Pakistan, January 31, 2024: Bank AL Habib (BAHL) announced its 4Q2023 result today, where the bank recorded consolidated earnings of Rs6.3bn (EPS of Rs5.7), up 3.8x YoY while down 44% QoQ. This takes full year 2023 earnings to Rs35.9bn (EPS of Rs32.3) up 115%.
4Q2023 result came lower than industry expectations primarily due to higher than expected provision expense.
In 4Q2023, BAHL recorded a provision of Rs5.2bn, compared to a reversal of Rs1bn in 9M2023. As per channel checks, the provision is primarily on account of advances.
Alongside the results, the bank also announced a final cash dividend of Rs5 per share, taking the full year 2023 dividend to Rs14 per share. This came higher than industry expectations.
Net Interest Income (NII) for 4Q2023 settled at Rs39bn, depicting a strong growth of 70% YoY and 14% QoQ, attributable to the rise in asset yields.
Non-Interest Income grew by 20% YoY and 4% QoQ to Rs6.2bn in 4Q2023, primarily driven by Fee & Commission and FX income.
Cost to Income for 4Q2023 increased to 48% from 45% in 3Q2023, while it decreased from 49% in 4Q2022. The full-year 2023 Cost to Income stood at 49%.
Effective tax rate of the bank clocked in at 66% in 4Q2023, compared to 59% in 4Q2022 and 49% in 3Q2023. For the full year 2023, effective tax rate of the bank clocked in at 50%.
We maintain a buy stance on BAHL. The stock is currently trading at attractive 2024E P/B and P/E of 0.7x and 2.3x, respectively. Additionally, the stock also offers an attractive dividend yield of 21% for 2024.
