Bank Al-Falah earns Rs 11bn in 2018

KARACHI: Bank Al-Falah Limited (BAFL) has declared earning of Rs 11 billion for the calendar year 2018, registering a year-on-year (YoY) improvement of 28 per cent.

On quarter-to-quarter (QoQ) downturn of 20% was witnessed and improvement in profitability was due to improvement in net interest income (NII) alongside controlled OPEX.

BAFL announced its fourth quarter 2018 earnings here on Friday, wherein it reported EPS of Rs 1.16, 68 per cent higher YoY, which was below expectations.

The increase in earnings YoY was due to higher Net Interest Income (NII) as well as lower non-interest expenses. However, earnings were still below expectations due to lower fee income as well as higher provisioning than anticipated. The bank also gave a final cash dividend of Rs 1.5/share.

Net interest income of the bank rose by 17 per cent YoY to Rs 8.4 billion, due to the impact of 425bps hike in policy rate during the year.

Moreover, admin expenses fell by 5 per cent YoY as the bank continues to focus on cost cutting. Resultantly, cost to income is down to 61 per cent compared to 71 per cent in the same period last year.

The bank booked provision charge of Rs 1.2 billion during the quarter, up 4.2x YoY. The charge is due to subjective provisioning as per channel checks.

Non-interest income fell by 8 per cent YoY due to 4 per cent decline in fee income as well as 17 per cent fall in income from foreign currencies.

For 2018, earnings were up 28 per cent YoY primarily due to higher NII, lower non-interest expense and higher non-interest income. BAFL booked profit of Rs 475 million from discontinued operations pertaining to its Afghan operations.

Key risks for the company include 1) lower than expected hike in interest rate, 2) lower than expected advances and deposit growth, and 3) deterioration in Pakistan macros.