Karachi, October 31, 2022 (PPI-OT): BAFL: Corporate briefing session key takeaways
Bank Alfalah Limited (BAFL) announced its 9MCY22 financial results wherein the bank posted profit of Rs14,088mn (EPS: Rs7.93), up 34% YoY. 3Q EPS clocked in at Rs3.03 (+52% YoY), over improving core income as assets repriced on higher yields. BAFL held its corporate briefing today to discuss the nine-months results and outlook, we present key takeaways from the session:
Total asset growth clocked in at 38% YoY, led by 34% YoY higher deposit growth. The asset deployment was seen in Investments, +60% YoY, while loan book expanded by 15% YoY. The bank’s book value reported 12% YoY growth.
Out of total deposits, current account growth was 30% YoY, hence mix of current account slightly declined to 44%.
The Investment book skewed toward variable rates, with only 16% of the book in fixed PIBs. The fixed PIB book holds a duration of 3.5 years with yields of 11.75%, with no major maturities in the near future.
Gross ADR has reduced to 56% (from 65% in Sep-2021) as deposit growth has outpaced the loan book expansion. Management remains cautious on the lending front, however will continue growth on that front.
Adequacy levels remained comfortable with CET I at 10.6% and Tier II at 14.5%. The bank is in process of issuing a Rs7bn ADT I paper by CY22 end.
On the P/L front, the bank’s pre-provisioning profit went up by 139% YoY over asset re-pricing (which has almost completed in 3Q) increasing Net Interest Income (NII) by 84% YoY. Moreover, strong Fee Income (+37% YoY) and higher FX Income (+216% YoY) also supported income growth.
BAFL reported a hefty provision of Rs4bn in 3Q, out of which a bulk pertained to subjective Specific provisioning, which belonged to certain parties being classified under Non-Performing Loans. PAT growth hence limited to 52% YoY.
As a result, Infection ratio also increased from 3.5% to 4.1% in 3Q. As provisions were booked accordingly, Coverage ratio remained a little above 100%.
Management views 100bp increase in the next Policy Rate announcement or in early CY23.