Flash Note: Bank Alfalah (BAFL): 3Q2018 Conference Call Notes
- Bank Al-falah reported profits of Rs2.7bn during 3Q2018, up by 13% YoY. Profits were led by 15% YoY increase in net interest income (NII). The management expects net interest income to increase further in coming couple of quarters as assets re-price with a lag and benefit from previous rate hikes.
- Fee income growth would have been higher if there was no drag from lower revenue generated by wealth management and advisory income due to prevailing market conditions.
- Cost to income has been lower than last year, but as bank continues with its expansion plan and investment into digital space, reducing costs further will pose a challenge.
- Outstanding PIB yield is at 8% so there is little to no re-pricing risk . Bank holds ~Rs65bn of PIBs which include ~Rs40bn of floating rate PIBs. The Bank also expects 100bps hike in the short term.
- The management intends to maintain CAR at a level which gives them at least a 2% buffer from regulatory requirements.
- Lower dividend income during the quarter is due to timing issue as the portfolio has not changed much.
- Loan recovery pipeline, as per the management, still looks healthy and recovery pattern is expected to continue in coming quarters.
- Bank’s loan portfolio is composed in a way that most of its loans re-price in 3-6 months.
- The Bank expects that IFRS-9 might be implemented by SBP by the end of 2019.
- On dividends, the management stated that they do intend to embark on a stable dividend policy.
- Divestment of Afghanistan operations could happen in 4Q2018 or 1Q2019, depending o regulatory approvals.
Bank Alfalah Limited is a holding company. The Company's segments include Retail banking, including loans, deposits, trading activity, wealth management and other banking transactions with its retail and middle market customers; Corporate banking, which includes loans, deposits, project financing, trade financing, investment banking and other banking activities with its corporate and public sector customers; Treasury, including liquidity management activities carried out through borrowing, lending and money market operations; Consumer banking, including constitutes consumer financing activities with individual customers; Islamic banking, pertaining to its full scale Islamic Banking operations; International operations, which includes amounts related to its overseas operations, namely, commercial banking activities in Bangladesh and Afghanistan, and wholesale banking activities in the Kingdom of Bahrain, and Others, including merchant banking related activities.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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