BAFL: Hefty capital gains and lower provisions drive profitability

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By MG News | April 22, 2021 at 02:38 PM GMT+05:00

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April 22, 2021 (MLN): Bank Alfalah Limited (BAFL) has reported its 1QCY21 results today, where the Bank posted net profits of Rs3.42bn (EPS: Rs1.92/sh) compared to Rs2.9bn (EPS: PkR1.63) in the same quarter last year, up by around 18% YoY.

The deviation has mainly come from hefty capital gains booked during the quarter, while a sharp decline in provisioning and lower effective tax rate further bolstered profitability.

During the quarter, the Net Interest Income (NII) of the Bank declined by 12.3% YoY owing to lower interest income, while non-markup income surged by 38% YoY mainly due to capital gains of Rs1.1bn compared to the loss of Rs47.48mn in 1QCY20, and higher fee income (up by 14.4% YoY).

Provisioning expense declined by 85.8% YoY, which can be attributed to the buffer created through higher subjective provisioning during CY20. Furthermore, operating expenses of the Bank posted a 5% YoY growth, this led to the cost to income ratio to 60% compared to 56% in SPLY.

On the tax front, the effective taxation of the Bank improved to 37% compared to 41% in SPLY which can be ascribed to a deferred tax adjustment.

 

Consolidated Financial Results for the quarter ended March 31, 2021 ('000 Rupees)

 

Mar-21

Mar-20

% Change

Mark-up/return/interest earned

    21,389,307

              25,907,916

-17.44%

Mark-up/return/interest expensed

    11,064,172

              14,127,997

-21.69%

Net mark-up/interest income

    10,325,135

              11,779,919

-12.35%

Non-mark-up/interest income

 

 

 

Fee and commission income

      1,943,395

                1,697,809

14.46%

Dividend income

          132,720

                      87,056

52.45%

Foreign exchange income

          657,996

                1,055,601

-37.67%

Gain/(loss) from derivatives

            49,113

                    (61,236)

-180.20%

Gain / (loss) on sale of securities

      1,094,391

                    (47,484)

-

Share of profit from associates

            38,345

                    107,710

-64.40%

Other income

            38,127

                      22,066

72.79%

Total non-mark-up/interest income

      3,954,087

                2,861,522

38.18%

Total income

    14,279,222

              14,641,441

-2.47%

Non-mark-up/interest expenses

 

 

 

Operating expenses

      8,509,541

                8,094,266

5.13%

Worker’s welfare fund

          109,584

                    110,122

-0.49%

Other charges

              6,535

                      41,090

-84.10%

Total non-mark-up/interest expenses

      8,625,660

                8,245,478

4.61%

Profit before provisions

      5,653,562

                6,395,963

-11.61%

Provisions and write offs - net

          216,168

                1,527,594

-85.85%

Extra-ordinary/ unusual items

                     -  

                                -   

 

Profit before taxation

      5,437,394

                4,868,369

11.69%

Taxation

      2,015,158

                1,975,606

2.00%

Profit after taxation

      3,422,236

                2,892,763

18.30%

Earnings per share - basic (rupees) - Restated

                 1.92

                           1.63

17.79%


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