EUR 30.00 For Business Accounts Only

Topline Flash Note: Bank Al Habib Limited (BAHL): Analyst Briefing Takeaways

• The bank has posted a YTD growth in deposits of 21% while a YoY growth of 26%. In terms of mix, this has been driven by a 25% YoY growth in Current Accounts, which constitute 38% of total deposits as of Sep-2020.
• The capital expansion for the bank has been the key in achieving these numbers with 86 branches added up until Sep-2020. The management informed that the current number of branches added stands at 90 with a further 5 branches due to be opened in Dec-2020.
• Going forward, the growth strategy will be similar to 2020 and the target is to open close to the same number of branches in 2021 as seen in 2020.
• The bank’s investment book as of Sep-2020 stands at Rs813bn. This constitutes 52% of PIBs and 38% of T-Bills. Revaluation surplus on the investment book stands at Rs6.3bn. The T-Bill book has largely been re-priced. On the PIB front, 60-65% of the holdings are fixed which were accumulated on the higher end of the yield spectrum.
• The loan book has largely been re-priced and contrary to industry’s contraction up until now, it has grown by 7% YTD. Key area of growth has been agriculture, as the bank traditionally has had a strong rural presence.
• The bank is playing catch up on the digital front and is investing in tech platforms to make inroads in the growing segment in 2021.
• Roshan Digital Accounts are expected to be launched in Dec-2020 with ground work nearing completion.
• The bank has an overall General Provision of ~Rs5.2bn, of which Rs2.2bn was added this year. The coverage stands at 158% as at Sep-2020.
• Cost to Income has come down further to 42% for 3Q2020, from 62% in 1Q2020.
• The bank has a sizeable chunk of the export business, accounting 14% in terms of market share.

The bank does not expect a material impact of IFRS implementation as stress testing has been going on since 2018 and a significant General Reserve buffer has already been created.