Bank Alfalah’s net profits decline by 9% YoY due to hefty provisions

By MG News | August 26, 2020 at 10:24 AM GMT+05:00

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August 26, 2020 (MLN): Bank Alfalah Limited (BAFL) has announced its financial results for the half-year ended on June 30, 2020 wherein the bank has reported a profit after tax of Rs 5.778 billion i.e. around 9 % lower than net profits of Rs 6.316 billion in the same period last year.

This has translated into earnings per share which clocked in at Rs 3.25 against Rs 3.56 reported in the aforementioned period.

The decline in the bank’s profitability was mainly attributable to hefty provisioning charges.

The bank’s net interest income went up by 7.81% YoY to stand at Rs 23 billion in 1HCY20 on a back of compression in deposits cost in response to policy rate decline, as per the research of Aba Ali Habib.

During the period under review, despite the decline in fee income due to lower trade activities, non-funded income showed a stellar growth of 40% YoY on an account of a substantial increase of 59% in FX income capital gains of Rs 1.73 billion in 1HCY20 along with a two-fold increase in the share of profits from associates.

The major highlight is colossal provisioning charges which increased by around 4.88x YoY from Rs 979 million to Rs 4.788 billion when compared to the prior year, hurting the financial stability of the bank.

Consolidated Financial Results for the half-year ended June 30, 2020 ('000 Rupees)
	Jun-20	Jun-19	% Change
Mark-up/return/interest earned	49,952,669	41,646,036	19.95%
Mark-up/return/interest expensed	26,595,634	19,980,873	33.11%
Net mark-up/interest income	23,357,035	21,665,163	7.81%
Non-mark-up/interest income
Fee and commission income	3,042,353	3,549,097	-14.28%
Dividend income	151,903	169,777	-10.53%
Foreign exchange income	2,008,614	1,263,768	58.94%
Gain/(loss) from derivatives	(61,228)	(12,892)	374.93%
Gain /(loss) on sale of securities	1,732,773	(63,094)	-
Share of profit from associates	343,649	159,068	116.04%
Other income	45,556	133,281	-65.82%
Total non-mark-up/interest income	7,263,620	5,199,005	39.71%
Total income	30,620,655	26,864,168	13.98%
Non-mark-up/interest expenses
Operating expenses	15,614,254	13,940,596	12.01%
Workers welfare fund	275,775	255,384	7.98%
Other charges	42,503	109,292	-61.11%
Total non-mark-up/interest expenses	15,932,532	14,305,272	11.38%
Profit before provisions	14,688,123	12,558,896	16.95%
Provisions and write offs - net	4,788,451	979,828	388.70%
Extra-ordinary/ unusual items	-	-
Profit before taxation	9,899,672	11,579,068	-14.50%
Taxation	4,121,385	5,262,665	-21.69%
Profit after taxation	5,778,287	6,316,403	-8.52%
Earnings per share - basic (rupees) - Restated	3.25	3.56	-8.71%

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