Karachi: Bank Alfalah Limited (BAFL) has reported a significant rise in its profits for the first nine months of 2024, with earnings reaching PKR 33.6 billion, marking a 23% year-over-year increase. This growth was propelled by a substantial rise in Non-Interest Income and moderate growth in Net Interest Income (NII).

According to AKD Securities Limited, the financial institution also declared an interim cash dividend of PKR 2 per share, bringing the total nine-month payout to PKR 6 per share. The growth in NII by 5% from the previous year was noted as a result of volumetric growth which offset the decline in spreads, despite the contraction of Net Interest Margins (NIMs) to 4.5% from 5.4% in the previous year due to an increase in the cost of funds outpacing the yield on assets.

The report highlighted a 76% year-over-year increase in Non-Interest income, driven primarily by a 27% increase in Fee and Commission Income and capital gains realized on government securities due to a sharp decline in yields. The bank’s administrative costs rose by 25% to PKR 58 billion, attributed largely to the opening of 130 new branches since January 2023 amidst higher inflation, which pushed the cost-to-income ratio to 46.7%.

Provisioning expenses saw a significant decrease, dropping 81% year-over-year to PKR 1.7 billion, thanks to recoveries and reversals. Deposits grew by 17% year-over-year to PKR 2.1 trillion in September 2024, spurred by aggressive branch expansion and strategic execution. The CASA mix improved to 72.4%, although the current account component experienced a slight decline due to high interest rates.

The bank has seen a 29% year-over-year increase in advances, reaching PKR 855.0 billion, as it aims to meet an Advance to Deposit Ratio (ADR) target of 50%. The gross ADR rose to 42.3%, with the bank maintaining a cautious approach to credit origination amid challenging market conditions. The Non-Performing Loan (NPL) ratio edged up to 4.6%, but coverage remains robust at 114%.

Investments in the bank’s portfolio grew by 27% year-over-year, predominantly in floater Pakistan Investment Bonds (PIBs) and Treasury bills, though there was a 6% sequential drop due to lower borrowings. Bank Alfalah remains well-capitalized with a Capital Adequacy Ratio (CAR) of 19.0%.

Significantly, Bank Alfalah’s digital throughput surged 48% year-over-year to PKR 4.0 trillion, with digital payment throughput increasing by 60% to PKR 47.5 billion, highlighting a strong shift towards digital banking services.