Karachi, May 17, 2012 (PPI-OT): Bank Alfalah limited (BAFL) posted net earnings growth of 29% YoY in 1QCY12 as provisioning against non-performing loans dropped by 50% YoY.
According to Arif Habib Limited, the net income of the bank in 1QCY12 stood at PKR 1,202mn (EPS: PKR 0.89) compared to PKR 930mn (EPS: PKR 0.69) in the corresponding period last year. This upsurge in earnings mainly emanated from the decline of 21% in total provisioning and a 17% YoY improvement in non-funded income. Arif Habib Limited has revised Arif Habib Limited’s provisioning estimates downward, resulting in CY12E EPS to grow by 7% to PKR 3.2. At yesterday’s closing price of PKR 17.17/share, the scrip is offering an upside potential of 16% to Arif Habib Limited’s Dec-12 target price of PKR 19.9/share and is trading at CY12E P/BV and P/E of 0.8x and 4.3x, respectively.
Net interest income rises by 5%YoY
BAFL’s net interest income has depicted a rise of 5%YoY as the bank’s average earning assets in 1QCY12 augmented by 14% YoY. Net advances of the bank grew by mere 1% YoY to PKR 214bn whereas interest earning investments have jumped by 40% YoY to PKR 161bn. However, lower policy rate during the period resulted in just 4% YoY rise in interest income to PKR 11.1bn. The bank’s deposits in 1QCY12 rose by 19% YoY to PKR 405bn. This has resulted in banks Advances-Deposits Ratio (ADR) to drop from 62% to 53% in 1QCY12 while funds allocation remained skewed towards investments with IDR, growing to 42% from 36%.
|Financial Highlights (PKRmn)||1QCY12||1QCY11||YoY|
|Net Interest income||4,645||4,447||4.5%|
|Non Interest income||1,463||1,247||17.3%|
|Profit before tax||1,824||1,439||26.7%|
Source: Company Accounts and AHL Research
Classified advances rise by 11% YoY
The bank’s Non-performing Loans (NPLs) have increased from PKR 18.4bn in 1QCY11 to PKR 20.4bn, a rise of 11% YoY while on QoQ basis it has augmented by 7% QoQ. This has resulted in Gross Infection Ratio to rise from 9% in Dec-11 to 9.65% by end of 1QCY12. The bank has realized provisioning of PKR 343mn against classified advances, a decline of 50% YoY. However, provision against investment jumped by 66% YoY to PKR 374mn. The bank’s coverage ratio has dropped from 65% in 1QCY11 to 61% in 1QCY12.
Non-interest Income rise by 17%YoY
Non-interest income of the bank has augmented by 17%YoY to PKR 1.46bn in 1QCY12. This rise is primarily due to 2x YoY times jump in income from foreign currencies while fee and commission income has registered a decline of 5% YoY.