FLASHNEWS:

AKD Securities Limited – Off the Analyst’s Desk (September 08, 2021)

Karachi, September 08, 2021 (PPI-OT): FABL – 2QCY21 Analyst Briefing Takeaways

FABL held its analyst briefing today. To highlight, the company reported consolidated PAT of PkR4.1bn (EPS: PkR2.68) in 1HCY21 vs. PAT of PkR3.8bn (EPS: PkR2.50) in the same period last year. On a quarterly basis, 2QCY21 earnings stood at PkR1.9bn (EPS: PkR1.29) against PAT of PkR1.7bn (EPS: 1.15).

FABL deposit grew by 9.4% in 1HCY21 vs industry wide growth of 10.7% over the same period. Deposits mix stands at 40%/36%/24% current/saving/term deposits, respectively.

Commenting on the Islamic bank conversion, the management strongly believe that they will be able to convert its balance sheet to at least 80-85% Islamic by the end of CY22. This will allow bank to officially submit request to SBP for its conversion where the FABL will surrender its conventional banking license for Islamic banking license from the SBP.

At present, composition of advances stands at 74.12%/25.88% of Islamic/conventional banking while deposits composition stands at 49/51% of Islamic/conventional and 21% of the investment composition is Islamic.

Sector wise, corporate banking accounts for 77% of the loan book while retail banking is 21% whereas investment composition comprises of Govt. securities/corporate debt securities of 78%/19%, respectively.

Management aims to convert 65 branches into Islamic by CY21 along with PkR100Bn in deposits in the coming months. This will help FABL to achieve its target of 90% branches to be Islamic by CY21.

Regarding the conventional banking operations, management stated that around 10 branches will be kept as conventional banking branches at strategic places post conversion to Islamic banking.