Topline Flash Note: Bank Alfalah Limited (BAFL): Conference Call takeaways
- To recall, the bank’s deposits had declined by 3.5% YTD at the end of 1Q2020. The six months which ensued saw the overall deposit growth to reach 4.8% YTD by the end of 3Q2020 (+1.5% QoQ). Current Accounts (+0.8% QoQ) have been maintained at the 46% mark as seen last quarter. Saving Accounts depicted a 6.1% QoQ increase, pushing CASA to 81%. The bank aims to open 70 new branches in 2021 to drive deposit growth.
- The bank believes that majority of the re-pricing on the Asset front has been completed with minimal impact to be seen in next two quarters.
- The loan growth for next year is again expected to be subdued despite the low interest rates.
- ~10% of the banks loan book has been restructured which amounts to ~Rs52bn.
- Suspended mark up from Bangladesh operations has been received and is reflected in the current quarterly accounts.
- On the investment front, ~Rs400bn Fixed Income portfolio is divided into T-Bills - Rs230bn, PIBs Floaters - Rs100bn (yield +9%) and PIBs Fixed - Rs70bn (yield +10%). Overall yield is +9% on the Fixed Income portfolio, while the PIB book has an average duration of 2.3yrs.
- The bank sees Oct-2020 inflation to come in at 9% and Nov-2020 inflation at 9.25% to be driven by higher Wheat prices. That said, interest rate cycle reversal is expected between 1Q2021 and 2Q2021.
- Major in roads were made in the remittances market with market share improving from ~5% at the start of the year to ~10% at the end of Sep-2020.
Medium Term Note (MTN) product for the bank has gained solid traction. The first tranche of the total Rs50bn on offer is expected to be closed soon. The size of which is Rs9bn and the book is oversubscribed in pre-open (Rs11bn). The issue is awaiting final SECP approvals, which is expected in the next 10 days. The initial tranche is of Rs1bn with a green shoe of Rs1bn.
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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