Omar Zwak, spokesman for the provincial governor, said at least 20 people had been killed and more than 50 wounded, including members of the police and army, civilians and staff of the New Kabul Bank branch where the attack took place.
There was no immediate claim of responsibility for the attack but insurgent groups, including the Taliban, have in the past targeted banks where police, soldiers and other government employees collect their pay.
The incident is the latest in a series that has underlined a steadily worsening security situation across Afghanistan, almost three years after international troops ended their main combat mission in 2014.
Emergency workers and passers-by tried to help the injured, who were strewn among the dead. Ambulances and private cars ferried the victims to hospitals.
The blast came as Afghans were preparing to celebrate next week's Eid al-Fitr festival marking the end of the holy month of Ramadan.
While high-profile attacks in the capital, Kabul, have drawn headlines, there have been dozens of similar incidents in provincial centers across Afghanistan over recent months.Helmand, one of the world's major centers of opium growing, and a traditional heartland of the Taliban, has been under particularly heavy pressure with large parts of the province in the hands of the insurgents.