BAFL: Hefty capital gains and lower provisions drive profitability

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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