Karachi, March 09, 2022 (PPI-OT): BAFL Corporate Briefing key takeaways

Key financials:

BAFL reported CY21 earnings at Rs8/share, up 36% YoY, where 4QCY21 EPS clocked in at Rs2.10/share. Total DPS for the year accumulated to Rs4.00.

While core income growth remained flat, Non-Core income increased by 29% YoY over higher Fee and FX income.

Provisioning expenses declined by 70% YoY, and was reported at Rs2.3bn. Out of this Rs1bn provisioning was on account of impairment on Afghanistan operations.

On Balance sheet front, total assets expanded by 25% YoY over 29% YoY higher Deposits. The bank parked higher deposits in Investments (+48% YoY), where Advances grew by 17% YoY.

The PIB book has crossed Rs500bn, out of which only Rs95bn are parked in fixed PIBs. Most of the TBill and PIB Floater book has been re-priced by now.

During the same period, Infection ratio improved to 3.5% (-80 bp YoY), and Coverage ratio increased to 102% (+11 ppt YoY).

The adequacy ratio declined by 210 bp YoY to 14.4%.

Outlook:

The management expects the exchange rate to continue to depreciate, while Policy Rate may further increase in the coming months.

Deposit growth may be slightly above 10% YoY. The bank is targeting to open over 100 branches in CY22.

Asset re-pricing can complete by 1QCY22, however yields may remain low as compared to previous trend as quantum of subsided loans under various SBP programs has increased. Complete TERF loans will reflect in the coming months.

Implementation of IFRS 9 may have insignificant attrition on adequacy ratios as the bank’s books are geared for any impact.