Bank Alfalah posts profit of Rs 2.7bn during 3rd qtr
KARACHI: Bank Al-falah Thursday posted profits of Rs 2.7 billion in 3rd quarter 2018, which is up by 13 per cent year on year (YoY). Profits were led by 15 per cent 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, the analyst said.
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 per cent so there is little to no re-pricing risk. Bank holds Rs 65 billion of PIBs which include Rs 40 billion 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 per cent buffer from regulatory requirements.
Lower dividend income during the quarter is due to timing issue as the portfolio has not changed much, the analyst said adding that 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 fourth quarter 2018 or first quarter 2019, depending of regulatory approvals.
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