Bank Alfalah posts slow profitability growth

Karachi, August 19, 2019: Bank Alfalah Limited (BAFL) announced earnings on Monday for the first half of Current Year (1HCY19) below expectations at Rs 6.5 billion (EPS: PKR 3.63), depicting a YoY uptick of 4 percent.

According to Arif Habib Research on a sequential basis (EPS: PKR 1.84) the bank posted a meagre 3 percent QoQ growth in earnings. Quarterly decline in NII plus higher OPEX were the major reasons behind the drastic slowdown in the bank’s profitability growth momentum.

Net Interest Income of the bank settled at PKR 21.7 billion, improving 41 percent YoY while settling at PKR 10.5 billion during 2Q, posting a 6 percent QoQ decline, which is primarily owing to a one-off spike in NII last quarter due to the booking of accumulated income on an NPL account. 

NFI of the bank declined 9percent YoY during 1HCY19 due to loss on the sale of securities worth PKR 63 million vis-à-vis gains of PKR 1.2 billion SPLY. Ex-capital gains, NFI is up 14 percent YoY. On a sequential basis, NFI jumped up 27 percent led by primarily by higher income from FX operations and derivatives (+60 percent QoQ). The fee income of the bank has shown an improvement of 10 percent YoY / 8 percent QoQ.

Provisioning expenses for the bank increased 20 percent QoQ, settling at PKR 534 million led by impairment charge on equity portfolio, as per management.

OPEX portrayed a jump of 20 percent YoY / 8percent QoQ which is owing to ongoing digital initiatives undertaken by the bank as per management.

Effective tax rate clocked in at 45percent for 1HCY19 vis-à-vis 40 percent SPLY due to additional super tax charge booked in the first quarter.