Karachi, August 12, 2022 (PPI-OT): BAFL: 1HCY22 Corporate Briefing key takeaways
Bank Alfalah Ltd (BAFL) announced 2QCY22 EPS at Rs2.07, +6% YoY (1HCY22: Rs4.90, +26% YoY) owing to higher core income (+53% YoY) and higher Income from FX dealing (+3x YoY). Earnings reported a growth despite substantial increase in provisioning expenses (Rs3.6bn) and higher tax charges (effective tax rate: 59%). Alongside result, BAFL announced first interim DPS of Rs2.50. The management of the bank held a Corporate Briefing session today to discuss 2Q results and outlook. Key takeaways are presented below:
Deposits clocked in at Rs1.3trn, up 29% YoY; led by 26% YoY higher zero-cost deposits.
Total assets increased by 24% YoY, led by 24% YoY higher Investments and 18% YoY higher Advances. IDR/ADR stood at 72%/55%, respectively.
Almost three fourth of the Investment book is parked in PIBs, out of which 82% of PIBs are floating and remaining are fixed with a yield of 11%.
International investment book remains comfortable in terms of credit quality and holds a duration of 4 years.
Asset quality of the lending book remains comfortable with Gross Infection ratio at 3.5%, and Coverage ratio at 110% over higher General provisions during 2Q (+Rs2.9bn QoQ).
The provisions were led by concerns on some sectors on account of ongoing macro headwinds. The management will continue to monitor the situation to determine if further General Provisions are required.
Post mark to market of higher yields at quarter end, bank’s Tier II declined by 13bp QoQ, reporting at 14.64%.
Despite 58% YoY Operating Expenses growth, Cost to Income ratio declined to 47%. Operating Expenses increased over expansion in branch network. A total of 49 new branches have been opened in 2022 so far, out of which 22 are Islamic. The total target for 2022 is 116 new branches out of which 65 would be Islamic.
The bank holds 20% market share in remittances and 7.8% in trade segments.
Management shared there could be room for another 100bp increase in Policy Rate in the upcoming MPS.