BAFL_Proceeding with Cautious Growth, (AKD Daily, Mar 14, 2023)
AKD Daily
BAFL: Proceeding with Cautious Growth
- Bank Alfalah Limited (BAFL) posted NPAT of PkR18.2bn (EPS: PkR11.5) for CY22, higher by 28%YoY. The growth, despite the higher taxation during the period, is attributable to the bank’s expanding NIMs
- BAFL grew its deposits on a sequential basis, to the tune of 7%, in the final quarter of the year. This was made possible by the cushion in its ADR, which stood at 56.1% at the end of 3QCY22.
- Despite the strong financial position of the bank, we perceive BAFL to have substantial risks on the horizon, particularly in the form of its lending composition. As of CY22 end, 23% of the bank’s lending was to the Textile Sector, with another 15% to individuals—categories that are susceptible to macro shocks—presenting risks in terms of bad loans.
- We have a Dec’23 TP of PkR41.0/sh on the stock, offering an upside potential of 35% from its last close. In addition to this, the bank offers an estimated dividend yield of 28% for CY23, representing a total return of 64%, warranting a “Buy” rating on the stock.
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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