 percent a year earlier, pushing advance income up to Rs. 497 million despite a relatively modest increase in the average advance book. Management noted that significant cash flows tied to major transactions should realize in the second quarter, potentially improving the income trajectory.
Deposits Stay Strong, Costs Fall
The total deposit base was at Rs. 158.81 billion with the CASA ratio being 92.11 percent, indicative of the commitment of the bank towards maintaining low cost accounts. The cost of deposits stood at 6.61 percent from 7.74 percent in the corresponding quarter last year, indicating an improvement going forward.
The gross NPL ratio declined to 39.52 percent from 41.49 percent at year-end 2025, driven by a Rs. 960 million reduction in non-performing loans. Coverage improved to 82.96 percent. The bank also posted net recoveries of Rs. 630 million during the quarter, well above the Rs. 201 million recovered in the prior period a meaningful signal that resolution efforts are gathering pace.
TFC Conversion Boosts Tier-1 Capital
An important development took place when the bank undertook a landmark deal, wherein Rs. 3.31 billion in the amount of outstanding Term Finance Certificates, which were made up of principal and profits, were exchanged for 27.9 million shares in the bank. This helped eliminate the liability from the balance sheet and strengthen Tier-1 capital, resulting in an increase in the Total Capital Adequacy Ratio to 14.12 percent from 11.65 percent at December 2025. VIS Credit Rating maintained its long-term rating of ‘A-‘, stable.
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Navigating a Turbulent External Environment
This was brought about by the macroeconomic environment becoming more difficult following the flare up between Iran and the United States of America in February 2026 and the blockage of the Strait of Hormuz, despite the fact that the increase in the cost of oil was expected to have a detrimental effect on Pakistan’s balance of payments, since its current account deficit was only at USD 700 million while remittances increased by 10.5% to reach USD 26.5 billion.
Bank Makramah enters the second quarter with a cleaner capital structure, improving asset quality, and rising advance yields foundations that matter more than a single quarter’s loss figure.
