AKBL’s 91.37% Profit Surge: Key Tax Considerations for Investors

Askari Bank Limited (PSX: AKBL) announced a dramatic 91.37% surge in net profit for the quarter ended March 31, 2025, reaching Rs7.16 billion, up from Rs3.74 billion last year, a performance that carries significant tax implications for stakeholders. Our tax law firm advises clients to leverage this financial upswing while ensuring strict compliance with Federal Board of Revenue (FBR) regulations.

The bank’s net mark-up income soared 70% to Rs21.92 billion, driven by a 38.33% reduction in mark-up expenses to Rs54.01 billion, outpacing a 24.44% drop in mark-up income to Rs75.94 billion. Total non-mark-up income dipped 3.66% to Rs3.71 billion, despite a 203% rise in gains on securities to Rs828.68 million and a 53% increase in other income, offset by a 51% decline in foreign exchange income.

Operating costs rose 23% to Rs9.94 billion, with total non-mark-up expenses at Rs10.1 billion, but a 78.21% drop in credit loss allowances to Rs256 million—down from Rs1.17 billion—propelled pre-tax profit to Rs15.27 billion, more than doubling from last year. Tax expenses also doubled to Rs8.12 billion, reflecting higher earnings, resulting in earnings per share of Rs4.94, up from Rs2.58.

From a tax law perspective, the sharp rise in tax expenses underscores the need for tax optimization, particularly in managing deductibility of operating costs and finance expenses under Section 29 of the Income Tax Ordinance. The gains on securities may attract capital gains tax (CGT) at 15%, requiring accurate reporting in income tax returns. Meanwhile, AKBL’s share price gained 1.3% to Rs30.12 on the Pakistan Stock Exchange (PSX), signaling potential CGT obligations for investors realizing profits.

Our firm recommends clients review tax liabilities, ensure compliance with FBR guidelines on profit reporting, and explore deduction opportunities for expenses, safeguarding their financial position amidst AKBL’s strong performance.