The Bank of Khyber (BOK) has announced impressive financial results for the year ended December 31, 2025, reporting a substantial 60% increase in profit after taxation. This strong performance is accompanied by a final cash dividend of Rs. 1.70 per share, bringing the total dividend for the year to Rs. 3.20 per share (32%), offering good news for shareholders.
Financial Performance Highlights
BOK's financial performance in 2025 showcased significant improvements across key metrics. Net mark-up/interest income, the bank's core revenue stream, grew by a healthy 15.2% to PKR 19.00 billion from PKR 16.49 billion in the previous year. This indicates improved interest margins, as interest earned declined while interest expensed saw an even larger reduction. Profit after taxation surged by approximately 60.8%, reaching PKR 5.82 billion compared to PKR 3.62 billion in 2024, translating to an Earnings Per Share (EPS) of PKR 5.02, up from PKR 3.12.
The balance sheet reflects a strategic shift, with total assets seeing a slight decrease of about 5%. However, a notable highlight is the robust 36% growth in customer deposits, which reached PKR 378.12 billion from PKR 277.64 billion. This strong deposit base allowed the bank to significantly reduce its borrowings by about 73%, from PKR 133.53 billion to PKR 35.70 billion, strengthening its funding structure. Net assets (equity) also grew by over 8% to PKR 23.68 billion, indicating a solid capital base.
While operating cash flow for the year remained positive at PKR 407.88 million, it plummeted by over 99% from PKR 58.11 billion in the prior year. This drastic reduction was primarily influenced by substantial movements in operating assets and liabilities, notably a significant decrease in advances and borrowings, largely counterbalanced by a robust increase in customer deposits. These shifts collectively indicate a strategic rebalancing of the bank's asset and liability profile, though the sharp decline in cash flow warrants investor attention.
Key Drivers of Profit Growth
The remarkable profit growth was primarily driven by two key factors:
- A robust 15.2% increase in Net Mark-up/Interest Income, reflecting better asset-liability management and potentially higher spreads.
- An exceptional 132% surge in Non-Mark-up/Interest Income, which jumped to PKR 4.13 billion from PKR 1.78 billion. This remarkable growth was overwhelmingly propelled by an astounding over 12-fold increase in 'Gain on securities', soaring to PKR 2.33 billion in 2025 from a modest PKR 177 million in 2024. This highlights highly successful treasury operations or exceptionally favorable market conditions for the bank's investment portfolio, a key driver of the year's profitability.
Furthermore, the bank recorded a higher reversal of credit loss allowance and write-offs, amounting to PKR 881 million, indicating an improvement in asset quality or effective recovery efforts, further bolstering profitability.
Management Strategy and Shareholder Returns
The Board's recommendation of a final cash dividend of Rs. 1.70 per share (17%), in addition to the Rs. 1.50 interim dividend already paid, signals confidence in the bank's sustained profitability and commitment to shareholder returns. The absence of bonus or right shares indicates a focus on cash distribution rather than capital expansion through equity dilution at this time.
The significant reduction in borrowings and advances, alongside strong deposit growth, points to a strategic effort by management to optimize the bank's funding cost and risk profile. This could involve a shift towards a more deposit-funded model and a more selective approach to lending, or a re-allocation of assets towards higher-yielding securities, as evidenced by the substantial gains from securities.
Investor Takeaway and Outlook
For investors, BOK's 2025 results present a compelling picture of strong earnings growth and an attractive dividend yield. The bank appears to be strategically repositioning its balance sheet, focusing on deposit growth and potentially optimizing its investment portfolio for higher returns. The total dividend of PKR 3.20 per share (32%) represents a healthy payout ratio given the strong EPS of PKR 5.02.
Key areas for investors to monitor going forward include the sustainability of the 'Gain on securities' component of non-markup income, which can be volatile. Continued growth in net interest income, further improvements in asset quality, and the bank's strategy for deploying its growing deposit base will be crucial. The bank's ability to maintain this strong performance in a dynamic economic environment will determine its long-term value proposition.