BAFL_Higher NFI Lead to earning surprise, (AKD Off the Analyst's Desk Jul 29, 2022)
AKD, Off the Analyst's Desk
BAFL: Higher NFI Lead to earning surprise
Bank Al-Falah Limited (BAFL) announced its 1HCY22 result today, where it posted consolidated earning of PkR8.8bn (EPS: PkR4.9), up 25%YoY. Along with the result the bank also announced a payout of PkR2.5/sh. The result was above our and consensus expectations owing to robust performance of the bank’s FX desk.
Here are the key takeaways from the result.
- BAFL’s Net Interest Income (NII) grew by ~46%YoY during 1HCY22 on the back of robust book growth and favorable asset pricing.
- Non Funded Income (NFI) was higher than expected and clocked in at PkR11.4bn owing to strong performance of FX trading desk which allowed the bank to beat our expectations on the higher side. Fee and Commission income also posted a growth of ~33%YoY whereas dividend income increased to PkR590mn from PkR273mn from SPLY.
- Admin expenses reportedly jumped by 24.9%YoY during the period under review on the back of rising inflation, taking the cost-to-income ratio to ~60% during the period under review.
- Provisioning expenses clocked in at PkR3.7bn during 2QCY22, which took the total provisioning expenses during 1HCY22 to PkR4.0bn, the provisioning expenses were slightly higher than expectations and therefore kept the bottom-line growth in check.
- Effective tax rate for the quarter clocked in at ~60%, attributable to imposition of super tax and poverty alleviation tax announced in federal budget.
- Along with the result, the bank announced a half yearly dividend of PkR2.5/sh. We have a buy call on the scrip with a TP of PkR40/sh. The scrip trades at a forward PER of 0.54x only
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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