KARACHI: BankIslami Pakistan saw its profit collapse by more than half during the first six months of 2026. Yet the board still recommended a cash dividend for shareholders, even as the bank's deposits pushed past Rs700 billion. Bank announces interim cash dividend of Rs1.5 per share 15% for the half year ended June 30, 2026.

On an unconsolidated basis, after-tax profit landed at Rs2.02 billion, down from Rs4.41 billion a year earlier. That's a 54% drop, and earnings per share fell in lockstep, from Rs3.98 down to Rs1.82.

The damage starts at the very top of the income statement. Profit and return earned on the bank's financing and investment book slipped to Rs34.37 billion from Rs38.9 billion. Net profit and return what's left after paying out to depositors, effectively the bank's core margin came in at Rs17.62 billion, down from Rs18.52 billion.

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Total income took a harder hit still, falling to Rs20.48 billion from Rs23.42 billion. Securities trading turned from a source of profit into a drag: BankIslami booked a Rs139.7 million net loss on securities this half, compared with a Rs2.39 billion gain over the same period last year.

Costs, meanwhile, refused to cooperate. Operating expenses rose almost 14%, to Rs17.1 billion from Rs15.01 billion, squeezing the bank from both directions at once. Profit before provisions fell 59%, down to Rs3.28 billion from Rs8.04 billion.

By the time profit before tax settled at Rs4.31 billion down 52% from Rs8.96 billion and taxation took its Rs2.29 billion cut, shareholders were left looking at a number less than half of what they saw a year ago.

The dividend lands regardless

None of that stopped the board from recommending an interim cash dividend of Rs1.50 per share, equivalent to 15% of the share's face value. Shareholders on record as of September 1 will receive it, with share transfer books closing September 2 through September 4. Bonus shares, right shares, and every other entitlement category came back nil.

Deposits climb while cash flow turns negative

Strip out the income statement and BankIslami's balance sheet tells a more expansionary story. Total assets grew to Rs810.87 billion from Rs771.34 billion at the end of December, and deposits climbed to Rs700.33 billion from Rs660.18 billion real growth on the funding side of the business.

But that growth came at a cost. Net cash used in operating activities hit Rs7.76 billion for the half, a dramatic reversal from the Rs63.86 billion the bank generated in cash during the same period last year. Deposits grew, but expanding Islamic financing and other operating assets also absorbed substantial cash, with Islamic financing and related advances rising Rs18.25 billion and other operating assets absorbing a further Rs2.36 billion. Net assets edged down slightly too, to Rs48.45 billion from Rs48.61 billion.

The bigger question

BankIslami's half-year results describe two different banks depending on which statement you're reading. The balance sheet shows deposit growth and expanding assets. The income statement shows margins compressing, trading income evaporating and costs climbing. The board has still chosen to recommend a cash dividend despite profit falling by more than half. Whether earnings recover enough in the second half to make that combination sustainable is the question that will actually matter for shareholders.